Patrick Nolan

Spending cuts must start with welfare

The new and independent Office for Budget Responsibility estimated that interest payments on public debt are set to rise to £67 billion a year by 2014-15. The hole in the public finances is so deep that every cut in spending that can be made should be made. Few commentators have grasped that tinkering around the edges, such as with “efficiency gains,” will not be enough. The only way to eliminate the deficit and to begin the task of repaying public debt is through making deep cuts in spending and for people to take more responsibility for themselves.
 
Cuts must start with welfare. The UK government spends more on welfare than on anything else. Welfare spending has increased in good times as well as in bad, with the total bill doubling in real terms to around £200 billion since 1988.
 
The government has received little bang for its buck from this increase in spending. International research shows that the UK not only has one of the most expensive welfare systems in the world but is also one of the worst performing, with low living standards for children and high rates of inactivity among young people, substance abuse, teen pregnancy and sole parenthood. Welfare spending does not need to increase; it needs to improve.
 
In an alternative Budget released today, Taking the tough choices, Reform identifies two ways to improve welfare spending.
 
The first way is to move from politically-motivated child poverty targets based on relative annual income and to instead focus on improving the performance of the poorest families in the school system, on ‘welfare to work’ and on reducing the mobility blocks in welfare. By expressing the government target in terms of relative poverty governments have been encouraged to continually increase benefit spending, when the better route would be to pursue a high and more even spread of skills.









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