Lawrence Kay

Welfare reform re-repeating

Welfare reform re-repeating
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To Albert Einstein, an insane person was someone who repeated the same course of action over and over again while expecting a different result each time. He would have found it easy to spot the trait in the British politicians who have attempted to change the benefits system over the past thirty years. As we continue into the recession, the thousands of people who have lost their jobs and claimed Jobseeker’s Allowance (the count is now 1,459,840) are moving into a system that the Government claims will help them find work but will actually fail to do so. This means that many of them are at risk of moving from a short-term, perfectly reasonable need for help in a downturn to long-term dependency on the state. This is what happened in the recessions of 1980s and early 1990s. It ruined the lives of millions of people.      

Since last summer, the number of people claiming Jobseeker's Allowance for over six or twelve months has been rising. This matters because the longer someone spends out of work the harder it is for them to get back into it. In July of last year, there were 237,000 claimants who had not had a job in the previous six months. That figure is now 313,000. Many of them will now be part of the population of claimants who have been out of work for twelve months or more, a number which has risen by around 15% to 113,000. Do not be fooled by the difference between the figures – many claimants will have just re-started their claims after a short break in order to avoid the extra demands from the system that come with being out of work for a long time.

Unemployment has devastating consequences for the people who bear it for years on end.  If another generation suffer those consequences, our welfare reformers of the past decade will have failed.

When Alistair Darling stands up at the despatch box next week, he will claim the opposite. As he talks about the extra £1.5 billion that is likely to be given to the companies bidding for the Flexible New Deal contracts (FND), he will say that Labour is doing its best to fight unemployment. In one sense, he will be right: using private firms to provide employment services is a good idea. But he will not state what is most obvious: that the extra money will be for all the extra people that are now moving from short- to long-term unemployment and that by the time someone reaches the FND stage (which a Jobseeker’s Allowance claimant reaches 12 months after an initial request for money), the Government will have already failed. There is no sense in which the Jobcentre Plus can be said to have helped a claimant if he has not found a job within that year. Future welfare reformers might want to try something different.

Lawrence Kay is a Research Fellow in the Policy Exchange Economics Unit.