Britain needs more honesty about unemployment

Is low unemployment causing us more problems than we realise? The suggestion might seem absurd, offensive even. It’s reminiscent of the days of Mrs Thatcher’s supposedly ‘cruel’ monetarism, when we had three million unemployed. Some on the fringes liked to argue that unemployment was good for the economy because it made people work harder, being fearful for their jobs. Mass redundancies would not, of course, help the economy now or at any other time. If a million people were to lose their jobs, as happened in the early 1980s, that would be a million households suffering a collapse in the spending power. As well as a human tragedy, it would

Liz Truss should increase Universal Credit

Liz Truss’s plans for a two-year energy bill freeze, estimated to cost £100 billion, underscore three points. One, the incoming Prime Minister expects the energy crisis to be with us for more than one winter. Two, she grasps how lethal it will be to the Tories’ hopes of re-election if the Treasury doesn’t intervene in a big way. Three, she is prepared to run up government debt even further in order to mitigate a crisis that threatens people’s quality of life. This third point is the crucial one. When a neo-Thatcherite like Truss concedes the merits of transformative interventions funded by borrowing, it opens up a broader conversation. If the Treasury

Rishi Sunak’s low tax pitch to MPs

Is Rishi Sunak a low tax chancellor? He certainly likes to tell anyone who will listen that he is. Yet his actions tend to suggest the opposite. The tax burden is currently on track to reach its highest level since the early 1950s, and while Sunak unveiled one big tax slash in the Budget in the universal credit taper rate cut, the main thrust of Sunak’s announcements was spend, spend, spend. Tonight Sunak addressed Tory MPs at a meeting of the 1922 committee. After announcing £150 billion in extra public spending, Sunak sought to convince his party that, despite this, he was committed to lowering taxes. Having said in the chamber that

Could the squeeze on living standards bring down Boris?

There is about to be a two-phase onslaught on the living standards of those on low-to-middling incomes. On 1 October the energy price cap, for dual fuel, rises from £1,150 to £1,277. This is a rise of 11 per cent, at a time when furlough is ending and just a few days before the £1,000 a year uplift to Universal Credit is removed (which presumably Boris Johnson will not be swanking about in his big speech to Tory conference). That’s the first hit to living standards. There’ll then be a gradual further erosion of living standards with rising food inflation (of around five per cent, as per what Tesco’s chairman John

Tory MPs are changing their minds on Universal Credit

Tory MPs will not get the chance to force the government into a U-turn on scrapping the £20-a-week Universal Credit uplift this afternoon after the Speaker didn’t select their rebel amendment. Sir Iain Duncan Smith and Damian Green had tabled the motion refusing to give a second reading to the bill on the basis that the money saved by breaking the pensions triple lock should have been diverted towards keeping the uplift. The motion would not have reinstated the uplift, but would have blocked the legislation process enabling the government to suspend the triple lock so that the state pension rises in line with inflation or 2.5 per cent, rather than

Universal Credit and the future of the welfare state

Amid the many failures of public policy during the Covid crisis, one success has gone largely unnoticed. The Universal Credit system coped with a huge uplift in applications without breaking down. In February last year 2.6 million households were signed up; six months later that had swelled to 4.6 million. Some 554,000 people made new claims in the first week of lockdown, ten times the normal levels. For a benefit which not so long ago was being damned for the poor execution of its rollout, it is remarkable that the system coped. Its unexpected success offers plenty of lessons for the future of the welfare state. The digitisation of the

Isabel Hardman

Amber Rudd changes the Tory tune on food banks

What’s behind the rise in demand for food banks? Over the past few years, the default Conservative line has been that the reasons people need emergency help are ‘complex’. This is certainly true: the figures released by the Trussell Trust, which runs the largest network of food banks in the country, show that there is no one factor in food bank use. But those figures also show quite clearly that problems with the payments of benefits, or cuts to benefits, are a major driver: the top four reasons cited for referring someone to a food bank in 2017-18 were low income (28.49 per cent), benefit delays (23.74 per cent), benefit

How Thérèse Coffey plans to help millions back to work

If you haven’t heard of Thérèse Coffey, then this will be — to her — a sign that she has been doing something right.  As Work and Pensions Secretary she has had to sign people on to benefits faster than anyone who has held the position before. If this had gone wrong during lockdown, she would be as infamous as Gavin Williamson. But the system, Universal Credit, managed 1.5 million claims in four weeks. Many things have gone wrong for the government over the past few months, but the welfare system has (so far) held up. Coffey has kept her anonymity.  ‘My main task has been making sure that DWP

Sunak’s coronavirus rescue package looks increasingly unsustainable

The number of people claiming unemployment benefits in Britain rose by over 856,000 to 2.1 million in April, the first full month of the lockdown. Figures from the Office for National Statistics reveal that the number claiming benefits due to unemployment has increased by nearly 70 per cent. This marks an unbelievable u-turn from the start of the year, when UK employment figures were hovering at record highs. These figures do not include ‘the furlough effect’: those who are still counted as employed, paid by the Government to stay home and wait for the green light to return to work. Today’s numbers, as bad as they are, don’t reflect the number of

The Tories only have themselves to blame for Labour’s threat to Universal Credit

The Labour Party is buzzing about in Iain Duncan Smith’s constituency today, threatening both to unseat the former Conservative leader and scrap the reform he introduced: Universal Credit. Jeremy Corbyn made the promise, saying the changes to the benefits system have been an ‘unmitigated disaster’. The party will first get rid of the most controversial aspects of UC – including the fitness-to-work tests, the two-child limit, and sanctions which dock benefits from claimants who miss appointments – before scrapping it entirely. This has naturally prompted protests from the Tories, including some of the many MPs who served as work and pensions Secretary at one point or another. But the truth

Amber Rudd admits Universal Credit is in trouble

Amber Rudd left the Home Office over the Windrush scandal and has joined the Work and Pensions department just as its flagship benefits reform is under fire from all angles. The new Secretary of State spent most of her first session at the dispatch box this afternoon answering questions on Universal Credit – and she had arrived determined to strike a rather different tone from her predecessor. Esther McVey, who resigned from the role last week, had garnered a reputation for being rather hardline when dealing with criticisms of the benefit roll-out, while also managing to give far more away about some of its problems than Number 10 would have

Delays to Universal Credit won’t fix its fundamental flaw

It’s rare that a government pauses the implementation of a flagship policy. There’s so much ego involved in these matters that to do so is to admit a failing, rather than merely being sensible. But the government has had little choice but to further delay the roll-out of Universal Credit while it sorts out some of the problems with it. The plan had originally been that a further roll-out to four million people would start in January, with more claimants moving in July. But today the Work and Pensions department confirmed that the July deadline has moved to November as a result of fears across Parliament that those who are

The best place to be poor

I was born in north London, at the Whittington Hospital in Archway, and at the age of 62, after many years of trouble and wandering, I have come to rest in the streets where I was born. And in my usual cunning way I have become one of the roughly 300 or 400 people living in inner London you perhaps think of as ‘homeless’, making the rounds from drop-in centres to churches, from morning till night, in the hunt for free food. For this is what my life has come down to as I stand on the threshold of old age, the endless movement from one soup kitchen to the

Tom Goodenough

‘Remain’ dodges a hammer blow from the European Court of Justice

‘Remain’ might be trailing in the polls, but the campaign can at least be grateful they haven’t been dealt another hammer blow by the European Court of Justice today. The European Commission had tried to claim that the UK Government was wrong to check whether those getting child benefits were allowed to live in the country before paying out. But thankfully for ‘Remain’, the ECJ ruled that it was legal to hold back money for unemployed EU migrants who were not allowed to be here. The good news for ‘Remain’ is that the decision didn’t go the other way. Given how momentum has increasingly shifted towards ‘Leave’, particularly after yesterday

Employees lose out after salary sacrifice perks scrapped

If you’re not familiar with the term, then ‘salary sacrifice’ is a bit of a puzzler. Just what is your boss expecting you to sacrifice? A chunk of your wages? A goat in the car park at lunchtime? Put simply, salary sacrifice arrangements enable employees to give up salary in return for benefits-in-kind that are often subject to more favourable tax treatment than their wage packet. They’re a nice little earner for staff and employers as they essentially permit a bypassing of National Insurance (NI) payments. So, employers allow their workers to take a so-called ‘pay cut’ and that money is funnelled into a pension or another benefit such as childcare or

Barometer | 3 November 2016

Strike force Nissan is to expand its plant in Sunderland, building two new models there. The Japanese company is praised for not losing a day to strikes in three decades in the city. But labour relations weren’t always so good. — In 1953, when part of Nissan’s business was assembling Austin cars in Japan under licence, the company suffered a bitter 100-day strike. Occupying US forces became involved, helping the Japanese government to arrest union leaders. — As a result of the strike, a new, less militant union was formed, with a Harvard-educated leader. The union accepted job losses but became involved in discussions over new technology. Global race And where

Briefing: What’s holding up EU leaders in Brussels?

David Cameron is locked in negotiations with the other European leaders at the crunch summit in Brussels. With no sign of a deal, there is a chance the whole thing could drag on until Sunday. But what exactly are the issues that haven’t been agreed? Here are the main areas which are proving a sticking point for the PM: Economic Governance: The Prime Minister wants recognition that the EU has more than one currency and that Britain won’t be disadvantaged by not being within the Euro. As well as this, David Cameron is seeking assurances that British taxpayers will never be liable for propping up the Eurozone. The emergency brake:

With an 18-point lead in the latest poll, momentum is with the EU ‘in’ campaign. 

Why is David Cameron having such trouble persuading Jean-Claude Juncker to give in to his minimal demands for EU reform? The Prime Minister pledged, in a Tory manifesto, to restrict welfare for migrants for the first four years they’re in Britain: not as an ‘emergency’, but as a matter of routine. He was returned with a majority, and under British democracy this means it ought to happen. If the Lords were to try to frustrate this, the PM would overrule them because it was a manifesto pledge, voted on by the public. Why accept a veto from the EU? But the polls show a clear lead for ‘in’ – a ComRes

Things we don’t mind paying for

Here’s a challenge for film buffs: can anyone remember, from the entire canon of cinema and television, a single scene set in an underground car park in which something unpleasant or nefarious did not occur? Yet I still rather like them. By far the best car park in London is the one found underneath Bloomsbury Square, which is in the shape of a double-helix. This allows you to drive all the way down and all the way up again with your steering wheel in one position. About once a year I park in the Mayfair car park at the bottom of Park Lane. I recently noticed that an annual season

Does George Osborne really want to make himself the scourge of the strivers?

Without George Osborne, we’d probably be living under Prime Minister Ed Miliband right now. His value to the government goes far beyond his brief as Chancellor; he is across most departments most of the time. But as Chancellor, he is judged by the success (or otherwise) of his Budgets – which is why he is now in a moment of great danger. His love of complexity has come to threaten not just his own reputation, but that of the Conservative Party too. Sometimes, Osborne is so clever that he can be downright stupid: This is one of these times. In my Telegraph column today, I say that Osborne is currently