Everyone agrees the benefit system in the UK is a total mess. The man appointed to sort it out thinks he has the answer, but Iain Duncan Smith doesn’t even understand what is the real problem.
Iain Duncan Smith is known to his friends as IDS. And his enemies? Unusually for a politician, he doesn’t seem to have any, probably because he is so bland. He was Leader of the Opposition at one point, and could in theory have been Prime Minister but the Conservative Party opted for style over blandness, and so we have Call Me Dave instead.
Actually, things are a bit more complex than that; after the Party passed a motion of no confidence, he was replaced by former Home Secretary Michael Howard. How he would have fared as PM we will never know, but although the Party may not have had much belief in IDS, David Cameron does, and he was made Secretary of State for Work and Pensions in May 2010.
While it is generally agreed that IDS would not have made much of a PM, he attacked his new task with relish, that being not simply to reform the benefit system but to ensure that work always pays, something he said in so many words. To put it another way, no one should be worse off working than he, she or they would be out of work and claiming state benefits.
People in this position are caught in what is known as the poverty trap. In November 2010, he addressed Parliament on the issue of reform. If you have an hour to spare, you can hear him describe his solution in detail. The simplified version can be found here.
It sounds good, but will it work? Let us take a purely hypothetical case, we can dispense with invented names. A single mother living in Greater London in rented accommodation with her young daughter. She has no academic qualifications, is frankly none too bright, and prior to becoming pregnant she had been a bit of a wild child, having picked up convictions for shoplifting and minor drug offences.
She is offered a job in Central London; because of the hours, she can travel off-peak, which means she has to fork out only £7.80 per day, at present. She is fortunate to be living in sheltered housing, but even that costs her £80 per week, a fraction of what she would have to pay if she were renting commercially. So before childcare costs, before she can even put food on the table, she has to find nearly £120.00 per week,.
The minimum wage in London is currently £5.93 per hour, but let us say she is paid £6 per hour for a 40 hour week, which gives her £240 before deductions. Half of that is gone already on fares and rent.
Now take her out of social housing and put her in private rented accommodation. Add to this that maybe she can’t always travel off-peak, which augments her fares considerably. Now what if she is forced to take a day off here and there? Do the math – it just doesn’t add up.
IDS has done his level best to dangle the carrot, but he makes it clear that there will also be a stick. As per the BBC report above: “There will be tougher penalties for people fit to work but unwilling to do so. A sliding scale of sanctions will see those refusing work on three occasions having their benefits taken away for three months”.
IDS is one of those well meaning twits who also believes the cure for Britain’s binge drinking culture is a minimum alcohol price. Clearly he has never heard of Sevareid’s Law, which predicts this would most definitely not solve the problem of public drunkenness, and would most definitely create other, far worse problems. David Cameron proposed a similar non-solution regarding crime - take away their benefits. Which would result in? More crime!
If a man or woman is unable to earn a living wage and is left destitute on account of this, what other choices are there?
Clearly the welfare system does need reforming, but IDS can’t see the solution because like every other mainstream politician in the world he is totally fixated with the delusion of full employment. That may have been possible – once. It is not anymore, and the reason is that many people in the advanced nations are totally incapable of earning a living wage. They are in effect unemployable. A few, like the unfortunate drug addict and habitual criminal featured here are totally unemployable, period, and under the current system are condemned to a life of repeat offending and misery that makes plenty of work for other people: police officers, prison officers, etc, but not for themselves. Others, like the hypothetical single mother alluded to here are not totally unemployable, they can certainly do odd jobs and menial work here and there, but they do not have the ability to earn a living wage, because a) the jobs are not there and b) even if there were, no employer in his right mind would take them on.
Indeed, in 21st Century Britain, some of the greatest cultural icons of the past would be totally unemployable, including William Shakespeare and Irving Berlin. Check this out and ask yourself if that is indeed not the case.
What IDS should do is face up to the reality, that many people today are unemployable, and the only way out of this problem is for them to be paid a Basic Income with no strings attached, something that should be paid to all of us - except those both rich enough and idealistic enough to opt out.
Then the entire benefit system could be dismantled including that vast bureaucracy of pen pushers, lawyers, snoops and spies, who would all themselves each receive a Basic Income. This would save billions and would also rejuvenate the economy. Until then, even the major reforms IDS is in the process of instigating will do nothing but tinker with the system, and hurt most the people he believes in all honesty to be helping.
[The above op-ed was first published May 26, 2012 (not May 15 as indicated on the archived page).]
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