Today’s Guardian is reporting a new conservative policy on welfare, which will target young people on housing benefit particularly. David Cameron wants us to think that this is a big and necessary change, but in making his case he is giving an implicit nod to what really needs to happen in the UK:
If you are a single parent living outside London, if you have four children and you’re renting a house on housing benefit, then you can claim almost £25,000 a year. That is more than the average take-home pay of a farm worker and nursery nurse put together. That is a fundamental difference. And it’s not a marginal point.
I agree, David, though perhaps you missed the key point in your speech: if a farm worker and a nursery nurse can’t between them earn more than 25,000 pounds a year, there is something seriously wrong with your economic system. Do you expect these people to build a life together on that income in modern Britain? And do you wonder why people might prefer not to bother looking for work? You claim that 1 in 6 British children lives in a workless household, but your alternative to their lack of work is to cast them into a labour market where two grown adults between them have to work in hard jobs to make 25k?
What David Cameron needs to do is buried in that speech. He needs to find a way to make work more rewarding, to lift people out of the state of working poverty. He either can’t, or doesn’t want, to do either. Why bother, when your rich mates are demanding that you flood the labour market with cheap and vulnerable workers?
Compromise and Conceit 
June 25, 2012 at 9:23 pm
For me, this idea points more towards the fundamental problem is that the United Kingdom is really about uniting London and the rest of island (+ Northern Ireland).
$25k is barely enough to live in a gutter in inner London, but in outer bug-fuck its heaps.
The UK would probably do better if it confronted the problem that London (and near London) is not like the midlands. The salary scales and costs are not competing against each other. And given the terrible British transport infrastructure there is no way they ever could compete against each other or meaningfully support workers to each other as the transit time is way too high.
To be able to meaningful interact economically the commute time is the primary factor. If you can live in Scotland and work in London then London’s wages would apply everywhere/anywhere and then it would also drive down prices in London. But the fact is that commute from London’s suburbs to the City is tortuous, let alone the idea of living a city over.
If the disparity between London and everywhere else could be confronted then the problems could be tackled separately. He could cut benefits to the regions then use the savings to invest in job creation or tax cuts in those areas to drive growth. Meanwhile London could be taxed more harshly to drive companies to the regions and push people and jobs with them. That would then allow London prices to come down which would let him cut benefits in London so that working in there was no longer a mugs game.
Note that in the examples above I’ve used cutting benefits as the example, but that’s primarily because I’m too lazy to state all the adjustments required to raise the other income types while holding benefits constant.
I think we can all probably agree that:
1. Life on benefits should not be terrible (though we’d probably disagree on exactly how bad it should be)
2. Life when working should be better than life on benefits
3. The exact numbers involved in solving this problem don’t really matter. $25k or $250k is a reflection of purchasing power, not an absolute value that must be hit
There are other rules that can be derived from those principles, such as the importance of avoiding high marginal tax rates when moving from welfare to work, but those tend to be the actually sticky, tricky parts of the policy to work out as there is always going to be a single mum with 3.7 children by 1.75 men who speaks Welsh and works Wednesday afternoons and Saturday mornings who is disadvantaged by any policy you pick.[1]
[1] No disadvantage checks can kiss my ass. Sometimes the government needs to just say “This works for 99% of people. We’ll probably screw 1% by accident, but we’ll pick that up on the next policy” and they need to say it in a sense other than “I’m allowed to screw the rich”. [2]
[2] Wayne Swan, I’m looking at you.
June 25, 2012 at 10:58 pm
Yes, there’s a development problem here, and solving it involves driving business out of London, without losing business from London (i.e. encouraging growth in the regions). I don’t think anyone’s been able to do that in Britain in 30 years. So what to do? I think Cameron’s thrown it all in the too-hard basket and decided that demonizing and punishing welfare recipients is easy. That tactic is only going to take you so far in a recession (at the point that unemployment reaches 10%, everyone knows a “decent” unemployed person[1]).
I agree with your three extremely reasonable points, and I think the big problem in Britain is 2. Life is not better working. It explains so much of what is wrong there – why people don’t want to work and why people are sullen and unhelpful when they are working. I really can’t see that Cameron’s plans are going to fix it though… and much as I like to think Cameron is genuinely compassionate, given his background and his recent efforts, I find it really hard to believe that he understands what it is like to be poor[2]. I think this lack of understanding is starting to show …
—
fn1: though one should never underestimate the power of the British to be bigoted against a whole class of people, “present company excepted, of course!”
fn2: I don’t know if current labour party folks know better – I’ve heard rumours Miliband comes from a family where someone might once have worked in a normal job, but that doesn’t mean the rest of his front bench aren’t highly-protected members of political dynasties