As a comitted social democrat I feel distinctly uncomfortable when I find myself agreeing with some of Iain Duncan Smith’s proposals on the benefits system. Labour spent far too much time blaming benefit claimants for their own situation without realizing that the circumstances conspiring to keep them on benefits are largely out of their control.
The benefits system is incredibly complex: There are more than 25 benefits that people of working age can claim, making it incredibly difficult to work out whether someone is better of in work or not. The murkiness of the system also makes it easy for that tiny minority determined to play foul to do so. Providing it is not used as a cover to cut benefits by stealth, the Coalition’s plans for a Universal Credit – all the benefits combined into one – is a sensible solution and one which, if implemented fully, would be a significant and well-overdue reform. Equally sensible is the plan to continue to pay benefit in the first few months of the claimant’s new job. As the first pay cheque can come in more than a month after benefits are stopped, many people don’t enter work for fear of not being able to pay the bills in the intervening period.
However, people become trapped not only by the vagaries of the benefits system but the inadequacy of the labour market. Ever since the 1980s governments – both Tory and Labour – have presided over a tremendous detioriation of our jobs market. Britain has become a sort of banana republic in terms of the availability of decent jobs: a vast proportion of the jobs Labour created came with rock-bottom pay and conditions, and little or no protection. Worst have been the proliferation of ‘zero hours contracts’ where a person can technically have a job but can go weeks without actually being able to work.
The mistake that Labour made and one that the Tories look destined to continue is to focus on the relatively small number of people who do not want to work and assume that this group is bigger than it acutally is, instead of looking at why the unemployed who are motivated and educated aren’t entering the labour market.
The Coalition is right in lamenting Britain’s high rate of economic inactivity (though, spuriously, people who volunteer or take care of family members are classed as such), but its diagnosis of why this might be so is completely wrong. The inactivity rate was high before the recession, so it is not merely the limited number of jobs that is the problem. People didn’t enter work during the boom times not because they were lazy or because they were living it up on benefits (contrary to popular belief, the UK has one of the least generous benefit systems in the OECD), but because they-quite rightly-were not willing to take jobs which offered minimal pay, no security and no prospects for advancement. Welfare and labour market reform are two sides of the same coin: get one wrong and you will get nowhere with the other either.
Both Labour and the Conservatives put a tremendous amount of responsibility on the shoulders of the benefit claimant – to look for jobs, go on job search courses and improve their skills and education but all this a complete waste of the claimant’s time and public money if the government does not keep it’s side of the bargain and ensure that there are enough good jobs for them to take once they have developed their potential.
Labour finally got the message with the Future Jobs Fund – a scheme to create 100,000 new good jobs in new, green and high technology industries but it came far too late and didn’t get very far before the Coalition abolished it. Its first big mistake but, one can safely predict, not the last.
All governments talk about the ‘long term unemployed’ as if it were a static, homogenous category but because you only need to be unemployed for a year before being classed this way, this is a group which is very quickly becoming more representative of the population at large. This will mean that more and more people will realise that it is a myth that life on benefits is a beach – whether metaphorical or Spanish – and put pressure on the government to get off its backside and do something about the quality of the jobs it is so keen for them to get.