A bundle of needs…

I appreciate that this is likely to be read as a massive attack on the Welfare State by some, and that I’ll be suspected of channeling the political spirits of Norman Tebbit, Margaret Thatcher and Atilla the Hun by others.  However, that’s not the intention.  As some of you will know, I hold Libertarian views and am a believer in as small a Government as is practicable, but that does not mean that I take the view that the State should not intervene to help those in genuine need.

This entry grew out of the ongoing study-tidying process that’s been going on for a few weeks now here at the Towers.  I came across a newspaper article that I’d clipped in June of this year, and in the article was an interesting observation from William Beveridge – the architect of the modern UK Welfare State.  In 1948, 6 years after he originally wrote the report that gave ultimately gave birth to the benefits system, he expressed his fear that the reforms he’d introduced might encourage people to be passive about their needs.

The Government of the day didn’t take his words on board; the rest, as they say, is history, and we’re now able to look at the society that was created and wonder whether the result of 65 years of cradle to grave Welfare State has been, in the words of the journalist Camilla Cavendish who wrote the piece, to reduce people to a bundle of needs.

And I agree with her; one of the side effects of the Welfare State, especially in the increasingly Nannyish manner that it has been implemented in the last 12 years, is that many people have been dumped in to a dependency culture.  The risk to entitlements and benefits if a job is taken means that many people are not going to run the risk of taking a job that will result in them losing money from their weekly income – and I can see their point.  For all the talk of dignity of work, self respect, etc. the bottom line is that if you don’t have as much money coming in to the household then, in the words of Quark, the ferengi bartender from Star Trek: Deep Space Nine – “Dignity and an empty sack is worth the sack”.

In 2007, roughly a third of all Government expenditure was in the from of State Benefits.  This constituted around 11% of GDP, and about half of the population of the UK were recipients of some form of state benefits.  Now, we live in a system where inevitably some people are going to slip to a point where they need state intervention to keep a roof over their heads.  And it’s appropriate that they get that help.  But half the country?  This is obviously not half the households; many households on benefits slip will involve a number of adults.  Some households can’t get much help at all; anyone who runs their own business or is self-employed will understand that if their business hits trouble they are very much on their own unless children are involved. 

But for those households and individuals who are dependent on benefits, and in many cases have their whole lifestyle driven by the need to maintain their access to the benefits system, let’s take a look at what this means:

  1. There are restrictions on paid and voluntary work that can be done whilst claiming benefits.  In other words, you are effectively being paid to do nothing for part of your week.
  2. The crossover between benefits and work is fraught with problems – it’s very easy to get a nice little job and lose out bigtime in the ancillary benefits that your household may be entitled to.
  3. The problems in moving in to and out of benefits – as may take place if you do contract / temporary work or find yourself on a series of short term contracts (not uncommon in a recession when piece work may be increasingly common) again discourages people from stepping out of the benefits pit to seek ongoing work.
  4. Some people with occasional illness that will prevent them working for a month or so here, a month or so there, again find it easier to stay on sickness and disability benefits rather than step in and out of the workforce and lose the regularity of cashflow of being on benefits.

There are some people for whom a loosening of the restrictions around working whilst on benefits would be a great advantage.  For example, allowing someone on benefits to do a paid job for a couple of months without losing access to benefits might seem strange, but think about what it would permit:

  1. Ongoing guaranteed income over the first month or so when pay in a new job may not be immediately available.
  2. No sudden shock to the family finances.
  3. The work is bringing in extra money for a month or so – it is worth doing.
  4. At the end of this period then the benefits can be stopped. 

There are people for whom this sort of movement in and out of the workforce would never be possible, due to illness or disability, and it should therefore be possible to allow them to do voluntary work / temporary work as required again with no financial loss.

This would require a synchronising of the Tax and Benefits system.  And the Government would also need to make it very clear (and structure tax and benefit regimes accordingly to ensure it) that if you wanted to sit on your backside you could do, but that your income would be less than someone on benefits who is working as and when they can. 

The aim is to encourage self-value, self-determination and get out of the need trap.  We cannot carry on like we are doing producing multiple generations of families in which no one has worked.  This is wrong, it’s perverse and we simply cannot afford it financially or as a society.