Tuesday, September 28, 2010

IDS Benefits reforms are good, but no good if the economy is in recession

I have put in a submission to the Department of Work and Pension's 21st Century Welfare consultation.

There is much valuable stuff in Ian Duncan Smith's proposed reforms. He is rightly determined to address the Byzantine complexity of the welfare system, which presently delivers scores of benefits from three different agencies. Crucially, he wants to break the unemployment trap, which means that people are demotivated from finding work as they can get more from welfare than they can by finding work. He is going for a more gradual withdrawal of benefits as people settle into work.

The key weakness of his plan is that it is pointless to train, facilitate and motivate claimants to seek work if there is no work out there for  them to take up - something that is going to be a major problem if we get a double dip recession.

This is an issue that I addressed in my book Bills of Health, where I found that up to 20% of NHS clinical work is directed towards ill-health caused by unemployment, poverty and pollution, and also identified 1-2 million potential jobs in the green sector of the UK economy.

My proposal to the DWP consultation is that IDS should go the whole hog and continue to pay benefits to people who find work in enterprises that are beneficial to society and environment - i.e. the green sector of the economy. The benefits are transformed from being a dead dole into a subsidy, and the new employer tops up the wage of the new worker to the going rate for the job. I have put the submission here on my website.

Clearly, this is Keynesian stuff which is unlikely to find immediate favour with the Coalition Government, but I hope that the strength of the argument, especially if combined with the problems of a second recession, a  will be strong enough to cause them to look at a couple of pilot studies.

I am trying to find communities who would wish to take part in these pilot studies. I am looking for areas with high levels of unemployment and high levels of social dysfunction.

If you know of any, that come complete with energetic, community minded people (maybe already unemployed) who would wish to press for a pilot study, let me know.

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