When asked what the Conservatives have achieved since coming to power, I would usually mention a two key things: the education reforms brought in by Michael Gove and the welfare reforms which Iain Duncan Smith provided.
The schools revolution continues – more free schools are opened, failing schools still face being put under new management as ‘sponsored academies’ and we continue to go up the international rankings. But on the other big achievement, tackling welfare dependency, progress has not merely stalled, but we have been going backwards.
This is not because the reforms were wrong. The introduction of Universal Credit remains a major success. It simplified the system and ensured people were always better off working. There were sticks as well as carrots – with benefits being docked for those refusing to take jobs that were offered.
Then, of course, came the lockdown. As the Prime Minister said last week: ‘Since the pandemic, 850,000 more people [have become economically inactive] due to long-term sickness. This has wiped out a decade’s worth of progress in which the rate had fallen every single year’. Half of them are diagnosed with depression or anxiety – something especially prevalent among the young. I am sympathetic. The lockdown was horrendous and the anxiety and loneliness it caused was obvious. The enforced idleness became habit-forming. The disruption to work was a blow to confidence and esteem. Others are more cynical – that these are dishonest wastrels who have found a way of playing the system. Rishi Sunak offered a more nuanced analysis by warning of ‘the risk of over-medicalising the everyday challenges and worries of life’. In any case, the upshot is that we need to get them back into work wherever possible.
As the Prime Minister pointed out, in 2011, 20% of people given a Work Capability Assessment were deemed unfit to work, it now stands at 65%. Sick notes were replaced with fit notes to get a mentality of highlighting what work claimants are suited for. But of the 11m fit notes issued last year, only 6% were signed ‘maybe fit for work’. The remaining 94% were signed off as ‘not fit for work’. At present, their own GP just signs them off. It is a huge decision and one with a significant conflict of interest. Think of all the trouble and abuse a GP faces who refuses to sign.
So Sunak will shift the decision to ‘specialist work and health professionals to provide an objective assessment of someone’s ability to work and the tailored support they need to do so’.
The financial difference is significant. If you’re single, under 25 and available for work, the standard allowance for Universal Credit is £311.68. But if you have ‘limited capability for work and work-related activity’ then you get £416.19. There could also be a Personal Independence Payment – perhaps of another £72.65 a week.
So the stroke of a GP’s pen could raise one’s allowance considerably. And currently, in nearly every case, all obligation to work is lifted.
Some may feel this is very caring and generous. But it is a false form of compassion. Work is a means of fulfilment and social interaction. Keeping someone stuck at home on benefits is a strange prescription for better health. Many of them want to work but, instead of getting encouragement and support to do so, they are written off by the system. Research by the Centre for Social Justice indicates that some 700,000 people are languishing on sickness benefits but would like to work.
So the Government is right to tighten up the rules. But they need to be more radical. Why not raise the age of eligibility for Universal Credit from 18 to 19? There should not be an assumption of leaving school and going straight on to welfare.
The amount paid should also be changed to reward work. Universal Credit should start with a lower amount and the ‘taper’ should be eased. At present, for each £1 worked, 55p is lost in Universal Credit.
But it’s much worse than that. Those earning over £242 a week have income tax kicking in at 20% and NationaI Insurance at 8%. So 28p in £1 has already gone in taxes before the Universal Credit taper applies. So for each extra pound you earn, you have 72p. Then of that 72p, the 55% Universal Credit taper (which comes to 40p) will be taken off. That leaves you with only 32p of the extra £1. Then it gets even worse when Council Tax kicks in. The taper for that is usually 20%. So the 31p is reduced to around 26p.
The Laffer Curve applies to the poor as well as the rich. There needs to be a proper incentive. It is more complicated than being tough or soft with the benefits system. It is about rewarding work – which is not happening enough at present.
The Labour Party retort to the Government’s proposals was that the answer is to reduce the NHS waiting list. That would certainly help – though judging by Labour’s performance in Wales, there is little evidence they would do any better. Why not introduce a mechanism that if someone was off work waiting for an operation, that the Government would pay for it to done privately? At least, this could be offered where it was estimated that the cost to the taxpayer for the operation was less than the cost of welfare payments in the months on the waiting list for NHS to do it.
Those Conservatives disillusioned by the Government will be encouraged by the Government’s focus on tackling welfare dependency. It is brave to have raised a sensitive subject. But tinkering will not be enough. The current situation is so dire that radical changes are required.
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