Value of benefits falling – TUC

Most unemployed people are desperate for a new job.

Most unemployed people are desperate for a new job.

The Trades Union Congress has produced a report which shows the steady decline in the value of state benefits compared to earnings:

“During the 1980s recession, unemployment benefit rates were around 17 per cent of average earnings. The rate fell to around 14 per cent of earnings in the early 90s recession and in 2008 JSA reached a record low of 10 per cent of average earnings.”

It goes onto say that this is one of the lowest benefits compared to wages in any OECD country; certainly something to bear in mind the next time the Daily Mail run’s one of it’s infamous ‘benefits scroungers’ stories. Although it is probably unfashionable to say it I can’t help but agree with Brendan Barber, the TUC General Secretary, when he says;

“The view that we need low benefits to encourage people into work makes no sense in a recession. The vast majority of the unemployed are desperate for jobs, and need no encouragement.”

The TUC uses the data to call for higher Job Seekers Allowance set at least at £75 per week and goes onto to make what I would call a sensible economic case. Although it sounds counter intuitive with Britain’s vast debt mountain it does rightly point to the fact that those on benefits tend to spend rather than save and obviously this money then goes back into the economy. Low benefits are thus not just detrimental to the individuals involved but the wider economy.

It seems to me that this is an area where radical thinking is required. Although an increase would be welcome I for one think it is high time the party revisited the idea of a citizens income. Dismissed as a Utopian fantasy I think it becomes a realistic prospect when we look at the prospect of savings made within the welfare system and also other potential avenues of revenue raising. What, for example, about a ‘social dividend’ levied on our hugely unpopular, and by admission of some of it’s leading lights, ‘bloated’ financial sector? Surely something that would be worth considering as a way of not just curbing the excesses but also actually making sure the money that is levied is reinvested in society where it is needetizend.

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About darrellgoodliffe

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6 responses to “Value of benefits falling – TUC”

  1. Letters From A Tory says :

    There is no justification for introducing levies on the financial sector. The state has no right to decide what people earn or how much they should be docked simply on the basis of what industry they work in.

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  2. Joe Otten says :

    Both wrong. A levy on the financial sector is justified to pay for guarantees it enjoys. It is the huge publicly funded guarantees during the crashes that make much of the profits during the boom times possible.

    As for Citizen’s Income – sure that would be great. Just not as urgent as schools, hospitals, roads, trains, energy, defence, you name it.

    And of course while means testing is evil, universality is expensive. So if you have only one huge pot of money you could increase the rates or move towards universality, but not both.

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  3. Andrew Hickey says :

    Joe – various on the libertarian wing of the party think that a Citizens’ Income could actually be less expensive than the current benefits system, once you cut out the bureaucracy needed to administer the current system. I’m not sure I believe them, but it’s rare to hear the right-wingers arguing for *more* to be spent on benefits… if you find a policy point where Darrell and I can agree with Liberal Vision, even in principle, it’s at least worth investigating 😉

    (I’d also say it was *more* urgent than defence – if we stop going into stupid unwinnable unjustifiable wars, we could spend a lot less there with no problems…)

    But I’d argue that if it’s a choice, raising existing benefits should come before extending them…

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  4. Joe Otten says :

    Hmmm. I could just as easily say that if you/Darrell and Liberal Vision agree on something, then it is twice as likely to be unrealistic, as if only one party supported it. Perhaps that is harsh. But I’m used to “left” and “right” being united in error.

    I find the benefit levels debate unsatisfactory because I never see any attempt to weigh up incentives and costs on the one hand and humanitarian considerations on the other. Instead people always bang on about one and dismiss the other.

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  5. darrellgoodliffe says :

    Letters,

    Totally disagree. You only have to see the social cost of the recklessness of the financial sector to see that what you say is not true; this is what gives the state its right.

    Joe & Andrew,

    Andrew made my point for me; that there are libertarians who agree with this policy because they see the potential for reduction in welfare costs. They also see that in a roundabout way it is a reduction of the role of the state in the sense it does not provide all these hypothacated and in some cases contested benefits but merely guarantees a certain level of income as a basic right.

    I agree that the benefits debate can become rather one-sided but that is sometimes due to the nature of the participants; those who argue about humanitarian concerns need to recognise the cost dynamic and those who argue purely about cost need to accept the principal that in certain instances the state must provide.

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