Child benefit saga: Lessons to be learnt

The BBC's Stephanie Flanders sums up the benefits dilemma.

Labour tilted the tax and benefit system in the direction of children and families, particularly low income single parent families ...

It is going to be hard to raise serious money from the benefit system without tilting it back.

According to the IFS, single parents are now about 13-16% better off as a result of Labour's tax and benefit changes, depending on whether they work.

Non-pensioner households without children, on average, are worse off than they would have been if the 1997 system had remained unchanged.

(These averages exclude people earning more than £100,000 a year who have been hit by higher tax.)

Interestingly, given this week's debate, Labour's changes also turn out to have favoured families with "stay at home" mums.

Other things equal, the average one earner household with children was nearly 6% better off in 2010 than they would have been under the old system, whereas, households with children where both couples work were just over 1.2% worse off.

But note this last group still did a lot better than dual earner couples without any children in the house, who were about 4% worse off as a result of the changes Labour brought in.

The upshot is that the coalition is not going to be able to take a lot of money out of the system they inherited without leaving a lot of families worse off.

Put it another way: "family-friendly" deficit cuts on the scale that Mr Osborne believes to be necessary are almost certainly a contradiction in terms.

BBC NEWS  06 Oct 2010    Crackdown on Welfare    Economic Democracy

Right to Work: In search of a new slogan

In the face of cuts, trade unions are demanding the 'right to work'. Better to rethink work altogether ...

... a new campaign has been launched, backed by a host of trade unions, including the UCU, PCS, CWU, RMT, NUJ and NUT, under the name Right to Work.

What has happened to our understanding of work in the decades between James's slogan and new forms of opposition?

In the middle of a recession in which jobs are being slashed with alacrity, should we be clinging on to employment at any cost, or should we instead be reconsidering what it means to work at all? ...

occurrin
29 Jul 2010, 10:53PM

Nina Power... you should read André Gorz´s Critique of Economic Reason, probably my favourite book, as it happens ...

The main points as far as this article is concerned are:

a. reduuction of working time is necessary to maintain anything like full employment, when productivity growth outstrips economic growth every year.

b. reduction of working time is the only possible meaning we can give to an industrial society. Fulfillment INSIDE work is impossible; the modern division of labour separates us inevitably from fully comprehending what we make and expressing ourselves fully in it. We should spend continuously less time inside the alienated, opaque industrial machine, in order to have a full and human life OUTSIDE of work.

c. "wages for housework" campaigns miss the point, which is that "work" is the problem not the solution. Couching women´s interests in the language of the employment contract destroys the difference between home and work that makes one´s home life worth living. Doing stuff without getting "paid" is intrinsically rewarding and human. We should do more of this, and spend less time in the office to have the chance to. With a 20 hour week men would lose the excuse to doing equal childcare and housework.

Read the book... it´s great.

suitone
29 Jul 2010, 11:56PM

petrifiedprozac posts

'First people have to reject crony capitalism and stop being slaves to consumerism'

It's very difficult to stop being a slave to consumerism. It's the behaviour you have learnt since you sat in a buggy and came through the supermarket checkout and saw the shelves of sweets at your eye-level. You shout for them, you get them.

Consumerism is what you do as a human being.

You live out what you are supposed to live out.

Perhaps it's a new definition of the human being that we need, that the kids evolve, a definition that disregards and throws out consumerism because it is such a blatant, hijacking of the imagination for no other purpose than to make someone else richer than they are already.

Guardian  29 July 2010    Towards a New Measure of Wellbeing

Critique of Economic Reason

Sir: Deborah Orr is right about the harrying of the unemployed (18 December) but misses the weakness in the Government's strategy of ending poverty by pressuring the unemployed into work.

It is claimed that no one will be expected to work in a job that does not get them £25 a week or more than they would receive on benefits; that does not end poverty even on the Government's own measurements.

The unemployment benefit for childless couples between 25 and 60 is £92.80 a week, and the poverty threshold is £183 at 60 per cent of the median, after rent and tax.

The national minimum wage at £5.52 an hour for a 37.5 hour week produces £132 a week after a modest rent and council tax have been paid, a long way below the poverty threshold, and further below for Londoners, for whom City Hall economics have estimated a living wage of £7.20 an hour or £195 a week after rent and council tax.

All that is assuming all employers are paying holiday and sick pay and the four agencies that administer the payment of welfare get their calculations right and do not land the recipients in overpayments, the repayment of which pushes them into even deeper poverty.

These are fragile assumptions to make.

The Rev Paul Nicolson

Chairman, Zacchaeus 2000 Trust, London SW1

The Independent 27 December 2007

Zoe Williams' belief that it is daft to give the same benefits to rich and poor (The means to an end, September 12) is misguided. She complains that the newly announced pregnancy grant for women (potentially worth up to £200) won't be means-tested.

"This is the modern way with initiatives," she says. "Especially in the realm of babies, and other sentimentalised demographic groups." She acknowledges that the alternative is complicated, but she adds: "The answer is not to shrug and say, 'too complex, can't be bothered, let's just give the cash to everyone'."

In doing so she shows a lack of understanding of the impact of universal, non-means-tested benefits on reducing child poverty, and the failure of the means-tested approach. The gap between the richest and poorest has grown alongside the increased use of means-testing in the welfare system.

Child Poverty Action Group has long argued that universal benefits are more effective at reaching the poorest families. Targeting financial support inevitably brings more complexity, and is accompanied by stigma, which can lead to reluctance to claim. Overall take-up of the means-tested child tax credit is around 82%, for working tax credit it is around 61%; but take-up of child benefit is around 98%. Universal child benefit has reached more low-income families than any of the means-tested payments specifically designed for them.

The work and pensions select committee's report Benefits Simplification, published in July, slammed the current system as "stunningly complicated". The Department for Work and Pensions alone administers around 40 benefits, each with different rules. As Williams acknowledges, the Treasury-managed tax credits system adds a new layer of complexity, which is far from seamless in its relation to the benefits system. Such is the overall complexity that the taxpayer now loses more money to official and claimant error than to fraud.

We once had less means-testing for benefits (not more, as Williams suggests) alongside more for taxation. This has been reversed, with substantial means-testing of benefits and tax credits, and the value of the remaining universal benefits falling well behind earnings. Meanwhile, taxation has shifted to indirect taxes, which hit the poorest harder.

The consequences for poor children are dire. Yes, means-tested tax credits have helped lift 600,000 children out of poverty. But the most recent figures show child poverty rising again, with 3.8 million children living in poverty. The Joseph Rowntree Foundation has predicted that if we continue to rely primarily on means-tested tax credits to end child poverty, it will cost us around £30bn more a year by 2020. So means-testing will continue to nibble at the edges, whereas universal benefits in tandem with progressive taxation can address the underlying inequalities.

Williams should really be calling for more means-testing in the tax system. With a return to progressive taxation, universal benefits could reduce inequality, without the problems brought by means-testing.

Kate Green is chief executive of Child Poverty Action Group

The Guardian 19 September 2008

Basic income

Offe, Claus (1992) "A Non-Productivist Design for Social Policies".

IN Philippe Van Parijs (ed.)

Arguing for Basic Income, Ethical Foundations for a Radical Reform.

Verso. London p. 61-78. p. 69-70.

"There are basically four strategic options that would adopt in response to the uncertainties and insecurities concerning the premises of the welfare state.

I want to specify them briefly and then explore the case for one of them, the basic income proposal.

First, economic liberals propose that since the empirical premises of the welfare state as itemized above are partly and progressively fading away, what remains to be done is to bid farewell to overly generous standards and promises of security, and let market decide. This strategic option involves in part the outright abolition of transfers and services, in part a narrower targeting and means-testing of the clientele of the welfare state…

.. Second, the conservative strategy recommends the selective punishing and rewarding of people’s attitudes towards work, education, health, the legal order and the family…

.. Third, the social democratic version of strategic responses, even to extent that it is prepared reluctantly to recognize the fragility of the assumptions underlying the welfare state, still denies the need for at basic orientation and insist instead upon the need and feasibility of defending and even further expanding the welfare state and its productivist premises…

..Finally, there is poorly defined and clearly undertheorized bundle of strategic proposals that come from what I would like to term the “post-industrial Left” and can be described as left-libertarian in their ideological orientation.

These proposals emphasize the values of security and autonomy, and envisage the possibility for reconciling the alleged antagonism prevailing between the two in relying upon the idea of citizenship and the positive rights and entitlements, such as the entitlement to a basic income, associated with it

The case for citizenship-based entitlements to a basic income differs from some or all of the preceding options in that:

(a) not class, occupational status, earnings or employment record but citizenship is the basis for entitlement to transfers and services;

(b) not paid labour but “useful activities” including activities performed outside employment and labour market and hence escaping formal measurement and accounting constitute the moral justification of the claim to benefits to the receipt of which no behavioural preconditions are to be attached;

(c) not the protection of (relative) status or the rewarding of dessert but coverage of basic needs is the criterion of justice; and

(d) not (absolute) security but a sustainable level of risk and maintenance of autonomous options concerning the citizen’s responsible conduct of his or her is the key value.

..Instead, I believe that a universal and adequate basic income could be designed to become a synthesis of the more desirable features of universalism and selectivity.

Such a synthesis would have to consist of several components:

(i) the most important component is an unconditional, subsistence level, tax-financed right to income based upon citizenship rather than labour-market participation.

(ii) The extreme universalism embodied in such a basic income would have to be complemented by a tax structure that ensured that all those who participate in gainful employment and thus do really depend upon the basic income will contribute – through direct and indirect taxation and I distributive progressive ways – to its financing.

(iii) As it would not be surprising to find a massive middle-class opposition mobilizing against such a scheme – which does, in fact, involve – the arrangement would have to be based upon legislation that provides for something like the following procedural rule: revisions of the scheme that would restrict access to the basic income and/or to say, 90 per cent of the net contributors.

iv) Extensive co-operative and other institutional forms of non-wage labour outside formal employment must be experimentally developed in order to expose the near-monopoly that the institutional arrangement of formal employment holds over the universe of useful human activities in competition with alternative modes of “getting things done”.

... The basic income cannot and should not be presented as a panacea to open the road to a “good society”.

First because, [if] the proposal eventually turn[s] out to be a strategy [to] that end (which I believe it is), it will be only one element in a policy package within which other elements are equally important.

Second, because we cannot claim to know enough about the short-term and long-term effects of the proposal once it is implemented, unpleasant surprises cannot be excluded – or rather, they must be excluded in practice through thoughtful experimentation and cautious exploration of the many questions, problems and potential side-effects about which we simply do not yet know enough.

Third rather than being a formula for the foundation of a new social order, it might be more realistic and honest to argue for [the] basic income in terms of a defensive measure to preserve and expand notions of social justice against a welfare backlash that has already started and must be expected to continue in view of the above structural changes.

As long as almost all wage earners are involved in producing wealth, the problem of sharing wealth is solved by way of each individual’s job.

Once this cease[s] to be the case and this supposedly normal condition has disappeared for good, the problem of distribution can be solved only by establishing specific economic rights that all citizens grant to each other.

A system of this sort can be articulated in terms of three principles.

First, no one has the right to exclude entire categories of the population (according to sex, age nationality, qualifications, and so on) from participation in the labor market.

Second: since adult citizens do not have a “right to work” but instead a right to compete for employment, then all those who voluntarily withdraw from the competition are doing a favour to all those who remain, whose chances are correspondingly improved.

Those who withdraw deserve compensation for [the] duration of their non-participation in the labor market.

It should come in the form of a right to a base income, without any further conditions (such as need, willingness to work, family circumstances), and should be financed from taxes, at a level commensurate with of modes [way] of life.

Third: compensation for withdrawing from the labor market, about which individuals can change their mind at any time, should not simply reward people for taking their labor out of the economy.

It should encourage them to put their labor to uses other than selling it in return for wages.

True, outside the intimate circle of family, such possibilities are not so easy to find.

For as the industrial societies have developed, they tended to force workers into a “modernization trap”: for a long time, the labor market appeared so much more rewarding than any informal and self-sufficient forms of activities that these largely died out, and now, when the market can no longer absorb the volume of available labor, they are not there in reserve for a subsistence economy.

Accordingly, there is no reason to expect that alternative forms of useful activity will crop up spontaneously or on command; they must be reinvented, sponsored, and encouraged.

Systematic reordering of work according to such principles would not eliminate unemployment. But since it is unlikely that there will ever again be enough work to go around, we should embrace an arrangement that will create tolerable conditions and thereby lessen the likelihood of social conflict.

"A Non-Productivist Design for Social Policies"

As of 08 April 2010, I am unable to find this url.

Go to Wikipedia for some further links to Claus Offe

The government's emphasis on full employment threatens to strip neighbourhoods of the people who make the difference between success and failure of public services - like volunteers, care workers and 'co-producers'.

This is one of the key findings of a pioneering study, published today, Tuesday 27 June 2006, into the concept of co-production - where the users of services are regarded as assets, involved in mutual support and the delivery of services. ...

The nef-led research found a vast range of informal, unacknowledged work undertaken in those neighbourhoods considered to be most 'disadvantaged', by people frequently considered a 'drain on society' - single mothers, refugees and asylum-seekers, people with mental health problems, and those too young or too old for conventional jobs:

• Sandra, a 28 year-old single mother lives in a run-down and inaccessible estate in the Welsh Valleys is unemployed, but not inactive. She helps to run and raise money for the local youth club - the only facility of its kind in the area, helped to launch a local community garden, and is among those who run a scheme with a local police station. Local police, interviewed during the project, said that her "adopt-a-station" scheme (volunteering to look after a local railway station) has reduced vandalism and saves them time and money.
• Karen (two children) and Molly (three children) from the same flats in the Welsh Valleys, help run the local playgroup and the community flat.
• A single dad (two children) in Glasgow can't work but helps with the fruit barrows at SEAL, a community health project, 'to keep from going mad'.

This is work that keeps local neighbourhoods safe, clean and inviting, keeps people healthy and happy and enhances people's abilities as parents, friends, neighbours, and potential employees - but never appears in government employment statistics. ...

"The government urgently needs to recognise that not all vital work is paid, and that they threaten to strip-mine neighbourhoods - leading to worse health, higher crime and higher public spending - unless they recognise the value of this hidden work, and the potential value of the people doing it," says report's lead author and nef associate, David Boyle

new economics foundation