Teaching Comparative Government and Politics

Thursday, November 18, 2010

Welfare reform in the UK

Reforming public welfare spending in the UK could save money, but not until a lot more money is spent. Doug Sanders, writing in the Toronto Globe and Mail, offers some explanation.

Tearing apart the British welfare state: Tories impose jobs on the 'workshy'

Almost a century after the modern welfare state was created by Liberal prime minister David Lloyd George, his successors in Britain’s Conservative-Liberal coalition government are hoping to tear it apart completely in a radical act of cost slashing.

In a huge and risky experiment sure to be watched closely by other countries wrestling with public debt, government budget deficits and shrinking work forces, Prime Minister David Cameron’s government Thursday announced sweeping plans to change the lives of 5 million people dependent on government payments in an effort to push hundreds of thousands of people into the work force...

Mr. Cameron... plans to force all welfare and unemployment recipients to seek work, even unpaid volunteer work, or to risk losing their payments.

The proposals will also unify more than 30 social safety net programs into a single “universal credit,” a move that was welcomed by many observers on the left. And through a “work program,” whose name evokes Britain’s Victorian efforts at reform, the perpetually dependent would be trained to do jobs, however minimal, or risk losing their cheques…

An estimated 2 million children – mostly descendents of the old industrial working class – grow up in households in which nobody has ever worked. Britain… suffers from very high levels of poverty and intergenerational welfare dependency, to an extent not seen in other European countries or in Canada.

It is a perpetual source of frustration to conservatives here that even in the midst of a serious recession there remain 450,000 job vacancies, requiring high levels of immigration to be filled, while there are 1.4 million British working-age people on long-term welfare and unemployment insurance…

[T]he root of Britain’s unique welfare-dependency problem is the large number of people classified as “NEETs” – Not in Education, Employment or Training – most of whom dropped out of secondary school at 16. Very few jobs exist for such people, and fixing this would require big expenditures in the education system, at a moment when the government is cutting it back…

Officials at the British Treasury said in briefings that aggressive welfare reforms are being pursued now because they are the one form of cost cutting whose effects are felt quickly…

But the change will not be immediate, or cheap. In fact, the changes will cost Britain an extra £2-billion over the next two years, and that does not factor in the cost of an elaborate new computer system that will be needed to unify the programs. Given that most economists do not expect the labour force to grow significantly as a result, and some fear the cuts could trigger a downturn, there is a chance that the whole exercise could end up costing the country more money.