Teaching Comparative Government and Politics

Monday, April 15, 2013

Can the Tories save money on social welfare?

We'd think that if anyone can reform the British social welfare system to save money, the Conservative Party could. But they don't have a charismatic leader (like Mrs. Thatcher) and they do have coalition partners (the Lib Dems) who don't share all the Tory goals.

The dole in the UK is more complex and resistant to change than the welfare and unemployment system in the USA is. This article offers some ideas about the system and attempts to change it.

Chipping away
SEVEN decades ago Britain’s welfare state arrived, with trumpet accompaniment. William Beveridge, whose 1942 report laid its foundations, pledged a war on the “giant evils” of squalor, ignorance, want, idleness and disease. The National Health Service that sprang up a few years later is still reflexively praised. But few people feel warmly about much of the remainder of the welfare edifice.

Can they reform the aging of the population?
Overall spending on benefits, including pensions, is now three times bigger in real terms than it was in the late 1970s (see chart). When he became prime minister in 1997, Tony Blair lamented “rising welfare bills combined with increasing poverty and social division”. Labour did much to reduce poverty, but little to stop the growth and sprawl of the welfare state.

A thicket of entangled benefits has sprung up... Receipt of some allowances makes people eligible for others. Some of the more esoteric ones have grown quickest. Housing benefit will amount to almost £24 billion ($36 billion) in the 2012-13 fiscal year, and disability benefits to £25 billion. Unemployment benefits are comparatively cheap, at £5.3 billion. Claimants can be snared in poverty traps, avoiding full-time work in order to retain their housing allowance, for example.

The Conservative-led coalition government is chipping away at welfare. On April 1st a benefits cap was introduced, to ensure that no household receives more than the average working wage… The criteria for disability claims will be tightened, while child benefit—hitherto paid to all, regardless of income—will be means-tested.

People living in social housing (owned by councils or non-profit associations) will have their housing benefit docked by 14% if they have a spare bedroom, rising to 25% for two spare rooms…

The government’s reforms are less radical than some. Countries with contributory social security systems have adjusted them to emphasise that welfare should be an insurance against hardship, not a way of life. Denmark has moved to treat claimants more generously if they previously worked, and offers extra incentives for those prepared to retrain. Germany has slashed entitlements for those who linger on benefits and refuse low-paying jobs.

Britain’s welfare system, which is paid for largely out of general taxation, is more resistant to radical change. As a result, a few want to change the system itself…

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At 8:01 AM, Blogger Ken Wedding said...

More on efforts to reform the social welfare system in the UK:

Benefit payments cap rollout begins in London

A government-imposed cap on many benefit payments nationwide is beginning in four London boroughs.

Couples and lone parents in Haringey, Enfield, Croydon and Bromley will not receive more than £500 a week while a £350 limit applies to single people.

The cap is set to be imposed across England, Scotland and Wales between July and September.

Jobseeker's allowance, income support, child and housing benefit count towards it, but not disability benefits…

Employment minister Mark Hoban told BBC Radio 4's Today programme: "People want to see a benefits system that's fair, affordable and gets people into work. And we are seeing that."

He added: "This is about fairness. There are people in this country making difficult choices about where they live and who don't claim housing benefits."

"If they want to escape the benefits cap, the best way to do it is to move into work," Mr Hoban said…

Labour argues that a better way to cut the benefits bill would be to offer guaranteed jobs to the long-term unemployed.

Shadow work and pensions minister Stephen Timms said… "They are having to borrow £245bn more than they planned, not to pay for the investment needed to grow our economy, but to pay for more welfare spending caused by high unemployment."
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