Dec 10 2008
Welfare reform – back to the future?
In Opposition Gordon Brown came up with a sensible economic policy which was attractive to moderate conservatives and moderate socialists. He said:
1. Cut the costs of welfare by getting more people back to work. He called welfare expenditure the “costs of economic failure”
2. Cut the costs of interest charges by reducing government debt.
3. Spend more of the money on schools and hospitals
4. Freeze tax rates at Conservative levels.
I agreed with all of this. I would have added cut bureaucracy and undesirable government programmes (like embryo unelected regional government and related quangos) more so tax rates could also be reduced. I was always sceptical about whether Labour would do it as well as say it.
The Blair/Brown programme was attractive in 1997 and they got a good vote and large majority to carry it out. In the first Parliament they did repay some debt, in line with 2. They failed to reform welfare in line with 1. They did keep tax rates down, but started to introduce some Stealth taxes against the spirit of 4. They began to accelerate spending the Health and Education departments. In 2001 they were re-elected, but with many fewer votes. The public put them on probation, with many floating voters still wanting the original prospectus.
From 2001 onwards they ditched virtually the whole programme. They not only failed to reform welfare, but the bills shot up, with many more people being offered a range of new benefits instead of working. Over 5 million people of working age are now on benefits. They started to borrow again, and now are out to break the all countries borrowing record at huge future cost to taxpayers. They greatly increased spending on Health and Education, but too much of this was spent on central and regional management and interference, too little in the schools and hospitals themselves. They did spend on some new buildings and higher pay, but we have ended up very short of beds, short of certain specialities in hospitals, and short of places at high performing state schools. They accelerated the Stealth taxes, and finally propose a hike in the Income Tax rate on higher earners.
Labour’s vote plunged in the 2005 election to disastrous levels, polling less even than the Conservatives in England when the Conservatives had another very bad year. The public no longer believed the government would do what it promised in 1997.
Today we learn that Mr Brown now wants another go at Item 1. I welcome that. The Opposition is likely to support the changes. I will want reassurance that severely disabled people are not going to be put under pressure or treated meanly, and reassurance that the rest of the reform is serious and not just more spin and window dressing. It is not the best of times to launch such a project when many people in work are having to battle to keep their jobs and when new vacancies are plunging, but there is no need to delay. We do need to tackle it and need to take the state of the job market into account when evaluating early results.
If Mr Brown is a “serious” politician rather than just another spinner from the spin era, he would also take up his other three policies which made sense and were popular in 1997 and could make sense again today. Of course there will be some increase in borrowing owing to the recession, but there should be nothing like the irresponsible surge he is currently undertaking. He does need to have some discipline in the debt programme. He needs to redirect more of the large budgets into the schools and hospitals themselves and buy us more places at good schools and more beds and consultants in hospitals. He needs to reverse his proposed Income Tax rate hike, and end the VAT reduction. Any tax reductions this year should be Income Tax reductions helping the lower paid.
Meanwhile the Conservatives have put in place many of the ingredients for a good economic strategy. The Leader’s attack on excess borrowing, his wish to curb wasteful spending, his opposition to the VAT reduction, his wish to revisit the banking support package and his wish to concentrate more of the present public spending in the schools, hospitals and other local facilities all makes sense. Mr Brown needs to be careful. He could find at the next election the Conservatives adopting a lot of his late 1990s strategy, backed by the wish and the ability to see it through. The pity with the PM is either he did not mean it when he set it out more than a decade ago, or he was incapable of implementing it.
37 Responses to “Welfare reform – back to the future?”
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
Something struck me on the way to work;
On the left of the political spectrum, “social justice” means people paying for that which they do not use. On the right, it mean people paying *only* for that which they use.
Brown and Labour are fighting to win the next election and will use any ploy to achieve their only ambition. Your party seems to have an attitude that you WILL win the next election but are not fighting hard enough to ensure it. Labour has a simple, albeit mendacious, message which is that the Conservatives would do nothing to help people in the recession. Your party needs a similarly simple response to counteract this lie, not for the benefit of those of us who read your column but for the majority who take less interest in political life. Your party’s message needs to be simply articulated. Surely within your organisation you have the people with the skills to do this? I have asked this question before and am coming to the conclusion that the answer must be “NO you haven’t”.
mikestallard Reply:
December 10th, 2008 at 4:55 pm
Mr Cameron’s speech yesterday was excellent and said, simply, all the right things. So was it reported? Hardly at all. On “Today” he was constantly interrupted by that brilliant economist Andrew Marr so that you couldn’t understand what he was trying to say. The snarl on the outstandingly intelligent and brilliant barrister Jeremy Paxman’s lips after he had shouted the same idiotic question at him several times said it all on Newsnight.
The very simple message is this:re elect new Labour and we are Italy!
rose Reply:
December 11th, 2008 at 11:44 am
And I would say Today’s Evan Davies needs a tutorial from JR too.
“The pity with the PM is either he did not mean it when he set it out more than a decade ago, or he was incapable of implementing it.” – or both
JR, with apologies, I could not resist Brian’s challenge above, so here are soome easy slogans
ON THE ECONOMY
No bail-outs for billionaire beggars
Borrow, borrow, borrow ~ oops, bankrupt
We can’t run the economy like a spendthrift teenager runs their Barclaycard
So when exactly will we pay back all the borrowing?
Is this ‘No return to boom and bust’ Gordon?
ON ID CARDS
Control of the state, not control by the state
In Great Britain, no-one can say “Papers please”. This is freedom. Keep it.
(To Mr Brown) You show me yours, I still won’t show you mine
ON THE NHS
(Outside an archaic hospital or in a long queue) You doubled spending, where’s all my money gone?
ON LAWLESSNESS
If you don’t increase prison places, it’s all just talk
StevenL Reply:
December 11th, 2008 at 2:00 am
This sounds fun, how about:
“His biggest export was the wealth of the hardworking families he claimed to support.”
“The truth is, his divorce from Prudence is landing us all with a rather nasty surprise of a bill.”
“Whilst he fiddled with VAT, the sterling in our pockets burnt.”
“He promised us no more boom and bust, he promised us he wouldn’t let house prices get out of control, seemingly the man who ran our finances for 10 years lacked the economic nouce to link the two together.”
In 1997 Frank Field was given his ministerial brief to ‘think the unthinkable’ on the welfare system. He did so and was then sacked for it. This was at a time when the new Labour government enjoyed a majority that most political leaders can only dream of. Now things are very different with many Labour backbenchers more dependent on the benefits constituency than ever when it comes to their prospects for hanging on to their seats the next time they are called upon to defend them. Perhaps this is why the measures announced are not supposed to have any serious effect until 2010; almost certainly after the next election. The truth of it is that they are simply more clunking spin from a Prime Minister who is completely out of his depth.
Stuart Fairney Reply:
December 10th, 2008 at 1:59 pm
Quite so. Frank Field could actually have grasped the nettle in 1997 in a way the tories would have found politically difficult (a la “only Nixon could go to China) and the failure of Blair to have the courage of his rhetoric consigned millions to dependancy and the rest of us to supporting this through excess tax. This is one of the great failures of his regime.
mikestallard Reply:
December 10th, 2008 at 4:56 pm
And Harriet Harman is now the Leader of the House for preventing Frank Field (a back bencher) from doing his stuff.
We are so reliant on Debt. Debt for consumer spending, debt for government spending, and nearly all new money flows are actually debt flows. Far more debt is created than money.
Taxes are really a debt as well. A debt to society. Paying for all the things other people can’t afford to pay for. If you pay tax you are paying someone elses debt not just your own.
Is that not reason enough to keep them low? The government is able to take your money by force. It forces you to take on someone elses debt. It abuses this power at its peril.
This is ultimately the failure of every Labour Govt.
Sir, what is happening at present is preparation for a snap election in the spring. The VAT cut, the borrowing surge, the tough talk on benefits and assorted other “Tell the electorate what they want to hear” ploys all tell the same story: this is a last-minute splurge from a dying party to try to get re-elected.
The job of the Conservatives now is to hold this most perfidious of Governments to task and do your absolute best to wipe out any gains this last-minute splurge may gain the Labour Party. If you once manage to keep their polls down below about 35%, Gordon will dither as per normal and wait too long and that’ll be it, all his election plans down the drain.
Asking if he’s going to go to the polls in the spring might be a good ploy too; if as expected he says “No” then if he does, you brand him a liar; if he says “Yes” then you’ve got Christmas to campaign against him, and if he won’t commit you portray him as a dithering incompetent; you really cannot lose by asking him the question.
If, over the past decades, Westminster had Printed EXACTLY the same amount of money as it had borrowed, would our children now be enslaved to the tune of £1 Trillion.
http://video.google.com/videoplay?docid=6507136891691870450
Take control of our money supply from the International Bankers who are the Real Govt in this country, indeed the entire Western world.
No Govt Borrowing, no Govt Debt.
Get rid of the Quangos which cost us £100 billion per annum.
Tear up the Treaties, Cameron says they can’t be torn up but they have torn up Magna Carta, common Law and the Bill of Rights so he is wrong.
When people retire, let them keep their entire Pension pot, currently they just get the interest, then when they die, the Pension pot gets trousered by the Pension co, which also explains why our Govt treats Pensioners so badly, they want them dead as soon as possible.
Close the Borders, we’re full.
Begin reducing the population to 30 Million.
stock up our rivers with fish so people can catch their own food, allow hunting.
Bring the Troops home,
Tear down the Cameras, put police back on the streets. currently only 1 in 58 police officers are on the street at any time.
If we can start building roads and houses, then we can also build ships and aircraft and cars and electronics.
Tell the Royal Navy to Recapture our Fishing Grounds.
Give all adults over the age of 25 yrs with a 10yr clean police record an assault rifle, any serving member of the armed forces and police to be allowed the same.
Ensure that children are taught about our constitution and heritage, history, culture and traditions in school.
http://www.britishpride.org/
You say:
If Mr Brown is a “serious” politician……
That is your problem I am afraid. You are a serious politician; he is a silly one. It makes meaningful discussion rather difficult.
The problem is getting anyone on benefits back to work. In a lot of cases they are not working due to previous governments policies. How is someone who has been long term unemployed/sick, often the same ailment, going to compete with a person who is fit and works every day? There is not enough jobs in the areas where the unemployed are. That is why they are unemployed. It’s not really possible to move to another part of the country and support another home on low wages, so there is no point in leaving the area where the unemployed are at.The East Europeans are often young and fit with a sense of adventure and fun and due to the often harsh realities in their own countries, take Britain on the nose and then return home.The danger is that cutting the benefits just leads to more desperate people. That is not to say they should be left to rot.
Stuart Fairney Reply:
December 10th, 2008 at 7:18 pm
Wait, this lot have been in power for more than a decade with thumping majorities in the commons, a world economic boom, an inherited economy the best it ever was, and today’s unemployment is John Major’s fault? Not wholly convincing, (and my language would be somewhat less temperate but I thought I would save the moderator the trouble.)
Bazman Reply:
December 11th, 2008 at 3:19 pm
Labour have got a lot to answer for. The huge majorities in the commons should have been put to better use. Politically annihilating the Tories could have been one use, but my point is that any government is responsible for a lot of unemployment and expecting 55 year old people to suddenly change their lives and towns of residence on the scale required is not realistic. As well as the question of should it be done. Many northern towns were industrial wastelands with mass unemployment and rundown town centers in the time of John Major for your information though. I know they were, as I was there…
Gordon Brown / old Lab …. like a hamster running on the wheel … hectic & busy ~ getting nowhere
Just as the banks have absolutely no idea who is lending and borrowing from them – it’s all money and computer figures at the top – so the Social Services have absolutely no idea who is a bludger and who is a genuinely sick/needy person. It is all figures.
By Social Services, I mean everyone who runs the Welfare State in which we live.
I suspect that the people who take the decisions in both banks and Social Services live miles and miles away from the people they support and that they secretly despise the people who still sit, poorly paid, behind their desks at the Dole Offices or in the (fat cat) doctors’ surgeries.
Now they both face the same sort of problem: in the banks’ case it is toxic debt. In the Social Service case it is serial bludgers.
Is there any chance of bringing back welfare stamps? Please do not accuse me of being heartless. With more people over 65 than 16 years old it is imperative that we get to grips with this ASAP.
And, of course, (whisper it softly) the Churches are really in touch with what is going on.
Please can I suggest a party game for Redwoodians to play this Christmas. On the following map you will see how the government spent £586.35 billion in 07/08.
I suggest that you collect enough bubbles to reduce the above figure by about £120 billion. Any player who can tell you which Acts of Parliament have to be repealed to achieve the savings wins another slice of Turkey and a mince pie.
http://image.guardian.co.uk/sys-files/Guardian/documents/2008/09/12/13.09.08.Public.spending.pdf
You may not be familiar with the US phrase “jumped the Shark”. This is used for TV series that, at some episode, literally loose the plot. Governments suffer the same syndrome. I leave it to you to establish when ZaNuLabour jumped the Shark.
The following is US originated – I just can’t find this sort of comment for the UK – but it is a mirror of what is happening in the UK. Us plebeians, are not allowed to know about such things in the UK.
http://www.financialsense.com/editorials/quinn/2008/1209.html
mikestallard Reply:
December 14th, 2008 at 5:50 pm
I always make a point of looking up your references. This was excellent too. Thank you. The words which ought to be printed above everyone’s computer are these, surely:
“The U.S. dollar is a green piece of paper. The only thing that gives it any value is confidence and trust. Confidence and trust are the only thing that distinguishes a U.S. Buck from a Schrute Buck. The more that we print, the less valuable they become. The government certainly appears to be printing money and distributing it willy-nilly. In 2002, Mr. Bernanke honestly admitted he had no idea what the economic effects of injecting money into the system would be. I guess we will find out.”
[...] ‘policy’ is just another Mandelsonian cynical announcement and, as John Redwood highlights the need for, reassurance that severely disabled people are not going to be put under pressure or treated [...]
John,
As the epic scale of Labour policy failings starts to unwind and the economy circles the bowl, do you feel there is balanced reporting of the facts? The BBC and even Sky seem to be so very ‘hmm, ah, well maybe’ about it all. It can’t be right that there is not a single big name TV journalist who will stand up and say ‘they’be blown it’.
I’m no politico and don’t really know how these things pan out in the westminster bubble – but does someone in the Tory party ever get on the phone to Peston, Robinson, Boulton, Paxman, Snow, etc and ask them what is going on?
The honest truth is we’re bankrupt. We can’t afford our public sector by a wide margin. Politics and economics reporting is all about Brown’s ’saved the world gaffe’ or ‘Sterling gets weaker’. Am I alone in feeling that the ugly truth is somehow unreportable?
reply: I am sure CCHQ contacts these people. I spoke to one of them yesterday when I was in a BBC studio,as I do when appropriate.
Purnell’s white paper is just Spin. They aren’t actually going to take money off people. But it sounds like they are being hard, and giving Tories less space to work in.
“The real point is that welfare claimants’ have no strong motivation to find a job because they lose more in benefits than they can earn in net wages. Until the Powers That Be grasp this simple fact, all this tinkering achieves nothing.” M Wadsworth today.
“There is not enough jobs in the areas where the unemployed are. That is why they are unemployed.”
*Important to remember that lack of demand for employment isn’t the only cause of unemployment. (you may not have meant this, but the above sentence gave me that impression)
The answer to the lack of labour mobility, is not to maintain high benefit rates just because it’s too late, but to facilitate the movement of labour so that those who wish to work can do so.
John,
I realise this is a touchy subject politically and I don’t want to get you into trouble, but do you not think re-visiting our support of the minimum wage could not only help the recession but also help alleviate the welfare problem at the same time?
reply: No, the Minimum wage did destroy some low paid jobs when it came in. We have no wish to revisit it now. There are many more important causes that could help get us out of this mess.
mikestallard Reply:
December 14th, 2008 at 5:27 pm
With immigrant workers, the minimum wage was, so often, a joke. Oh yes, they all got it! Indeed, in a factory, many were on £11 an hour. Mind you, there was then £5 to the agency, £2 for transport to and from work/day, then, of course, some had to have acommodation and, yes, food…….
Dunno about the snap election. I expect things to get much worse after Christmas ; lots of redundancies and cutbacks.
Brown gets away with it because his electorate is thick ; they look at Petrol at 87p (nothing to do with him) and all the cheap things they can buy (25% off sales because retailers are desperate) and think that his ‘medicine’ is working. They look at Woolworths and think ‘wow, cheap goodies’ ; not as an economic and employment mess.
Brown will never axe his beloved regulators, quangos and other pointless public sector workers, or attack the benefit scroungers.
No-one else will vote for him.
Bazman, I used to work in an area with 10% unemployment. I had jobs available, any age 16-65, no qualifications needed, chance for training and development. I put the jobs in the local job centre. In three years I had precisely one applicant via there who gave it up after a fortnight.
The jobs are there. They are too ‘fussy’. Odd that migrants, who can’t get benefits (I believe), seem to find employment.
Bazman Reply:
December 13th, 2008 at 7:55 am
Yes Paul migrants do living five to room going to work for any pay in any conditions five in a car and eating the cheapest food. Often working illegally and living in illegal conditions. Your any age 16-65, no qualifications needed, and chance for training and development. I bet had ‘negotiable’ wages that where the going rate. The ‘going rate’ is the market rate, not yours or the workers rate. If you had paid £20 an hour you would have had to many applicants, telling us the problem is that its not a shortage of workers, but a shortage of money. Your business is not anyone else’s business. Further leading to the conclusion that your business was not viable on the rates of pay needed for the workers and the country.
Well done that man for lasting two weeks! I would have not even spent two seconds looking at your ad.
British workers are not desperate enough is what you are saying. They may be thick, but not thick enough to work for the likes of you.
Paul Reply:
December 13th, 2008 at 5:31 pm
The job in question could lead to a job paying £30k+ ; we trained more than one person to that level.
Why one should pay £20 / hour (about £40,000 a year if you do 7.5 hours a day 5 days a week) to anyone with no qualifications, skills or experience, or indeed why anyone is naive enough to expect that is beyond me.
People who think like this (economic illiteracy) are the reason the country is in such a mess.
Tomek Reply:
December 25th, 2008 at 12:38 pm
I fully support your view Paul,but still the task like convincing Mr Che Bazman Guevara is hopeless.
During my almost 4 year stay in UK, I had contacts with hundreds of Poles.
1. People livin 5 in one room? Sure, 5 or more in one house but what is wrong with it? Oh yes, there is something wrong – deposits not returned by landlords at the end of tenancy!
2. What is wrong with people going 5 in a car to work? Just enviroment friendly attitude.
3. Eating the cheapest food? If healthy home made sandwiches and youghurt are cheaper than coke and oily chips from factory cantine then the choice is obvious.
Paul – your employment offer was not attractive. You should have provided full pay for being “sick” on mondays and fridays, mobile phones upgraded regularly, right to have unlimited breaks. You should have promised no disciplinary interviews not to breach human rights of your employees etc…
mikestallard Reply:
December 13th, 2008 at 7:36 pm
The Zloty is now standing at 4.5 to the pound. It has, four years ago, been right up in the 20s. Immigrants are not coming over any more (except a trickle from Latvia and Lithuania and loads from the Commonwealth). This means, round here, that the fields which are not being used for bio fuels are going to remain unpicked unless there are some students around.
I do not think my next door neighbour who works in a factory is going to be that pleased when his son leaves “College” and goes onto the dole to be, in fact, supported by his dad.
His mum, of course, works for the Council, so she is OK.
Bazman Reply:
December 14th, 2008 at 7:57 am
The next door neighbors son could pick in the fields or if he was ambitious and naive, work for Paul as I suspect Paul’s company just wants a lot of free work. No qualifications/ skill leading to 40 grand? Commission based no doubt. No East Europeans interested? Must have been bad. Get real. Everyone else did, as you have found out Paul, your business is not everyones business. Bosses tend to run companies for their own benefit and complain when they can’t get staff.
He will of course be smart and get a job on the council or become a teacher as you say. As few companies have formal apprentice/training schemes. Cheaper to poach from each other, employ sub standard foreign workers, and bleat about education and the government of the day, as well as the youth of today. As if they have ever been any different.
Meanwhile, the daily Mail think that the only impact of the collapse of the pound is that holiays in France will be more expensive.
Bazman Reply:
December 14th, 2008 at 7:59 am
He could also have the Daily Mail life of running a wine or antique shop.
The problem is I lost the use of my legs in an accident not my fault, I was left without the use of my bowel bladder which has affected my kidneys liver and my heart my condition goes up and down,over the last year down wards.
But I want to work I’d love to work I was a supervisor for a large building company .
Now I went for a job with a well known building merchants open to the public, the job was advising people about building problems and giving general advice, I can do this without legs, the company said yes your suitable for the job but having no legs customers might find it difficult to talk to you, they gave the job to a bloke from Poland and sent him for English lessons. I’ve had this type of treatment for the last ten years, the New Deal was a laugh, the Pathways to work failed, and work fare is just a means of lowering what benefits I get, here I am give me a job and I will do it.