Wednesday, 3 April 2013

The Welfare debate

Over two years ago I wrote this piece for Labour-Uncut; it was the first such article that I had written and consequently not the best. However the main points that I make (or intended to make) are still prevalent today. Is it better to pay someone a pittance to live on the edge of society or pay them more to take a ful part in society, a part which may result in a lower burden overall on society. People in work are healthier and therefore make fewer demands on the NHS; people in work are significantly less likely to be involved in crime (and by extension anti-social behaviour) and of course people in work are paying tax. I don't propose that a massive centralized state is the answer, it is not the job of Whitehall to directly provide jobs; but I would expect central government to have a plan about who is going to provide employment and to have some plans for ensuring that NEETS are employable in the future. The plan at the moment seems to be to “free” the market to determine employment and training for all (and we know what a great job the market did with the financial industry). If, therefore, the private market is not capable of providing full employment, which is worse, paying someone to work or paying them to stay at home.

Which is worse: work or welfare?

by Robin Thorpe
The viability of full-employment has been debated since the industrial revolution. Ever since we began replacing human labour with machines, people have sought to create more efficiency in the workplace. Agriculture, manufacturing and construction now need fewer operatives to generate a higher yield. Individuals are increasingly employed in offices and call-centres dealing with the flow of information and money. Those without the skills or opportunities for this type of work are supported by the community as part of a philanthropic welfare state.
The Tory-Lib Dem government seems to have decided that the burden of welfare is too great and that work should be made “more attractive”. This ideological goal is to be achieved by reducing the extent of benefits available to the unemployed (whether through ill-health, redundancy or lack of skills). However, the reality is that often, although not exclusively, people would prefer to be in work, but do not have the opportunity.
At the same time as cutting benefits, the government has chosen to reduce the funding allocation of local authorities, universities, police, military and other public sector employers. These cuts will increase unemployment. The NHS is also being asked to make efficiency savings, which again will probably result in higher unemployment. And further private sector redundancies could arise in businesses that rely on public sector contracts. A by-product of high unemployment is an increase in the welfare bill.
Unemployment is a logical and unavoidable by-product of the type of efficiency savings that the Tory-Lib Dem government is calling for. Reducing public spending and decreasing taxation, to allow for financial growth and increased spending, may sound rational in a Whitehall office. But they fail to take account of true value for money.
In a free market, full employment is not a viable reality. But the government is seemingly pinning its hopes on the private sector picking up the slack in the employment market. But what if it doesn’t? What if the balance sheets show that the current staffing levels are the most efficient? What if the value-added services, previously provided by the public sector, cannot be provided at an efficient cost by the private sector?
The government’s gamble could well result in enormous damage to the health and wellbeing of vast swathes of society. There is recognised evidence that shows that being in work is good for your physical and mental health and is an effective means of reducing poverty and social exclusion. With appropriate support many of those who have the potential to work, but are currently not working because of illness, disability, or social disadvantage, can access the benefits of work. But instead the government is reducing education and training support.
The obvious question is: “Is it more efficient to pay people to be in work or to pay them to be out of work”? Right-wingers might propose that we should not support them at all. Perhaps someone could rewrite Swift’s Modest Proposal to reflect the current crisis afflicting the socially disadvantaged.
Unless government regulates the market in some way, we will see a widening of social division.
Let us assume that private sector organisations take up the mantle and provide some of the services previously offered by the state. And that entrepreneurial business rise up and service some gaps in the market. Surely this will be at an increased cost to the individual? Is that not the essence of the private sector – to maximise profit for shareholders?
Does private enterprise actually do the same job more cost-effectively than a public body? Not without substantially reducing staff remuneration and/or work-related benefits. If this is the case, is it more cost-effective or just cheaper?
Price and value are different entities. If the services that communities enjoy are not to suffer, private enterprise must step into the breach. It follows that if prices go up then some individuals will be without that service. Others will be left with no choice as to whether they pay for a service, especially those living on reduced benefits. There will be no training or support to enable them to re-enter the employment market, as they simply don’t have enough money. The only winners are private investors who pocket a tidy profit.
The crux of the Tory-Lib Dem argument is the creation of profit, and therefore tax revenue, which results in increased investment, which in turn equals more jobs. This is their economic model. But can this model deliver full employment? If not, then the cost of this model is damaging to individuals’ and, by extension, societal, health and well-being.
The key argument against the Tory-Lib Dem economic model is that it benefits mainly venture capitalists: the few and not the many. Is this the way that the big society is going to work its way out of recession?

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