Benefiting Society: Why We Need More Welfare not Less?

Almost thirty years ago I sat on a sunny afternoon, not unlike this one, in a classroom. Miss Clarke’s Geography Lesson: I was probably paying little attention, doodling dragons and thinking about my next game, but who knows? I recall one thing she said, one thing that stood out, in all those years of Plate Tectonics, Population Growth, Rainfall patterns and Economic Hinterlands. “In the future, when you are forty, most people will work only three days a week, and the biggest problem we will face is to how to manage our increased leisure time.” Her words struck me forcefully: this was the kind of problem I could get interested in!

Image

Dad was always his own boss: I don’t think he ever wanted to work for anyone else, or could have. Sure he would subcontract on other building sites from time to time, but mainly he worked as a small independent builder, with a handful of employees. However him and mum worked long, hard hours, and I knew it wore them out. Five days a week they would go off to work, and work hard, but they seemed to enjoy it. I asked them about Miss Clarke’s prediction, and they both looked glum. They thought “increased leisure time” might well equate to mass unemployment. They are old style socialist, to whom a “fair days work for a fair days pay” was a maxim, but they believed in full employment as an ideal, and they believed in “jobs for life” culture I think. They still do, actually. They regard having a job as a blessing not a curse, something that lets you better yourself, something that gives you both money and self-respect

A strong principle I adhere to is that in prosperous societies like ours where malnutrition, slum housing and desperate absolute poverty are FAR less common than sixty years ago, the biggest problem with having no job, no money and no credit is not starvation — few people will die of that with the NHS – but lack  of opportunity. It’s simple: having money gives you options in a capitalist society, it lets you increase your choices, and responsibility. The poorest elements, and I have lived there in the past, make few choices. The Benefits Agency might pay your rent, and give you enough money to live, but your choices dwindle to lesser of two evils all too often – do I pay the gas bill, the water bill or the electric bill this month? Do I maintain an internet connection in the hope of finding a new contract, or switch it off and use the money to buy a second-hand suit jacket from OXFAM and pair of Primark trousers to match, in the hope I will get that job on Friday’s interview? Do I buy a ream of A4 for the printer, or do I spend that cash on  a packet of razors or cheap haircut? Such paltry decisions are actually gratifying: you retain some tiny amount of free will, even in adversity.

Once you take your income up to my current level, the choices become MUCH wider. Your diet is no longer a sack of potatoes and twelve cans of tuna fish to last for a while, with a loaf of bread and some pasta for variation. I can choose where to shop, what to buy, whether to fund myself for a night class or buy some books. Get a good job, and you can make meaningful lifestyle choices. People used to talk about affording to get married, saving up to buy a home: they had disposable income that covered the basics, so money gave them choices. Jobs are good, proper jobs though, jobs that let you afford to live and make choices.

I was chatting last night to a fellow I know, who does work in my ward here, which is one of the twenty most deprived council wards in England in terms of absolute poverty and social deprivation. Yes really, it actually is; I live in the VERY nice part (by comparison) of it, but we have stark miserable levels of deprivation in absolute not relative terms in a couple of our wards in the borough. He was greatly unsure what could be done to help the community he serves and loves, and we got to the issue of aspiration, and the fact no matter how much one tries a lot of people don’t want to get out of the cycle of benefit dependency and poverty that follows.

I agree with him: they don’t. And that is because they are rational. It is s a tremendous risk, and a dangerous one. You may starve in the month before you are paid, you may get sacked and not be able to claim benefits for six weeks to six months. And you know what? The very poor are risk averse, because they have no savings, and no fall back plan.  Well at least not these days…Image

Firstly, I am forty now, forty three in fact; Mrs Clarke was wrong! The marvellous 3 day week we face is actually because an awful lot of people can only get part time work. Work, well paid decent work, has become concentrated in the hands of, well still a majority I guess, but it’s not evenly distributed. Self Employment and start ups appeal at times like this, because you can work as much as you want. For many of my friends, they are not trying to get better pay or conditions, but more working hours, so they can make ends meet.  Still an awful lot of people I know are desperate to work. So why do I say some want to remain dependent on benefits, and rationally so?

Well there are people in our society who for all kinds of reasons, from caring for dependants, including children, the sick, the elderly and the vulnerable, can’t realistically work. There are people who can’t for plenty of other reasons, including a tiny percentage who have severe personality issues, or just while lovely are not bright at all and might endanger themselves or others, and who a decent society will recognise as needing help. There are those who are ill, those who mentally handicapped, those who lack basic skills, those who have background issues that make it hard for them to “fit in” in many jobs (Ex-Cambridge Professors of Classics, former child Movie Stars and folks who have spent many years in mental institutions  for example are unlikely to be employed by many companies). Those people need a just and fair benefits system, and specialist help. I think few would deny them that?

What interests me more is those who dare not leave the benefits system, and the many who do leave the benefits system and take work, despite being far worse off through it.  “Better Off In Work” the slogans say: they lie. Sure, if you have 40 hours a week, at minimum wage, you will be significantly better off I guess, providing you are lucky enough to live somewhere where your rents are not ludicrous. Here that will mean you will earn enough to pay rent on a flat, which will be about 45% of your income, or 55% – 60% after tax and NI I think. Pay Council Tax, and maybe 65-70% of your earnings have gone on housing, and you can start working on bills and food. Given many people are mortgaged at that kind of level (though for most home-owners remember paying a mortgage is much cheaper than paying rent for an equivalent property) that is fair enough. On 40 hours a week you get those options I talk about, and you can start to plan your life, rather than drifting from crisis to crisis and making worst-case decisions if you make decisions at all.

However, this is based on forty hours, for an honest reliable employer. Unfortunately there are often potential employers who fall in neither category: the work is part-time, or you don’t earn what you signed up for. and I am seeing more and more of this, sadly. A lot of people are doing a few shifts a week – one friend has a “zero hours contract”, and is no better off than casual labourers throughout history, waiting for the call from his employers to days they have a couple of shifts for him. At least contractors like me are responsible for finding/making/negotiating their income sources – he has all the disadvantages of both employment and unemployment rolled together. Get more than 16 hours work, he must sign off, then sign on again losing a few days JSA – get no work, and then he has once or twice has his benefits stopped by the Benefits Decision agency while they “investigate” his claim and ask for pay slips for zero pounds zero pence his employer refuses to give him, leaving him desperate.

Another friend works arduous but part-time night shifts, and the fly by night company he works for have “mislaid” his pay slips – HMRC and the Benefits agency are not going to be sympathetic. Another has just started a decent job, but for the next 6 weeks has no money for food or rent, because she missed the payroll date while her company tries to sort her contract out and add her to the systems – and she has to pay almost £120 in bus fares just to get to her job in that period. Sure she will get paid well in July – but that is not helping right now. This looks like a better option for them right now…

Image

OK, so successive governments have spouted rhetoric about making people “better off working”. What they fail to realise is that however thick they may think the welfare dependent are, and however enticing my notion that it is better to have work and thus money and choices than not, they can add up. If you hit 30 hours you can get Working Tax Credits, which are great, but unfortunately if you have between 16 hours (when you lose entitlement to JSA) and 29 hours, you are absolutely stuffed. We subsidize the retail  giants low wage Part-Time culture by Housing Benefit payments, something I have written about before, but we don’t seem to have found a system yet that actually ensures people are really better off working.

The easy way to address that is to cut benefits and make being on the dole so horrendous that any person would rather do any work than stay on it. This is the punitive approach to unemployment relief: the Victorian Workhouses adopted this approach, and it’s part of our history that people are uncomfortable with. We see few museums of the Poor Laws, few visitors centres in old Workhouses, because we are profoundly sensitive to the scale of human tragedy they represent.  We learn about them in History, but we don’t dwell on them. The closest many of us may ever come to thinking about them is the musical Oliver!

Image

I contend that despite the popularity of the appeal to many of this approach, it is not only immoral, because some find themselves in this situation for reasons that are absolutely outside their control – laid off, genuinely unable to find work – and because some are vulnerable and unable to, like the sick and dying who cluttered the workhouses. No, the actual problem is  it represents a race to the bottom.

Employers exploit the system to use Housing Benefit to subsidize their workforces, but we can’t maintain our Housing prices if we allow rents to fall to a natural level, and when that happens we see a massive bust like 2008 when the sub-prime US market collapsed with global ramifications.   Punishing the poor, by reducing in real terms welfare payments like this administration might motivate individuals, but it does not increase the overall amount of work or desire of employers to pay. (It might possibly lead to deflation, but that is another story).

I believe, maybe wrongly, based on my reading over the years that about 10% working age unemployment is structurally necessary, perhaps even economically desirable, Randomly cutting off folk’s benefits, especially those who are declaring part-time work as has now happened to seven of my friends since Christmas (all working, all having no money for weeks) does not make people rush out and take part-time work if that work and associated travels costs will mean they can’t pay their rent or eat. People want jobs that will let them live comfortably, not £80 a month worse off than they were on benefits because the £40 improvement is gobbled up in commuting costs and they need to pay three times that to get to where the work is.

So what are the structural issues, and where might we see light at the end of the tunnel?

Four main problems and possibilities occur —

A. Second and third jobs are taxed at a much higher rate. There is no incentive to try to juggle two jobs, because you simply lose out and can’t make that pay. You need to make this work by reducing tax and NI for second jobs.

B. Rents are too high in relation to wages, because house prices and hence landlords’ mortgages were so high, and housing supply is restricted, so people can’t afford to get off H.B. Employers subsidize low pay part-time work by making their employees dependent on Housing Benefit and Council Tax relief, of which the majority of claimants of are working. We can’t do much about this but what Labour did – give P/T employees the same rights, pro rata, as F/T employees, to try to increase full-time employment.  You have to build more affordable housing – but realistically affordable, so social housing, not for profit housing.

C. You need to give people enough money to take risks: and that means increasing welfare payments to the point where people can afford to risk getting a job. Why? Because if you try the rewarding unemployment route,  wages must increase or people will leave their work en masse, and no one will do these P/T jobs that don’t pay the rent. Increasing wages is something economists are wary of, as driving inflation, but looking at deflationary economies and theory we know that wage inflation does stimulate demand and hence CAN lead to economic growth. As a Fiscal Stimulus increasing the level of welfare benefits till my friends would be genuinely able to live on benefits would force wages and real jobs of the full-time variety to become available, and see wages actually rise to a liveable standard as the workforce sees they have an option. People who want to work will be able to make something of themselves, and people who want to  claim dole and look after granny or paint pictures of sunsets can do just that, but the wages will at least rise to a level where one can pay the rent without state handouts. Secondly you need the unemployed to be able to save a little for the inevitable costs of starting work. Against our more vicious humans instincts, I think this is actually  better than punitive unemployment relief —

D. Finally, and most vitally, we need to pay HB and JSA for a full month after people take a job. If you start work tomorrow, and won’t be paid for 4 weeks minimum, you need to know you can pay your rent and buy food and pay the bus fare to work. People DO NOT always have that much money put away – any amount of the time on the dole will rapidly erode savings and any cash you have. Likewise, if you leave a job right now it is six weeks before we pay dole – an insane situation as so many people can’t afford to live that long with no income, and feed their kids, so they would rather not risk leaving a terrible low paid job that they can’t survive on than return to the security of the benefits, so they never risk taking a job. We need to pay people who get jobs money to set them up, and remove the penalty for leaving a job which is unrealistic in terms of your pay and conditions.

I’m no economist, I’ve never claimed to be an economist, and I may be talking nonsense. However my “work lies among the poor”, like the mother of one of Saki’s characters, and is have seen human misery up close. I know the system isn’t working, and I think that economic growth is only one aspect of the problems Britain faces. Perhaps Mrs Clark was right, and we should legislate for the three-day week, that quaint echo of 1970’s Britain, where people could not get work, and make it compulsory, like the leisure driven paradise she told me about that day. Until then, let’s reward people for working, and you can’t do that by punishing those on benefits – more welfare may mean more work, less welfare just perpetuates this endless spiral of misery.

cj x

Advertisements

About Chris Jensen Romer

I am a profoundly dull, tedious and irritable individual. I have no friends apart from two equally ill mannered cats, and a lunatic kitten. I am a ghosthunter by profession, and professional cat herder. I write stuff and do TV things and play games. It's better than being real I find.
This entry was posted in Social commentary desecrated, Uninteresting to others whitterings about my life and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s