“Poundland slavery” graduate finds work…in Morrison’s

Posted on February 12, 2013

Cait Reilly, the geology graduate who claimed being asked to work a placement in Poundland in return for her benefits was a form of slavery, must be celebrating today after winning her ludicrous case on a technicality in the Court of Appeal.

The back-to-work scheme, she claimed, was “forced labour”, unpaid work and therefore in contravention of her human rights. Worse, “the experience did not help [her] get a job”.

Let’s ignore the fact that there was no force involved, in that she could choose to take part or to refuse to do anything. Let’s ignore that it was emphatically not “unpaid”, in that she was paid benefits in return for taking part.

Let’s focus on her other claim:

“those two weeks were a complete waste of my time as the experience did not help me get a job”

Really? Happily, Ms Reilly has now found work – as a supermarket worker in Morrison’s.

It seems the Poundland work experience did the trick after all. Or was it her geology degree the supermarket hired her for?

The benefits cap debate – a win for Ministers, and an economic fail for critics

Posted on January 23, 2012

The furore over Iain Duncan Smith’s proposed benefits cap was predictable, and Ministers have merrily sailed into it for two reasons – because a high profile fight on this topic brings them an electoral advantage, and because they knew the Left would swallow the bait in one great, unthinking gulp.

The idea that no household should get more than £26,000 in benefits – equivalent to a pre-tax salary of £35,000 – is overwhelmingly popular. British voters subscribe to a strong idea of fairness, particularly when it comes to the idea that working should be more rewarding than not working, and they have been outraged by numerous reports of large families living at no cost to themselves in huge, overpriced houses in particular.

The critique of the proposals coming from the Left, notably from Lib Dem Guardianista Tim Leunig, is fatally flawed because socialist economics fails to recognise that the economy is dynamic. You can’t change one input to the system without others shifting in response – both when macro market forces and micro human behaviour are involved.

The flaw comes when they crunch the numbers. Leunig’s Guardian piece claims to calculate that the benefits cap would leave people living on 62p a day. The most crucial element of his workings is that a 4-bedroom house in Tolworth costs £400 a week. That’s true right now, but it wouldn’t be the case once a cap has been brought in.

The truth is that some of the main beneficiaries of overly high benefits are private landlords. They may not get payments from the DWP direct, but they reap the cash anyway through inflated rents, secure in the knowledge that every time they put the price up, benefits levels are raised to pay them. This is a racket, exploiting the foolishness of officials in pumping more and more money out and the absence of taxpayer power to rein in this behaviour.

Tim Leunig is right that if rents were fixed as they are now then his hypothetical family would pay£400 a week. But rents aren’t fixed, they are fluid. If you remove a large amount of cash from the system then prices will fall. By arguing for the system to remain as it currently is, rather than accept a cap, this supposed “progressive” is effectively fighting the corner of benefit-farming landlords.

There are knock-on benefits to removing the artificial inflation in rents, too. If renting property out becomes less profitable, the desire and the financial means to buy-to-let will be reduced, helping to address the shortage of affordable housing that is so often highlighted as a problem.

This is why we can expect IDS to be intensely relaxed about this fight gaining so much publicity. When it comes down to it, he has public opinion and solid economics on his side.