“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?

How high taxes killed our belief in helping others

Posted on January 08, 2013

When all factual and economic arguments have failed, Britain’s proponents of high taxes fall back upon philosophical justifications for their position. “Tax is the thing that makes us civilised”, they declare, “It brings us together as a society”.

Such arguments are dragged out to perform again and again, like those 1960s pop acts who were fleeced of their retirement pots by unscrupulous managers. Of course, there’s no actual evidence for them – that’s the point, they are declarations of conveniently unmeasurable truths.

But even such intangible claims are starting to look shaky. As the debate about cutting benefits for the better off intensifies, it is increasingly clear that high taxation has killed our national sense of helping others, of the well to do making sacrifices to help those less fortunate than themselves.

Just look at the row over Child Benefit. There was a time when people recognised that if they earned a good salary, they didn’t really need welfare to top up their income – whereas others who were barely getting by did.

Now, the letters pages and radio phone ins communicate a very different world view. Those who have been squeezed over and over again by successive Chancellors grabbing at their earnings, their savings, their pensions, their petrol bills and their pasties want something back in return. The idea that just because they might be earning £50,000 a year then they shouldn’t get Child Benefit enrages large numbers of people – the payment is one of the few things they get back from the large amounts they have to pay to the Exchequer.

That is a remarkable shift from the widespread sense of “middle class oblige” that once existed to the far less attractive sight of well-heeled parents defending their right to be welfare recipients.

But people who want to hang onto their payments cannot be blamed for feeling that way. It’s a natural reaction to want to get at least a bit back when you are shelling out a small fortune every year through constant, multiple taxation. It is our politicians, and particularly the high tax lobby, who are responsible for the near-total erosion of that sense of sacrifice for the greater good.

Of course it is an absurdity to pay welfare benefits to the well-off. It is a perverse interpretation of a welfare state that was intended as a safety net – particularly at a time when there are plenty of families who can only dream of earning £50,000 a year. Worse, it means cycling cash through a wasteful tax collection and benefits payment system, only to return some of it to the pocket where it originated.

The welfare bill must be brought down, and the just way to do that is to withdraw benefits from those who need them least. High taxation has driven out the sense of responsibility which would once have made that the obvious and natural thing to do for most Britons. Far from making us “civilised” or “bringing us together”, overfeeding the tax man has made us selfish. Taking more and more money from workers has made them grip what they have left all the tighter.

The moral case against high taxes must be made or – counter-intuitive as it may seem – the moral case for helping others will continue to fall on deaf ears.

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.

The Child Benefit proposal is a vote-winner

Posted on October 07, 2010

The child benefit hoo-hah over the last few days is understandable. It’s controversial, communications within the Cabinet clearly weren’t as hot as they should have been and – inexplicably – it was launched before obvious potential loopholes had been spotted and sorted out. As a result particularly of those unsealed loopholes it has been pretty roundly panned, particularly in the Mail, Telegraph and Express.

However, I think the media have called this one wrong – this idea has the potential to be a big vote-winner. In the words of one lobby editor I spoke to on Monday, the papers swiftly resolved to “pour a bucket of shit over the idea”. As Guido points out, this may in part be because many of those writing our papers are on more than £44k, so are themselves going to lose out from the policy. Whatever the reason, there is now definitive evidence that their assumption that this was an unpopular idea is mistaken.

According to YouGov there is massive 83% support for the principle of the policy. Interestingly, on its implementation (where there have been some screw-ups) the only real concern comes from the 46% of people who want fully-fledged means testing introduced – a much more radical suggestion. Instead of the predicted popular backlash, the Government’s real challenge is that they aren’t going far enough for many people.

The grim reality of the welfare system

Posted on July 22, 2010

From my (now former) colleagues at the TaxPayers’ Alliance comes a new video about the many problems with the welfare system:

I don’t know about you, but for me the most shocking statistic in there was that those who choose to work instead of living on benefits effectively only get to keep 26p per hour of the minimum wage. We have a system that could hardly do more to discourage work – a system that crushes aspiration - and that is a disgrace. The TPA’s proposals to fix that are online here (PDF).

The other thing to note is that the video looks great – thanks to the TPA’s in-house video-whizz Andy Whitehurst. It’s not very expensive to produce these kind of good-looking virals now, and we should see more think tanks and campaign groups doing the same sooner rather than later.