National Security and social security

I once wrote that whilst the left in the media and politics endlessly run their scissors over the defence budget to look as if they wish to curb spending, the far larger social security budget gets ignored. Social security costs around five times as much as national security. The simple truth is the UK cannot afford to keep almost six million people of working age on benefit and out of work.

I would like there to be more debate about this issue in this eleciton. Last night in my public meeting in Burghfield I set out a five point plan for dealing with unacceptably high levels fo worklessness. I will repeat it here for a wider audience:

1. Control our borders, to stop illegal immigration and cut the numbers of economic migrants with the Conservative’s quota and cap system. More of the jobs we do create need to go to the unemployed already here.

2. Cut taxes on jobs. The Conservative plan to cut Labour’s National Insurance Tax hike, to cut the rate of Corporation Tax and small business tax, and to get rid of the damaging effects of tax legislation like IR 35 is a start. The more that can be done to make the UK tax competitive, the more firms will stay here, come here and grow here, with the benefit of more jobs.

3. Cut needless regulation. The box ticking form filling cultutre has gone too far. I am all in favour of controlling the solvency of financial institutions and demanding high standards of health and safety, but the UK is now regulated in a costly and unhelpful way, which puts people off creating jobs here. The Conservatives have adopted my proposal of setting regulatory budgets and requiring cuts each year in the costs government imposes.

4. Split up the banks the taxpayers own, and make them compete more for our busienss. Change the current regulatory requirements so the main banks can lend a bit more to UK business to kick start the private sector recovery we need.

5. Reform welfare, so it is more worthwhile to work, and so fit and able people cannot live on benefit if jobs are offered to them.

I am all in favouir of being as generous as possible to those with bad disabilities who cannot work. They are the minority within the 6 million of working age without a job. We need to get serious about creating mroe jobs. Labour’s pathetic recovery is jobless. Under Labour the private sector has been badly squeezed in the last three years. We need to change things.

Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

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32 Comments

  1. Slightly Green Conse
    Posted April 27, 2010 at 10:15 am | Permalink

    Few things anger me more than those who regard living off benefits as a 'lifestyle choice' , and the system that lets them do so.
    A few years ago I was off work for the first time in my life with serious back trouble, eventually needing an operation. I battled like hell to get right and back to work, and eventually did. But my doctor said that many people just get used to the non-working lifestyle and benefits and don't make the effort. I personally know of people who are on Invalidity benefit and have no intention of working again, even though I'm sure that they could do some form of work.
    Another thing is that people now use the fact that they have to start on a low wage to turn down a job. If it's less than they earned before or less than their benefits they seem to feel themselves justified in saying no. But they should see it as an investment; if you do well and get more experience in that job, your income will in all probability rise. Too many people, those who've previously had better paid jobs but had to lose them for whatever reason, and those who've never worked, don't want to start at the bottom or take jobs that require a short term financial sacrifice but have potential to get them established and off benefits.
    It's just too easy opt out of being employed.

  2. Norman
    Posted April 27, 2010 at 10:27 am | Permalink

    I can't fathom why immigration comes top of a lot of people's issues when the underlying cause of immigration (EU and non-EU) is our benefits system, yet it hardly gets a mention. I'm a firm believer that the more you tax something the less you get of it and the more you subsidise something the more you get of it.

    At the margins, taxing low income earners whilst simultaneously subsidising people not to work via tyhe benefits system creates the conditions that allows politicians of a certain ideology to embrace immigration under the pretence they are 'doing jobs Britons won't'.

    I'm talking about legal immigration only here – the massive problem of illegal immigration is a complete mess and not easy to see how to fix it.

    • no one
      Posted April 27, 2010 at 11:43 am | Permalink

      there are plenty of British IT and Telco workers currently out of work and looking for work, while the government continues to print work visas for Indian nationals to come in and do these jobs, your view is too simplisitic

      Brits cannot compete with the wages an Indian national will accept, we are a 1st world country they have completely different living expenses, current government policy is a mess

      As is giving entry level jobs to Indian grads with only a years experience rather than British grads, if all the entry level jobs go to Indian nationals it is self fulfilling that there will be no middle or senior level Brits in a year or two

      this doesnt even help the country as outsourcing our IT and Telco work to India is not giving the wider country a lower cost base when you take into account the lower quality and rework needed etc

      and of course the tax breaks given to foreign nationals which act against Brits in the workforce market place

      all needs fixing asap

    • backofanenvelope
      Posted April 27, 2010 at 11:56 am | Permalink

      Seems easy enough to me. Imprison any "illegals" caught till they can be deported. Close down any business caught employing illegals.

    • APL
      Posted April 27, 2010 at 1:24 pm | Permalink

      Norman: " .. cause of immigration (EU and non-EU) is our benefits system, yet it hardly gets a mention."

      You have a point. But ask yourself why it hardly gets a mention? In my opinion it is because those in the Tory party are too lazy to make the case for reduced benefits and lower welfare more charity and less STATE. Instead they try to present themselves as the 'nice party'.

  3. wonderfulforhsage
    Posted April 27, 2010 at 10:34 am | Permalink

    Mr R.

    "Reform Welfare". May I ask how specifically you would do this?

    • Stuart Fairney
      Posted April 28, 2010 at 7:51 am | Permalink

      We could do worse than look at former Republican governor of California, Pete Wilson's ideas. He proposed limited duration welfare, I believe (from memory) it was two-years at a go, five years life time limit.

    • alan jutson
      Posted April 28, 2010 at 10:02 am | Permalink

      Wonderfulforhisage

      You could put a limit on the total weekly/monthy amount it is possible to get on benefits.

      Examples:

      Total no more than the minimum wage assuming 40 hours a week.

      Net amount (after all tax and insurance stoppages) of the average weekly wage.

      Clearly it is not easy, as benefits have the added complication of a state subsidy (tax credits) on wages for many.

      But we have to stop the idea that benfits are an alternative to work for those who are capable of work.

      We have to get back to the basics of why the welfare system was introduced in the first place, which was as a very simple safety net.

  4. Posted April 27, 2010 at 10:39 am | Permalink

    I believe that the government should freeze all benefits to the unemployed at the rate that they were when the person first became unemployed, making them worth less year by year. At present many have no incentive to even think of looking for work. This would enable those who genuinely can't work to be paid a bit more and reduce the overall bill.

  5. no one
    Posted April 27, 2010 at 10:51 am | Permalink

    yes but most of the folk on welfare are not in the areas where most of the jobs are, so you need to do more

    1) encourage geographic mobility, folk in social housing especially need to be able to move around the country in ways which are tough at the moment, the crap from the nhs which depends on being in one part of the country for routine hospital appointments and so on needs breaking up to support mobile workers and mobile families, these are fundamental as folk aint going to move to jobs for marginal amounts of money if their kids get put to the back of hospital queues or they get significantly worse housing deal

    2) need to move more of the potential jobs to regions where folk are available, there is no reason for many jobs to be in the south east for instance

    3) folk need training/education, especially those on sink estates and inner cities, there needs to solutions here, we need to see some role models escape and do well for others to follow

    • Jonathan Tee
      Posted April 27, 2010 at 1:45 pm | Permalink

      I agree with the relocation issue. Cost of traveling to interviews and then cost of getting accommodation arranged when I last moved jobs was about £2K, which is an impossible sum to raise if you've been out of work for a long time (or are just starting out). So there is a cash-flow trap that keeps people stuck in areas of low employment. One solution could be a Student Loans style resettlement loan repaid on low interest via PAYE. Also worth considering other practicalities such as cost of suits for work – perhaps a small loan or grant to buy a couple of Marks and Spencer (or whatever) basic suits and a pair of smart shoes.

      An admittedly pub-derived suggestion that I really like is to make job seeking more like full time work. It is very demoralizing to be stuck in the house staring at four walls reading rejection letters. So I can understand people getting demotivated and staying in bed after being out of work for a time.

      If you had to go down to an office block for 9am, and stay until 5pm working on your c.v. and applying for jobs, calling recruitment agents, going to training sessions, etc., with time out to go for interviews; it would give back a lot more structure, as well as let people enjoy a bit of office camaraderie. It would also allow people to make use of IT facilities they may not have access to at home, learn the basics if they haven't (how to touch type, how to use MS Office, how to write a business letter, basic book keeping, etc.). If money is preventing people travelling to interview, you could even consider treating travel costs as a business expense.

      There would also be a stick – if you don't turn up five days a week, you don't get the full allowance. Don't turn up at all, you get nothing. Behaviours in the job centre that may be detrimental to staying employed could be addressed with a quiet word, just as a good employer does in the private sector, or in extremis with financial sanction.

      Admittedly this would involve additional expenditure from the government initially, but it would be a good investment. There would be no opportunity to not bother getting out of bed – low paid work would actually feel like a step up on the ladder as job seeking would require the same time and effort anyway. With relocation loans or grants, the low employment traps in areas like Doncaster would be a thing of the past.

      People who want to work will be enabled by giving structure to maintain motivation, support to develop skills, and financing to pay for travel, suits, relocation costs. People who don't will change their minds when the allowance gets stopped.

    • dave
      Posted April 28, 2010 at 2:19 am | Permalink

      Most folk were not in these areas 200 years ago before the industrial revolution.
      Why are there 15,000 dutch Somalians in Bristol. because of Europe and allowing them all through are borders wiyh Schengen agreement.
      How many left at sandgat after the Icelandic underground eruptions

  6. Ian Jones
    Posted April 27, 2010 at 11:02 am | Permalink

    How about setting a maximum amount a family can claim on benefit. I do not see why families need to be based in central London at huge cost when its much cheaper outside.

    Welfare should be a safety net and not a lifestyle choice, people should not be rewarded with huge sums of Govt money just because they cant be bothered to try.

  7. lola
    Posted April 27, 2010 at 11:05 am | Permalink

    I am going to make a very personal comment in regards to your last point. I have asthma, eczema, hayfever, a heart murmur (duff valve) and gastric ulcers, plus years of abuse has done me back in. However I have worked for myself for years and have created and run a successful innovative business that has created employment and wealth. But I am not in any way a rich man and I cannot affird to retire until I’m at least 65.

    By any measure I am, despite my conditions, fit and able to work. But I know that if I’d worked in the public sector I would have accummulated very comprehensive and valuable entitlements for pensions and benefits. And I know from my related business experience that the combination of the conditions that I have would have made it very easy for me to claim full ill health early retirement – and I personally know of quite a number of people – far less afflicted than I am – who have.

    A few things spring form this. One, I was bloody stupid not to join the State gravy train. Two, anyone can do something, as it is not necessarily one’s physical health that prevents you working, it’s your head. Three, managing ill health benefits in the State sector and for unemployment benefits claimants is out of control. Both these areas suffer endemic producer capture.

    Whenever I hear McMental or Cleggy banging on about ‘fairness’ my blood starts to boil. It is clearly ‘unfair’ that I should be taxed so that my eyes water just support a load of crafty nerks clever at the barrack lawyering, more fit and even more lazy than I am, and resident in the biggest jerrymandering scam the world has ever seen.

  8. PHM
    Posted April 27, 2010 at 11:16 am | Permalink

    off topic

    john – perhaps you could comment on Lloyds TSB results this morning. I know you have some good views on this but i was specifically interested in the spin eithyer Lloyds or BBC are employing today.

    On R4 repeatedly the message was that not only had Lloyds turned in a very large profit number but that, at current share price levels, the taxpayer would make a £2BN profit on our investment. This was further ramped by an analyst who suggested the share price oculd further double in coming years delivering 'a very tidy profit' for the UK taxpayer.

    I may be naive here but aren't the bulk of the profits Lloyds TSB have earned this year been as a result of the widening spreads between rates paid on savings versus the rates charged to borrowers of all sorts? The fact that this market remains uncompetitive in the current climate, and the spread being very large indeed, is the origin of these profits. I would view this as equivalent to a tax on every saver and borrower in the country. It is disingenuous to view our 'investment' and now the claimed profits form this investment as a positive thing as we have all paid for it twice – once because we have impoverished ourselves to bail out the bank in the first place; twice because we are being asked to accept lower rates on savings and higher rates on borrowing in order to pay for it. we are being bribed with our own money here. right?

    Reply: That's part of the story. Taxpayers also need to remember we are underwriting a lot of possible bad debts and have advanced money in many ways, not just for share purcahse. We need to see the overall position to understand the scale of the losses so far.

  9. Javelin
    Posted April 27, 2010 at 11:24 am | Permalink

    I think kids from estates need a real help. I've met lots of people who were basically left behind at school. A few girls I know go on to get degrees and/or good jobs. Having said that I know alot of girls from Oxbridge, LSE etc who gave up jobs to become full time Mums.

    I've also met a lot of people who deserve to live on sink estates.

    Those who want to get degrees should be allowed to study.

    Those who don't want to work should be not allowed to drive, borrow, live in nice areas etc.

    New Labour has really ruined the economy in some areas by simply creating public sector jobs and no provate sector jobs. If I live in the North East I would be hoping mad at New Labour.

  10. Posted April 27, 2010 at 11:35 am | Permalink

    A recent examination of the Spanish economy showed that for every subsidised "Green" job they created there was a net loss of 2.2 jobs from the real economy, due to the tax money needed to pay for it. With all the "official" parties committed to producing 100s of thousnads of such "green" jobs they should be held to account every time they claim to be creating jobs rather than deliberately announcing their intent to destroy 220,000s of jobs. The refusal of the, in large part state owned media, to report the truth on this is much of why our election & thus our entire "democratic" system is fraudulent.

  11. Andrew Mitchell
    Posted April 27, 2010 at 2:46 pm | Permalink

    John

    At last someone has mentioned the dreaded IR35. This is the atypical Labour anti business legislation. The more you encourage self employment/feelance operation the better; getting off the backs of those who seek to provide for themselves is a far quicker way to shrink the dole queue and grow the economy than any amount of green subsidies.

  12. Mark Parker
    Posted April 27, 2010 at 2:49 pm | Permalink

    The Conservative's policy on immigration is nowhere near strong enough. To get my vote you will need to pledge to deport enough immigrants to get EVERY unemployed British person back to work , including the excess employees not really required in the public sector. At the moment there aren't enough vacancies in the economy to do this. (Benefit withdrawal will doubtless be required to motivate some longterm unemployed, but there must be vacancies.)

    It would be necessary to leave the EU to implement this, of course.

    Btw, is the breakdown of the £196bn "Social Protection" budget published, or does the government keep that a secret? I'd love to know where it all goes, ie, precisely how much on JSA, HB, ESA, etc. When the Telegraph found out a couple of months ago that the Housing Benefit bill was £20bn pa they seemed to act like they'd discovered a state secret.

  13. Steve Cox
    Posted April 27, 2010 at 4:25 pm | Permalink

    Interesting to see you bring up IR35, John. That perfidious piece of legislation caused me to shut down my company in 2004 and move to SE Asia, where I have been living ever since. In that respect, it did me a favour, but the sheer injustice of the rules, and the way that it was left to the IR to decide whether your LLC constituted a legitimate company or not, overturning centuries of company law precedent, was utterly shameful. We took the mater to Judicial Review, but to no avail, unsurprisingly given the circumstances at the time.

    I see that HMRC are now doing much the same thing with claiming no-resident status – basically, there is no longer a hard and fast test (the 90 day/180 day test) as to whether you are non-resident, it's up to the Hector that you happen to meet with to decide. HMRC claim that this is actually not a change to the rules, but we expats all know how disingenuous that is. This will also discourage companies from sending staff on valuable broadening assignments overseas, as they will no longer be certain of their tax status if, as most will do, they retain a home in the UK whilst working abroad. I'm sure that you can see how damaging this will be to the development of future UK management material.

    Do you or your party have any views on this issue, and how matters may be made more black and white in future? It's impossible to plan for one's future when some bowler-hatted clerk in an anonymous Revenue office can decide your fate at his whim (or that of his political masters). We need certainty.

    Grateful for any feedback.

  14. Lindsay McDougall
    Posted April 27, 2010 at 4:40 pm | Permalink

    Agreed on all of this but nobody's talking about the size of the elephant in the room. The annual deficit is £163 bn and the structural deficit is £107 bn (2010 budget report) or £90 bn (Institute of Fiscal Studies) or £132 bn (Bank for International Settlements).

    So the "bulk of the structural deficit", which the Conservative Party is commited to eliminating during the next Parliament, is round about £100 bn. Nobody has produced a package of public expenditure cuts and tax increases that comes anywhere near that. Instead, all parties seem to be relying on economic growth in excess of 3% pa, well above the historical trend, to pull us out of trouble.

    So either the electorate is full of emotional cripples that can not face up to reality, or the body politic mistakenly thinks that it is. Either way, it is a very bad basis for governing.

  15. alan jutson
    Posted April 27, 2010 at 5:32 pm | Permalink

    Its simple really.

    Social security benefits were designed as a short term safety net, NOT a lifestyle choice.

    Invalidity benefit was designed to give support for those who were unfortunate to be medically unfit for work. NOT to get people off of the unemployment figures.

    The sooner we get back to the original purpose of these Benefits the better.

    The problem is successive governments of all colours complicating the issue of Benefits with their own Social agenda, and getting involved to try and surpress and alter market forces, which then creates a totally false need and requirement.

  16. Alan Wheatley
    Posted April 27, 2010 at 6:01 pm | Permalink

    While standing in the Post office queue today I listened in on a conversation between a couple of locals. One explained to the other how his motor repair business was being squeezed such that there was not enough work for himself and his one employee. He explained that his life is being made much more difficult by insurance companies insisting on conditions for accident repair jobs that only large businesses can contemplate.

    I was reminded of my local butcher while living in the Yorkshire Dales. He had done his own slaughtering for decades without there ever being any problems. But one day the regulations changed and he found himself one foot too short on a critical dimension, so that was the end of that.

    One way for big business to increase market share is to take customers from small business. One way this can happen is by government introducing regulations that make trading more onerous and which small businesses will find difficult to cope with.

    I hope this is something he Conservatives will bear in mind when the lobbyists beat a path to their doors.

  17. Peter Lavington
    Posted April 27, 2010 at 6:57 pm | Permalink

    Ok, for those who have worked for more than, say, five years in total they receive full benefit when unemployed. If after six months they have still not found a job they revert to the system for all people who have never worked for a full five years. No cash should be handed out. There should be a chain of state run supermarkets (which will create jobs for the unemployed and pay in cash) and the unemployed would be given coupons to be redeemed for food and clothes. There would be no alcohol or cigarettes available. It would be an incentive for anybody to find a job. It would only make life difficult for young people. For anybody over fifty it is difficult to find work and I would allow them to receive benefits in cash.

  18. Acorn
    Posted April 27, 2010 at 8:38 pm | Permalink

    Well said JR. You will be aware that this fiscal year, the government will spend circa £230 billion pounds on welfare provision as defined under COFOG. That is, getting on for one third of the £700 billion the government will spend. A quarter of that £700 billion will be borrowed. This will obviously buy a lot of votes in the welfare classes.

    Redwoodians may not be aware that there is a metric called "cost per life year saved". A basic calculation used by the NHS and the much maligned NICE quango, for calculating which drugs and medical interventions, the proletariat should be allowed to have.

    The following link has two paragraphs 5&6 under "Solutions". They are worth reading. My current estimate is that there are circa 1700 government spending programs. How many of those do you think have had a comprehensive cost benefit analysis done on them. Oh, in the link, replace the word congress with the word parliament.
    http://www.econoclass.com/savinglives.html

  19. William H
    Posted April 27, 2010 at 10:23 pm | Permalink

    I am pleased to see the Tories concentrating their fire on the iniquitous national insurance. Hopefully this will prevent them using it as a stealth tax. Both governing parties have made a big show of reducing the rate of income tax, but NIC has increased steadily. In 1979 it was 6.5%, in 1997 it was 10% and is now 11% and rising. By the time we add the employer's contribution (which is part of the cost of employing someone), many people pay much more NIC than tax. In reality, most basic rate taxpayers pay 31% on most of their income, over 40% if you include the employer's contribution. As what someone receives in terms of pension or benefits bears almost no relation to what has been paid in, the term "insurance" is a massive fraud. If the tax on employment income wasn't so high, there would be no need for measures such as IR35.

  20. Antisthenes
    Posted April 28, 2010 at 12:32 am | Permalink

    If the welfare system is cut back so that being unemployed and on the dole is not so attractive as being employed that will go a long way to reducing immigration. Immigrants are attracted because there is work available that can be filled by Britons but is not.

    You talk about cutting needless legislation and reducing taxes to encourage wealth creation. If you cut deeply into needless legislation that 13 years of Labour has foisted on the country then not only would you be getting rid of thousands of non jobs you would be returning freedoms to the people that labour have so callously stolen from them. This would have the benefit of helping to cut the public sector down to an affordable size without cutting front line jobs and paying for the tax reductions.

  21. Posted April 28, 2010 at 12:52 am | Permalink

    "Reform welfare, so it is more worthwhile to work, and so fit and able people cannot live on benefit if jobs are offered to them"

    Even if you make it "worthwhile" to work, there are a large number of people who wouldn't work – as long as they get "enough" on the dole, they won't work even if they would have much more money if they did.

    And what makes you think anyone would offer a job to that type of person?

    Only workfare would really make the workshy work.

  22. Stuart Fairney
    Posted April 28, 2010 at 7:54 am | Permalink

    I fear, that after much heat being generated on this, actual progress will be utterly minimal and tokenistic. Why? Too difficult and most of our politicos don't live anywhere near the ASBO generation.

  23. Mike Paterson
    Posted April 28, 2010 at 8:07 am | Permalink

    6) Raise the tax-free threshold to at least, say, £10,000 in order to incentivise the jobless to take a lower paid job rather than remain on the dole.

    What's that you say? The Liberals have that in their manifesto already? Oh dear.

    PS Ian Jones: there is no such thing as Govt money. It's your money and mine.

  24. APL
    Posted April 29, 2010 at 8:41 am | Permalink

    Today on the BBC a body called the 20:20 trust was wheeled out to oppose cuts.

    £10 to a penny the organization is funded by public money making the case for more public funds.

    Fake charity anyone?

  25. Posted April 30, 2010 at 3:09 pm | Permalink

    Welfare is a trap, it is designed to ensnare us, once enough are ensnared, the rug will be pulled from under them and the Kommunists will have us all by the short and curlies.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

    Promoted by David Edmonds on behalf of John Redwood both of 30 Rose Street Wokingham RG40 1XU

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