Why bother to be prudent?

Many of the emails and blog replies I receive effectively ask just this question. I am bombarded with many examples of how our welfare state rewards people who do not get a job, do not buy their own home, do not save hard for a rainy day, and fail to provide a decent pension for their old age. Those who have worked hard to make provision for themselves and their families ask why do I have pay twice, once for myself and once for those who did not bother to be prudent?

The answer is in one sense very easy. I want to live in a society where we all contribute to provide an income to those who are disabled, who have fallen on hard times through no fault of their own, who cannot find a job despite looking hard for one. Few of the toughest critics of welfare would make the case for letting people sleep rough on the streets for lack of a roof over their heads, or would wish to see children go without food or basic amenities for lack of money.

The problem is in the tests we apply to see who should be eligible. All three main parties and most voters agree that much of our welfare provision should be means tested. No-one wants to offer unemployment benefit to the billionaire who does not need to work, or to pay for the children of the banker or footballer on the seven figure salary. Most agree we need to target the aid and assistance on those in need.

So far so good. It is the next step of the argument that causes the practical problems, and some of the moral argument. It is the need to offer the money to those who not only need it but deserve it. Most people and the three main political parties do not think benefits should be given to the individual who simply will not work, despite work being available. Difficult judgements have to be made case by case. Was this individual unlucky in not having a job in an area of relatively high employment? Was this individual trying to put employers off by his approach to job interviews so he could stay on benefit?

I always want us to be more generous to people who are blind or deaf or unable to use their limbs. These are visible and debilitating medical problems. It is more difficult if someone claims they are depressed or have a bad back. The condition could be life sapping and make it impossible for them to work, or it might be something many put up with without stopping them earning their own living. These tricky decisions are having to be made by adjudicators and medical advisers, to offer justice over claims.

The welfare system largely provides help to individuals and families with insufficient independent income, but some of the money is also based on spending patterns. Instead of giving people a fixed amount to take care of housing needs, housing benefits are based on the actual cost of the person’s accommodation. There does seem to be widespread support for the reform that says there needs to be some upper limit on how much a family without income can spend on housing to receive state support.

The issue I would be interested in comment on is how tough should the state be when assessing eligibility for benefits? How do we answer the question Why should I be prudent? At the very least it must always be worthwhile working. It also needs to be worthwhile saving, a topic I shall return to later this week.

I was pleased to see the Shadow defence Secretary acknowledge Labour needs to show what it would cut. They have always found cutting national security easy – they did some of that in office whilst presiding over the huge overall surge in public spending elsewhere. I await with interest how they would cut this far bigger area of social security, where cross party agreement could add to the authority of the decisions. This year national security or defence is scheduled to cost £40 billion and social protection or social security to cost £200 billion.

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268 Comments

  1. StevenL
    Posted January 8, 2012 at 7:30 am | Permalink

    … do not buy their own home…

    I thoroughly reject the notion that not buying a house makes one ‘imprudent’. Mortgage interest is just rent on money. If I did have the required deposit to buy anything worth owning (i.e. not a tiny studio) – or £100k – why would it be imprudent to simply invest it in the stock market for income and use the stream of dividends to pay toward rent? Over a 25 year period one would expect both the income and capital to rise, meaning that as the years went on you would be able to either rent a better property or supplement your income and keep your capital in tact.

    As an investment manager I suspect you know this fine well too – as you do that ‘putting all your eggs in one basket’ – i.e. UK residential property – is a dumb thing to do.

    As for the original question, the notion that people should never get more on benefits that the average worker does is a sensible one, and I sincerely hope the coalition can make this change against the tide of kicking and screaming from the ‘poverty’ industry.

    • APL
      Posted January 8, 2012 at 8:56 am | Permalink

      Stephen: “I thoroughly reject the notion that not buying a house makes one ‘imprudent’. ”

      Agreed.

      But in the UK Socialist state where the Head of State pays homage to Brussels, no one actually owns their own property.

      If a person isn’t in hoc to the bank, he or she is an obligated wage slave to the local authority. When one can be thrown in goal for failure to pay a council tax on the property you supposedly own.

      The best we can claim is that we rent from the state.

    • Tedgo
      Posted January 8, 2012 at 9:08 am | Permalink

      I do not really understand your thoughts regarding renting. The tiny bungalow next door to me (600 sq feet) is rented at about £700 per month, that is £8400 per year. There are plenty of takers.

      To finance that at current interest rates of about 2%, one would need a capital sum of about £420,000. This represents about 2.5 times the value of the bungalow. That capital sum is unrealistic for normal people to acquire.

      I own my bungalow which now costs me nothing, other than the odd maintenance bill, council tax and utilities bills, the latter two of course still has to be paid by the renter.

      • A different Simon
        Posted January 8, 2012 at 1:24 pm | Permalink

        So the market price for the bungalow is about £168,000 .

        About 6.5 times the median gross pay package which these days does not include an employers contribution to a pension .

        Land owners and banks have made fortunes by restricting supply to puff up prices . Govt has to take measures to increase the supply and stop it being monopolised .

        I don’t think this country has a future unless it can provide it’s residents/businesses with accomodation/premises at around half current costs .

        • Tedgo
          Posted January 8, 2012 at 3:52 pm | Permalink

          I agree that house prices need to halve.

          Sadly too many developers are sitting on land they have paid probably six times too much.

          • Single Acts
            Posted January 8, 2012 at 6:06 pm | Permalink

            Tedgo and Simon

            I would be interested to hear how many houses each of you has built over the years?

          • A different Simon
            Posted January 8, 2012 at 11:02 pm | Permalink

            I haven’t built any am aware that the costs of complying with onerous regulation , and proving that you have to various inspectors who might take a trip on site in pairs , have added an undue amount to any activity from bulldozing a pile of earth to construction .

            My concern is with the “land” portion which as I understand it is still more than the rebuild cost in most locations .

            I am on record that :-
            – the land component of a house or business premises should be treated seperately from any enhancements on that land .
            – natural resources should be considered to be collectively owned and that the dividends from natural resources should therefore acrue to everyone (obviously not equally)
            – that land is a limited natural and should therefore be collectively owned and a land value tax paid on the value of an unimproved plot of land in that location .

            Single Acts ,

            Would you dispute that the cost of accomodation/business premises has to be reduced by at least one third and probably one third ?

            What would you do to bring down the cost of accomodation ?

      • StevenL
        Posted January 9, 2012 at 4:41 am | Permalink

        Well the thinking (long term) is that capital tied to UK property only really benefits from UK GDP growth. Whereas capital invested in ownership of multinational companies benefits from world GDP growth.

        So you might be paying a bit more for the first 10 years, but after 25 years you’ll be better off having bought equities than UK housing, provided the world as a whole outgrows the UK (which seems likely).

    • lifelogic
      Posted January 8, 2012 at 9:51 am | Permalink

      I agree the state should be neutral on rent or buy. Renting makes sense for people who move a lot whose needs may change (often the young and indeed the elderly). It used to be the case that interest tax relief made renting more expensive but now huge 5% stamp duty and reducing capital values makes it often far cheaper to rent.

      I would however charge market rent on all properties, including social or housing association – which is clearly an unfair subsidy to some for no rational reason.

      The real problems are how to enforce people to provide for their own retirement and care in old age where no house is available that can be sold. The influx of new claimants mainly from the EU, who have often not even ever contributed, and the problem of parents with young children (who clearly need and cannot afford child care in order to be able to work).

      There are many families putting off having their own children because they are paying too high taxes being used to provide for others with very many children.

      • lifelogic
        Posted January 8, 2012 at 10:02 am | Permalink

        You also, if you do loose your job, get more help with rents than you do with your mortgage under the current benefits system.

        • Mark
          Posted January 8, 2012 at 12:01 pm | Permalink

          Mortgages are at present heavily subsidised by ZIRP policy. They’re welfare for those in work or out of it. Compare the cost of a mortgage at 13-15% even with MIRAS as we had after the 1989 property bubble to today’s 3-6% without MIRAS.

        • A different Simon
          Posted January 8, 2012 at 1:28 pm | Permalink

          Lifelogic ,

          Would you agree that house prices have to halve and market rents halve with them ?

          • lifelogic
            Posted January 8, 2012 at 3:20 pm | Permalink

            Not really in some areas where there are no jobs due to over regulation. over government and over taxation they might have to. But in London and the South East they will probably rise a little over the next five years as there is a shortage of supply and more people (and thus demand). This particularly if the banks sort themselves out a bit on lending. They could rise more strongly if Cameron started to do the right things on the economy and looked as if he might win the next.

            Over regulation also make new buildings expensive with restrictive planning, large fees, stamp duty, too much OTT building control, “green” measures and inflation in building materials.

          • Bazman
            Posted January 8, 2012 at 4:43 pm | Permalink

            You forgot to mention that some areas have no work through being geographically isolated, so unless they are given an advantage which you have said in the past is unfair, will always require subsidy by benefits or taxation.

          • Single Acts
            Posted January 8, 2012 at 6:09 pm | Permalink

            Lifelogic ~ well said, many a section 106 proposal has killed a housing scheme.

            Bazman ~ get real, nowhere in the mainland UK is that remote! It’s about taxes and regulation

          • A different Simon
            Posted January 8, 2012 at 11:53 pm | Permalink

            Lifelogic ,

            I think you are sticking your head in the sand .

            At the very least the Govt should charge home owners for restricting housing in order to prop up house prices .

            When you are old aged how are you going to look the next generation in the face and tell them you supported the restriction of housing supply because it helped puff up the value of your own assets ?

            We will all lose a lot more than the value of our own assets by denying the next generation a chance .

          • Bazman
            Posted January 9, 2012 at 6:28 pm | Permalink

            A town with a single road of 35 miles going over mountainous terrain to the nearest motorway is only going to be helped economically by government contracts or by tax concessions or other subsidies including benefits. There cannot be enough private enterprise any other way to create enough employment. How would this town compete with another area geographically in the center of the country or close to London with good road and rail links?
            There is no money in being a wandering minstrel especially after living expenses have been taken out, not to mention the quality of life. Most tradesman are doing this to pay for a life in the geographically isolated area where their roots are.

          • lifelogic
            Posted January 11, 2012 at 7:31 am | Permalink

            I agree planning should be relaxed to provide more housing. You can house pigs and cows with no planning but not people!

      • Mark
        Posted January 8, 2012 at 11:53 am | Permalink

        If as you suggest rents are set at market rates for all properties, with subsidies only being offered to people in accordance with their circumstances, rather than attaching to a given property there is no problem. A low income family might get a subsidy that would allow them to live in a suitable property. Once the children left the home, that subsidy would reduce. It would be up to them whether to trade down, or to let out spare rooms. Either way the allocation of property would become more efficient. It would not matter whether someone like Frank Dobson chose to live in a modest property that happened to belong to the Council, as he would pay a full market rent for it. Likewise, the subsidy for living in expensive parts of London could be removed for those who remain workless for longer periods of time – forcing them to move to cheaper areas: I’d suggest a free train ticket to Kircudbright and Cowdenbeath.

      • Disaffected
        Posted January 8, 2012 at 12:56 pm | Permalink

        John, all three parties have continuously failed to address the problem and have in all instances made it worse. There are 370,000 households where no one since the age of 16y rs has ever worked, this is not temporary or someone falling on hard times or the deserving disabled, it is a life choice and culture. The statistical information is available to the government to act upon- it chooses not to.

        There are people who attend training through jobseekers instead of job interviews and deliberately fail. This costs us more because the taxpayer pays for the training as well as the continuing benefits. Some of the training institutions know this but want the funding, Once more, information is available, but not acted upon. How many training courses can a person fail? It is in their interest not to work because they cannot command a wage that would give them anywhere near the life style the state provides and they know they will be looked after in old life without any worry or concern how it will be funded. No responsibility nor expected from government. In fact the government encourages it by its continuing mass immigration policy.

        We all make life choices and that is based on our financial position ie where we live, work, socialise, hobbies etc. The government has undermined this notion by social engineering in every aspect of life. Housing laws mean that any build over 15 houses social housing has to be provided. Why should hard working people want to live next door to some of these people or want their children to be influenced by people with different values to their own. Instead of raising standards in all aspects of life government policy is dragging everyone down whether it be housing, education, elderly care, health care, taxation etc. The system in some aspects is worse than communism, at least all have to work.

        It no longer pays to work hard at the “all inclusive” schools because the previous and current government allow students with lower grades who come from perceived poor backgrounds to get university places in preference to those who have worked hard to get higher grades- it dumbs down our education system. Inflating grades did not work under Labour to con the public that education was getting better so now students are just selected with poor grades.

        Some of the university places are given free of charge to EU students ahead of UK students when they are our competitors. Not only is this unfair, immoral it is also economic madness. China send more students to university than the US and India combined, with an emphasis on medicine, science and engineering. Whatever we may criticise China for at least it has a plan to continue to be a power house in industry through the education of their people. One retiring Oxford academic stated he thought his college would be filled entirely with Chinese engineering students within three years. The small amount of money gained from international students is peanuts compared to what students would provide in income for their country throughout their life. The government is content to provide this charitable facility at the taxpayers expense to foreigners as well. This sentiment could equally be applied to housing and health.

        Merit and hard work should be awarded from early education the work place and elderly care. Time limits could be placed on people who find themselves temporarily out of work, financial limits set for benefits and housing. Some states in America force people, who are on benefits, to work after a period of time so it crucially changes their mindset that they have to work rather than get the money for nothing- hand up not hand out. To start with the state pays the difference between the wage and what they previously got on welfare- if the wage is lower. It was found to change the psychology, reduces the welfare bill, reduces unemployment and the number of welfare lifers.

        • uanime5
          Posted January 8, 2012 at 6:14 pm | Permalink

          Are most of the house where people haven’t worked located in areas of high unemployment? Do you suppose there could be a connection between lack of jobs and high unemployment?

          Training isn’t provided for those on Job Seekers Allowance (JSA) because if you’re in training you’re not available to start work immediately, making you ineligible for JSA. So in effect the Government penalises anyone who tries to acquire the skills they need to get a job.

          Given that most wages above minimum wage give you more money than unemployment benefits most jobs provide a better life style the state provides.

          What’s your alternative to housing the unemployed in neighbourhoods where people work? Building sink estates where the unemployed all live just makes the problem worse as being unemployed become the norm, rather than the exception.

          Those who get high grades in schools with a terrible reputation for teaching tend to be better at learning than those who get the best grades because they attended the best schools with the best teachers.

          EU students have to pay the same levels of tuition fees as the local population, which is why the number of EU students coming to the UK sharply fell when the UK increased tuition fees to £9,000. Those from outside the EU have to pay even more.

          The system you described in America doesn’t work. Which is why the US has so many soup kitchen and places where the poor can buy cheap food. It has also resulted in a lot of people becoming homeless.

          • Disaffected
            Posted January 9, 2012 at 3:18 pm | Permalink

            Once more, a lot of drivel without fact.

          • uanime5
            Posted January 9, 2012 at 7:07 pm | Permalink

            So you don’t have any rebuttals despite the fact that I destroyed all your arguments.

          • Bazman
            Posted January 10, 2012 at 5:09 pm | Permalink

            This is exactly what they want. Sink estates where the poor can be contained and policed.

      • lifelogic
        Posted January 8, 2012 at 1:46 pm | Permalink

        Good news for a change:- I see Cameron is finally minded to give shareholders more power over Directors’ and top staff’s pay levels. Let us hope it gives shareholders some real power not just a take it rubber stamp vote.

        It also needs to be able to reduce pay level without legal claims as many are already paid over ten times their true worth. There is a similar problem at the BBC and some quangos which needs addressing. Many are on about ten time the going rate and worse still have pensions linked to these rates.

        • BobE
          Posted January 8, 2012 at 6:17 pm | Permalink

          Nobody paid by the state should earn more than the PM. Councils Quangos Civil servants, all of them.
          State pension payouts shoud be capped at 50k per annum. Any more is returned to the treasury.
          BobE

        • Bob
          Posted January 8, 2012 at 6:50 pm | Permalink

          From David Vance at Biased BBC blog
          “With State Sector workers earning more than those in the Private sector that funds them, I’m surprised the Prime Minister is not looking to curtail the excesses of that sector. For example, is a BBC presenter worth a salary package worth hundreds of time more than the man or woman who makes the tea in the BBC canteen?”

          • lifelogic
            Posted January 8, 2012 at 10:13 pm | Permalink

            I suspect the chap who makes the tea in the BBC canteen and the engineers who run the technical equipment would probably talk more far sense on politics than the endless supply of lefty BBC journalists do.

          • lojolondon
            Posted January 9, 2012 at 9:50 am | Permalink

            Typical Cameron – talking about cutting exec pay in the private sector (where he has no interest, no bill to pay and no reason to have a say) while NOT cutting pay in the exec level of the public sector (where he IS responsible for paying the bills, laying down guidelines, and he DOES have a say, AND WHICH HE PROMISED TO DO!)

          • APL
            Posted January 10, 2012 at 12:21 pm | Permalink

            Lojo: “while NOT cutting pay in the exec level of the public sector”

            Thank you, a very good point.

            There can be no justification for the town clerk ( as correctly used to be called nowadays the CEO ) getting paid £150k to £250k not counting expenses.

            It is simply immoral.

        • Javelin
          Posted January 8, 2012 at 9:25 pm | Permalink

          Directors huge pay rises are pure greed

      • davidb
        Posted January 8, 2012 at 6:29 pm | Permalink

        We had a discussion earlier this week on what a market rent actually is. If the state pays housing benefit to people it distorts the “market”. I heard a chap on radio 4 last year complain that if his tenants were not given tens of thousands in housing benefit then he wouldn’t be able to keep up the huge mortgage payments on his flats in Central London he was BTL ing. So who is it we are subsidising exactly? What would the true market bear if some entrants were not feather bedded by the taxpayers?

        • zorro
          Posted January 8, 2012 at 10:47 pm | Permalink

          The scale of this has to be seen to be believed. BTLs have been subsidised by the state for years to provide overpriced accommodation to benefit claimants. As others have said, property is clearly overpriced in relation to income. If the subsidy was removed the price would fall, and hopefully, less controls would be put on new accommodation. Then, people could be taxed less and they could look after themselves more easily, spend some more money, and we might get back to a more balanced economy.

          Instead, we have the nonsense of QE and ZIRP to subsidise investors in housing, whilst strangling any potential investment in our productive capacity….the British disease with this pathetic obsession with houses.

          zorro

        • Mark
          Posted January 9, 2012 at 12:30 am | Permalink

          Follow the chain through…

          Landlords are clearly being subsidised – as is the value of the equity in their properties. In turn the subsidy to the mortgage payments subsidises the banks who would otherwise face non-performing mortgages, and a strong likelihood that repossession proceeds wouldn’t cover the outstanding principal.

          It would be unfair on tenants to be thrown out because of banks pursuing repossessions because the landlord paid too much for their house and the bank lent too much against it. That is one reason why I think that BTL should have a much lower limit on maximum LTV – as indeed it used to before the Brown deregulation.

    • Gran Fondo
      Posted January 8, 2012 at 10:29 am | Permalink

      @ StevenL. The problem I can see with your strategy is that compared to taking a mortgage over 25 years, you have to rent for life (at what cost over the average lifespan?) or build up enpough capital in your share portfolio to buy something outright. This might be within the scope of some people but I would suggest most of us prefer the relative security of bricks and mortar and the certainty that when the mortgage term is completed we own the house. The value of a house might rise and fall, but given that you always have to live somewhere then that’s almost irrelevant.

      • lifelogic
        Posted January 8, 2012 at 1:51 pm | Permalink

        Yes but you job may move, you may need a bigger or smaller house or one without stairs. Renting is usually cheaper and more flexible initially at least and for short periods of less than say about 5 years due to stamp duty and legal/agents costs – but you need to invest the money saved and not just spend it as most do.

        • Robert Christopher
          Posted January 8, 2012 at 4:04 pm | Permalink

          The money could be invested in a company that rents out housing to those who don’t want to buy a house or flat!
          There will be overheads, of course, but you must agree that it a logical plan.

          • lifelogic
            Posted January 8, 2012 at 7:38 pm | Permalink

            Indeed if you have no capital wealth then you either have to rent the house or you rent (borrow) the money and buy the house. With the former the rents tend to be less initially that 100% mortgage but usually increase with inflation/wages.

            With the later buying it tend to be more initially but you are forced to save through repayments and inflation. If you rent and do force yourself to save as well you are probably better off. Unless you are going to stay in the house for a very long time. As you save stamp duty (up to 5%), lang reg fees, agents fees, two lots of legal fees, building insurance/maintenance costs and 20% vat on most of these too. Renting is also far more flexible as needs or desires change. You pay your money and take you choice they government are fiscally pushing renting at the moment due to the absurd stamp duty taxes. At least they (almost) got rid of HIPS.

      • nicol sinclair
        Posted January 8, 2012 at 4:44 pm | Permalink

        @Gran Fondo. I was in the Army paying rent for my married quarter. I suddenly realised that, for the same outlay, I could buy a house in Warminster. I did so. And never looked back…

      • BobE
        Posted January 8, 2012 at 6:19 pm | Permalink

        By buying I hope to pass on something to my kids. It will be the most help that I can give them.

      • davidb
        Posted January 8, 2012 at 6:39 pm | Permalink

        But even although we are fed a fantasy inflation figure, inlation has never gone away. The house “investment” is more akin to paying rent then getting the underlying assett free after you’ve rented it for 25 years. You are probably safer buying the place than renting it as long as you are likely to stay employed.

    • A different Simon
      Posted January 8, 2012 at 10:51 am | Permalink

      Stevenl ,

      Agree that if you are borrowing £100k with an expectation of paying interest on it over 20-25 years that you need to feel you are getting something worth living in .

      In order for the UK to move forward I think we need to have a complete rethink on housing just as Germany did in 1945 .

      The average house in the UK needs to cost around £90k in order for people to save enough money to provide for their old age . More basic accomodation need to be less than that .

      All that high prices do is ensure people give more of the fruits of their labour to the financial services industry in the form of excessive margins on interest payments on oversized loans .

      Imagine how many more small businesses we would have if the premises were only half the cost .

      My contention is that ownership of natural resouces must be collective so that the dividends accrue to the whole country , not just the few , and that land should be categorised as a limited natural resource .

      A land value tax should be charged on the unimproved value of the land .

      This will enable more damaging taxes elsewhere (ie on employment) to be lowered and discourage people from hoarding land so that they release it which will increase supply and lower prices .

      • Andy
        Posted January 13, 2012 at 8:17 pm | Permalink

        I think that people need to over their obsession with living / owning a house, rather than apartments.

        The same amount of land in the UK that could hold 10 4 bedroom houses could hold 20 or 30 4 bedroom flats. These would need to built for families (i.e. large rooms).

        Nice communal grounds / BBQ / Play areas would of course be needed.

    • libertarian
      Posted January 8, 2012 at 11:13 am | Permalink

      Dear Steven L

      What utter rubbish, so many people spout this kind of nonsense now. Its very simple. You pay rent the money disappears that’s it. You buy somewhere, you own an asset of some value. You do the arithmatic accordingly when you enter into the mortgage agreement.

      You’d have to have a very special reason to make renting more long term viable than purchase

      • nicol sinclair
        Posted January 8, 2012 at 4:51 pm | Permalink

        @libertarian. Agreed. However, in the current circumstances, the value may be (or probably is) less than the capital expenditure…

      • lifelogic
        Posted January 8, 2012 at 7:42 pm | Permalink

        Not true you are just forcing in to saving when buying – when you rent you tend to spend what you save on extra consumption. Also rent includes building insurance and maintenance and no stamp duty legals to pay. Renting is usually better in the short term and flexible.

        • zorro
          Posted January 8, 2012 at 10:51 pm | Permalink

          Absolutely, buying short term and then selling can be a right pain in the ar**….., and you may well lose money if you do it now or in the near future.

          zorro

      • StevenL
        Posted January 9, 2012 at 4:46 am | Permalink

        But mortgage interest = rent on money. Look at the growth in dividends on blue chip companies like Johnson & Johnson, Chevron Texaco, Lockheed Martin etc.

        Sure, you can’t get a 100% mortgage on equities. But now, borrowing 3.5 times income, the deposit you need in the south means you need so much capital as a deposit, you might as well just buy equities with it (unless you think UK housing will outgrow multinational companies for the next 25 years) and use the dividends toward rent.

    • Mark
      Posted January 8, 2012 at 11:45 am | Permalink

      Overpaying for a home at bubble prices is imprudent, as is treating a mortgage like an ATM.

    • Bob
      Posted January 8, 2012 at 1:17 pm | Permalink

      You should also consider the following:

      1. Dividends are taxed ?
      2. Your share portfolio could go pear shaped (think Bradford & Bingley) ?
      3. How much would you be prepared to invest in home improvements on a rented property?

      • StevenL
        Posted January 9, 2012 at 4:48 am | Permalink

        1. Not in an ISA they are not.
        2. Yes it could, there is a risk.
        3. £Zero, I’d just buy more equities, bonds or ETF’s.

        • Bob
          Posted January 9, 2012 at 9:03 am | Permalink

          @Steven
          Re dividends – ISA dividends are taxed at 10%.
          It’s deducted at source and not refundable.

    • Bazman
      Posted January 8, 2012 at 4:48 pm | Permalink

      Only by owning your house outright can you be in charge of your own destiny and not at the whim of a landlords or employers.

      • lifelogic
        Posted January 8, 2012 at 7:43 pm | Permalink

        The employer makes you redundant and you then own a house in the wrong place!

        • Bazman
          Posted January 9, 2012 at 7:40 pm | Permalink

          Not if you live in an area where there is work and good transport links. The tradesman moving around is mainly now limited to the ones in areas of high unemployment as they cannot get any work. The rates are so low as to make it not worthwhile. It’s not ‘petit bourgeois’ to give yourself a base to work and protecting your family from rent of property or money and interest rate rises and therefore supporting everyone’s else’s business. You are also not panicked into taking the first offer of work, leading to a better job closer to home. Interesting to see employers faces when they realise that you are not desperate. Most don’t like it..Ram it.

      • zorro
        Posted January 8, 2012 at 10:53 pm | Permalink

        How very ‘petit bourgeois’ of you Bazman!

        zorro

    • Iain Gill
      Posted January 8, 2012 at 10:20 pm | Permalink

      I agree, especially for people who have a trade which demands that they move around frequently

      • Bazman
        Posted January 10, 2012 at 8:04 pm | Permalink

        What trade will that be? Wandering minstrel? Self employed accountant or maybe a self employed cleaner?

  2. Antisthenes
    Posted January 8, 2012 at 8:03 am | Permalink

    One thing is certain the UK welfare system is far too generous so it creates an environment that makes earning a living by other means less attractive. It attracts a disproportionate numbers of economic migrants and is open to large scale abuse. This situation is now untenable given the weakness of the UK economy. It is using resources that the UK does not have and it is an obstacle to economic growth. IDS and the DWP are addressing the problem which tackles many of the inadequacies of the current system but is going to take many years to introduce. The interim solution has to be to continue to reduce the value of benefits. It should be sufficient for basic needs and no more, it should be means tested so that it is targeted at the most in need and for migrants from outside the EU subject to a qualifying period of 5 years.

    • Mike Stallard
      Posted January 8, 2012 at 9:57 am | Permalink

      I could not agree more.

      If you simply declare that anyone, (yes anyone, even with three wives and fourteen children, two brothers and aged parents to go with it), gets the full Monty when it comes to benefits, (hospital treatment, pension, free education, car allowance, housing benefit, social service provision, full citizenship, the vote in fair elections), then people will come from all over the poorer parts of the world looking for things they can only dream of.

      And any State that is stupid enough to do this goes bankrupt very quickly. And lawless. And the people who have been paying for all this go homeless, get poorer and live in run down areas where they murder people just to survive.

      • Bob
        Posted January 8, 2012 at 1:26 pm | Permalink

        @Mike Stallard
        “…any State that is stupid enough to do this goes bankrupt very quickly. “

        As we found out, and yet we’re still increasing benefits and foreign aid.
        Looks like the UK’s bankruptcy is the intention.

    • Bob
      Posted January 8, 2012 at 1:21 pm | Permalink

      Antisthenes
      “The interim solution has to be to continue to reduce the value of benefits.”
      They just increased them by five percent !

    • nicol sinclair
      Posted January 8, 2012 at 4:54 pm | Permalink

      agreed

    • uanime5
      Posted January 8, 2012 at 6:19 pm | Permalink

      Given that benefits are barely sufficient for basic needs they don’t need to be cut.

      • Bob
        Posted January 8, 2012 at 10:37 pm | Permalink

        uanime5
        Would you consider cigarettes, alcohol, foreign holidays and smartphones as basic needs ?

        • uanime5
          Posted January 9, 2012 at 7:08 pm | Permalink

          Please explain what this had to do with anything? Are you claiming that those on benefits shouldn’t be able to save their money and spend it on what they want?

          • Bob
            Posted January 9, 2012 at 10:59 pm | Permalink

            You commented that“benefits are barely sufficient for basic needs.”

            So now your saying that they have money left over after paying for their basic needs to buy those other things ?

            Hardly the same as “barely sufficient for basic needs” then?

            There are plenty of people who work every day but still cannot afford those things, why should they pay for others to have them?

        • Bazman
          Posted January 9, 2012 at 7:42 pm | Permalink

          What about food above subsistence levels Bob.

  3. Gary
    Posted January 8, 2012 at 8:35 am | Permalink

    No problem taking care of those who fall on hard times or cannot care for themselves, the problem is the system that forcefully takes from the productive to redistribute is administered by people who are prone to graft and self enrichment. That is because our so-called democracy does not work.

    What we need is either a trust in the basic goodness and kindness of people to give willingly to charity, or failing that, if we feel we cannot trust people and need to confiscate some of their earnings as tax, then we have a direct democracy where the people who administer the tax redistribution can be replaced at any time by the electorate.

    This nonesense where a govt with close to 30% of the vote gets 100% of the power locked in for 5 years is a recipe for skullduggery.

    • A.Sedgwick
      Posted January 8, 2012 at 2:24 pm | Permalink

      2011 Fixed-term Parliaments Act became law a few weeks ago and requires a two thirds majority to end a Parliament early. The arrogance and lack of democracy displayed by Cameron and Clegg for their own egos is breathtaking.

      • BobE
        Posted January 8, 2012 at 6:21 pm | Permalink

        They only have 3 years and 4 months. Then oblivion I suspect. (Sorry John).

  4. JimF
    Posted January 8, 2012 at 8:47 am | Permalink

    “the three main political parties do not think benefits should be given to the individual who simply will not work, despite work being available”

    Do you really believe this?

    My experience is the converse-the individual will work so long as the money available is greater than the sum of benefits and the other lost opportunities of being on benefits.

    • lifelogic
      Posted January 8, 2012 at 9:54 am | Permalink

      Indeed there needs to be an incentive to work. There so often is none what so ever.

  5. Johnny Norfolk
    Posted January 8, 2012 at 8:52 am | Permalink

    It just boils down to the deserving poor and the undeserving poor. No one who is able bodied should be given long term money for nothing.

    • alan jutson
      Posted January 8, 2012 at 9:50 am | Permalink

      Johnny N

      You sum it up in a few words.

    • lifelogic
      Posted January 8, 2012 at 9:56 am | Permalink

      Indeed it is not good for them or their children. It encourages long term dependence and what ever they get they are never satisfied anyway.

    • A different Simon
      Posted January 8, 2012 at 10:53 am | Permalink

      I think that maybe there is an obligation to provide work-fare .

      What is your opinion Johnny Norfolk ?

      • libertarian
        Posted January 8, 2012 at 5:36 pm | Permalink

        Work-fare meaning what exactly?

        • zorro
          Posted January 8, 2012 at 10:59 pm | Permalink

          Workfare is perfectly reasonable for people who have never paid any contributions into national insurance, and should be considered after an extended period of unemployment. There is lots of socially useful work that could be done to avoid idleness to incubate or spread as Beveridge might have said…..

          zorro

          • A different Simon
            Posted January 9, 2012 at 10:03 am | Permalink

            Good answer Zorro , much better than I could have come up with .

            Perhaps in the short term it should remain sufficient to just prove you are looking for a job .

            The solution to so many of these problems is getting towards full employment – as Beveridge understood completely . Equality and employment laws become less important in an employees market because people have more of an opportunity to move to a new job .

            The real damage to this country has been done by the people at the top .

            We need to be careful that we don’t blame it on those unfortunate to be at the bottom .

      • uanime5
        Posted January 8, 2012 at 6:21 pm | Permalink

        Unless work-fare leads to a job that pays minimum wage it will just make the situation worse. After all why would an employer create jobs when they can hire people on work-fare for a fraction of the cost.

        • zorro
          Posted January 8, 2012 at 11:00 pm | Permalink

          That could be avoided when setting up a workfare scheme.

          zorro

          • uanime5
            Posted January 9, 2012 at 7:10 pm | Permalink

            No it can’t as it’s the consequence of setting up a workfare scheme. Basically every job done for free by those on workfare means one less paid job available.

  6. ITF_Tory
    Posted January 8, 2012 at 8:54 am | Permalink

    John, what about the problem with means testing itself? As I understand it (and I could be wrong here), the means testing that we do in this country takes account of savings but not of material assets and not of past earning history. So, if two people have earned identical salaries over their lifetime, and one has saved all his disposable cash and the other has spent it all on cars, electronics, holidays, etc, and has nothing in savings, then the means test will end up giving the bigger benefit to the spender and less to the saver. So, not only has the spender enjoyed a nicer lifestyle, he gets rewarded for not saving anything. The saver gets punished for being prudent. If this is the case, then why should anybody save anything at all? We should all simply spend all our money.

    How can this problem be solved?

    • lifelogic
      Posted January 8, 2012 at 10:00 am | Permalink

      Indeed the problem in a nut shell. Many know this only too well and exploit the unfair system in exactly this way.

    • alan jutson
      Posted January 8, 2012 at 10:48 am | Permalink

      ITF_Tory

      “How can this problem be solved”

      Perhaps everyone should be entitled to the same benefits.
      No means testing at all, if Benefits are to be reduced to a much, much lower level (see post 10.26am) where only basic comforts and needs are funded by the State.

      The savings in administration would be large, once an initial claim had been fully verified.

      • A different Simon
        Posted January 8, 2012 at 10:56 am | Permalink

        Alan Jutson ,

        I heard that the administration of means testing of old age benefits cost £18billion a year .

        Did not manage to obtain clarification that this was only the means testing portion of the administration costs and not the whole administration costs .

        Agree that benefits should be universal and not means tested .

  7. Paul Danon
    Posted January 8, 2012 at 9:00 am | Permalink

    You identify the problem and describe a solution (means-tested benefits) but I fear you may miss the key point that at least some people are making when they ask you that question. Few of us would deny that there were needy people, and that the less needy should be screened-out of being helped. The assumption on which you and the main parties seem unwittingly to proceed is that the prime (or exclusive) way of funding any relief should be taxation, the prime deliverer the state.

    That approach assumes that my problems belong equally to all the other 60 million people in the UK (or at least to those of them who pay tax). However, it could be said that my family have a greater interest in my wellbeing than strangers at the other end of the country. If I’m a child, I may well have been conceived by parents who wanted me and who ought to have known about the responsibilities of parenthood when they did that.

    Other networks can have disproportionate interests in someone’s welfare. Traditionally, a parish, town or village would care for its poor; trades and professions had benevolent funds; and individuals could save, and take-out insurance against hard times. All that can still happen.

    A major reason why some people are welfare-dependent and others resent paying tax to enforce that dependency is that we too often treat poverty and illness as though they had been nationalised.

    • Robert K
      Posted January 9, 2012 at 3:21 pm | Permalink

      Good points

  8. StevenL
    Posted January 8, 2012 at 9:14 am | Permalink

    Another point on saving:

    In nations where they do save, their banks have just lent it all to the imprudent anyway. Germans have lent their savings to the Italian government, Chinese workers to the US government. Just a thought.

  9. APL
    Posted January 8, 2012 at 9:16 am | Permalink
    • APL
      Posted January 8, 2012 at 9:37 am | Permalink

      I thought I had embedded that link in accord to the techie directions at the foot of the comment box.

  10. Stephen Almond
    Posted January 8, 2012 at 9:34 am | Permalink

    And how do we address the fact that the number of ‘disabled’ people has increased threefold over the past 30 years?

    • Antisthenes
      Posted January 8, 2012 at 12:53 pm | Permalink

      Deny access to the internet to the unemployed so that they cannot look up the symptoms they need to fake to be given disabled status. That of course is a tongue in cheek remark however given that the numbers seem very high it must suggest that wide spread abuse of the system is taking place.

    • Bob
      Posted January 8, 2012 at 1:34 pm | Permalink

      It always amazes me how the mere thought of work can bring on backache or sciatica.

    • Jon
      Posted January 8, 2012 at 2:00 pm | Permalink

      Exactly.
      When I started commuting into london I saw plenty of people with little imperfections getting off the train. I kind of liked that as we were all the same doing the same thing together. That all changed, havn’t seen a person with a club foot or crooked arm for many years. I do see the seriously disabled struggling to work sometimes with heroic with determination. I guess the person with an inch difference between the length of one leg and the other is at home on benefits.

      Do we have the do-gooders to thank for that? Also I remember seeing an explosion in disabled parking spaces at B&Q, Homebase, Wickes, said it all really.

      • davidb
        Posted January 8, 2012 at 6:52 pm | Permalink

        When I was a kid we got little sugar cubes to stop us getting polio. There were still people with calipers on their legs from that disease then. Perhaps some of those you once saw had conditions our improved health and hygiene have eliminated. Still others may have been screened out of the population prior to birth.

        I do concur that there seems to be abuse of the blue badge system – and there are vast numbers of cars available which cost far less than the figure I heard recently was going to be the motability limit – but there may be other reasons than excessive welfare for a lack of physical disabilities in those you see on your commute.

    • uanime5
      Posted January 8, 2012 at 6:25 pm | Permalink

      A better understanding of disability. 30 years ago mental illness was poorly understood and Carpal tunnel syndrome was unheard of.

      • zorro
        Posted January 8, 2012 at 11:02 pm | Permalink

        Do you think that alone explains the exponential growth in ‘sick’ people, bearing in mind technological and medical advances, and healthier, cheaper foods to eat.

        zorro

        • uanime5
          Posted January 9, 2012 at 7:14 pm | Permalink

          Medical advances haven’t cured many conditions such as depression, Carpal tunnel syndrome, dyslexia, IBS, cerebral palsy, or CFS. They’re better understood and some can be controlled but they aren’t curable.

          In short there are more sick people because more conditions are recognised as disabilities.

  11. Martyn
    Posted January 8, 2012 at 9:35 am | Permalink

    John, you ask “How tough should the state be when assessing eligibility for benefits?” Very much tougher that it is at the moment. There needs to be a hugely simplified set of rules through which it is far too easy for claimants to obtain support to which they are not entitled whilst ensuring that those those in genuine need are properly supported.

    Strict upper limits should be set for all immigrants, legal and otherwise, who arrive and immediately claim housing and financial support to reduce the attractiveness of the UK to purely economic migrants.

    There should be one decision maker (and a deputy) at senior level to review and decide every single claim, instead of as at the moment decisions being made at lower levels by various juniors attempting to bring together a raft of sometimes disconnected evidence provided to them by various different agencies.

    The right for people to choose their own accommodation, at no matter what the cost to the taxpayer, must be removed. Recent action by the government in setting a rental ceiling figure is a laudable step and may soon drive down cost to the taxpayer.

    You also ask, “How do we answer the question why should I be prudent?” Personally, I would say “because I want to be as independent for as long as possible of the dead hand of the State and retain my right to choose what is best for me and my family. In short, within the Law my personal freedom to do what I want, when I want, without being dependant on the State for support or approval.

    • uanime5
      Posted January 8, 2012 at 6:29 pm | Permalink

      Where exactly are these immigrants going to stay for the years it will take to assess their claim (longer if people at a senior level have to review the hundreds of thousands of claim the UK has every year)?

      • zorro
        Posted January 8, 2012 at 11:03 pm | Permalink

        ‘Years to assess their claims’….Why?

        zorro

        • electro-kevin
          Posted January 9, 2012 at 9:41 am | Permalink

          Zorro 11.03

          No one dare tackle political correctness. (Further comments on race and crime without proof are removed-ed).

        • uanime5
          Posted January 9, 2012 at 7:18 pm | Permalink

          Well if 1 million immigrants try to get into the UK each year this means 2,740 cases have to be reviewed each day. So if senior managers have to review each case, rather than junior ones, it will take a lot longer as there are fewer senior managers.

          • zorro
            Posted January 9, 2012 at 10:39 pm | Permalink

            It’s nowhere near that number applying for housing, and a lot of the time foreign nationals are not entitled to it. It is the legal aid system which supports too many spurious attempts to try and get housing. Unfortunately, the authorities do not see these cases through to the end because of the exhorbitant cost of pursuing these cases.

            The government needs to be a lot tougher on entry criteria and significantly bear down on long term arrivals.

            zorro

      • Mark
        Posted January 9, 2012 at 12:36 am | Permalink

        Abroad?

        • APL
          Posted January 9, 2012 at 8:07 am | Permalink

          Mark: “Abroad?”

          But not at the British tax payers expence, I hope?

        • Martyn
          Posted January 9, 2012 at 8:42 am | Permalink

          Unless they have a clear and demonstrable right to enter the UK, stop them at the UK borders. Can’t be done, of course, because of the army of UK-based Human Rights lawers and the rejection by those other countries through which they have passed to take them back….

  12. oldtimer
    Posted January 8, 2012 at 9:45 am | Permalink

    All good questions because the prudent and the savers are taken for suckers under the present arrangements. To your questions I would add another one. How should “poverty” be defined and who should define it? My impression, and I am open to correction, is that “poverty” is defined very generously and, in the national circumstances, unrealistically.

    • Bob
      Posted January 8, 2012 at 1:36 pm | Permalink

      The term relative poverty was designed to ensure that we can never abolish it, and maintain the poverty industry in clover.

      • lifelogic
        Posted January 8, 2012 at 7:47 pm | Permalink

        Indeed if they have accommodation, food, heat, light and health care they are very rich in world terms.

        • Bazman
          Posted January 9, 2012 at 7:46 pm | Permalink

          You are comparing Britain with the third world? This is like saying we are better off than we where in the 17th century and should be grateful. Not real.

      • zorro
        Posted January 8, 2012 at 11:04 pm | Permalink

        Agreed

  13. Tedgo
    Posted January 8, 2012 at 9:52 am | Permalink

    I would do away with all benefits including universal child benefit and introduce a realistic citizen income allowance, paid to every adult over the age of 18, whether they worked or not.

    It would be administered through the tax system to keep costs down. Nothing else would be available, other than for the truly disabled who could receive an additional allowance based on real needs.

    To qualify for the citizen income allowance one would have to have lived in the UK for probably 12 years or more.

    • Ian
      Posted January 8, 2012 at 8:55 pm | Permalink

      Hear hear. Imagine the taxpayer savings – all those benefit bureaucrats made redundant. We could spend the money on benefits for broken banks. Just kidding! I mean we could reinstate the Major government’s brownfield reclamation grants, banned by Commissar Monti for giving an unfair advantage to British industry. This means leaving the EU.

      Of course the ex-bureaucrats would need jobs to move into, so a land value tax to replace business rates (as mentioned in a previous comment) would, by lowering rents through the law of supply and demand, create new enterprises and hence new vacancies. (With the help of the currently-banned brownfield reclamation grants.)

    • zorro
      Posted January 8, 2012 at 11:07 pm | Permalink

      I am attracted to this option, and have seen several studies on its potential implementation. I think that when the Tories thought about it, they (and the Treasury) were concerned about up front costs (short sighted in my view). It should have been implemented in 1997.

      zorro

  14. Mike Stallard
    Posted January 8, 2012 at 9:59 am | Permalink

    I have a friend in Singapore who has saved and saved for his house all his life (he is by no means rich) and now has a heart problem.
    He realises that he has just so much social capital left. It is sufficient to survive, but if he is not careful, then it is the street.
    So he is careful. Very careful.

  15. Julie Innis
    Posted January 8, 2012 at 10:02 am | Permalink

    There are still too many incentives not to work or provide for your old age. Not only does the state look after those who don’t look after themselves but it also in many case makes them better off whilst still continuing to punish the prudent.

    We are a classic example of it not being worth ‘doing the right thing’. As a woman in my late fifties who will now have to wait a few extra years to receive my state pension, we live on my husband’s state and private pensions but after paying 10% of his salary into a private pension fund for over forty years, we now find we are worse off than if he hadn’t bothered. Not only has George Osborne only raised the over 65’s personal tax allowance by £450 compared to the much trumpeted £1,00 for under 65’s shamefully drawing more pensioners on modests incomes into paying income tax when they are already having to live off their small savings in many cases but we can also get no help with council tax. After income tax and a whopping £2,040 has been paid from his £13,000 combined pensions, we are worse off than if we hadn’t bothered and were in receipt of pension credit instead which will at least go up annually unlike my husband’s non-index linked pension. Nor do they and others on benefits have to to pay the punitive and unfair council tax which takes no account of ability to pay and I don’t see the government doing anything to address this unfairness in fact I actually received a reply to a letter from Eric Pickles’s department stating they had no intention of helping pensioners with their council tax unless of course they are on benefits. Even under a Conservative government, why bother to do the right thing and provide for yourself when you can be better off relying on the state instead ? They are are no better than Labour at punishing the thrifty and rewarding the feckless.

    Reply: We are of course living under a Coalition government, not a Conservative one. Mr Clegg and his party seem keen to increase benefits to those who have not saved for the retirement. The government has frozen Council Tax, which helps a bit.

    • JimF
      Posted January 8, 2012 at 6:28 pm | Permalink

      Unfortunately 10% of salary over 40 years is only 4 years’ salary. This would in any event be unlikely to be enough to fund the average life in pension at more than 20% of your husband’s salary.

    • Julie Innis
      Posted January 8, 2012 at 8:28 pm | Permalink

      Well isn’t it about time John that Mr. Cameron stopped letting the tail wag the dog because I am sure there are many others like myself, a lifelong Conservative voter who feels totally disillusioned. It’s about time Mr. Cameron stopped pandering to the Lib Dems and letting them get their own way on everything and started showing some Conservative policies of which we have seen far too few so far. The Lib Dems are going nowhere, I only hope the same can be said for Conservative voters.

  16. Mazz
    Posted January 8, 2012 at 10:04 am | Permalink

    How tough? I believe that State Benefits should be enough for a person to live on, i.e. food and clothing and have a roof over their head and no more, except for extra discretionary help in extraordinary circumstances.

    People are not owed a living. If people on benefits can afford to live the same life-style as a person who has a job, they are getting far too much. They should also have to do community work for a few hours a week for the money, in between looking for a job.

    People who cannot earn their own living because of a disability, deserve to have at least as decent a standard of living as a person earning the minimum full time wage, with extra help in extraordinary circumstances.

  17. Alex
    Posted January 8, 2012 at 10:06 am | Permalink

    I must disagree with you on means testing of benefits; I think that most should not be means tested. After all, no-one seems too worried about the state pension being a universal benefit.
    I know that this will push up the direct costs of the benefit. However, it will hugely reduce the cost of administration and the hassle for claimants. It will discourage splurging away money (or hiding it) to be eligible for benefits. It will remove the penalty for renters where cash assets are counted but house equity isn’t. It will also stabilise the economy by incentivising saving when times are good (one of the main reasons why the economy is still weak is that that individuals have been reducing the debts run up during the boom, unlike HMG.) The current system encourages people who think they may lose their job to spend money, which is crazy.

    • A different Simon
      Posted January 8, 2012 at 11:08 am | Permalink

      “no-one seems too worried about the state pension being a universal benefit.”

      The state pension must not be considered a benefit it should be considered the cornerstone of everyones saving for old age .

      The state pension must be administrated completely independently of the Govt and have an electable board of trustees .

      State pensions contributions should be the first thing taken out of National Insurance Contributions and only what is left should be available to politicians and civil servants .

      This is another reason why N.I. should not be rolled into income-tax ; it is for a specific purpose and should not be misappropriated as general taxation .

      State Pension is the only provision for old age for over half the population . They simply will never earn enough to save a meaningful amount for their old age .

      Increasing the state pension to £7,000k is a step in the right direction but it needs to be increased further to a liveable amount so that all those means tested old aged benefits can be completely scrapped .

      Needless to say more money needs to be set aside during peoples working life and the cost of accomodation needs to be brought down to enable this to happen .

      Reply: If you wish the state pension to be funded through hypothecated contributions you will soon discover the contributions do not buy the size of pension you like.

      • A different Simon
        Posted January 9, 2012 at 2:22 pm | Permalink

        J.R. ,

        I agree that it is a problem and that hypothecated contributions alone may not be enough given we are running a deficit and that the income tax take barely covers the benefits bill .

        The problem of provision for old age was completely foreseable 30 years ago which was when measures should have been taken to address it .

        Bit late in the day now and our populate has increased by at least 7 million people .

        No matter how you look at it the sums do not add up either at national level or individual level .

        Clearly the market has failed to provide private sector workers with any s0rt 0f worthwhile pension schemes .

        The NEST scheme may be a step in the right direction but as it stands the cost of living is so high that people do not have a surplus to save .

        I’m sure neither of use are happy with the current solution to provision for old age : means tested benefits .

        J.R. , could you tell us your thoughts on pensions provision for the self employed , unemployed , employees in the private sector please ?

    • sm
      Posted January 8, 2012 at 1:18 pm | Permalink

      How can you control the benefit bill without controlling immigration? 500,000 persons gross each year. (Daily mail link below)

      http://www.dailymail.co.uk/news/article-2083394/For-years-YOUVE-paid-2-000-week-rents-But-housing-benefit-gravy-trains-hit-buffers.html

      IMHO a tax system which favours leverage and multinationals versus small domestic business. (Tax research link)

      http://www.taxresearch.org.uk/Blog/2012/01/06/how-companies-avoid-tax-a-quick-summary-in-8000-words/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+org%2FlWWh+%28Tax+Research+UK+2%29

      We have indirect taxes to feed bureaucracy and essentials rising. eg Council Tax has to be reformed to cap it at a % of income! The only way to limit their growth and force efficiency.

      And we worry about means tests? Capping the benefits at a low but subsistence level is a better solution until we are solvent as a nation.

      A ‘basic but low’ non taxable citizen income (non-means-tested) with flat tax on other income/capital gains must be the way to go. Means testing is the number 1 problem. A billionaire is a citizen. Why make a system complicated when it can be simplified of administration and self serving bureaucracy. I shudder at the thought of DSS and Council Tax.

      Our system of means tests is nuts, (its a short term measure to reduce a growing bill and pushing the problem onto a further parliament).

      The banks need to be fixed so that increasing debt to gain interest income isnt a one way bet for them. Housing costs need to reduce! (Increase supply/allow interest rates to rise slowly and discourage a tax encouraged rentier market)

      • A different Simon
        Posted January 9, 2012 at 2:27 pm | Permalink

        Quote “Our system of means tests is nuts, (its a short term measure to reduce a growing bill and pushing the problem onto a further parliament).”

        Quite , if 90% of applicants qualify for a benefit then it’s unlikely to be worth the expense of means testing to trap the other 10% .

        “solvent as a country” , what an idyllic thought .

    • uanime5
      Posted January 8, 2012 at 6:34 pm | Permalink

      Table 2 shows that in 2008 the total cost of welfare payments was £137 billion and table 5 show the cost of administering these benefits was £5.8 billion. The administrations fees are a small price to pay compared to having to give benefits to everyone.

      http://www.dwp.gov.uk/docs/annexes-22816.pdf

      • sm
        Posted January 10, 2012 at 7:21 pm | Permalink

        100,ooo FTE approx at DWP ,thats £58K per person if that is a fully loaded cost. I suspect a lot of other costs are missing?

        Still £5.8billion is not insignificant.

        Think aspiration and increased economic activity, think of the positive impact it may have to aid positive contributions. That ‘on the books’ temp job for the odd few hours might be attractive and also aid confidence and minimize exclusion , depression etc

  18. Antisthenes
    Posted January 8, 2012 at 10:06 am | Permalink

    The question asked is “why bother to be prudent”? The short answer of course there is no point in being prudent as the welfare system rewards the imprudent and penalises the prudent. It was never intended that that should be the case however it has evolved into that situation. Mostly left wingers and bleeding hearts hijacked the system and turned what should have been a safety net into a universal right. Having done so it has replaced personal responsibility and self-reliance with the collective. Nothing wrong with that if it had been run exactly like a proper insurance scheme but it has not so has become a Ponzi scheme instead. The same can be said for pensions and healthcare. Now that we have an economic crisis it has exposed the mass failings in the systems that indicates that the current systems are no longer sustainable. If the UK returns to a period of sustained growth then the systems despite their failings can continue to be tolerated. However there are many factors that suggest that future growth is going to be slow if at all. Not least of the factors are the welfare, pension and healthcare systems and the debilitating effect they have on the private sector who are the wealth creators and therefore on growth. If the politicians do not reform these systems so that they fulfil the purpose for which they were originally intended then eventually the economic crisis as it worsens will do the job for them but in a much more catastrophic way.

  19. DiscoveredJoys
    Posted January 8, 2012 at 10:09 am | Permalink

    The issue I would be interested in comment on is how tough should the state be when assessing eligibility for benefits?

    I think that this question assumes that providing money as a safety-net is the answer. It might be so for the short time a person needs to find a new job, or recover from a short illness, but for the long term…. Perhaps we ought to be concentrating on finding work for all those who are capable, even if it is ‘make work’.

    I realise that it would not be sensible to mobilise a million road sweepers, but all the people who are paid to do nothing are a lost opportunity to the country and themselves. Give each person a guaranteed 2 days a week road sweeping, litter picking, maintaining or building council houses or roads, or helping people recover from addictions, or helping the disabled, or training people to do those things, or providing child care for people who do those things – and we make Britain a more pleasant land for all. The ‘wages’ for those 2 days per week should be broadly equivalent to unemployment benefits and less than wages for full time work.

    And those who are not prepared to work those 2 days a week? Minimal benefits, enough to keep them off the streets. Tough love, as they say.

    • uanime5
      Posted January 8, 2012 at 6:37 pm | Permalink

      Here’s a radical idea how about creating jobs that pay minimum wage, rather than requiring people to work in exchange for their benefits. After all there’s no point training people if it won’t result in a job that will get them off benefits.

  20. lifelogic
    Posted January 8, 2012 at 10:11 am | Permalink

    On HS2 I see in the telegraph today (from Andrew Gilligan). Perhaps we can learn some lessons before the money is gone and it is too late:

    The new “Fyra” high-speed service in the Netherlands — opened just two years ago — is close to financial collapse with passengers shunning its premium fares and trains running up to 85 per cent empty.
    The line, between Amsterdam, Rotterdam and Breda, cost taxpayers more than £7 billion to build but is losing £320,000 a day amid disastrous levels of patronage.

    • electro-kevin
      Posted January 8, 2012 at 7:37 pm | Permalink

      The second issue to that is that the HS2 railway TOC will be based in London. It was the sheer number of London based TOCs which caused a driver auction to take place and which drove up staff costs.

      HS2 will cause this to happen again. They won’t be allowed to staff it with new drivers straight off the streets.

      Perhaps I should have kept my mouth shut.

      Nah !

      Some of us still put country first.

      • electro-kevin
        Posted January 9, 2012 at 9:37 am | Permalink

        A third point …

        Internet working from home is still in its infancy.

        More carriages across the whole network on peak services NOW please.

    • Mark
      Posted January 8, 2012 at 11:34 pm | Permalink

      Fyra is a disaster story, from the problems with the V250 “Albatros” trainsets that include inadequate wiper blades, problems with the catenary pickup, interface with the signalling system and so forth, through common delays and cancellations and the disastrous economics where even with the fares slashed traffic remains low. The Betuwelijn dedicated high speed freight route from Rotterdam to Germany is also continuing to make losses despite running at close to capacity.

      The Dutch government has in fact agreed to bail out HiSpeed – underwriting it with a guarantee. They claim the blank cheque is only going to cost €390m, rather than the projected €2.4bn bankruptcy.

  21. electro-kevin
    Posted January 8, 2012 at 10:17 am | Permalink

    “I want to live in a society where we all contribute to provide an income to those who are disabled, those who have fallen on hard times …”

    So do I. In fact I doubt that any of us would disagree. However, our welfare system has become a charter for total piss takers.

    I say this from personal family experience; where the unemployable daughters of relatives have deliberately got themselves pregnant through casual sex to get housing which those in work cannot possibly afford.

    The abuses of ‘carers’ allowance and how – predictably – the children end up disrupting schools with their bad behaviour and are diagnosed with ADHD and dyslexia an get yet more money. And then how this cycle of failure is repeated generation to generation because it is such a sure way of making a living. The abuses of disability allowances among people who could do work if pressed. Some even getting an alcohol allowance to spend at the local mini-market !

    This behaviour must be truly endemic, John. Simply from the amount of people close to my circle who are involved in it. An endless supply of taxis and fags to next door (none of whom have worked.)

    The question I am asking is not just ‘why should I be prudent ?’ (and I am an utter mug for being so) but:

    WHY DO I BOTHER OBEYING THE LAW ?

    If (when) I lose my job in the next couple of years I will not be inclined to accept my situation meekly. I expect millions of prudent and – otherwise – law-abiding people such as myself feel strongly because they are utterly fed up with being treated second class to layabouts and having their noses rubbed in it.

    Let’s hope there’s enough left in the pot for working people when they are going to need it. Otherwise you’re going to have to build a lot more prisons.

    • APL
      Posted January 9, 2012 at 8:12 am | Permalink

      Electro-kevin: “This behaviour must be truly endemic, ”

      Reward a particular behavior pattern and you get more of it.

  22. Rebecca Hanson
    Posted January 8, 2012 at 10:18 am | Permalink

    “The issue I would be interested in comment on is how tough should the state be when assessing eligibility for benefits?”

    I agree this is an important question which deserves attention.
    However it disappoints me that the parallel topic of how we can enable the big society to support those in need no longer seems to exist.

    In our society there are people who couldn’t care less about the other people who live in their street but there are also people who do care. I thought this government was going to empower the latter group to make a difference. What happened to that promise then?

    • libertarian
      Posted January 8, 2012 at 11:16 am | Permalink

      Rebecca

      Why on earth would you need politicians to give you permission to care about your friends and neighbours? That is quite frankly ludicrous.

      Just do it or are you suggesting that you should get some kind of financial reward for it?

      • Rebecca Hanson
        Posted January 8, 2012 at 6:54 pm | Permalink

        People need to be supported and empowered.

        • David Price
          Posted January 9, 2012 at 6:35 am | Permalink

          If someone cares they don’t need permission or be empowered by someone else.

          If you go looking for permission and empowerment some local/central government bod will see it as their role to do just that and of course pay themselves generously to do it. Next you’ll get a quango or five to coordinate it which will invent it’s own form of English and a snappy title, say “Big Society”.

          Alterntively people could just go ahead and volunteer their time and skills like some of us already do, it used to be called “giving something back” and didn’t require quangos or public sector organisating.

          Any attempt to rebrand or interfere with these activities as “Big Society” will put me right off volunteering, though seeing how much the chief execs of charities pay themselves is already doing that.

          • Rebecca Hanson
            Posted January 9, 2012 at 2:31 pm | Permalink

            Lots of people are in favour of support and the arts. Are you suggesting they would be thriving so well if Major hadn’t set up the lottery?

            I’d like to see the intelligent policy and infrastructure promised which will bring the big society to life. I can think of plenty which would enhance rather than compromise personal freedom of action and I’m disappointed the government doesn’t seem to be able to and annoyed it was just election spin.

    • Rebecca Hanson
      Posted January 8, 2012 at 12:59 pm | Permalink

      Also just a reminder of the important of the distinction between making judgments about particular situations which draw down benefits (which is relatively easy) and judging a person or household as a whole. While the latter sounds much more efficient and clearly would be if it was straight forward to do or administrate, it brings many complications in real life which create substantial inefficiencies.

      The two most important complications are
      1. the challenges associated with defining who is an individual and who is part of a household and managing the transition between the two states

      2. the realities of the interaction of judging a person or a household as a whole and a person having to make the decision not to provide them with sufficient money to avoid poverty. When aspects of situations are judged a degree of distance and objectivity is created which makes this easier to do.

    • Alan Radford
      Posted January 8, 2012 at 2:01 pm | Permalink

      Whay wait for the State to do everything? That was the whole idea – DIY.

      • Rebecca Hanson
        Posted January 8, 2012 at 6:56 pm | Permalink

        Some people will and do get out and use their energies to the full.

        Others will never bother.

        However there are many in the middle who need information, support and a planned infrastructure to make enable them to fulfill their potential in the community.

        And there are others who will do more if they feel their efforts are valued and accredited.

  23. Andy Large
    Posted January 8, 2012 at 10:18 am | Permalink

    John, I am with you on most of your points here. I agree that no-one wants to see those in genuine, undeserved hardship suffer. It is not right in a civilised society.

    But the instant that one uses means testing as a way of determining who should get what benefits, you create an disincentive to work or to be prudent about one’s own future. There is no greater example of this that than UK pensions “time bomb”, caused by Labour’s misguided mechanisms for ending pensioner poverty. There is now such a lack of clarity about what the government will or will not provide as retirement income that few people bother to save for a pension at all. So we need to be very careful about means testing indeed, because of the hidden consequences later on.

    • A different Simon
      Posted January 8, 2012 at 11:26 am | Permalink

      “few people bother to save for a pension at all”

      What vehicle/wrapper should anyone who has a surplus after ISA saving use though ?

      Obviously personal pensions are out if you want any sort of positive return after charges . What a success for the financial services industry and disaster for policyholders like me .

      That leaves a SIPP but what will you be able to do with it when you do retire ? Purchase an indexed link annuity paying less than 3.6% ie pay almost 28 times the amount of guaranteed income ?

      The average person is not capable of investing their own money .

      Even if you are in the 40% income tax band you are likely to lose out .

      We need to beef up the state pension to a livable amount and ensure that politicians , civil servants , public sector workers are reliant on it’s success by drastically reducing their secondary (occupational) pensions .

      I suspect that growth in the real economy is correlated almost 1:1 with contraction of the financial services industry .

  24. alan jutson
    Posted January 8, 2012 at 10:26 am | Permalink

    You are opening up a can of worms today John, but its a can of worms that people have refused to open for too long.
    After it is opened, spread out the contents, fully examine the contents (not being afraid to dump the lot) and replace with a carefully weighed, well thought out menu of fully costed, but high quality simple ingredients, that everyone can understand, that is fit for purpose, but which only has a limited 6-12 month shelf life.
    Thus re-application has to happen on at least an annual basis.

    In short IF FIT FOR WORK benefits should not be for life, they should be time limited, on a sliding downward scale.

    No one individual should be able to claim more than a minimum wage.
    No couple should be able to claim more than the average take home pay, after tax, of the median national wage.
    Child Benefit should it continue, should be limited to the first child only for individuals (hence couples total of two children) but should only apply to children resident with parents in the UK.

    Merge Income Tax and National Insurance

    The minimum wage should be tax free.
    No one on the minimum wage should pay any sort of income tax.
    The tax free personal tax allowance for everyone should mirror the minimum wage.
    The Personal Tax allowance should be allowed to be transfered in full, each year, to a partner of choice (no need to be married).

    Aware that I have not included housing enitlement, but until Local authorities hold suffiecient housing stock themselves (why selling off council house was wrong) they should not be legally liable for housing anyone who just turns up.
    The days of single mums getting a flat or house, when their parents have a perfectly good one which could be used should end.
    The days when immigrants who come here and are entitled to immediate housing should end.

    In short we need to encourage self sufficiency, and the work and savings ethic.

    The days of CHOOSING to stay at home at the taxpayers expense, has to end.

    I have absolutely no problem with the taxpayer looking after those who cannot for genuine reasons work, I have a very real problem paying for those who can.

    There is always enough Community work that can be done by those who cannot find a (so called proper full time) job, so let us get the country back to work and make our own infrastructure a cleaner, tidier, and better maintained place to live.

    • electro-kevin
      Posted January 8, 2012 at 11:25 am | Permalink

      The question “Why bother to be prudent ?” is key to whether or not Britain remains a functional and civilised nation.

      The theft by the state of hard earned money to redistribute to the feckless is done deliberately.

      Why ?

      Because the most feckless also happen to include the most violent and disobedient.

    • A different Simon
      Posted January 8, 2012 at 11:42 am | Permalink

      Alan ,

      You make good points as always but I think you are mistaken when you suggest “Merge Income Tax and National Insurance” .

      National Insurance is supposed to be for very specific purposes , a hypothecated tax .

      Income tax is for general taxation .

      Absorbing N.I. into income tax legitimises the current abuse of N.I. 0f using it as general taxation .

      This is money which is supposed to be part of a social contract and the pensions component would be much better spent by actuaries and fund managers in a completely seperate department rather than left to politicians to waste how they choose .

      Obviously the time to build up a fund was when things were going better and it’s much more difficult with our deficit .

      • A different Simon
        Posted January 8, 2012 at 11:47 am | Permalink

        PS ,

        To put the deficit into perspective the market cap of B.P. is about £120 billion .

        The UK is borrowing/hemorrhaging 1.5 B.P’s per year .

        We were told at the time of the Deepwater Horizon disaster that 1 in 6 pounds of UK pension funds were invested in BP .

      • alan jutson
        Posted January 8, 2012 at 3:31 pm | Permalink

        Simon

        I would agree with you if National Insurance contributions were going into a fund of some sort, but it’s not.

        National insurance is only but a name for another type of tax, which goes into a central pot, to be in many cases spent and wasted, just like the other taxes raised, under another lot of different names.

        This is a deliberate policy to hide the true level of taxation, which a certain G Brown was very good at.

        Time really for the Government of the day to be honest.

    • Janet
      Posted January 8, 2012 at 1:34 pm | Permalink

      I find myself in agreement with much of this, although I’d personally suggest a few tweaks:
      – The child benefit should stay with the child. For instance, if someone with two children leaves an abusive spouse and has custody of the children, the child benefit stays with the child. The previous spouse should not be able to get it again for another child from another relationship.
      – The personal tax allowance transfer could also be transferred, for example, if someone takes in an elderly parent. It would help offset additional costs of doing so.

      • uanime5
        Posted January 8, 2012 at 6:47 pm | Permalink

        So the person who now lives with the abusive spouse is penalised because the abusive spouse previously had children. Surely the children in this relationship would be able to get child benefits.

        • electro-kevin
          Posted January 9, 2012 at 9:52 am | Permalink

          Do we want abusive people breeding in our society ?

          The system you defend, Uanime5, happens to be the one we are living under and I don’t care for it much.

          Mine would be a far nicer place.

    • A.Sedgwick
      Posted January 8, 2012 at 2:33 pm | Permalink

      Agreed, but I am more likely to become an astronaut than much of this happening.

    • Robert Christopher
      Posted January 8, 2012 at 3:45 pm | Permalink

      Looks like Chris Grayling, the Employment Minister, has already started to tackle the problem.

      Half of benefits claimants refuse to do unpaid work
      Half of those claiming unemployment benefits refused to do unpaid work in return for the money.
      “A pilot scheme found that one in five who were ordered to take part in a four-week community project stopped claiming immediately. Another 30 per cent never turned up and had their £67.50 weekly handouts axed.
      The trial was deemed so successful that a £5 million scheme will now be rolled out nationwide, targeting up to 50,000 unemployed.
      Government officials were said to have been shocked by the figures, which they believe prove that a core group of claimants have no intention of working.
      They suspect that many of those who refused to do a stint of voluntary work are simply not declaring their earnings.
      Chris Grayling, the Employment Minister, will announce a major expansion of the scheme next month.”
      http://www.telegraph.co.uk/finance/jobs/8993825/Half-of-benefits-claimants-refuse-to-do-unpaid-work.html

      • Damien
        Posted January 8, 2012 at 6:49 pm | Permalink

        Robert,

        Those remaining 4/5th who were not required to participate in voluntary work should have been required to sign on daily. I would expect that the majority would be unable to do so because of other commitments and they also should then have their entitlement stopped.

      • uanime5
        Posted January 8, 2012 at 6:52 pm | Permalink

        I wonder how many didn’t work because they had no way of getting to their employer or because the work was unsuitable? The ‘mandatory work activity’ is not the solution to unemployment.

        Also there was an interesting comment by dragon83uk:

        “Full Fact, an organisation that promotes accuracy in public debate, has just posted a piece about this story (or rather exactly the same story as it appears in the Daily Fail and the Express) in which they contacted the DWP for more info on this claim. According to the source they contacted no data has been released on the programmes mentioned in this article. Furthermore they were told that the results of these pilots will not be released until next month. “

        • electro-kevin
          Posted January 9, 2012 at 9:56 am | Permalink

          There is nothing wrong with making claimants pick up litter for a few hours a week or for them to help the elderly if they are capable.

          It would be healthy for all.

          The UE’s morale would be lifted. The taxpayer would feel less put upon.

          I understand that the majority of unemployeds are in a terrible situation not of their making.

      • alan jutson
        Posted January 8, 2012 at 8:41 pm | Permalink

        Robert

        The mind boggling thing is that the Politicians were astonished at the results.

        Most of us could have told them this, and have been for a decade or more.

        Just shows how out of touch some politicians are with reality.

    • uanime5
      Posted January 8, 2012 at 6:44 pm | Permalink

      “Aware that I have not included housing enitlement, but until Local authorities hold suffiecient housing stock themselves (why selling off council house was wrong) they should not be legally liable for housing anyone who just turns up.”

      So if a council sells off all its housing stock if won’t have the cost of provide housing to anyone. Perhaps you should punish councils for having a low housing stock, rather than rewarding them.

      “There is always enough Community work that can be done by those who cannot find a (so called proper full time) job, so let us get the country back to work and make our own infrastructure a cleaner, tidier, and better maintained place to live.”

      If this Community work was turned into a paying job there wouldn’t be so many people unemployed due to the shortage of jobs.

      • alan jutson
        Posted January 9, 2012 at 7:43 am | Permalink

        unamine5

        That is why I said selling off Council houses was wrong.

        You are making up your own argument !

        The idea of Community work is to get back the work ethic for many who have forgotten what work means, and for them to do something for the money they get.
        Where did I suggest it would be full time, 5 days a week 52, weeks a year.

        • electro-kevin
          Posted January 9, 2012 at 10:05 am | Permalink

          We do have ‘council’ houses. But this now takes the form of private landlords and housing associations.

          The private BTLs are paid rent by the govt at local market rates.

          The govt funded BTLs are keeping the market rates up.

          This is how we’ve ended up in the situation whereby the new generation of workers can’t afford to buy houses and pay inflated rents and whereby things have got so out of proportion that a resident can live in assisted accommodation even if they are on a wage of £100k pa !

          If you want children then stay unemployed and unmarried. It’s the ONLY sensible option for many young people.

          The proposal is that they reduce the wage ceiling to £99k pa. That says it all about the house price madness really.

        • uanime5
          Posted January 9, 2012 at 7:28 pm | Permalink

          Here’s what you said

          “Aware that I have not included housing enitlement, but until Local authorities hold suffiecient housing stock themselves (why selling off council house was wrong) they should not be legally liable for housing anyone who just turns up.”

          So your argument is that if Local authorities don’t have sufficient housing stock they can refuse to house people without any consequences. I said that this will result in Local authorities selling all their housing stock so they don’t have to house anyone as there’s no punishment for not being able to house people. So if you don’t want the Local authorities to sell off their housing stock they have to be legally liable for not having sufficient housing stock.

          Community work doesn’t improve work ethic. Also if you don’t obtain any skills that make you more employable it’s totally pointless.

          Finally even if this community work is seasonal, rather than full time, it should be done by a paid employee not cheap labour. Paying jobs won’t be created while employers can make people do the job for free.

          • alan jutson
            Posted January 9, 2012 at 10:51 pm | Permalink

            unanime5

            So your solution is for Councils to be legally bound to house anyone who asks for it, no matter how much it costs, no matter how many houses they build ?.

            If not this, then what is your suggested solution, and who pays.?

  25. Joe McCaffrey
    Posted January 8, 2012 at 10:55 am | Permalink

    When you say “letting people sleep rough on the streets for lack of a roof over their heads” that is perhaps looking at it in the wrong way – if we assume that this should be avoided, I would say that if someone has been reckless then they should face the consequences of their actions but a person who is homeless through no fault of their own their is some merit to the argument they should be housed. What is to say that this is a legitimate function for the state to provide? Is this not best left to individuals, churches and other groups? I think welfare is a function of society and not the state – the bureaucratic system of state welfare makes people dependent on the state, ensures people who do not deserve help get it – and thereby diminishes individual responsibility, fails to help some that deserve help, and is immensely costly at an estimated £200bn (a government figure so it is almost certainly more) – also because it is payed for by tax it reduces wealth by far more than this ammount thanks to the reduction in innovation and enterprise it causes.

    The welfare state must be abolished to allow much greater prosperity as well as to regain the strong cohesive society that we had in this country before its creation when people felt dependent upon oneanother and not on the bloated state.

    • uanime5
      Posted January 8, 2012 at 6:54 pm | Permalink

      The effects of abolished welfare will be detrimental to society because all it will do is push millions into poverty and crime.

      • alan jutson
        Posted January 9, 2012 at 7:46 am | Permalink

        Unanime5

        Well, we could offer more employment in the increased Police force.
        Build more prisons (work for construction workers), have more prison officers etc to compensate, paid for with the savings made.

        • uanime5
          Posted January 9, 2012 at 7:33 pm | Permalink

          The only problem is that this will cost more then giving people benefits. Housing the unemployed in the Ritz is cheaper than keeping them in prison.

          So there won’t be any saving to pay for more prisons, police, or prison officers.

          • alan jutson
            Posted January 9, 2012 at 10:59 pm | Permalink

            unanime5

            I think the Ritz is more expensive.

            But ever thought how much more expensive it is to our society having people constantly breaking the law, robbing, mugging, dealing in drugs, and yes white coller crime (fraud) as well.

            People will eventually take the law into their own hands, then you do have chaos, and the weak, old and law abiding people go to the wall.

            Please do think through the alternatives, before you make sweeping comments.

            Surely better to have the present extended police force to combat increasing crime, than the rule of the jungle.

        • Bazman
          Posted January 9, 2012 at 7:55 pm | Permalink

          There you have the truth. More police and prisons. In effect advocating a police state. Real Tory stuff straight out of the Soviet Union. As I have said the many times. the Soviet Union is alive and well in Britain. Communism for the rich.

          • Joe McCaffrey
            Posted January 9, 2012 at 9:22 pm | Permalink

            “There you have the truth. More police and prisons. In effect advocating a police state. Real Tory stuff straight out of the Soviet Union. As I have said the many times. the Soviet Union is alive and well in Britain. Communism for the rich.”

            I think in my entire life I have never seen an opinion misrepresented to so great an extent, I do not advocate a police state nor is this something made more likely by abolishing the welfare state – indeed it is made less likely because it will greatly reduce the power and influence of the state as well as reducing the state dependency tragically imposed on millions.

          • Bazman
            Posted January 10, 2012 at 5:16 pm | Permalink

            I stand by my Soviet Union comment and this comment reinforces it. We do not believe enough so should be imprisoned. Poverty would be ‘tragically imposed on millions’ and I mean starvation and disease not poverty of ideas which is the real poverty. Ideas from someone with a cushy life telling us how the welfare state keeps everyone ‘poor’. What keeps you from poverty? Wit and intelligence?

  26. Peter T
    Posted January 8, 2012 at 10:57 am | Permalink

    The only observation I will make is that both my sons employment histories include periods of redundancy. Once for my youngest son and twice for my eldest son. Redundancy can be a hurtfull thing and can, in sensitive people, take away all their confidence in them selves and all their own feelings of self worth. Both my sons experience of Job Centres is negative with little, if any, actual assistance being given. Both my sons have degrees, the eldest in Mathematics from Imperial College and the youngest in Chemical Engineering from Cardiff. However, my youngest son is confident, ambitious and easily makes a pathway for himself. He is OK. My eldest son may have mild Aspergers (diagnosis of the condition in the adult is not easily obtained in West Wales where we live) and being made redundant twice has literally destroyed him. It is in this area of need that Job Centres have no understanding, no empathy and provide no help. They seem to have one purpose only – to control the money being given to the unemployed. They need an overhaul and a drastic improvement improvement in giving proper help where needed. They need managers who understand personality and suitable job roles for the type of personality presenting and they need to educate employers.

    • ChrisXP
      Posted January 8, 2012 at 10:18 pm | Permalink

      I sympathise completely regarding your eldest son….I have first-hand experience of (as a parent) and understand the condition you speak of and agree that a Job Centre is totally inadequate to assist such people in finding work. There are actually a lot of people around with this condition, more than we think and sadly so few of the average public understand the difficulties. I do hope he will soon find a new position.

    • alan jutson
      Posted January 9, 2012 at 10:05 am | Permalink

      Peter T

      Many Job Centres do not seem to be able to help fit people back into work either, yes they go through the tick box proceedure, but as for good and helpful advice, it is very thin on the ground according to my youngest daughters experience, after she was made redundant.

      She did eventually find herself a job after working on a temp basis, they liked her, and subsequently offered her full time employment.

  27. David John Wilson
    Posted January 8, 2012 at 11:04 am | Permalink

    Even in your constituency of Wokingham one does not have to look very far to find houses where there are three generations living, none of them working. This is totally unacceptable in an area that has one of the lowest unemployment rates in the country and where some local retail establishments have advertisements for staff outstanding for months.

    • uanime5
      Posted January 8, 2012 at 6:57 pm | Permalink

      Try applying to these places using a CV where you admit you don’t have any relevant work experience and have been unemployed for over a year. You won’t get asked for an interview. It seems they prefer no one rather than having to train someone.

      • StevenL
        Posted January 9, 2012 at 5:24 am | Permalink

        Not sure that’s true. I see loads of Spanish and Italian kids turn up here looking for basic minimum wage jobs. They often have a poor standard of English, and have been unemployed since leaving education, but they have get up and go and are trying. Most of them find a job within a few weeks.

        • uanime5
          Posted January 9, 2012 at 7:36 pm | Permalink

          I can’t recall being served in Wokingham by anyone who sounded Spanish or Italian. Were they working in a Spanish or Italian restaurant?

          Also did they have work experience from their previous country (I’m guessing that if they lived here they’d probably be able to speak English).

      • alan jutson
        Posted January 9, 2012 at 10:13 am | Permalink

        Unanime5

        Why would you want to put you do not have any experience in a particular field, when applying for a job.

        Surely you simply list your work experience, qualifications, and interests do you not. Or have I got the wrong end f the stick.

        If you do not want a job in a particular field then do not apply in the first place, but do not say there are no jobs about, just no jobs that you want to do, which is a very different argument.

        Most of us who have worked all our lives have had to change our working pattern, for which perhaps our qualifiations/interest are no longer suitable during that period.
        No job or industry is for life anymore, but if you want to move foward you have to be prepared to be flexible.

  28. Nick
    Posted January 8, 2012 at 11:09 am | Permalink

    There is one huge bit missing. If we take a claimant in Kensington, with 5 kids we can tote up the welfare offered.

    Housing benefit – 104,000
    Child Tax Credit – 13,337.04
    Income Support – 5,539.67
    Council tax – 2,157.83
    Child Benefit – 3,863.91
    Free Schooling – 6,000 * 5 = 30000
    Free Health Care – 1800 * 7

    Total 172,000

    Tax Free.

    That’s what politicians have done. They have set up a group of people who aren’t working and (live on taxpayer assistance-ed). They are taking hundreds of thousands of pounds. It is lottery win money that they are taking from other people.

    People on minimum wage are paying 2,500 a year in employment taxes (income tax and NI) towards these people.

    • uanime5
      Posted January 8, 2012 at 7:06 pm | Permalink

      Your maths is flawed as most of the money doesn’t go directly to the family. Also it’s incorrect to combined the total value of the house with annual costs such as child benefit.

      Since housing benefit goes to the landlord, Council tax goes to the council, free schools goes to the school, free healthcare goes to the doctor/hospital; of the £172,000 only £22,740.62 is disposable income for the 2 adults and 7 children. This means they get on average £3,248.66 each.

      • JimF
        Posted January 8, 2012 at 10:16 pm | Permalink

        I think the point being made was that there was little prospect of work being in propsect for members of that family. They would have to earn an inordinate amount to compete with the welfare payment.

        • uanime5
          Posted January 9, 2012 at 7:37 pm | Permalink

          You can get most of these benefits even if you work if you earn a low salary.

      • Mark
        Posted January 9, 2012 at 12:46 am | Permalink

        If I didn’t have to pay any rent or council tax I think I might choose to live somewhere where the rent was over £100,000 p.a. too – regardless of my income.

      • alan jutson
        Posted January 9, 2012 at 10:16 am | Permalink

        unanime5

        Housing benefit goes to the landlord.

        Wrong, Housing Benefit goes to the tenant who then pays (or does not pay) the landlord.

        In the old system it did go directly to the Landlord.

  29. Acorn
    Posted January 8, 2012 at 11:09 am | Permalink

    BTW JR. What is your opinion of MMT (Modern Monetary Theory). Have you published on the matter?

    “If the central bank desires to maintain the current positive target cash rate then it must drain this surplus liquidity by selling government debt. In other words, government debt functions as interest rate support via the maintenance of desired reserve levels in the commercial banking system and not as a source of funds to finance government spending.

    However, the central bank could equally just pay the commercial banks the target rate of interest on all overnight reserves which would achieve the same end without the need to issue debt. So there is no intrinsic reason for a sovereign government to borrow to “finance” its net spending.” If the central bank desires to maintain the current positive target cash rate then it must drain this surplus liquidity by selling government debt. In other words, government debt functions as interest rate support via the maintenance of desired reserve levels in the commercial banking system and not as a source of funds to finance government spending.

    http://mmtwiki.org/wiki/MMT_Overview .
    http://pragcap.com/resources/understanding-modern-monetary-system

    Reply: I do not agree with that approach to government debt. I think governments that wish to spend more than they raise in traxes should, have to borrow the money and pay interest on it. They then command private sector resrouces to agument their public sector resources, with the benefits and costs that entails.

  30. Nick
    Posted January 8, 2012 at 11:10 am | Permalink

    The line, between Amsterdam, Rotterdam and Breda, cost taxpayers more than £7 billion to build but is losing £320,000 a day amid disastrous levels of patronage.

    =============

    It’s the same distance as London to Birmingham. Now the Netherlands is the most crowed country in Europe. More so than the UK.

    UK cost for an equivalent railway – 32 bn (Olympic estimate) compared to 7 bn there.

  31. Nick
    Posted January 8, 2012 at 11:11 am | Permalink

    There should be a simple rule.

    No one gets benefits above 60% of median wage. The left can’t argue against that because its their definition of poverty.

    Cap all benefits at that level.

    • uanime5
      Posted January 8, 2012 at 7:08 pm | Permalink

      Does this apply to those who work but still claim benefits because they’re in a low paid job?

      • APL
        Posted January 9, 2012 at 8:22 am | Permalink

        Uanime5, If I recall correctly it is you that keeps asserting that the HS2 link between London and Birmingham is nothing to do with the European Union, because the EU project is only concerned with rail links between European states.

        My reply is to always remind you that Scotland is a country in Europe too and that shortly there will very likely be an extension from Birmingham to North of the Border.

        Well, whowouldhavethoughtit?

        http://www.heraldscotland.com/comment/herald-view/we-must-not-allow-high-speed-train-ambitions-to-be-derailed-1.1079413

        • uanime5
          Posted January 9, 2012 at 7:44 pm | Permalink

          From the EU’s standpoint the UK is currently one country, so a rail link between parts of the UK is not required under EU law. Though if Scotland was to leave the UK and join the EU independently then the UK could be forced to have to have a rail link between England and Scotland. However the EU cannot force either country to link London to Edinburgh and the existing rail connection will be more than sufficient.

          After all it’s not like Northern Ireland and the Republic of Ireland have been forced to link their capitals with a high speed rail line.

  32. Faustiesblog
    Posted January 8, 2012 at 11:24 am | Permalink

    The problem is in the tests we apply to see who should be eligible.

    Why should the government be involved in the process at all? Setting any such means-tested level is bound to be erroneous – such actions would not be out of place in the old Duma.

    Instead, let people keep more of their own income. The Treasury should not be free to dip into our savings and pensions by way of taxes – its kleptomania is precisely the reason most of us now have inadequate provision for our old age. Had the government kept out of our affairs, the great majority would have had adequate old age provision.

    The issue I would be interested in comment on is how tough should the state be when assessing eligibility for benefits?

    Firstly, eliminate from the process the absurdities, such as those who are deemed by government criteria to be “in poverty” still paying taxes. They include pensioners, low-paid workers, job seekers and the unemployed/disabled. Unfortunately, with VAT on everything, including services, the disposable income of these people is massacred by the 20% robbery that the Treasury inflicts.

    The answer is surely for the government to refrain from taking with one hand and giving with the other. A wasteful and controlling exercise which merely serves to increase the cost of everything.

    In order to decide how much to extract/dole out, the government must make assumptions so as to define modelling criteria – which are virtually guaranteed to be unrepresentative, since human nature and the human condition are too ingenius, adaptable and resourseful to be adequately captured by any static model. The model represents the modeller’s perception of reality – not the actual reality. That is why every government system runs into trouble – reality catches up with and destroys the credibility of the man-made system.

    The best the government can do is to get out of the way. Eliminate the absurdities and I’m sure you’ll find that the complexity of the situation will be drastically reduced and a sizeable chunk of the problem will simply cease to exist.

    The ‘problem’ is of the government’s making. The government is the problem.

    Why should I be prudent?

    Indeed. Government creates moral hazard. The trick is simply to seek out and destroy that moral hazard – in every government department, in every tax clause, in every government policy.

    We also need to ask what incentives there are for people to make long-term provision for themselves. After the MF Global scandal where it is alleged …… that segregated accounts were plundered, after the government’s plundering of private pensions and after massive inflation heaped on the populace to pay reckless bankers, what confidence can anyone have in the financial sector, the pensions industry and banks?

    Why would I put money into a pension or a savings account, rather than in gold? Why would I invest for my future in this country at all, when I can better invest elsewhere?

    The government should do less. Much less. It needs to let the free market work and be free for all – not just for palm-greasing corporations.

    • Faustiesblog
      Posted January 8, 2012 at 11:26 am | Permalink

      Forgive the typos, please! 🙂

    • uanime5
      Posted January 8, 2012 at 7:10 pm | Permalink

      Given that many people don’t having savings because they don’t have a job tax breaks won’t help the unemployed save for their pensions.

  33. Nick
    Posted January 8, 2012 at 11:34 am | Permalink

    Now for the question asked, rather than the one avoided.

    Why be prudent?

    Well, tote up all the debts, including the debts that John Redwood has fallen silent about post being elected, and it comes to 7,000 bn. Most of those are pension debts with no assets.

    The government can’t afford to pay those on tax revenues of 550 bn, when the debts are going up with inflation, plus a deficit of 150 bn a year. ie. This year alone the debts will increase by 500 bn

    So since the government won’t be able to pay, you need to be prudent in order to look after yourself.

    However, that means avoiding pensions – they will steal the lot for the public good.

    It means avoiding property – they will tax it because you can’t move the house.

    It means looking at investments that the government can’t get their hands on.

  34. forthurst
    Posted January 8, 2012 at 11:40 am | Permalink

    It is very clear that the system we have has been specifically designed to force the English to work for the benefit of those who do not work and should not necessarily even be in this country.

    Most working families find that both partners have to work in order to make ends meet. Why? Because a large part of their income is being expropriated for the benefit of people who they have never met (etc-ed) They pay high rents or have large mortgages, not because property costs a lot to construct, but because we are being deliberately overcrowded out of our own country by (words left out) migrants, whilst the price of property is being artificially inflated further by the housing benefit scam which enables (benefit takers-ed) to be accomodated to a better standard than many working families.

    When both adults in a family have to work to live, their progeny become not the responsibily of their families to instil cultural and moral values, because they do not have the time, but, by default, of the state education system where they can be groomed from an early age with Cultural Marxist propaganda designed to destroy their pride in themselves as a people and a proper sense of what is right and wrong.

    It goes without saying that the last labour government (words left out) introduced measure(s) which w(ere) designed to create and buy voters for them whilst forcing the rest of us to pay (rubbing our noses in it): a million non-jobs, hospital training posts preferentially for (migrants-ed), the secret importation of millions of others (from abroad-ed) making our country more overcrowded and less safe, wars for the benefit of neocon crazies etc.

    It is a matter of deep concern that the Conservative party has done very little to rectify any of this; it makes one wonder whether they are either clueless or part of the same conspiracy against us to destroy us as a nation and a people. How much longer at the present rate will all those who are English, of English values of probity have decided to leg it, sickened by the destruction wrought to their country and their futures, sick of reading about the latest fatuous thoughtcrime to dominate the MSM news,etc etc

  35. English Pensioner
    Posted January 8, 2012 at 11:47 am | Permalink

    One starting point would be to adopt the principle from the days of Parish Relief “No person in this parish, on relief, will receive any more that the lowest paid working man in the parish”, although I’d change it to “Shall not receive more that 75% of the lowest paid” There is a minimum wage, so the lowest pay is known, an allowance can be made for travel costs, etc, and a maximum figure calculated.
    I don’t see why the state should provide individual housing, particularly for all the single mothers living of the state by having children at carefully calculated intervals. What is wrong with hostel type accommodation, Spartan but adequate? I’m not advocating a return to the Victorian workhouses, but we seem to have gone to far the other way and people are now expecting to live in luxury at the expense of the state.
    Whenever we see the “poor” on television complaining about some issue, they seem to all be able to afford large flat screen TVs, computers, and all the fancy gadgets – I read recently that a Sky TV subscription now forms part of the calculation in evaluating a family’s support!
    But whatever is done, there will be the inevitable cry “What about the children, we mustn’t let them suffer”

    • uanime5
      Posted January 8, 2012 at 7:11 pm | Permalink

      Who is going to pay for and build enough hostels for single mothers?

      • Mark
        Posted January 9, 2012 at 12:50 am | Permalink

        If single mothers (as opposed to widows or divorcees) were required to live in hostels, perhaps not a great number of them would be needed. That was essentially the experience of times gone by.

      • alan jutson
        Posted January 9, 2012 at 10:22 am | Permalink

        unanime5

        What is wrong with them living with their own parents, in their own parents home.
        That is what used to happen a few decades ago.

        Thought one of the duties of family members and being a parent was to help your children and your grandchildren.

        Why should total strangers pay ?

  36. NickW
    Posted January 8, 2012 at 12:08 pm | Permalink

    At the end of the day, the determined scrounger knows that he or she can rely on the basic decency of others to provide support in the face of a determined denial of the ability to work; there is no way out of this.

    However, if support was provided in the way of non negotiable vouchers for the necessities of life, it might go some way towards targeting the needy whilst not pandering to the greedy.

  37. backofanenvelope
    Posted January 8, 2012 at 12:12 pm | Permalink

    The English state has wrestled with this problem for 800 years. There have been dozens, scores, maybe even hundreds of Acts of Parliament dealing with “the poor”. Most of them have created more problems.

  38. Richard
    Posted January 8, 2012 at 12:19 pm | Permalink

    In 1997 Tony Blair told Frank Field and Harriot Harman to go away and “think the unthinkable” on the social security benefits system.
    They did and when they came back with their radical reforming proposals Tony threw the report and them into the long grass.
    Its not a problem I would like to try to cure with so many pressure groups and different Government ministries all with strong vested interests involved and I wish Iain Duncan Smith the very best of luck.

    Frank Field is perhaps the most knowledgeable MP on this topic and basically his idea was to have a negative income tax system, as well as reducing the many diffrent benefits into just one universal benefit.
    As I understand it we would all be given a standard level of benefits in the form of real money or in the form of a tax free allowance and then any extra income earned is added on and taxed depending on your personal circumstances.
    Whilst the devil is in the detail it would solve the benefits trap where if you do manage to get a job you can be worse off and it would reduce the incentive to work for cash whilst on benefits.

  39. Peter Wood
    Posted January 8, 2012 at 12:20 pm | Permalink

    I agree very much with John Redwood’s measured comments and would raise the following points:
    . Would it help if all income was taxed?
    . Yes, work must always be made worthwhile – i.e. more income coming in than when out of work
    . Low interest rates make sense in the current economic climate – but it is important to protect the real value of savings (as NSI’s index-linking allows)
    . Perhaps we need more incentives to encourage people to provide for themselves

    • Robert Christopher
      Posted January 8, 2012 at 3:56 pm | Permalink

      How about making it more attractive to build up a personal pension fund for oneself.

      You know, like it used to be; even if it is so ‘last century’!

  40. ian wragg
    Posted January 8, 2012 at 12:31 pm | Permalink

    If your from Afghanistan and have a bunch of kids you can live in the best streets in London paid for by the taxpayer.
    Whats the betting this continues after “umanrites” are wheeled out as defence.
    We must have the most stupid public servants in the world.

  41. Malcolm Etchells
    Posted January 8, 2012 at 12:59 pm | Permalink

    My suggestion is that we have to turn back benefits to what they were originally a “safety net” for people that through no fault of there own have fallen on hard times not a lifestyle choice as it can be now.

    So take out all genuinly disabled people, serious case of disability or proven medical cases and pay them a fair benefit. Then we have all of the other medical conditions that are eligable for benefits like alocholism, piles, depression, bad back that the MRI scan can not find, etc. These cases should get benefits for 12 months. This would be sufficient time for the NHS to solve the issues and allow the claimants to get cured or change their lifestyle to handle their new circunstances. After 12 months back to JSA, only.

    The second problem that the country has is that having babies is now an income stream for people on benefits. The more kids you have the more cash you get. So to solve this issue when people first enter the benefits system the benefits they get should be based on their circumstances then. So if you enter with 2 children you get xx benefits and these should remain at they level for as long as the person is on welfare, no annual increases of 5.1%. Also whilst in the benefits system if people have more children the benefits, including large houses, should be frozen i.e no extra benefits for more kids. These people would very soon stop having kids if the result was they had to give up the Sky, fags and booze.

    If a person who was on benefits got a new job worked had extra children then had the misfortune to hit hard times again then when they re-entered the benefits system the new payment would be based on the new number of children, as a reward for paying taxes whilst working and being responsible.

    Then we have the issue of people first joing the benefits system weather they are school leavers or newcomers to our country or people recently disabled or lost their job. Simple, the rule should be if you have paid in for 2 years you get the benefits if not it should be minimum benfits paid on a card (like assylum seekers), that can only buy food and that are fixed for the time the people are on benefits and have no increase for having more children or an annual increase.

    The above would make work pay. If you froze all benefits now at the level they are apart from old age pension and proven serious medical conditions then the wonders of inflation would mean that over time people would be better of working than on benefits.

    Also stopping the extra benefits for having babies would mean that the choice of a life on benefits would stop. Also the beneficial side affect would be that young ladies wanting a family would target young men with stable jobs and a work ethic. So the young men get a good incentive to work as it will have additional benefits in additiona to pay, camaraderie and job satisfaction.

    All in all it is not that difficult. Politically it may be difficult but I believe any government that did the above would win a landlside in the next general election as long as they increase OAP pensions and genuine disabled peoples benefits, whilst freezing all universal benefits and limiting the max benefits to working age people to sub 25K per year.

    • uanime5
      Posted January 8, 2012 at 7:20 pm | Permalink

      People won’t magically be cured of medical conditions that prevent them from working in 12 months. Paying them less money also won’t fix this problem.

      Benefits have to increase with inflation or they’ll be reduced in real terms. Given that the unemployed aren’t responsible for inflation it’s unfair to penalise them because of it.

      Your plan doesn’t fix the problem caused by the lack of jobs yet you see fit to penalised the unemployed because of it.

  42. RD
    Posted January 8, 2012 at 1:35 pm | Permalink

    To be fair our own defence cuts are just as mindless.

  43. Jon
    Posted January 8, 2012 at 1:43 pm | Permalink

    I dont believe there are 1 million able bodied youngsters not able to find work.

    When I was young and we had 3 million unemployed, the times of that poster of a long queue at the job centre. I found myself out of permenant jobs for 18 months. That said I worked ave 6 + days a week doing anything and everything temping, type of work not suited to my qualifications.

    I met lots of young people back then protesting “I’m not doing this” or “I wouldn’t get out of bed for that”. I’m guessing I would find it the same now. Back then I got recomendations for working hard so got the temp jobs that were going and got a nice paying 12 hr night shift job at the week ends. I recon if I was in the same place now I would find 6 to 7 days worth of work a week night or day.

    Benefits are for those on real hard times or disabled, we have to have a safety net. Don’t have a lot of time for the able bodied rest who won’t get out of bed for an hourly rate, work the hours needed!

    • uanime5
      Posted January 8, 2012 at 7:22 pm | Permalink

      There are 1 million able bodied youngsters not able to find work. The statistics have confirmed that only 52% of young people (18-24) are in employment.

      At present there are 2.64 million people unemployed but only 455,000 jobs available, so more than half of the 1 million unemployed 18-24 year olds won’t be able to get a job no matter what they do.

    • BobE
      Posted January 8, 2012 at 7:34 pm | Permalink

      People in recipt of benefits they should be employed by the state. Minimum wage, 0900-1700, working 5 days a week. There is no need to pay benefits without work, except for the disabled. So we need a government workforce of people that have no other work.

      • Robert K
        Posted January 10, 2012 at 10:06 am | Permalink

        That has the same merit as the Keynsian idea of employing one group of men to dig a hole and another to fill it in.

        • sm
          Posted January 10, 2012 at 7:39 pm | Permalink

          But with a little imagination we could impose a duty on multinationals who claim skill shortages areas to train up residents rather than import labour. This could be funded by realistic charging for temporary labour visa’s.

  44. Neil Craig
    Posted January 8, 2012 at 1:48 pm | Permalink

    A way to make it more transparent and less unfair woul;d be to combine the tax and benefits systems into a “negative income tax” system. People on low incomes or with families receia cheque rather than making payment. This was Liberal policy decades ago when they were far from [power and is something no politician ever seems to disagree with – or to do when they have the power.

    Since it would greatly reduce the need for civil servants to run the system the unaccountable failure to do this reform seems compatible with the theory that the main problem is not the recipients of welfare but the massive army of government employees and their friends.

  45. Alan Radford
    Posted January 8, 2012 at 1:59 pm | Permalink

    John, you didn’t mentioned that recipients of government largesse usually vote for more of the same, and that means Labour. This is the start of vote-buying by fraudulent politicians and the end result is where we are now – massive current account deficit and a national debt approaching £1trillion.
    Here’s my simple solution: If you receive state benefits, you don’t vote. The state is charged to manage responsibility the money it confiscates under the guise of taxation, and it cannot be exposed to the conflict of interest that arises when state functionaries derive their own benefit from mis-use of funds, the prudent care of which they are responsible for.

    • alan jutson
      Posted January 8, 2012 at 3:49 pm | Permalink

      Alan

      “If you receive Benefts you are not allowed to vote”

      I suggested something similar about a year ago, got some very odd comments, but do you know what !

      Only taxpayers having a vote, has still got something going for it, after all its their money that is being spent, no one elses.

      No its not perfect, it probably is not democracy as we know it, but to have people vote, who just want to constantly take, take, take, from the system I suggest is not democratic either.

      The politicians promises are at fault for this sort of bribary for votes, and this is where we have ended up.

      • ChrisXP
        Posted January 8, 2012 at 9:53 pm | Permalink

        Where do you class child benefit, then? A lot of women do not earn because they are fulltime housewives and do not (on the whole) pay tax. However they may be receiving child benefits (if they are young enough). Are you saying they should be stripped of their rights to vote? Despite being jointly responsible with their husbands for the running of the household? That’s turning the clock back to the old days when only men were permitted to vote. Dear me….I’m glad you’re not running the show.

        • alan jutson
          Posted January 9, 2012 at 11:14 pm | Permalink

          Chris

          It was tounge in cheek.

          I did say it was not democratic, but if you want most people to still have a vote, then perhaps we should think about taxing benefits, rather than them being tax free.

          Then at least everyone would realise what the tax rate really is, why it needs to be so high. and what it pays for.

  46. Viv Evans
    Posted January 8, 2012 at 2:03 pm | Permalink

    ” … how tough should the state be when assessing eligibility for benefits?”

    Very tough!
    There must be an end to the practice of ‘gaming the system’, where benefits are handed out to those who know best which forms to fill in, with the kind help of social workers.

    In fact, the idea, mentioned above by several posters in one form or another, of a flat rate for welfare seekers points in the right direction. Give the benefit needers a weekly sum from which they have to pay for everything: housing, utilities, council tax, appliances.
    Yes, this would mean a higher sum for jobless than what they receive right now, but it would cut back on the huge sums paid for housing in a style now regarded as human rights, on the council tax bills where we who pay are paying for them as well.
    They would need to learn how to budget properly, and they may even learn how to save to pay for what they want, rather than have it handed to them.

    Those with proper medical disabilities ought to get more – which would become affordable once the free hand-outs are stripped out.
    Immigrants ought not to be provided with the whole panoply of benefits at all unless they’ve contributed for a set number of years.
    Child benefit to go only to one child per individual: excellent idea! especially with the stipulation that individual and child have to live here, not somewhere else.

    However, this must be accompanied by a lowering of income tax, one which people can see in their pockets – not one where one will be ‘better off’ by fifty pence per week.

    People with more money in their wallets, and with the certain knowledge that the state is not robbing them to give to the feckless for a better life than they themselves have, will be far more inclined to give to charities and do voluntary work locally. They will know that they can alleviate suffering, on a local basis, better than the state.

    • uanime5
      Posted January 8, 2012 at 7:27 pm | Permalink

      Expect this to end badly. Some people are unable to budget, especially if they have a below average IQ, drug or alcohol problems, or learning difficulties.

      People won’t give more to charities or do volunteer work if they have more money. Those who give to charities and volunteer do so no matter how much or how little they have.

  47. badgerbill
    Posted January 8, 2012 at 2:09 pm | Permalink

    In yesterday’s Daily Mail there was an article on rent being paid to those who have come here from abroad of £106,000 per year plus benefits. A pensioner has to get by on £100 per week and pays rent, utilities, council tax and so on.

    How on earth does parliament justify paying these amounts of money to people who have made no contribution whatsoever and have arrived here solely for the benefits our over generous parliament gives them whilst taking form the honest hard working poor?

    They are here to expoit us either through benefits or in many cases fraud and theft. They owe no allegiance to this country or its people who are looked upon as fools!

  48. Jon
    Posted January 8, 2012 at 2:51 pm | Permalink

    Also with all these young people earning enough on benefits to live where do they get their kicks and extras in life from? If you work for it you understand not just value but other peoples values.

    I think the generous benefit system funds criminality, instead of working 40 hours during the day they might be seeing how they can get a Niki trainer all those workless hours funded by the taxpayer.

    • uanime5
      Posted January 8, 2012 at 7:30 pm | Permalink

      The benefit system doesn’t fund criminality, it hinders it. Allow me to demonstrate:

      Working person: I’ll work and save my money until I can afford to buy some Niki trainer.

      Unemployed person: I’ll save my benefits until I can afford to buy some Niki trainer.

      Criminal: I’ll break the window of a shoe store and steal some Niki trainer.

      Thus benefits encourage people to buy things, rather than steal them.

      • APL
        Posted January 9, 2012 at 8:33 am | Permalink

        uanime5: “Allow me to demonstrate”

        There is of course no reason why being a ‘working person’ militates against being a criminal too.

  49. John B
    Posted January 8, 2012 at 3:14 pm | Permalink

    Leaving aside those who are not able bodied or of sound mind, the question should be is it really the case that in the UK it is possible for anyone to be unable to provide for themselves and require others to support them?

    Given free education; free access to modern health care; strong industrial based economy; more jobs than people to do them; excellent communications; small geographical areas so labour mobility is not a problem; enhanced civic amenities; well developed infrastructure; stable, democratic (just, still) and peaceful society…

    In my view the answer is no.

    Council provision of low rent, not no rent, housing and temporary – up to 12 months – unemployment benefit (this being a cash payment equivalent to the average wage and nothing else) are a reasonable provision. But nothing else.

    Providing the range of benefits currently available only encourages people not to rely on themselves and expect a standard of living which they do not have to earn and themselves fund.

    Time to make it tough – again.

  50. Norman Dee
    Posted January 8, 2012 at 3:20 pm | Permalink

    Mr Redwood, please choose your words more carefully, depression is not something to mock and if genuinely given as an “excuse” to not working it will be because the symptons and effect of depression is as handicapping as a physical wound. I was the last 12 years of my working life suffering from a relatively moderate form of depression which I still have to this day and as I get older I am told it may get worse because the drugs to treat it will have gradually less and less effect. I was offered sick notes more times than I can remember but I made the effort, some won’t either because of a predisposition to laziness, or because the depression is too deep. I used to lock my office door and just cry for no apparent reason, I was paranoid, and distrustful on occasion it is not funny, the irony was that when I was eased out at the age of 59 it turned out my paranoia was not without some reason, and had dulled me to not see the warning signs. Stress and tension in the modern workplace is too often overlooked, at least 3 of the people I worked with were displaying genuine signs of depression but would do nothing about it because of the stigma that you and other people have chosen to give it.

    Reply : I did choose my words carefully and covered your point fully. Please read what I wrote again. I do understand from others I have known well how some people are badly affected by depression.

  51. Tim Almond
    Posted January 8, 2012 at 4:01 pm | Permalink

    No-one wants to offer unemployment benefit to the billionaire who does not need to work, or to pay for the children of the banker or footballer on the seven figure salary. Most agree we need to target the aid and assistance on those in need.

    I do. If someone was prudent enough to leave their millions in the bank, why should they be penalised over people who earnt as much but spent it?

    And this isn’t even at the billionaire level. Save £16,000 and you won’t get income support. Which is why you’re probably wise to simply pay off your mortgage or stick it in a pension where the DWP can’t touch it.

    The DWP also penalises people who take out income protection policies, by treating the payments as income.

    • Bazman
      Posted January 9, 2012 at 8:04 pm | Permalink

      You can claim unemployment benefits as long as you have paid enough national insurance no matter how much money you have got, for six months.

  52. Robin
    Posted January 8, 2012 at 4:10 pm | Permalink

    With some notable exceptions, no one should receive benefits of a value higher than the minimum wage less an individual’s basic tax allowance. Why should someone be better off than the man or woman earning the average wage?

    We should also look to reduce the rate of population growth. Address that and we could probably dispense with Chris Huhne’s job destroying taxes.

    Finally, let us all wish IDS success.

  53. Martin Ryder
    Posted January 8, 2012 at 4:21 pm | Permalink

    1. Help for disabled people should focus on the disability and be designed to remove, or at least mitigate, the adverse effects of the disability. This should be done by the NHS, using public money, and by charities using private money. It is help for the able that is the problem.
    2. Half of the population in every society on the planet must be living on less than the average income. This would be the case even if everyone worked full-time from the day they left school until the day they died. I leave it to the mathmeticians to define ‘average’. 3. The key issue is to define how far below the average income must a person be to expect (or at least hope for) help from those who are on the other side of the average and how should that help be given.
    4. My feeling is that, as much as is possible, help using public money should be automatic and not involve much human intervention, simply because humans are fallible, gullible and can easily be corrupted.
    5. Help using private money through a charity can use whatever methods the charity and the contributors like, as no one has to pay into the charity. So a Help4Homeless charity could buy mansions for the homeless, if people are prepared to contribute money for this purpose.
    6. My mechanism for helping those on low incomes or no incomes would be a flat income tax-take of, say, 40% on all income and a flat tax-back of, say, £500 per month for all people legally resident in the UK, who are employed in paid or unpaid work of at least 25 hours per week or have reached the state retirement age. A person receiving the full tax-back amount should have lived legally in the UK for 25 years. An person born in the UK who starts work at the age of 16 would get 64% of the full tax-back amount. The tax-back would be faded out for people earning more than £52,000 per year.
    7. Unpaid work would include the full-time care of one or more child below 16 years old or for a disabled person or persons of any age. The tax-back would take the place of all benefits and the state pension and would be paid to individuals directly by HMRC into a registered bank account on receipt of the tax-take from paid employment or confirmation from a responsible person that the unpaid work had been done.
    8. I would not pay housing allowance but local councils could, if the council taxpayers agreed, set up hostels for the homeless. No one should sleep in the street.

  54. Mike Stallard
    Posted January 8, 2012 at 4:27 pm | Permalink

    Mr Redwood – you have hit a real nerve here. Look at the number of comments!

    Today there was a scathing programme on Radio 4 about the Big Society where, to the amusement of Polly Toynbee and the Guardian Newspaper and indeed to several Labour people, Mr Cameron’s pre-election speech on the Big Society was reprised.

    Before the election, Mr Lansley spoke a lot about the Health Service, Mr Duncan Smith spoke a lot about Welfare Reform, Mr Gove spoke a lot about truly free schools.

    So where are all these reforms? My suspicion, based on the free Schools debacle, is that they have been deliberately undermined and then exploded by the Civil Service.

    Do you yourself have any ideas?

  55. Robert Christopher
    Posted January 8, 2012 at 4:29 pm | Permalink

    I have always thought that if someone was out of work and that there was a vacancy, that it was legal and thought to be suitable by the Job Centre, then it should be taken.

    That was until I saw what has happened in Germany!

    We are all in the EU now so, if we can’t veto it and just take it lying down, it could happen here:
    http://www.telegraph.co.uk/news/worldnews/europe/germany/1482371/If-you-dont-take-a-job-as-a-prostitute-we-can-stop-your-benefits.html

    • uanime5
      Posted January 8, 2012 at 7:38 pm | Permalink

      The Job Centre can only recommend you apply to some suitable vacancies. It’s beyond their power to ensure you get the job.

      Also in Germany brothels are legal.

  56. Brian Taylor
    Posted January 8, 2012 at 4:46 pm | Permalink

    As a very recent pensioner (65) and a tax payer with a tax Code is it possible for those with a tax code that indicate they are paying 40per cent tax or 50 per cent to be excluded from such benefits as, fuel benefit,child benefit etc.
    All benefits could be set by the tax code at a level of income regardless of age.

  57. Derek Emery
    Posted January 8, 2012 at 4:46 pm | Permalink

    Cutting defence is the easy option for Labour as it barely involves taking on the public sector unions. Spendthrift Labour have never said how they would make cuts to the parts of the public sector where their supporters work and never will.

    • Ian
      Posted January 8, 2012 at 9:16 pm | Permalink

      A good reason for legalising union membership in the forces.

  58. Sarah
    Posted January 8, 2012 at 5:43 pm | Permalink

    I believe we are fundamentally confused about the work/benefit/regulation equation.

    It is impossible to discuss this without engaging in massive generalisations in which it is then very easy to pick holes as though the author of the mass generalisation was in some way dim or prejudiced.

    We find ourselves in a mature highly regulated post industrial economy. Due to the fact that the economy has these characteristics the possibility of creating a dynamic and fluid jobs market is very limited. It is therefore the case that many people ( too many) will simply be unable to find jobs at all or will be unable to find jobs which will fund housing, transport and retirement costs. It is hopeless to blame people who are incapable by virtue of
    background or education of competing in such a jobs market for surviving anyway they can within a state sponsored benefits system. Such a system is the necessary corollary of our present choices with regard to the economy.

    The choices which have been made over the post war decades have largely benefitted the educated middle class who have been able to have comfortable jobs, rising house prices and funded retirements and have therefore been content to pay for an underclass.

    Globalisation is now squeezing and will continue to squeeze middle class incomes and outlook to the extent that they will not be prepared to pay for such an underclass (nor incidentally a bloated public sector). We find ourselves heavily in debt with the wrong economy/benefit equation. Whilst the economy retains its present shape I do not see how we can change the benefit equation. However unless we change the benefit equation we will go broke.

    Discussing prudence in this context is not desperately relevant.

  59. Geoff M
    Posted January 8, 2012 at 5:49 pm | Permalink

    Some good replies to you article John.
    May I go at a slight tangent to what you have said- in so far as I agree with Dave only in respect of the state sector, leave private business alone.
    As we are the shareholders of the BBC because of paying licence fee could you suggest to the PM that we have a say in the wages of senior management and broadcasters of this organisation. How about the remuneration of all the quangos while we are at it as well?

  60. uanime5
    Posted January 8, 2012 at 5:54 pm | Permalink

    As long as there’s more people than there are jobs people will remain on benefits. At present there are 2.64 million people unemployed but only 455,000 jobs available.

    A cap on benefits may force some people to move from high cost areas to lower cost ones. As most low cost areas tend to have fewer jobs than high cost areas (which is why they’re low cost) this may introduce another barrier to work and reinforce the poverty trap.

    Here are facts about unemployment from the DWP:

    “71.8% of those aged 50-SPA are in employment. This is lower than the employment rate
    for people aged 25 to 49 (80.1%) but higher than for those age 16-24 (52.2%).”

    “People aged 50-SPA are more likely to be long-term unemployed. 30.7% of those
    unemployed aged 50-SPA compared with 21.0% of those under 50.”

    5.6% of men and 38.5% of women aged 24-49 work part time.

    17.7% of men and 47.4% of women aged 24-49 work in Public administration, Education and Health.

    http://statistics.dwp.gov.uk/asd/asd5/rports2009-2010/owsib2009.pdf

    Table 2 shows that in 2008 the total cost of welfare payments was £137 billion and table 5 show the cost of administering these benefits was £5.8 billion.

    http://www.dwp.gov.uk/docs/annexes-22816.pdf

    “Out of the 2.25 million claims for JSA every year, we know that around 60 per cent of jobseekers leave benefits within 13 weeks and increasing to around 80 per cent within 26 weeks. … Only 10 per cent of jobseekers making a claim for JSA are still unemployed 12 months later.”

    “Evidence shows that by moving people from unemployment into employment reduces GP consultation rates and medical costs by 33 percent.”

    http://www.dwp.gov.uk/docs/dwp-worklessness-codesign-ir.pdf

  61. BobE
    Posted January 8, 2012 at 6:25 pm | Permalink

    Instead of benefits they should be employed by the state. Minimum wage, 0900-1700, working 5 days a week. The problem is benefits without work.
    BobE

    • uanime5
      Posted January 9, 2012 at 7:49 pm | Permalink

      This could work as long as there’s relevant work for them to do. If they sit around all day doing nothing or don’t obtain the skills they need to get another job then once people are employed by the state they won’t ever be able to leave.

  62. Bob
    Posted January 8, 2012 at 6:42 pm | Permalink

    I just read that Cameron will have a reshuffle in March to “buy off” Eurosceptic Tory MPs. Have you been targeted ?

    Google Eurosceptic MPs to win out in Cameron reshuffle

  63. David
    Posted January 8, 2012 at 7:09 pm | Permalink

    John, yo may remember that some months ago, I introduced the idea here that the State pension retirement age should be indexed to life expectancy on (say) a 2-3 yearly basis.

    For housing benefit (and other benefits) I see the same indexing possibility. Here, the index (or ‘base’) would be the oft quoted figure of ‘average wage’ (or some understandable variant of it). Assuming the calculations were appropriate this would eliminate the feeling of gross injustice felt by many.

  64. MajorFrustration
    Posted January 8, 2012 at 7:35 pm | Permalink

    Have a lot of sympathy for views of Disaffected. Hope welfare reforms do have some teeth and not just political rhetoric. If reforms are brought lets hope there is a system to show/measure what has been achieved in financial terms.
    Housing benefit is being capped at £400pm which equates to about £19k pa – substantially above the average wage – where is the sense
    In the Times today there was a quote that a single mother of two can receive approx £400pw – surely there should be some contribution from the father to reduce easy benefits- but no the state his picking up the tab.
    Benefits, Government waste, immigration are important issues that people want addressed and not by just lip service to the voters. An now DC is chasing up coys regarding excessive executive pay especially when any uplift overlooks lack luster performance – hope this will also include the civil service not forgetting the Governor of the Bank of England – if anybody deserves to have had his pay and benefits capped for the last three yrs its Merv.

    • uanime5
      Posted January 9, 2012 at 7:50 pm | Permalink

      The average wage is £26,000 per year.

      Unless the father is working how is he meant to contribute?

  65. Andrew Johnson
    Posted January 8, 2012 at 8:24 pm | Permalink

    Interesting answers. Can anyone tell me where all the extra jobs are coming from so earnings can replace benefits?

    • uanime5
      Posted January 9, 2012 at 7:51 pm | Permalink

      The Government is claiming that it’s policies will bring about strong growth and jobs, despite weak growth now and weak growth being forecast later.

  66. Frances Matta
    Posted January 8, 2012 at 8:49 pm | Permalink

    I remember the day my darling Daddy returned from work at the National Assistance Board which had been changed into the DHSS by Harold Wilson.
    He was FUMING.
    “From now on every girl should have as many bastards as she can and they’ll all be kept by the State forever”.
    Oh for the pre P.C. days.
    In many cases we are now paying for the 4th generation of Wilson’s radical ideas.

  67. Caterpillar
    Posted January 8, 2012 at 9:40 pm | Permalink

    JR / Thanks for a thoughtful piece: How do we judge when we are all too quick to judge?

    My less thoughtful contribution:

    (1) Decide whether UK wants to be at the cut-back core state end or the high tax, high trust end. At the moment it seems a little stuck in the middle.
    (2) On means testing:
    (i) Where is it efficient and effective, presumably Govt Depts have short term data and some understanding on longer term spillover effects.
    (ii) How to do means testing? Well looking at one value on a personal balance sheet seems inappropriate. I suspect the solution to being stuck in the middle would be, access to all benefits for a certain period of time in ones life irrespective of means, additional access to be means tested where the means testing includes some historical measures. There would seem to be no easy answer.

    More generally fixing the system such that prudence flows into savings which flow into investments – the mechanism for giving something up now in order to be more productive in the future and hence increase GDP per capita has been lost with the BoE/MPC’s policy direction and media’s misplace belief in the paradox of thrift. Savings (the UK’s as well as China’s) should flow around the system.

    As an aside I do agree with others on here that the ZIRP policy is essentially a huge benefit payment to mortgagees, irrespective of means testing and should be seen as such and discussed as such. (This doesn’t prevent recognition of the other failings of ZIRP and the UK housing market.)

  68. Robert Christopher
    Posted January 8, 2012 at 9:55 pm | Permalink

    “Why bother to be prudent?” To be prepared for war!

    John, this is getting a bit serious:

    “DAVID Cameron has three weeks to decide whether to bless a new eurozone treaty or use Britain’s veto and place the country in a “very grave position”, a senior observer warned last night.

    However, veteran EU analyst Mr Ludlow said one “very senior member” of the European Council had told him that if Britain were to try to block the deal it would be “tantamount to a declaration of war.

    They want the rules enshrined in EU law so that sanctions can be ­levied on any member breaching them.
    That would mean a bigger role for the European Court of Justice and un-elected European Commission, which would also have a larger say on the ­single market, not just matters relating to the euro.
    Mr Cameron said on Friday he would be against such a development but Mr Ludlow, who lectures around the world on EU affairs, told the Sunday Express: “The Germans and the French are absolutely serious.”
    http://www.express.co.uk/posts/view/294244/-If-Cameron-blocks-EU-treaty-it-will-be-act-of-war-

    So, to recap: Mr Cameron said on Friday he would be against such a development but Mr Ludlow, who lectures around the world on EU affairs, told the Sunday Express: “The Germans and the French are absolutely serious.

    Let us hope Mr Cameron is serious!

  69. Reaguns
    Posted January 8, 2012 at 10:27 pm | Permalink

    Obviously a very difficult one and demonstrating John’s superiority to most politicians. I doubt if Andy Burnham or Chuka Umunna would ever be able to offer a webpage like, though they’d be capable of listening to this argument and responding on question time with “Well unlike the tories I DO want us to provide for the poor” or some other evidence avoiding banality.

    Anyway, I too want to live in a society where we take care of the young, the old, the sick, the disabled, and yes those who are unemployed.

    As for bad backs and depression – its very very difficult. We obviously do want to help those who suffer from these things (they must be pretty bad when you look at how many people kill themselves as a result) but we don’t want just anyone to be able to say they have a bad back or depression. I don’t know the answer.

    A horrible expensive, nanny state, authoritarian solution comes to mind where social workers would ‘watch’ those on such benefit just as they watch for dole cheats “doing the double”. Because people with depression usually barely leave the house, and people with bad backs don’t go out to play sports.

    As a minimum, the thing that annoys me most about certain types of benefit abusers, is the young hoodlums who are on benefit yet have the time and money to come into areas, loiter and behave yobbishly. If you are going to receive benefit fine, but don’t ever harass the people who are working to pay for it.

  70. Iain Gill
    Posted January 8, 2012 at 11:26 pm | Permalink

    People who are let down by the benefits system:
    1 single people, far too many people sleeping rough in this country. Far too many rough sleepers are ex-forces with exemplary records. Far too much incentive for young females to have a child to trigger better housing. Rebalance the system so that single folk get enough for a roof over their head.
    2 people who have worked the majority of their adult life. If you have proven yourself as a positive contributor to society by being in work the majority of your adult life the system should be a lot more tolerant. You should not have to jump through hoops in front of the kids employed at the local job centre. You should be trusted much more.
    3 people who live in areas where there are no jobs. Big council or housing association estates subsidised by the state in areas where there have been no jobs for more than 10 years should be shut down. People in such areas need to be helped to move to areas with better prospects.
    4 people mid way through bringing their children up who suddenly find themselves genuinely ill and have problems working. if you have been a positive contributor to society most of your adult life, have paid large amounts in tax, find yourself seriously ill, you end up spending your savings and then falling back on the state. I think we could do a lot better for such people, this is most of the decent people in the country if a bit of bad luck strikes.
    5 children in care. Absolutely appalling standards of care from the state for children who end up in care, and they tend to go onto produce children themselves who have problems.
    6 people who do “get on their bike” and move for work. In all sorts of ways the state lets them down. They can lose the nice safe house they were bringing their kids up in. they can lose the social networks and need child minding etc much more. People who take such risks need to be rewarded or too many of them will take the easier option of staying put.
    Things the conservative party needs to understand:
    7 if there are more adults of working age than there are jobs in the economy then some people are going to end up out of work through no fault of their own. These people are not all scroungers.
    8 if the government prints work visas like confetti in some trades like IT its hardly surprising that many Brits end up out of work and replaced by the swarms of foreign nationals in the country on those work visas. Immigration needs a root and branch reform.
    People who can get it too easy on welfare:
    9 people choosing not to work as a lifestyle choice who can get by on benefits or even top them up with wages from the black economy.
    10 people who play the rules, move assets into other friends or families names so that they then become eligible etc.
    Why bother to be prudent:
    11 good question.
    12 I tend towards the view that benefits should not be means tested.
    13 I also tend toward the view that your benefits payout should be higher the greater the proportion of your adult life you have worked. This puts incentives in the system to work.
    14 I tend to the view that ALL of your assets should be counted if any are going to be. Take 3 people
    Person A has 200 K house equity 200 K pension pot 0 savings
    Person B has 0 house equity 200 K pension pot and 200 K savings
    Person C has 200 K house equity 0 K pension pot and 200 K savings
    They are all equally wealthy, I see no reason why Person A gets benefits when Person B and C do not. This needs sorting. People could have benefits paid to come out of their house equity or pension pot at a later date, better solution would be to remove means testing altogether, we need to remove the disincentive to having savings.
    15 state needs to stop rigging the market. Subsidies to council/housing association housing need to stop, subsidies to house buyers need to stop. Subsidise people in need instead and let them make the tradeoffs re distance to potential employments/house size versus how nice the area is etc.
    16 benefits rules could be changed so that you have to spend X % of your savings before you can claim, rather than having to spend almost all of your savings before you can claim if you have a decent amount. By making it a % of what you have when you first fall unemployed it also means those that saved the most keep the most.
    17 people who are helping themselves also need help. For instance I see no reason why we have to pay for training relating to jobs or potential jobs out of taxed income, we should be allowed to pay for training ourselves for the jobs market out of earnings before tax. People who go private because the NHS lets them down, again I see no reason why they have to pay again for healthcare and out of taxed income. People who move house for work could be helped or encouraged much more for doing the right thing, why not let them pay for moving out of pre-tax income?
    Other thoughts:
    One some of the bad estates I would be tempted to start giving targeted hand outs rather than straight cash in many cases, throwing money at the worst estates has been a repeated failure. I would be generous giving books to the children for instance. I would be generous paying for the children to go on educational trips. I would start pushing the money in the direction that decent parents would always try to anyways. Those parents with little money who are in the bookmakers, pub, cigarette shop, etc need big incentives to change their ways.

  71. Monty
    Posted January 9, 2012 at 1:07 am | Permalink

    Malcolm Etchels:

    “The second problem that the country has is that having babies is now an income stream for people on benefits. The more kids you have the more cash you get. So to solve this issue when people first enter the benefits system the benefits they get should be based on their circumstances then. So if you enter with 2 children you get xx benefits and these should remain at they level for as long as the person is on welfare, no annual increases of 5.1%. Also whilst in the benefits system if people have more children the benefits, including large houses, should be frozen i.e no extra benefits for more kids. These people would very soon stop having kids if the result was they had to give up the Sky, fags and booze.”

    You are absolutely right that the idle use babies as a means of unlocking the benefits system, and that in turn gives rise to dysfunctional households where the pattern of welfare dependancy is renewed every generation. And all they have to do is have a baby, and they get a council house plus living expenses, and letting that baby go short of food or housing would be unbearable. The bairns have to be provided for.

    We need to assess the circumstances of every new baby, and those for whom there is no independant provision, no breadwinner, should be placed for adoption. If a family or single mother with a track record of working for their living are temporarily unemployed when their baby is born, we would exempt them and provide support until they are back on their feet.
    But our current system confers a free house and a free living to any girl who has a baby, and that’s exactly what they are doing. If we stop making it worth their while, they will have no incentive to do that. Being sent home from the maternity unit with no baby, no keys to a council house, and no benefits, will put them right back to square one. Just as importantly, it will break the cycle of freeloading which has become so entrenched in our society.

    • Iain Gill
      Posted January 9, 2012 at 9:23 am | Permalink

      depends, in some parts of the country where there are no jobs at all this is not a viable policy for instance.

      rather than picking on people on benefits i would pick on big time criminals! current policy of allowing children to remain with their parents no matter how many and how big the criminal convictions of the parents i think is a failure. it would be better to get the children out and brought up elsewhere than leaving them to be brought up into the next generation of criminal underclass. and guess what all sections of society would support this including the poorest and most vulnerable!

      • Robert K
        Posted January 10, 2012 at 11:07 am | Permalink

        Even leaving aside pragmatic arguments about the state making a lousy parent, about the high rate of academic underachievement and mental health problems of kids in care, and about the mess in the realm of regulated adoption in the UK, it’s breathtaking that anyone could suggest families should be broken up by state diktat.

  72. RDM
    Posted January 9, 2012 at 12:25 pm | Permalink

    “Why bother to be prudent?” is too narrow a question, not just for those who don’t have any spare income.

    How about;

    How do we, as individuals and family’s, generate wealth, and go about building their own life? Parliament and Government ensuring a proper and viable framework for everyone, based on the rule of Law, …

    I think it can now be said; Politicians can no longer offer a Utopian dream, they must Represent our best interest within Parliament! And not try to Govern the way we live!

    It’s not just reducing the size of the State, nationally and locally, although a priority.

    It’s also, and at the same time, to ask; Are we equipped to take what ever (whenever) opportunity life throws at us? Locally, nationally, and globally, because, as a country, that’s where our focus should be.

    The key question that I come back to, every time, is Does everyone have equal access to the British Banking Systems? Absolutely Not is my answer!

    Access for startups and project finance, allowing individuals to take opportunities not based on Matched funding or short term loans, but associating Risk to their Reward, and creating real Value!

    Access to the British Banking System is the enabler of Free Enterprise! Not something Politicians, especially within the Regions, want! Surely the days of the structure Economy have now gone? This includes Trickle Down economics, all the spare capital has trickled overseas, looking for better Returns! Now we are left with highly concentrated Markets (Energy, Banking, Financial, etc …) and monopolistic suppliers (BBC, BT, etc …). Price fixers and Innovation killers!

    Isn’t it the Left that created the dependency culture and big Government, isn’t it the Left wing Regional politicians that want a Federated UK, within a Socialist Europe?

    It’s within a Free Enterprise Economy (Culture) that Prudence can pay?

    I find it difficult to ask; Why bother to be prudent? Until we have some sort of understanding of the context.

    And it is foolish to suggest imposing change on people, our People, without fully understanding how they can address the most basic questions that confront them, daily! Taking what ever opportunity life affords them! And not only must they understand this, but Politicians must understand that there must be a framework already in place. Access to the British Banking System must be part of this!

    Do you realize how many People have been left “economically inactive” since the changes (that were needed!) of the 80’s???

    Until then; their (my) attitude can be summed up by understanding this;

    Being forced into the “World of Work” is a good reason to Stay on the dole! And if you doubt this, the answer is STUFF!

    Regards,

    RDM.

  73. John Chell
    Posted January 9, 2012 at 4:56 pm | Permalink

    I note in the Telegraph today that families with 10 children can obtain as much as £60.000 a year.

    Is it not time, in view of overcrowding in future years, to limit offspring to two only, i.e. replacing the parents in due course? Any children above that figure are the sole responsibility of the parents. I am sure that will keep the population stable and avoid a nightmare situation in this country.

    JC

    • Iain Gill
      Posted January 9, 2012 at 6:58 pm | Permalink

      Depends

      If you have a big family while earning large enough sums to support them and realistically could expect to earn enough to support them through their years and then fall too ill to work, or lose your job through no fault of your own, then I have some sympathy and such folk should be supported

      On the other hand people who have never worked and who have no realistic prospect of earning enough to support them before the children are conceived really should not be incentivised to have large families by the benefits system

  74. Barbara Stevens
    Posted January 9, 2012 at 6:29 pm | Permalink

    This is a complex issue for many, particularly if you find yourself homeless or unable to pay the mortage through loss of a job. When we bought our modest small house in 1979, we were thrilled to be able to say, one day it will be ours, it now is. From hard work, no holidays, not smoking drinking and being wasteful, you could say thrifty. We’ve never owned a car, we couldn’t afford a mortage and a car. As the kids grew up we put them through college when needed, we paid for the courses, they’ve never been unemployed. If they have been made redundant they’ve sort work elsewhere. The ethos of work as always been there in our household. On the question of support. I believe paying NI, is the key. No NI, benefits should paid accordingly. We can amend legislation for those who are ill or have to look after children. For the young who have no NI on their cards, benefits could still be paid if they attend college and train for a job, like plumbers, electricians, and carpenters, which we are short of. Its silly to stop JSA when a person wants to retrain, another area where things could help.
    We struggled to buy our own house, we went without intentionally, we had to, to survive. We’ve no regrets. However, when you live nextdoor to rented propety, it’s not always for the best. We have that scenorio by us, we’ve spent money on our house for our retirement, but the rented properties, owned by foreigners, are not kept clean or looked after which reflects on our investment. We cannot afford litigation to set it right, and at our time of life why should we; so we have to endure. I would like to see with rented properties now more widely available, laws put in place for the council’s to use, to make these new vendors responsible to these properties. Their letting licences should be revoked or not given if properties are not up to scratch, to protect prospective tenants and those who live by them. Fairness on both sides. The rents @ some £650 per month is not cheap, therefore there should be laws put in place to stop abuse. I’m hoping, but doubt if anything will change.

  75. Bazman
    Posted January 9, 2012 at 8:45 pm | Permalink

    Why bother to be prudent? Prudent in taking what come s along? I’d agree with that. Then frugal to give yourself a shelf to stop the state or employer from cutting your benefits/pay and getting the landlord off your back. It’s the only way. Much more bleating about personal circumstances on Johns credit card post. Did you all pay your cards off? Or did you ram it? You rammed it.
    A man works for a company reliant on government contracts in an isolated town for 30 years as a tradesman and has 3 children who by this job supports. The government pulls the plug on future work. Him and thousand like him are made redundant. He gets a job in a call center as he is quite smart and able to turn his hand to many things. The call center is then based abroad. He is out of work again. Tries taxi driving, but to many taxis and not enough work. The other local business have no vacancies and the supermarkets also have no vacancies as most of this work is done by woman. Now what? Compete with young Eastern Europeans for minimum wage jobs in large conurbations leaving his family of teenage boys and an infant girl to themselves whist he barely earns enough to live on himself? The teenage boys have little work as they are competing with smart and fast middle class eastern Europeans and men like himself. He cannot find work and gets depressed. The doctor is sympathetic and signs him off as sick. He is now one of the long term unemployed. A scrounger some would say. He gets more depressed. Employers even if there is any are less interested. He survives by benefits. his wife’s cleaning job and the tenner a day to fix cars his mate pays him. A tenner for a days spannering? Hard work, but pays for the boys football subs and a couple of pints to save his sanity.
    Now many of the contributors think this benefits scrounger and fraudster should also be put on the street and not even be allowed to have pint or watch sport on SKY TV. for getting himself in this predicament and so should his feckless teenage boys. His wife should not have had so many children even though the government said jobs were secure at the husbands work. The boys should live like East Europeans and work anywhere for any money. In fact they should be as desperate. In short if they are all starved then they will find work and not be a burden on the taxpayer and especially not have a family with a girl in the same circumstances until they have the means to do so. Though this seems like the only ‘career’ they will ever have and the only ‘material’ things they will ever possess. They are being told this by middle classes in cushy circumstance like them often not of their own making and millionaire politicians supported by millionaire bankers and the like. If their are undeserving poor then by default there is undeserving rich and in a country like Britain certain living standards for the population have to be maintained whether deserved or not. Ram it again.

  76. Monty
    Posted January 9, 2012 at 9:58 pm | Permalink

    There is another aspect to multi-generational welfare families and it is this: Why does every successive generation become eligible for benefits as soon as they reach 16 or 18? If the parent is dependant on welfare for their home and living, they should have an ongoing legal responsibility to house and provide for their offspring, regardless of age. And if the parent evicts the son or daughter, that parent should be divested of their welfare entitlement. Otherwise, when that problem family grows up, you have to provide each of them with a seperate house and living.

    Welfare dependancy should be an uncomfortable, austere, and unpleasant experience for those who choose to wallow in it.

  77. Monty
    Posted January 10, 2012 at 12:10 am | Permalink

    Here is an approach for dealing with applications for housing and benefits from those who are not registered disabled, or incapable of work:

    For every five years the applicant has been in full time work, one year of welfare support should be paid to maintain them in current housing. The running of that meter provides a strong incentive to get back into work, because that allocation is running down. Even if they take a low paid job, the clock stops and their credits start building up again. Entitlement is based on work, not income. During this year of grace, the applicant is eligible for free training. We could call this Stage 1 maintenance.

    If the year runs out with no return to work, the first stage of austerity kicks in. Applicant has to move to social housing, and benefits are reduced sharply. The one year countdown re-starts, and we would call this stage 2 austerity.

    At the end of the second year, with no take-up of work, the applicant moves into a hostel. This is stage 3 austerity, involving the bare minimum of food and shelter, in a room in a supervised hostel.

    Of course, no government would dare put such a system into place, without first stemming the tide of immigration. With luck, we will be out of the EU soon, so you might actually be able to do it.

  78. Robert K
    Posted January 10, 2012 at 11:21 am | Permalink

    Q: How tough should the state be when assessing eligibility for benefits?
    A: The state, i.e. the national government, should not be involved in assessing eligibility. The diversity of responses on this web post alone demonstrates that no one nationally set mechanism will ever be satisfactory. (And bear in mind that most bloggers here come from a broadly similar part of the political spectrum.) Those in hardship should be supported within their local communities, at the parish level.
    You cannot blame the benefit claimant for their lifestyle – they are simply making rational economic choices. The blame lies with the bureaucratic elite that claims the moral high ground by administering the benefits system.
    Q: How do we answer the question “why should I be prudent”?
    A: I should be prudent so I can provide for myself and my family and not be a burden on anyone else. Prudence also allows me to support charities that I believe deploy funds effectively to relieve hardship. If the financial burden of excessive taxation was reduced I would have more money to give to those charities.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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