11 November 2010

Bluff And Bluster

In the benefits debate, both sides ignore the obvious. This is not about benefits at all - The right are correct to say that any one person can probably get a job if they try hard enough (but not if they all try at the same time), but the left are also correct to say there are not enough jobs and that most aren't worth taking anyway. Even Carol Vorderman could tell the Tories 2.5m unemployed into 500,000 vacancies does not go, even before we look at the skills mismatch and social problem/criminal records of applicants. The Tories universal credit sounds great and if they were serious about it, it would work. But moving from withdrawal rates of 65p in the pound to 55p will not 'make work pay'. Just saying 'work will pay more than benefits' will not make it true.

Anybody with any sense knows our benefits system is broken, so too is our tax system. Both are too complicated. If we really wanted to 'make work pay' we would sit down and all of us decide what is a 'reasonable' living wage, then guarantee that amount as take home. It doesn't have to be just a minimum wage, it can be tax credits as well, in-work benefits, a citizens basic income (CBI) or whatever. I would prefer a CBI because it is the simplest and most efficient method, but the main point to make is - if we really want people to work we have got to make it worth their while with better pay and conditions than at present.

At the moment somebody working full-time on the minimum wage would earn around £11,500-£12,500 gross. They would take home around £900-£950 a month. On benefits in a high cost area housing benefit and council tax benefit could easily come to more than this, let alone the £300 a month jobseekers allowance, or £400 a month Employment Support Allowance on top. In most areas, unless a job delivers more than £1,000 a month take home, low wage workers will be worse off than on the dole. The fact that 5m people still choose jobs that pay less than benefits tells us all we need to know about how much people want to work. A further point to raise about this is that benefits are not 'too high', they are just enough to put a roof over someones head and food on the table with little for anything else. I defy anyone to live for long on benefits without running up debt. Remember most benefit goes to landlords (the housing crisis is for another post).

And it is not just low pay that is the problem. Low wage jobs tend also to be a 'living hell', with bullying bosses, extreme stress and barely legal minimum breaks, holidays and sick pay (if they can get them at all) and long commute distances on expensive and unreliable public transport. Why face all this AND be worse off financially? Yet most poor people do take these jobs, out of pride or fear or whatever. We also need to remember that low wage poor and benefit poor are not completely distinct groups, most interchange regularly between the two states. Most people on benefit have spent most of their time in work and most people in work have spent some time on benefits - maybe as a 'lifestyle choice' as middle class students taking a 'gap year' before work or who knows.

Yet we do know what people think is a comfortable take home pay - around £1700 a month in the most recent survey. People involved in this survey took home an average of £1250 a month which is about the median 'average' wage. The mean 'average' is around £1700 take home. So if everyone was paid the same we could pay £1700 a month. But for starters lets aim for 2/3 of this, which is the poverty guideline around £1150 a month. If work always paid this amount, watch unemployment fall. But this money would have to come from somewhere and it would mean that the rich would have to be made to pay their taxes and tighten their belts. Well I would vote for that. I doubt I'm alone. The poor are the majority we should have more than 7% of the wealth. But we have a fight on our hands to beat their wealth and ownership of the media.

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