A shaft of light amidst the murk of pessimism

The speech this morning from Rachel Reeves, Labour’s Shadow Work and Pensions Secretary, advocated a policy ‘making sure all those who can and should be working, are working’. The idea is that all those on Job Seeker’s Allowance (JSA) should sit a basic skills test for maths, English and IT; all those who fail should have to do training in these areas as a condition of receiving benefits.

In one sense, the ‘Basic Skills Test’ is a calculated political manoeuvre to cut the Conservative Party off at the pass and to reduce its scope for appealing as the party concerned about welfare costs and welfare dependency. In fact, the policy is very much the opposite number to the Coalition Government’s compulsory training for the under 21s who are out of work, announced in the Autumn Statement. Under this scheme, young JSA claimants without Level 2 qualifications will be required to do 16 hours of training alongside their job search.

Both policies mask worthy and valuable support to the unemployed under a veneer of harshness. Both policies fit with the evidence: for instance, that those with poor numeracy are more than twice as likely to be unemployed.

The tone is symptomatic of austerity politics: with the two main parties eager to show that there are few limits on the number of conditions that should be attached to social security benefits.

However, the nature of the debate is also indicative of factors more engrained even than austerity. First, as the SMF’s report Beveridge Rebooted argued, although the UK provides extremely meagre welfare support for the unemployed, 62% of people now think that ‘benefit payments are too high and discourage work’, up from only 27% in 1991. Therefore, it was positive to hear Rachel Reeves speak about seeking to ‘protect the integrity of the system’ through the contributory principle and ‘restoring a sense of something for something’ (it might be noted that even this was dressed up as a means of ensuring that benefit entitlements for migrants are restricted). The Labour Party is after a cost neutral policy – the question is whether it can live with the fact that this would have to come with a significant curb on the numbers eligible for support.

Second, the speech was framed very much around ‘getting more people into work and creating better paid and more secure jobs, [so] that we’ll tackle the drivers of rising benefits bills and ensure the system is sustainable for the long term’. This means more people in work, and increasing the productivity and earnings of those on low pay. In this regard, it is unclear why Labour’s advocacy of better skills does not extend to the low paid. Its policy of strengthening the National Minimum Wage and encouraging the Living Wage through tax breaks may increase take-home pay for some, but it won’t necessarily improve the productivity of the workforce nor boost the UK economy. So, why not extend the principle of skills assistance also to those on low pay? This could increase the productivity of the low paid and save the Government on its bill for in-work benefits down the line.

But, then, I can’t see the veneer of harshness on that one.


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