Support for those between jobs
It is right that we, through our taxes, support each other at times of personal crisis. This is one of the defining justifications for a collective authority to tax individuals. During our working lives, any one of us could find ourselves between jobs, temporarily bereft of income, at times when we still have a home and family to support. Relying on individuals to insure themselves against this eventuality simply won't give universal and fair cover, or the degree of social equity about which we as a society are in consensus.
A universal, compulsory State insurance scheme paid for by contributions from those in work needs rules and limits. Entitlement should be conditional on the recipient having worked and paid into the fund for a minimum period - so it wouldn't cover school leavers, for instance. The level of benefits should also be related to earnings prior to claim. Most importantly, it should be a short-term benefit, strictly limited to three or six months, as a genuine 'between jobs' cushion.
Such a scheme involves no element of judgement, no means testing, no local knowledge, no geographic weighting and can pay for itself. It can be easily integrated with the tax system, whether at local, regional or national level.
One of Labour's most grievous errors was to lump those temporarily between jobs, people with a lifetime history of work, in with a feckless feral underclass and to manipulate the benefits system to boost the income of the latter cohort at the expense of the former. It simply isn't fair.
These are a long-term cost for which the monetary flow is strictly one-way - we always pay out, but the recipients don't pay in. It's vital that we separate welfare benefits from unemployment insurance.
The level and scope of welfare benefits must therefore be dependent on actual cost of living (regional and local weighting), means testing and an element of judgement as to the 'deservingness' of the individual claimant; it must be closely linked to elements of coercion to discourage indolence, idleness and dependence and encourage those of working age and fit for work of some kind to take it. It must never again be a lifestyle choice as it has become under Labour. It must never be an 'entitlement' as unemployment insurance should be, but always a 'grant'. For all these reasons, the best level at which to award and monitor welfare benefits is at the lowest possible local level.
The Swiss system
I am grateful to Edward Spalton for the following comment to a previous post, well worth quoting;
Switzerland operates a system of national insurance which gives quite generous unemployment benefit under strict conditions for a limited period. When that runs out, people are "on the parish" (local commune) and know that the money comes out of their neighbours' pockets. Also the local officials are better able to distinguish between deserving and undeserving cases. Switzerland's unemployment and "economically inactive" rate is vastly better than Britain's.
James Bartholomew in the Speccie also recently commented on the Swiss system;
While Tony Blair was claiming that half of young people must go on to university for economic success, Switzerland was and remains content to have a mere 24 per cent doing so. It has, at the same time, achieved much greater economic prosperity. Education is only compulsory until the age of 15, yet the vast majority keep going voluntarily because the schools, colleges and universities are good.Most of the other three quarters of students progress from school to vocational training. They don’t do airy-fairy theory. The training typically consists of one and a half days a week at college and the other three and a half at a commercial company. This truly prepares people with the skills and attitudes desirable for a successful career. The result? Switzerland has only 4.5 per cent youth unemployment compared to 18 per cent in France where they have the supposedly economy-boosting 50 per cent of students at university. It seems that writing essays on Racine does not make you a shoo-in at a pharmaceutical company. Funny that.
It seems that the Swiss have more than one lesson that we could learn from.