Friday, 28 May 2010

IDS please note

I have a lot of time for Ian Duncan Smith, but less so for his slightly hissy threat to the Treasury that unless he gets £3bn for welfare reforms he'll walk. Is he just another central Statist, or does he really have what it will take to reform Welfare? Read this from Anthony Hilton in the Standard;
The long-term challenge this country faces is not the deficit, because with common sense and political will it can be managed almost as comfortably as a similar deficit was in 1993. Rather the danger is that we will get back on an even keel without ever having to confront the fact that we have a dysfunctional benefits system, which has created a hugely corrosive dependency culture in a significant slice of the population and now serves as a huge drag on our ability to compete.

Above all it has destroyed the work ethic. By some estimates 70% of the million or so jobs created in this country between 1997 and 2007 went to immigrants, including even the lower-end services jobs in construction, retail and restaurants, because native British workers either did not have the skills or did not want to do the work.

Too much of our economic resource is ill educated, unskilled and unproductive, but if we are ever going to compete with Asia a way has to be found to motivate, mobilise and utilise it. This is where insurance comes in. Roughly a quarter of government expenditure goes on benefits of some form or another —unemployment, sickness, housing, residential care, pensions, top-up payments — and we can self evidently no longer afford it, neither in terms of the direct costs, nor in the way it distorts human behaviour.

Benefits are in fact the state's way of providing the population with risk management against life's uncertainties, but this is exactly the business of insurance.

So when Breedon talks of insurance as being part of the solution he opens the door to a world where much of this provision of benefit is transferred back from the state to the individual.

Payments would come not from people paying taxes and collecting benefits from the government, but from people paying premiums and collecting benefits from the insurance industry.

In the past the idea has been too radical for politicians to contemplate it but if this crisis does nothing else it provides political cover for contemplating such a move. What is needed is an open-minded examination of how best to provide and pay for basic levels of social protection and then do what is rational, not what is dictated by outdated political dogma.
Thatcher's one time advisor and one of my heroes, Ralph Harris of the IEA, was adamant that insurance enabled Britain's working class to be independent and maintain a strong identity, a pervasive work ethic and enormous self-reliance. The last word I think must go to Arthur Seldon of the IEA;
I was appalled by the insensitivity of governments to the efforts of the working classes to help themselves - the belief that they could not do all the necessary things. I began to sense a sort of anti working class sentiment in all parties. They wanted the State to do these things. They didn't like people to do things for themselves. They thought that ordinary people weren't capable. They forgot all the history of the working classes. The records are that the working classes were sending their children to schools by the 1860s. They were insuring for health cover and so on by 1910 - 11 when all parties in England, the main ones Tory and Liberal, with people like Lloyd George and Churchill and Beveridge at the centre, passed the infamous act of 1911 which forced the working class to insure with the State despite the fact that nine tenths of them were already covered by private systems. Politicians seemed to me to be saying you are not capable, you need us to ensure you take care of your families, which was nonsense.
Finally, I'd like to push you in Guthram's direction for details of a forthcoming series of events coordinated by the Cobden Centre; exactly the sort of thing we need to be talking about.


Michael said...

I think that anti-working-class sentiment is an important one, and welfarism is an expression of that - it really does benefit the middle-classes by essentially removing the competition of the working-class from the education and jobs markets. I've touched on this a little bit here (hope you don't mind my posting the link) -

Anonymous said...

The issue is that Labour has mistaken the proletariat for the lumpenproletariat. Or perhaps it's truer to say that Labour pursued a deliberate policy of turning the working proletariat into dependent lumpenproles.

In either case, in Labour's Britain the defining characteristic of the working class is that they don't work. Labour scum see nothing wrong with this - after all, so long as the proles have money for booze, fags and lottery tickets, who cares whether it comes from work or handouts?

The problem, of course, is that handouts create dependency, erode independence and destroy any moral or ethical identity in the recipients (especially if the recipients can work but are being encouraged not to). Labour policies and Tory acquiescence in those policies have turned the working men and women, who were once the iron-hard backbone of this country, into drink-soaked, drug-addicted, child-neglecting two-legged rats whose only function is to destroy their own environment.

Fifty years ago, the West of Scotland was the engine driving much of the British economy and gave 50% of its votes to the Conservative Party. Today what is the West of Scotland and to whom are its votes given?

Anonymous said...

Don't laugh at me. I know that this is incredibly naive of me but... before it's meaning was bastardised to the point where we now all just look upon it as another tax, the proceeds of which all go into the same pot as every other tax, wasn't this kind of what National Insurance contributions were supposed to be for?

If so then I'm all up for paying for my own insurance premiums but can I lose the 8% Class 4 NI Contributions if I do?

And to lose those annoying little Class 2's would be nice too (or are they Class 1's? I don't know, it's all so confusing these days).

Anonymous said...

Just to reply to the first Anonymous poster and his description of the Labour working classes. I'd just like to expand a bit...

Labour had a brilliant idea of inventing millions of what I like to call "non-jobs" (you know the type I mean - the ones which only get in the way of people who are actually trying to do REAL jobs).

So, instead of paying some people £7k p.a. to sit at home on the dole, they were given one of these non-jobs with a fancy title and £25k p.a.

Probably Gordon Brown's biggest regret is that he wasn't able to coax the entire population of unemployed to take up one of his cosy little non-jobs and join in the fun with their comrades.

Jeff Wood said...

Anon at 10:47, yes National Insurance is now just another bloody tax, and it wasn't meant to be.

Long-term, the answer is indeed the privatisation of social security.

Short term, we should begin with a time limit on most benefits. For unemployment benefit, the cap could be absolute. I would suggest two years to start with, and most active unemployed are off it within months anyway.

After a while, bring the limit down to a year, and if anyone wants to insure themselves for beyond that time, the products are in the market now.

For Incapacity, the term limit should again be two years, renewable if the need is independently verified.

The taxpayer might well agree to keep on the responsibility of looking after the genuinely incapable, long term or permanent, as long as the free riders are kept to the minimum.

English Pensioner said...

For some reason, many of the co-called working class seem to have lost the desire for their children to be well educated. I went to a well known grammar school, and at least half the pupils were sons of working-class parents, and many of these parents were very pushy to see their boys get on in the world.

Things seems to have changed. Many parents these days seem to be quite actively opposed to education and have no aspirations for their offspring. They can see no wrong when their little darling disrupts the class and seem to be permanently at the school complaining and supporting their ill-disciplined brats.

Somehow parents need to be taught about the need for their children to get a good education. If they were pushy like in my day, the schools would need to improve to meet their aspirations.

Anonymous said...

Anon 11:03

I'd agree with you broadly but there's one point I'd make: Labour's non-jobs are not intended for the proles; they're intended for Guardian reading sociology graduates from the "New Universities" (i.e. ex-polytechnics). That is to say, they're intended for the Labour-voting middle classes who could never function as employees in the private sector or as students in a rigorous education system.

These people are the self-appointed intellectuals who read Marx's nonsense about the dictatorship of the intelligentsia when they were 14 and decided that they were the natural leaders who could save the proles from themselves. They're the type who look at Polly Toynbee and see something to which to aspire.

arfur pint said...

Anon 13.43: An excellent suggestion to revert such "universities" to Poly status; and then fund them properly to turn out properly qualified technical graduates (if anybody can be found to teach such subjects these days, of course)