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Business News

Help jobless homes, help the economy

Report argues that the Government should encourage households to find work

New research that shows Britain has the highest number of workless households among the biggest European economies argues that more welfare reform is the best means to economic growth.

Dr Peter Warburton, in a report published tomorrow by the Centre for Policy Studies, reveals that 11.5 per cent of British households are workless, slightly better than a decade ago. He adds that the boom between 1992 and 2007 did not improve employment prospects for many workless households because most new work was taken by families where one person was already working.

But Dr Warburton argues that reforming the benefits culture, with a range of policy measures designed to help people back to work, could add up to 3 per cent to GDP.

He claims that even a 10 per cent fall in the number of these households could add around 1 per cent to GDP: "Reducing the proportion of workless households could have a significant impact on growth; a 10 per cent drop in the number of workless households represents a potential 3 per cent increase in the number of working households." Even if the transitional householders were only half as productive as existing ones, it would still add 1 per cent to GDP.

The report, More Producers Needed: why tackling workless households can lead to growth, adds that the Government can help such households to work by imposing sanctions on benefit claimants for failing to comply with training programmes, that training should be carried out locally and that local authorities, which are much more efficient at helping people find work, should be rewarded for success.

Dr Warburton also wants low skilled immigration reduced to encourage local employment and a tax system that ensures that work pays. "In 2020, it is socialised households that require privatisation" he adds, compared with two decades ago when privatisation invigorated the UK economy.

Of the six countries studied, the Netherlands has the lowest number of workless households at 6 per cent, the next lowest is Germany with 9.2 per cent. Spain, France and Italy are all around 10.5 per cent.