Poor way to tackle poverty

Yvette Cooper explains why US plans to slash benefits will not help people into jobs
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The Independent Online
Bill Clinton is giving "welfare-to-work" a bad name. When, as Arkansas governor campaigning in the 1992 US Presidential election, he promised to get Americans off benefits and into jobs, it sounded a worthy and sensible aspiration. After all, everyone agreed that it was better for people to be in work than stuck on the dole: better for their own dignity and self-respect, better for their family finances, and better for the taxpayer's purse.

Politicians on this side of the Atlantic adopted the slogan with enthusiasm, with all three main parties using it to describe new policies. However, the crusading, pioneering role of the Clinton Democrats soured suddenly this week, when the President agreed to sign the new welfare bill passed by a Republican Congress.

Although Mr Clinton described the bill as "the best chance we have for a long, long time... [of] ending welfare as we know it", the detailed provisions look less like welfare to work, and more like welfare to the workhouse. The poor will lose food stamps worth around pounds 400 a year. Heads of families will have to find work within two years before losing their entitlement to welfare. And no one will be able to claim benefits for more than five years in a lifetime.

Last year's Conservative leadership challenger, John Redwood, thinks the US bill is great. But this kind of benefit slashing is completely wrong - because it is immoral and mistaken. It's all very well looking for ways to encourage those who can work to get jobs, but the US bill is targeting families (often single parents) with children. Mothers who cannot work because they can't find or afford child care will have their money (and their health insurance) taken away. No civilised society should push people - especially children - into destitution.

Even on the broader point of restricting benefits to encourage people into work, the Republicans are making a mistake. Neither cutting the level of benefits (supposedly to make work more worthwhile) nor curtailing the duration of benefits (supposedly to prevent long-term unemployment) are the best way to tackle the serious problems faced by the unemployed.

Take the level of benefits. It is true that many unemployed people are better off on the dole than in work - especially if they have children and a spouse who is also unemployed. According to the recent Organisation for Economic Development and Co-operation employment report, the income of an out of work couple with children is 77 per cent of that of a similar family with one earner on the average wage.

The relationship between benefits and average wages doesn't tell the entire story. Many of the unemployed are low-skilled and cannot hope to find a job paying average wages. Recent research by Paul Gregg and Jonathan Wadsworth of the London School of Economics shows that the unemployed take jobs which are considerably worse paid than those taken by people already in work. As for single parents, they need to earn enough to cover child-care costs, while still finding spare time to spend with their children.

So many of the unemployed simply can't find employers who value their labour highly enough to pay them more than they get on benefits. The real problem is not that benefits are too generous, it is that the wages the unemployed can earn are so low.

Governments that are serious about getting the unemployed into work should be trying to raise their earning power, and their income in work, rather than slashing benefit levels below the poverty line. Education to help people get better-paid jobs, tax cuts for the low-paid, in-work benefits such as Family Credit or the US Earned Income Tax Credit - underpinned by a minimum wage - and help with child-care costs are all better measures for helping people support themselves, than taking the benefits away.

The same applies to the second plank of the Republican/Redwood approach; cutting the duration of benefits. Again, they are right to have identified a problem: people can spend years unemployed becoming more and more depressed, stigmatised and unemployable. Time limits on benefits in some countries (for example Sweden) encourage people to leave unemployment just before the benefits run out.

But this is not an argument for ending entitlement to benefit altogether. Even with the end of their benefits looming, some people still won't be able to find jobs, or affordable child care, without help.

The Swedes provide that help by guaranteeing the long-term unemployed a job when the benefits run out. The Labour party is proposing something along similar lines. It argues that anyone out of work longer than two years (or six months if they are under 25) should be found good training programmes or adequately-paid employment (perhaps through wage-subsidies to the private sector). Young people who refuse reasonable offers of work would have their benefits reduced.

Getting peo-ple off welfare and into work doesn't require punitive, immoral measures, US-style. It is possible for the state to provide genuine, constructive help for the unemployed, make them better off in the process, and save the taxpayer money on benefits in the long run.

Just because Bill Clinton has bowed to electoral and political pressures to accept the Republican agenda, doesn't mean the rest of us should give up on his original ideals.

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