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What to do with all that knowledge on welfare

17 May 2010

Is Frank Field back? The Labour MP has spent much of his life talking about the poor.
Judging by reports today, he might be offered a job chairing a commission on child poverty.

This is good news but, as Mr Field has already said, there is not much point in him debating the finer points of poverty definitions. He would need to be given remit to suggest policy. What should
those suggestions be?

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First, he should argue that we need to be a lot less self-indulgent about how we think about child poverty. It may be great to think of ourselves as tackling a major social ill, but the past
government’s approach was not nearly as successful as it or its supporters liked to think. Between 1997 and 2007 the percentage of the population with less than 60 percent of the
nation’s median income (i.e. those below the official poverty line) fell from 20 percent to 18 percent. But the percentage of the population living below 40 percent of the nation’s
median income rose from 5 percent to 6 percent. In other words, those who were worst off were still very poor after ten years of Labour government. As Policy Exchange pointed out in Poverty of Ambition: Why We Need a New Approach to Tackling Child Poverty, it is much more
important that we have a range of measures of deprivation to which specific solutions can be developed.

Second, it is clear that the benefit system needs to give welfare claimants more of a reason to work. At the moment some claimants can face tax rates of around 90 percent if they decide to work
rather than stay on state handouts. For many, this means that they would have to work very hard in a job in order to achieve the same amount of income in work as out of it. To make things worse,
the system is so complex that claimants just don’t trust the advice they get from welfare advisers. The solution? Allow claimants to keep more of their benefits as they earn, as Policy
Exchange suggested earlier this year. This would start to solve some of the poverty trap
problems that Mr Field has talked about in the past.

Welfare reform is always a top priority for a new government, but is very hard to push through. Thankfully, the new team at the Department for Work and Pensions probably has more expertise in it
than any other. Iain Duncan Smith has spent years looking at these issues for the Centre for Social Justice, Chris Grayling mastered the welfare-to-work brief when he shadowed it in opposition, and
Steve Webb is a professional economist who specialised in the tax and benefits system at the Institute for Fiscal Studies. The addition of Frank Field to the arena only gives more reason for hope.

Lawrence Kay is a Research Fellow in the Policy Exchange Economics Unit.

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Show comments
  • Tim Carpenter LPUK


    Very important/good point, which is why I try to focus on reversing the distortions the government currently imposes.

  • Rhoda Klapp

    Here’s a question, to which I don’t know the answer, which would be important if anybody serioulsy wanted to tackle the problem.

    To what amount of poverty is due to misfortune, what to behaviour, and what to structural deficiencies in the way our nation is run? If you haven’t got that data, you really ought not to be jumping to solutions.

  • Osred

    RoY = Dave Spart

    You are hilarious mate – keep up the good work. Loving it.

  • GDS

    The biggest issue with relative poverty is that as the median rises so does the need to push/squeeze people nearer to the median to keep up the pretence of improvement. Hence the “best” way to improve relative poverty levels is to make everone earning more than the median POORER. Such a socialist olution don’t you think?

  • Tim Carpenter LPUK

    @Timbo “Are we seriously saying that people with low paid work – like security guards, care assistants, teaching assistants – should not be allowed to have children?”

    No, no and again NO, Timbo, nobody is saying that people with low paid work should not be “allowed”. Your language says alot about your mindset but nothing about mine or others here.

    What is being said is that others should not be forced under threat of imprisonment to pay for and house those children.

    I am trying to reduce coercion while you seem to only think in terms of it.

  • Richard of York

    @Ian Walker
    What a nice man you are…not!
    Why not go the whole hog and just sterilize poor people and let the poor die out as a species.
    How then will capitalism work if there are no poor….do we copy Saudi Arabia and import poor people on contracts to do the dirty jobs?
    Ever thought that for every £1 raised on the minimum wage we save £1 on tax credits and get 20% more back in tax. Give people living wages and then the poor won’t need top ups. Why should the tax payer support private companies by topping up low wages.
    When the new CEO of M&S gets a £25m golden hello how many shop staff would that pay for on the minimum wage?
    How can Vodafone justify £6.8bn pretax profit… many jobs would that support?
    Why are we charged for text messages anyway?

  • Timbo

    I’m confused about the idea of people in poverty not having children.

    Just over half the families below the poverty line have work. Are we seriously saying that people with low paid work – like security guards, care assistants, teaching assistants – should not be allowed to have children? This is against my belief in freedom.

    What of those who want to work but have been out of work long-term through genuine disability and health problems – and the well documented employer prejudice they face. Should we tell such disabled people they cannot have children? This is also against my belief in freedom.

    And if we are to have a benefits system that discriminates against children born in poverty, rather than in a household that subsequently falls into poverty, how would this technically operate? The benefits system is already too complicated, which is one of the main problems with it.

    Wouldn’t we do better just to have proper sex and relationship educatio ngiven by adults in our schools? These days children learn about sex from pornography on the internet, so no wonder birth control is poor. I’m conservative in regard to personal responsibility in sexual relationships but I don’t get the Daily Mail brigade who don’t accept we live in a different world toady and the only to teach sex and relatinoship responsibility is in schools for all children, or the pronographers teach them unchallenged.

  • Ian Walker

    If we really cared about poverty when it specifically applied to children, then we would take children away from poor families, and give them to rich families with fertility problems instead of paying for expensive IVF treatments.

    Since I’m assuming the above would be unacceptable to most people, then we need to just tackle poverty. The “child” moniker is just New Labour dressing to tug at a heartstring or two, and should be ignored.

  • Tim Carpenter LPUK


    I am in favour of free banking. Gold is not the answer alone, but plurality and transparency are.

  • David Parker

    If Frank Field were to have been a candidate in my constituency I would have voted for him, regardless of party, purely upon the grounds of his personal integrity, fairness and personal convictions, irrespective of ambitions of prospects of party promotions.

    I feel that he will be a very positive addition to the new coalition, provided, of course that they will be prepared to listen to his views and this is not merely a cosmetic appointment.

  • Daniel

    It is so infuriating to see this ridiculous game of whack-a-mole, enacting policies which merely push problems around, hitting them with the hammer so that they pop up elsewhere.

    Everyone is working within a damaging paradigm. Instead of unendingly playing the game, why not reach behind the machine and turn it off?

    These problems of poverty and social deprivation are symptoms, not causes. They are symptoms of an unsound monetary regime, where inflation insidiously robs from the poor and gives to rich.

    This began in 1922 at the Genoa Conference when the gold standard was ditched in favour of the gold exchange standard. This began a war against gold, waged by central bankers – for profit and by politicians – for control. Gold being blamed for all the problems whilst it was the greed and stupidity of politicians at fault.

    Fortunately, this insane act will be punished by irony in the coming greatest economic collapse ever and the system will be purged, giving the poor a chance to make real lives for themselves.

    In the meantime, these pointless parasites can carry on with their fairground attractions, pretending to serve us as they line their pockets and line up their lucrative post-parliament roles, leeches on skin of society.

  • In2minds

    Rather like the addict who can never up the fix that’s doing him down Frank Field can never seem to give up Nulabour. Field became an MP in 1979 you would have thought he could have worked out by now that the problem all along was his political party.

  • Tim Carpenter LPUK

    I cannot resist anymore…

    RoY: “If you want to eliminate the poor… have to make work pay.”

    “make”? Wrong, you are trying to fix symptoms, not diseases. You have to have a situation where there is work the poor can do that will be valuable enough, i.e. their labour has to be worth enough.

    RoY: Fundamental to making work pay is to create jobs for workers to do.

    Only the market can “create jobs” and the only way jobs are created is if there is a demand for that labour. The State is incapable of delivering jobs, nor can central planning spirit up demand in any meaningful and sustainable way.

    RoY: Unskilled workers need unskilled jobs.

    Keep them down, there’s a good chap. Wrong. I refer you to my first answer.

    RoY: Reward qualifications, encourage kids to stay at school with incentives and real work experience with real prospects of employment.

    What, any qualifications? No. Which ones? The ones that are needed by vacancies or those predicted BY THE INDIVIDUAL in the future, so that is the incentive and the reward all in one. No need for the State. Again. Prospects? Again, see first answer.

    RoY: Give employers graded incentives to employ the long term unemployed ie training grants and tax breaks for those out of work over 12 months.

    “give”? Who pays? Fairies? No, Employees and employers who will then not be able to pay as much to anyone, employ as many people as before, spend or save as much and then UK PLC becomes even more uncompetitive and we lose jobs still further. Genius. If there is no demand for labour, there is no sustainable mechanism to spirit up fake demand. All it does is add heat and no light.

    RoY: Make a law that gives long term unemployed a priority in certain jobs.

    More coercion. How to administer “fairly”, to use the now bastardised word? I will tell you: impossible AND costly in more non-jobs, or is that your plan to eradicate “unemployment” by salarising it.

    RoY: Once you are out of work more than 12 months you are less likely to get a job when up against someone who has a job and is just job shifting.

    Agreed. First sensible/correct thing you have said.

    RoY: Force all companies to advertise jobs with job centers.

    More coercion. No thanks. And what of employers who know their market and cannot deal with the thousands of pointless applications? More heat and less light again.

  • Alan Douglas

    The basic problem is very simple. If you are willing to pay people for a certain course of action, then people will take that course.

    One of the first actions must be to separate the truly un-able from the rest, then be sure to strengthen the safety net for the genuine.

    THEN arrange to gradiently reduce the amount of support available for the lead-swingers, on a well-predicted time basis. When MY business crashed, I started doing whatever is available, such as delivering directories, which hardly covers the minimum wage for each hour worked. I did NOT fall on the state as a victim, I “got on my bike.” Many state claimants could do the same, but they are paid not to.

    Also, limit the money for children to those already here, or for new claimants, to a maximum of two children, with notice that this will start in exactly one year, so no one can claim to have accidentally slipped under the wire. When the costs of pregnancy fell on the girl, her family and circle, rather than the taxpayer, responsible behaviour (ie NOT getting pregnant in the first place) was much more widespread. Cancel the huge amount of cash given for baby equipment (we bought our pushchairs from charity shops, while we often saw very young girls who seemed to emanate from millionaire households with all the gear), and cancel the automatic right to new or larger state-subsidised accommodation.

    Put the responsibility AND costs back where the decisions are made, and suddenly many more “right” decisions will miraculously appear.

    AND those initially forced into responsibility will actually feel much better for living a life of exchange rather than rip-off.

    Alan Douglas, in preaching mode !

  • Tim Carpenter LPUK

    I am again saying “What Snowman Says” and also seconding Rhonda.

    We are almost where we were 150 odd years ago. People were “on the parish” and getting by, but they were often in the wrong place trying to do what people no longer wanted them to do, namely agricultural labourers.

    The plan then was to introduce workhouses so that it provided an existence that was less comfortable than the worst job out in the marketplace. Had it not been, the workhouses would be full and the worst job undone.

    Many say we should not go back to that. Well, if not back there, where? Just saying “somewhere” is not good enough! We need to re-solve the problems the workhouse solved – entitlements trapping people. To say we come up with a new “solution” that does not solve those problems is foolhardy and self-indulgent.

    A couple of other observations:

    1. I hear about the suggestion that people keep more of their benefits when they start work, but for how long? It cannot be indefinitely, for that means you are creating another form of de facto income support and why should someone who has endeavoured to not claim be worse off than someone who has? The benefits need to dissolve and rapidly. This will then make some peoples’ heads explode.

    2. Child poverty.

    I see no acknowledgement of the fact that many children are born into poverty as opposed to them falling into poverty. Falling into should be more of a focus than those being born into. Paying for children born into poverty has one result – more children born into poverty, and I mentioned how we should deal with this in a previous thread.
    3. Immigration.

    While I do not wish to see a limitation on the free movement of people and trade, while we have a system of legal entitlements, mass immigration is likely to cause mass unemployment, especially when we have entitlements that enable people to live better than the worst job, they are back “on the parish”. Immigrants will often work for less than those already here and this will therefore cause mass unemployment in those who can claim benefits, for there will be a wage below which they will not work. Do not blame them. They are rational actors. Forget morality, it is the system. Coming up with significantly higher minimum wages is avoiding the problem, and impoverishing us all into the bargain, for that raises the cost of everything by paying more than what something is worth.

    People need to be doing something worth more, not paid more for doing something.

    The way you raise the wages of cleaners is by having so many people employed that they have to just to attract candidates, not because benefits means they see no point.

    4. Mobility.

    4a. “social” housing. While the State increases its position as main housing provider and arbiter, you reduce mobility in the workforce. People are stuck in their housing and cannot move without going cap in hand to the State and asking permission to move. In the private sector one finds the nearest housing one can at a price one can afford. You cannot go to the State and say “I will pay more rent to get x property”. The natural market forces cannot work. While the state uses vast amounts of land for its housing, it distorts the private sector.
    4b. Schools. Do not underestimate the issue of schools. While we have a shortage of good school places, not just some in a borough, but even at the neighbourhood level, moving to find work or just change a job without massive journeys – which in themselves reduce the efficiency of UK PLC – is very hard to do. We need a surplus of spaces and while we have a de facto state monopoly over schools we will not achieve that for the State is hard-wired not to provide over capacity in this form*.
    4c. An end to Stamp Duty on housing should also assist in liquidity in the labour market.

    * but boy can it oversupply in other areas!

  • Beer Moth

    How does the phrase ‘child poverty’ help at all?

    It was unleashed as a concept only quite recently, it has had its obfuscatory day and should be consigned to the same bin as those who cobbled the two words together.

    Poverty blights children to the same extent as it blights their parents. How it is tackled has its own set of arguments, but to harp on in emotive language, is the best way of ensuring the right measures are not put in place.

  • JohnPage

    A very Westminster posting.

    1. Are we still tied to defining poverty in terms of equality? I doubt if this is what those famously disgruntled C2s had in mind.

    2. Solutions costing new money are non runners.

  • Richard of York

    If you want to eliminate the poor… have to make work pay.
    Fundamental to making work pay is to create jobs for workers to do. Unskilled workers need unskilled jobs.
    Reward qualifications, encourage kids to stay at school with incentives and real work experience with real prospects of employment.
    Give employers graded incentives to employ the long term unemployed ie training grants and tax breaks for those out of work over 12 months. Make a law that gives long term unemployed a priority in certain jobs.
    Once you are out of work more than 12 months you are less likely to get a job when up against someone who has a job and is just job shifting. Force all companies to advertise jobs with job centers.
    Once work is established in a household it takes over as a life style for the others in it.
    Oh and for those who think all benefit spending is on the workshy…..85% goes on tax credits and child payments, only 15% is JSA and ICB.

  • TomTom

    Child Poverty is because people with low earnings have more children than they can support and expect people with higher incomes to pay for them and be unable to combine family with work.

    It is a fascinating division of labour.

  • Wight Tory

    The bit about the complexity of the benefit system rings true with me.

    I’m getting a business off the ground (delayed on health grounds but now in full swing) its not making a profit yet, but am getting there. My wife for all intensive purposes is the sole earner, however I have been able to factor in some “drawings” into my cash flow.

    Telling the dept that deals with Tax credits, that my wife has done some more hours and that I am getting a small income from the business, thus being better off, saw us get AN INCREASE in monies paid to us!

    Now we have payments going into the bank that we are scared to spend, because of the history of this dept and their overspending/repayment regime…

    So instead of spending the money we could do with, we live in fear of having to repay money, that we might owe. How can it be right that you earn more, so the state pays more…Madness


    This whole concept of poverty in relation to a median is nowt but a socialist crock.

  • Ian Walker

    Rhoda Klapp: Mr Hammer, meet Mr Nail.

  • Snowman

    Rhoda Klapp @ 5.07

    That warrants an entry into my list of famous quotes, and it’s so very true.

    Stepney at 4.84:

    The waste of money pales when compared to the other ‘wastes’ on your list. Harsh as it may sound, the best solution may indeed be furnished through Benjamin Franklin’s ‘the best way to help people out of poverty is to make them uncomfortable in it’, a fix that our feeling society will never contemplate.

  • Hugh

    I thought that we were promised a Wisconsin solution?

  • Rhoda Klapp

    If you are willing to pay people to be poor, you will never lack for poor people.

  • inigojones

    Churchill said, and Frank Field agrees, that the Welfare State must provide a safety net above which all may rise, but none should fall. On his past record, I can think of noone better qualified or more respected than the Frank Field / Duncan Smith duo to tackle the problem of the poverty trap. The crucial problem in getting the poor back into work, as was pointed out this morning, is that too many of the ‘starter’ jobs available are taken up by equally hard~up but eager to work immigrants. We really do need British Jobs for British Workers if the problem of homegrown poverty is to be solved.

  • stepney

    Crack this one and we will all be grateful for centuries to come. The current system is about waste and financial waste is only the half of it.

    The waste of ambition, the waste of talent, the waste of lives that could otherwise be full, the waste of time spent papering the cracks, the waste of effort trying to sort out the consequent problems, the waste of so many childhoods and the waste of education.

    Solve this one thing and you will have a country that can look in the mirror once more.

  • Nickle

    I don’t buy the Saint Frank notion one bit.

    1. He claimed that it was Labour policy to halve the debt in 4 years.

    2. He’s duplicitous. All his plans on pensions were related to redistributing money.

    Force everyone to contribute and rob from the richer pensioner (poor by workers standards) to give to poorer pensions (those that can’t be bothered to save – in the main because they are taxed)

    All done on the quite, so those losing don’t realise.

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