Ed Miliband's proposals won't do anything to tackle Britain's welfare problem

June 06, 2013 1:32 PM

Reacting to Ed Miliband's speech on welfare, Matthew Sinclair, Chief Executive of the TaxPayers' Alliance, said:


"Ed Miliband is right to acknowledge the burden of our enormous welfare budget but his proposals won't do anything to tackle it. The best way to bring down the welfare bill is to focus on the cost of individual benefits, not introduce an overall spending cap. It's also crucial that work pays, which means cutting taxes and leaving more money in the pockets of the people who earned it. Continuing to trap people in a complex welfare system just isn't acceptable, so politicians must get serious about simplifying benefits, cutting taxes and removing regulations."

Several policy ideas were floated in the speech in an attempt to address some of the challenges in the welfare budget. There are better ways to deal with these problems.

Housing Benefit:
The main cause of Britain’s ever-increasing housing benefit bill is a lack of housing supply due to planning restrictions, not poorly negotiated deals by local authorities. Freeing up private investment in housing will bring down housing costs for everyone, including the Housing Benefit bill. Trying to cut Housing Benefit by increasing direct spending on housing won't help taxpayers.

Grants for living wage:
Offering taxpayers' money to companies in return for paying a living wage would do little more than link two bad polices into one. Incentives for companies to switch from low-paid jobs to capital investment could lead to fewer jobs, not more.

Tax Credits and low pay:
Heavy business taxes and onerous regulations mean companies have to pay lower wages. The Government should stop making it so expensive to hire low-paid workers by cutting business taxes like employer's National Insurance and let workers keep more of the money they earn.

The contributory principle:
Benefits and taxes are already too complicated. Reform should focus on expecting people to work for their benefits and preparing job-seekers for the job market while simplifying the system.

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