How to get shameless workshy dole recipients back to work and earning their own keep is one of the oldest problems in welfare. Indeed, it was the principal driver for the Poor Law reforms of the 1830s (see this blog and James Bartholomew’s outstanding Welfare State We’re In for details). Of course, those reforms were later reversed, and under the entitlement culture engendered by today’s Big Government, the problem is more acute than ever.
Today there are 4.2m people of working age living in workless households. The vast majority are supported by taxpayers, costing us an estimated £12.7bn pa, including £3.4bn pa on benefits for lone parents (source: NAO Report). That’s equivalent to nearly 4 pence on the standard rate of income tax.
Getting these people into work is generally called Welfare to Work, although New Labour naturally branded their programme with an upbeat Newspeak title- the somehow familiar sounding New Deal.
Now, as taxpayers, we ought to be applauding the New Deal: get those people back to work and we could save a huge amount of money. The trouble is, the New Deal doesn’t seem to be saving us money at all. In fact, according to the NAO’s report published in July, it costs us even more than just paying the benefits.
The following table summarises the costs and benefits for each of the ten (!) separate New Deal back to work programmes. "Net fiscal benefit per participant’ estimates the cost effectiveness to the Exchequer of the programme. It is based on the cost of the programme, minus the direct benefits to the Exchequer (such as increased tax receipts and reduced benefit payments when people move into work) and the costs of any additional in-work payments such as Tax Credits" (report para 5.3):
As we can see, only two of these ten programmes end up saving us money. With all the rest, the costs of running the programmes significantly exceed the savings we make. Hardly surprising when one of these programmes has cost £76,540 per job.
Looks like we’d have been much better off without the New Deal, saving ourselves the £6bn the programme has already cost (Report figure 1).
So what’s going on? On Wednesday, your correspondent attended the Public Accounts Committee meeting that tried to find out.
Appearing before the PAC were three mandarins led by the Department for Work and Pensions’ Permanent Secretary Sir Leigh Lewis. But despite being given one-and-a-half hours, they were entirely unable to demonstrate the New Deal delivers taxpayer value. In fact, it became painfully clear the whole programme is another all too familiar amalgam of wishful thinking and bureaucratic treacle.
Here are some key points:
PAC question: How can we be getting taxpayer value if the costs exceed the benefits?
DWP answer: We think there must be many additional benefits which have not been quantified. Lower NHS costs, lower costs from crime,and a load of other stuff
PAC question: How can you possibly know that?
DWP answer: We’ve had three studies conducted by academics. We paid them and they confirmed we’re right.
PAC question: How do you know your "clients" haven’t simply got jobs they’d have got anyway because of the strong economy?
DWP answer: Because we say so. Trust us.
PAC question: What about churn? Surely most of these people get pushed into a low grade job for a few months, then lose it, and then have to start all over again.
DWP answer: There’s absolutely no evidence to support that conclusion. Or more precisely, there’s absolutely no evidence. The simple reason being we don’t collect any.
PAC question: What about immigration- surely large-scale immigration must be making it much harder to place our own native workless into jobs.
DWP answer: You are falling for what our economists call the Lump of Labour fallacy. It’s well known that immigration boosts the economy and so must be good for jobs. QED. (for an exposition of how most economists outside Whitehall now agree that mass immigration really does take income and jobs from native workers see this blog).
PAC question: Why have you set up such a ludicrously complicated structure? The NAO report says that in Glasgow alone the local programme involves 125 organisations and 325 individual programmes, projects and services.
DWP answer: Yes, well, this is work in progress (even though in reality some of these programmes have now been running for over a decade)
The overall conclusion is clear. The New Deal delivers shocking value for taxpayers. It is costly and ineffective, and has spawned yet another gigantic bureaucracy.
In essence, it is yet another social service. But by masquerading as a measure to boost GDP and somehow make us all better off, it is managing to deliver the worst of both worlds.
Still-rising levels of truancy, reported today by the Independent, are a result of the failure of an education system under political mangement. There are a few key failures at work here.
1) Children haven’t learn to read
Poor literacy standards mean that a child will often find the rest of their education nothing but a humiliation. Under a more flexible system the schools would not want to press vainly on trying to teach a child Shakespeare when they can’t read the Sun. A decentralised system where schools respond to the priorities of individual parents rather than the constant flow of central government diktats could be more flexible.
2) Teaching to the test
We’ve noted before that it is becoming very apparent that schools teach what is needed to pass the many public examinations to the exclusion of a broader and more meaningful education. That has to make things less interesting which will feed a desire, on the part of children, to avoid school.
3) Focussing on those who can make the ‘C’ grade
Teachers face a big incentive to focus on making sure that the central "% Grade A*-C" number looks good for their school. Students playing truant often won’t be anywhere near that standard. While good schools will do their best for every student many will accept the reality that they have to meet the political standard and focus on boosting as many students as they can over the line to grade C. That undermines efforts to make combatting truancy a priority.
Around 40 TPA supporters and activists joined us last night at the Old Monk Pub for the first London area social. We had a great turnout, allowing the TPA staff to meet our activists working so hard campaigning for lower taxes and better government. It was also a good opportunity for TPA activists to network and talk about their plans.
Two of our key activists, Austin Spiteri (left) and Saverio Bongo discussed joint campaigns in north London and Hertfordshire. Austin’s son Richard (right) walked away with the raffle prize, the signed bumper book of government waste.
We also got an excellent turnout from younger activists and those interested in joining the TaxPayers’ Alliance. Everyone got a pack of Political Trumps, recruitment leaflets and some bumper stickers and you can guarantee that we’ll be organising more of these events in the future.
Responding to the publication of MPs’ expense claims for 2006-07 today, the TaxPayers’ Alliance described the rises as “extortionate”. TPA Chief Executive Matthew Elliott said:
“MPs should be ashamed of themselves. Families are struggling to pay higher tax bills whilst MPs are spending more and more of our money on themselves each year. What’s worse is that they won’t even give us a full itemised breakdown of their expenses as MSPs do in Scotland. No wonder voters have little respect for politicians when they see so many MPs with their snouts in the trough.”
The TPA has compared this year’s expense claims to last year and has produced a ranking of all the MPs by their overall increase. This analysis reveals that the MPs who increased their claims the most are:
NB: Sinn Fein MPs are excluded from this list given the dispute over their expenses that occurred recently, which reduces the 2005-06 figures, thereby inflating the increases.
Contact the TaxPayers’ Alliance if you wish to see the full rankings.
The TaxPayers’ Alliance has been campaigning for the House of Commons authorities to publish MPs’ expense claims in full, to include a breakdown of all receipts and invoices, as occurs in the Scottish Parliament.
Heather Brooke, freedom of information campaigner and TPA supporter, said:
"The totals published today are merely the tip of the iceberg. If the Government is serious about open government then it needs to follow the Scottish example and publish a detailed breakdown of all claims. Instead we find the House of Commons spending thousands of pounds on expensive lawyers battling to keep secret the details of how MPs spend the public’s money. What have they got to hide?"
The TPA’s analysis of today’s expense claim figures for MPs ranks the main Parties by the average amount claimed per MP in expenses. Travel expenses are excluded given the different geographic spread of the Parties.
Matthew Elliott, Chief Executive of the TaxPayers’ Alliance, said:
“Conservative MPs should be proud that their average expenses are lower than the other political parties. However, their expense claims have still gone up by around 7 per cent, far more than inflation, so there is still room for improvement. Plaid Cymru MPs should go to the back of the class.”