Monday, January 23, 2012

How do we attack the benefit culture without attacking poor children?

I heard my old mucker Enver Solomon, now a spokesman for the Children's Society, on Five Live this morning, a voice of calm authority amid the oddballs and eccentrics who form most of Nicky Campbell's callers these days.

It was all about this proposed cap of £26k on benefits for families, regardless of where they live. This leaves many people uneffected but has a big hit on families in London where rents and living costs are high.

The debate seems to be settling into a left-right seesaw, with one side feeling it will just increase inequality and punish children and the other saying it is the only way to financially motivate certain parents to get a job.

Both sides have a point. To increase child poverty and inequality more than is going to happen anyway in the short term seems plain wrong. And since when did people who can't get it together to work respond to such incentives, even if the jobs were there for them? Equally, we have let a benefits lifestyle develop which is unhealthy for all involved and which, over time, needs to be dismantled. All advanced countries are having this debates, especially the Nordic countries where benefits are extremely generous.

Let's be realistic here though. There is no perfect solution. Any civilised society will always have a certain number of 'free-riders' - people who take out without putting back. There will always be a level of disgruntlement with such people, rightly so.

By the same measure, we have a larger responsibility to make sure our society justifies its name and that we are guided by a long-term view of what it means to share a country in terms of rights and responsibilities. I don't think the abuses of the few mean we should take a US approach to welfare and nothing should be done overnight which affects the life-chances of our most vulnerable children. I can't help but believe we need to adjust for rent in London and the South-East and raise the cap there, as a minimum measure.

But we must also retilt the scales over time so that those 'putting in' feel more comfortable about this, buy into the system and can believe that the free riders are, over time, getting a progressively worse deal than those who are net contributors. This can be done by cutting tax for the very low paid. We can get some of the money back, I believe, by re-introducting rent controls, which are successfully in much of continental Europe.

Long term of course we need new housing and vacant stock to be replenished but it is vital short-term that current measures both shore up confidence in the system without massively harming the life-chances of poor children.

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