Friday 28 December 2012

Increase the National Minimum Wage and slash the benefits bill!

On reason why the welfare bill is so big, is because of the gradual drift since the 1970s towards subsidising low earnings through the benefits and tax credits system.  This was started by the Conservatives under Edward Heath with Family Income Supplement and Rent Rebates, added to by the Thatcher government's mass shifting of public subsidy from bricks and mortar to rents for those on low incomes with the introduction of Housing Benefit and then accelerated under New Labour with the introduction of Tax Credits. 

The Coalition's Universal Credit will just make this worse by reducing the "withdrawal rate" when people earn and the automatic adjustment of benefits through the proposed Real Time computer system will provide a ready workforce which can be called in and sent home when it suits employers - public subsidy not just of low pay, but poor employment practises too.

It stands to reason that if wage levels increase, the amount paid out as public subsidy through benefits and tax credits is reduced and now the Resolution Foundation and the Institute for Public Policy Research have quantified this.  Specifically, increasing the National Minimum Wage would save the public purse a net £2 billion.  It is surprising that there seems to be no government research into this which I discussed in an earlier blog.

Here is a summary of the Resolution Foundation and IPPR research in their press release:

PAYING A LIVING WAGE COULD SAVE THE UK BILLIONS

Introducing the living wage across the UK would save the Treasury just over £2 billion a year, a new study will reveal.

The analysis from the Resolution Foundation and the IPPR think tanks to be published early in the New Year is the most detailed examination yet of the potential impact of the living wage on the public finances. The living wage is a pay level calculated as the minimum hourly rate for a basic but acceptable standard of living and currently set at £7.45 outside London and £8.55 in the capital.

The new analysis suggests that its introduction nationally would add around £6.5 billion to the gross annual earnings of the country’s employees.

However, the report shows that the Treasury would collect more than half of the initial financial gains from a living wage – around £3.6 billion - in the form of higher income tax payments and national insurance contributions, as well as lower spending on benefits and tax credits.

But the study also examines the extra costs to the public purse of paying a living wage to all public sector workers. It suggests that wage costs would increase by more than £1.3 billion – leaving an overall public saving of more than £2 billion.

The report will also look at the possible effects of a living wage on labour demand, recognising that the lower national minimum wage (currently £6.19) is set by the Low Pay Commission to avoid risking jobs and that an immediate shift to a universal living wage across all sectors may not be feasible.

As a start, the report will recommend, all Whitehall departments and London boroughs should pay their staff at least the living wage by April 2015 and explore the costs of paying sub-contracted staff the same rate. The London weighting means that most public sector workers already earn at or above the London living wage, so introducing the living wage for all staff would cost relatively little in the capital but would set a precedent for others to consider following. Only six London boroughs currently are accredited living wage employers -Lewisham, Islington, Camden, Lambeth, Hounslow, and Southwark.

Five million people are paid less than the living wage, three million of whom are women. Yet more than 85 per cent have permanent contracts. More than 3 million households (13 per cent) contain at least one adult earning less than the living wage. Fewer than 45,000 workers have achieved a living wage as a result of recent campaigns.

The report builds on research previously published by Resolution Foundation and IPPR which showed that the cost of paying a living wage would add less than one per cent to the wage bills of firms in sectors such as construction, food production and banking.

Kayte Lawton, Senior Research Fellow at the IPPR  said: "At a time when typical wages have flatlined but prices have continued rising, concerted action to drive up levels of pay for low earners is an essential component in the improvement of living standards. As a first step, making sure that all council staff in London are paid at least the living wage wouldn’t cost very much but would be an important symbol of political leadership. Councils in other parts of the country, like Glasgow and Newcastle, have shown that the living wage can be affordable even though the costs are higher."


Matthew Pennycook, Senior Analyst at the Resolution Foundation, said: "There are significant overall public savings to be made from paying a living wage, on top of the beneficial effects it would have on reducing working poverty. Public-sector employers are well-placed to expand the living wage and to set an example which the private sector can follow."

Workers earning less than a living wage across the country:
32% in the North East (375,000 people)
31% in Yorkshire and Humber (714,000 people)
31% in Wales (344,000 people)
30% in the West Midlands (617,000 people)
28% in the East Midlands (552,000 people)
27% in Scotland (623,000 people)
27% in the South West (583,000 people)
25% in the North West (683,000 people)
24% in the East of England (593,000 people)
23% in the South East (843,000 people)
20% in London (581,000 people)

Friday 21 December 2012

Not blaming the poor

The myths about skivers and scroungers seem to have become so embedded in national consciousness that it is refreshing to see some honest and objective research attack the widespread misconceptions, as recently published by the esteemed Joseph Rowntree Foundation.  There's also no research from the right-inclined policy research bodies which supports the idea that people are choosing to have to survive on benefits.

This issue is becoming a central political theme and is of huge importance for the type of country we will be living in.  As another Neil said, "I warn you not to be ordinary. I warn you not to be young. I warn you not to fall ill. I warn you not to get old".
 
Are ‘cultures of  worklessness’ passed down the generations?

This study investigates the idea of ‘intergenerational cultures of worklessness’ and if there are families where ‘three generations have never worked’. It is based on research with families living in deprived neighbourhoods in Glasgow and Middlesbrough.

Key points
  • The idea of ‘three generations of the same family who have never worked’ appeals to many,including politicians and policy-makers, as an explanation of entrenched worklessness in the UK.
  • Despite strenuous efforts, the researchers were unable to locate any such families. Even two generations of complete worklessness in the same family was a very rare phenomenon, which is consistent with recent quantitative surveys of this issue.
  • Families experiencing long-term worklessness remained committed to the value of work and preferred to be in jobs rather than on benefits.
  • There was no evidence of ‘a culture of worklessness’ – values, attitudes and behaviours discouraging employment and encouraging welfare dependency – in the families.
  • Workless parents were keen for their children to do better than they had, and actively tried to help them find jobs. Working-age offspring remained strongly committed to conventional values about work as part of a normal transition to adulthood. They were keen to avoid the poverty, worklessness and other problems experienced by their parents. 
  • The long-term worklessness of parents in these families was a result of the impact of complex, multiple problems associated with living in deep poverty over years.
  • Policy-makers and politicians need to abandon theories – and resulting policies – that see worklessness as primarily the outcome of a culture of worklessness, held in families and passed down the generations.
More details here


Tuesday 4 December 2012

Unspeakable, but why are we not surprised?


From The Independent 4th December 2012

"Disabled man abandoned on the second floor of building during Atos fire alarm evacuation

A disabled man was trapped in a centre run by Atos, which assesses fitness for work, when the fire alarm went off and staff evacuated the building, leaving him behind in his wheelchair.
Geoff Meeghan, 32, who has early-onset Parkinson’s and is unable to walk more than three metres without support, was being assessed on the second floor of a building in Neasden, north-west London.

Disabled people arriving for appointments are supposed to be asked if they can exit the building without assistance, but Mr Meeghan, pictured, was not. He waited with his support worker Nick Ephgrave, from the charity Parkinson’s UK, and his sister, who acts as one of his carers, before being called in for his assessment. A few minutes in, the alarm sounded and the doctor present said they needed to evacuate.

“The doctor held the door open for us to come out but then ran down the stairs and left us there,” Mr Meeghan said. “We weren’t allowed to use the lift and asked a security guard for help – he said he’d send some but no one came. Eventually another security guard came past and stayed with us, even though he had been told to evacuate.

“Even though I can tackle stairs with help, it was a highly stressful situation and I felt like it was far too risky. I was worried that flames might come up the stairs and that I might fall or something. It wasn’t a drill. We could see the fire engine arriving outside. I feel like there was a general lack of respect for disabled people at Atos – they make you feel as though you’ve done something wrong by being disabled – like you’re being persecuted.”

An Atos spokesperson said: “This should never have happened and we apologise unreservedly. We will be getting in contact with Mr Meeghan directly. We have since reviewed this case internally with the building security and management team to ensure this doesn’t happen again.”