The Sunday Times

November 14th, 2010

Glory be, archbishop – a benefits system that’s fair to the taxpayer

It is a strange fact of public life that when this country’s spiritual leader, the Archbishop of Canterbury, chooses to speak out on a major political matter, he is usually wrong. It is becoming almost reassuring: one can take the opposite view with some confidence. Rowan Williams has felt obliged to comment on Iain Duncan Smith’s radical reform of the benefits system, announced last week in the white paper Universal Credit: Welfare that Works. Concerned of Lambeth has “a lot of worries” about the new system for putting pressure on people to work or lose their benefits. “I don’t immediately think it’s fair,” he said.

In truth, far from being unfair, Duncan Smith’s upheaval of the welfare system is being introduced in the name of fairness. What is unfair is the current system. What is unfair is that people who struggle to work are often little better off, or even worse off, than people on benefits, who wisely avoid work because it doesn’t pay — the benefits trap. What is unfair is that working people on low and moderate incomes pay high taxes to support people in idleness who could perfectly well work.

The unemployment benefit system has proved a disaster. Nearly 2m children grow up in workless households — more than almost anywhere in Europe — both poor in fact and poor in expectations, with blighted futures. Some 7.2m adults and children in Britain live in homes that are entirely reliant on benefit, according to the Office for National Statistics.

More than 4m jobs were created in the past 14 years, but 70% of them went to immigrants: unemployed local people either couldn’t or wouldn’t do them. Social mobility has actually decreased in recent years, while the number of people in severe poverty has increased.

Meanwhile, the total welfare budget has risen by nearly 40% since 1996, to £87 billion in 2009-10, and we have a crisis of social care and the need for harsh spending cuts. The truth is that welfare is often unfair, and urgently needs to be made fair. Even senior Labour politicians are beginning to acknowledge this in public, at long, long last.

It is a mystery to me that taxpayers have quietly acquiesced in all this for so many decades. A contorted mindset has developed in which there’s nothing wrong in claiming benefits you don’t truly need, and — equally — there’s nothing foolish in paying taxes for other people to abuse the system. This mindset seems to have taken deep root even among intellectuals such as the Archbishop of Canterbury, or indeed the comedian Frank Skinner.

Last week Skinner wrote an extraordinary article saying he felt there was nothing wrong in claiming unemployment benefit while deliberately avoiding work, as he and many of his friends did for several years in the 1980s, to lead a very modest life reading and drinking cheap sherry on the dole, or “free money” as one friend called it. His logic seemed to be that his theft from the taxpayer was only very small; he didn’t seem to understand that it is the exhausted woman on the bus, with low-paid work and heavy responsibilities, who is paying for people who, like him, are workshy, or who see the dole as a state scholarship for the creative.

I have met many actors who take that view, as young rock musicians always have. But what is fair about that? What is fair about the countless black-economy workers who claim unemployment benefit, in a double fraud? The fact that bankers and fat cats are guilty of much worse does not make benefit fraud acceptable. There was a time when most ordinary people would have been too proud to take money from poor taxpayers as much as from the rich ones. The welfare culture has destroyed such proper pride.

It is that culture that Duncan Smith and the coalition government are trying to change. Whether it is actually possible to change such a very distorted and deep-rooted growth is one of the many known unknowns facing the entire welfare shake-up. However, the essentials of the government’s universal credit system seem reasonable and overdue.

Broadly, in the biggest welfare revolution since Beveridge, the existing work-related and out-of-work benefits will all be brought together in one payment in 2013-14. (It will not affect disability living allowance or child benefit.) The amount claimants receive will take account of their changing circumstances, with monthly adjustments, rather than annual ones as now. Genuine claimants need not fear losing benefits, and it is intended that people will always be better off working and better off for every hour they work.

Supposedly, this universal benefit will replace the confusion, complexity and perversity of the current system, cut back fraud and make claiming and paying simpler and fairer. But there are sanctions attached: people who refuse to accept a reasonable job offer, or who fail to apply for a job or to attend mandatory work activity courses, will have their benefits cut for at least three months, or in extreme cases for three years; the same will apply to fraudulent claimants. They may not be granted hardship benefits for any of that time either.

No one, in fairness, can argue with any of that. And most people don’t — there has been a great change in public attitudes. A YouGov/Channel 4 survey showed last week that 66% of respondents, including 57% of Labour voters, think that jobseeker’s allowance should be withheld from people if they turn down a job or a job interview. And 69% supported coalition plans to give people stricter tests for disability living allowance.

The common complaint about the proposed universal credit is that it will distress and disturb the vulnerable — those with disabilities, mental illnesses or simply nebulous problems that make them pretty much unemployable. But there is no reason at all to think that people who are really unable to work, or not ready for work, will be dealt with any worse than they are today. And there’s reason to hope that some will get actual support in preparing for work.

Of course it’s true that jobs may for a while be scarce, but there is an unending demand for unpaid work, for helping hands, which Duncan Smith’s proposals intend to exploit, to help the vulnerable. It is true that no one can know whether these reforms will fall foul of known unknowns — such as HMRC’s unreliable IT system, or the job market, or the culture of those who administer the new system — or of some unknown unknowns.

But one thing we can know is that the reforms are intended to make things fairer than the way we live now.