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PH Opinion

PH Opinion


Views and comment from Westminster

Ed Balls: Britain needs real welfare reform that is tough, fair and that works

Writing for PoliticsHome, Shadow Chancellor Ed Balls unveils Labour's plan to give all adults unemployed for more than 24 months a guaranteed job offer.

Look behind the rhetoric and we will see the true character of this Conservative-led government in 2013.

Day after day we see Tory and Lib Dem Ministers claim they are targeting the work-shy and benefit ‘scroungers’. But it’s no wonder even Cabinet Ministers have told the newspapers they are uncomfortable with these smears. Because the truth is very different.

Two-thirds of people who will be hit by David Cameron and George Osborne’s real terms cuts to tax credits and benefits are in work. Millions of pensioners will also pay more in April as their ‘granny tax’ takes effect. And next week child benefit will be taken away from thousands of middle income families.

Yet while hitting striving families and pensioners on modest and middle incomes, David Cameron’s government is this year giving a £3 billion tax cut to the very richest people in the country. By squandering the ability to claim that we are all in this together, the government has made a major economic and political mistake. This is why George Osborne’s so called ‘political trap’ for Labour will end up backfiring on Tory MPs in marginal seats across the country.

Of course we need spending cuts and tax rises to get the deficit down, but with the flatlining economy sending borrowing up by 10 per cent so far this financial year it’s clearer than ever that you cannot get the deficit down without a plan for jobs and growth which works.

We also need a welfare system that works. And for Labour, that means any reform of the system must pass three tests.

First, it must pay more to be in work than live on benefits, both for the individual and the Exchequer.

Labour introduced a minimum wage alongside tax credits to help ensure work pays. But this government's deep cuts to tax credits already mean that thousands of working parents are now better off if they quit their jobs, while cuts to childcare support mean thousands of mums and dads are struggling to afford to take up full-time work.

The implementation of the government’s flagship universal credit is already proving to be a shambles with Iain Duncan Smith’s own Cabinet colleagues warning this week that it is a “disaster waiting to happen”.

Meanwhile the government's benefits cap could also end up costing more than it saves. Labour supports the principle of a benefits cap but this government's crude 'one size fits all' cap - with the same level in London as the rest of the country - will simply lead to taxpayers funding the cost of rising homelessness as families living in high cost areas are turfed out of their homes.

Second we must get tough on the scourge of long-term unemployment by matching rights with responsibilities.

A One Nation approach to welfare reform means government has a responsibility to help people into work and support those who cannot, but those who can work must be required to take up jobs or lose benefits as a result – no ifs or buts.

Tackling long-term unemployment will be a top priority for the next Labour government because we know from the 1980s that it has a scarring effect on individuals and communities, damages our economy and society, and builds up long-term costs for the taxpayer.

Once again this government’s record is lamentable. It’s so called welfare to work programme is nothing of the sort. The Work Programme’s results have been worse than doing nothing with just two in 100 jobseekers helped into sustained employment. And the government’s wider economic failure, with a flatlining economy and rising long-term unemployment, means the welfare bill is set to be over £13 billion higher than George Osborne planned.

Labour has already proposed a compulsory Youth Jobs Guarantee, which would use funds raised from a tax on bank bonuses to fund a guaranteed job for every young person out of work for a year or more - which they will have to take.

Today we are urging the government to go even further, because we won't get the costs of welfare down if adults who can work are languishing on the dole for years and years on end. So Ed Miliband, Liam Byrne and I are today calling for a compulsory Jobs Guarantee for the long-term unemployed.

This is the One Nation jobs contract Labour would introduce right now: the government will ensure there is a job for every adult who is long-term unemployed, and people out of work will be obliged to take up those jobs or face losing benefits.

Our Jobs Guarantee for adults will build on the model of the Future Jobs Fund with government working with the private and voluntary sectors to ensure there is a job paying the minimum wage for every long-term unemployed person.

While getting people back to work will save the taxpayer money in the long-term, the upfront costs of Labour’s jobs contract can be funded by reversing the government’s decision to stop tax relief on pension contributions for people earning over £150,000 being limited to 20 per cent.

When times are tough it cannot be right that we subsidise the pension contributions of the top 2 per cent of earners at more than double the rate of people on average incomes paying the basic rate of tax. £1 billion a year would fund a compulsory jobs guarantee initially for all those out of work for 24 months or more – which we would seek to reduce to 18 or 12 months over time.

Our third and final test is this: any welfare reforms must be fair to those who are in work or genuinely want to work.

Of course we must come down hard on the minority who try to cheat the system - whether that's through benefit fraud, tax evasion, or simply by drawing jobseekers' allowance while never seeking a job.

But the government is hitting millions of striving working families on middle and low incomes who will see their child benefit and tax credits cut. And it is also hitting the vast majority of people who are out of work but desperately want to find a job in an economy where there are 5 people chasing every vacancy.

David Cameron cannot be the one nation Prime Minister Britain needs when his government targets people in work and people who want to work, and labels them as scroungers. When a government becomes more interested in exploiting the challenges the country faces rather than solving them, it shows they are no longer fit to govern, and are just interested in scoring cheap points and trying to set so called political traps.

The fundamental truth is that the best way to get the benefits bill down is not to attack the striving mum in part-time work or the redundant nurse desperately trying to find a new job, but to get everybody back to work. That is what Labour's jobs guarantees would do. Britain needs real welfare reform that is tough, fair and that works. Welfare reform that unites the country and takes the economy forward, not divisive, nasty and misleading smears from an out of touch and failing government.

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