McTernan on Politics

Gordon Brown continued his audacious programme of welfare reform in
last week’s Budget. Labour’s much-vaunted fundamental
transformation of welfare as we know it was abandoned early in its
first term. But while a big bang has been eschewed it is
insufficiently recognised that, step by step, the chancellor has
been radically amending the complex web of benefits for people of
working age.

From its early days the government has been consistent in telling
us that “work is the best form of welfare for people of working
age” and it is right. Worklessness is often associated with stress,
depression and ill-health for the unemployed worker; poverty and
disadvantage for their family; and too often it casts a vicious
pall over whole neighbourhoods.

Much of the basic architecture of welfare to work has been taken
from US models. But Labour has made a significant change in
incentive structures.

In the US the emphasis is ultimately on the moral case for working
to support yourself and your family and this is underpinned by the
fact that you have only time-limited access to benefits – if you do
not find a job you can run out of dole. Here the government has
invested substantial resources through the elaborate tax credit
system to ensure that everyone is better off in work than they
could ever be on benefits.

Having achieved much success with the groups easiest to return to
the labour market – young people and adult jobseekers – Brown has
turned to boosting the New Deal for Lone Parents. For some time
debate on how to give incentives to lone parents has turned on a
spurious argument about “compulsion” – should they be made to sign
on in order to receive benefits. This has been a debate based on
false premises for two reasons.

First, since most lone parents have children under five it was
always going to be difficult – to say the least – to force them to
sign on.

Second, there are not enough staff in the Department for Work and
Pensions to administratively handle millions more people signing
on. Brown has cut through this Gordian knot with a bribe – £20
a week extra in benefits for lone parents who sign up for active
jobseeking. A further premium will be paid to them for the first
year that they are in work.

This initiative may well prove to be the tipping point for lone
parents – the time when all the incentives are aligned and momentum
gets under way in the New Deal. If so, it will be a moment for real
celebration.

But then the next challenge looms: getting a New Deal that works
for long-term sick and disabled people.

John McTernan is a political analyst.