'No claims bonus' for employers that hold onto staff

The eclectic think tank, Demos, has today published a collection of essays which argues that Government should aggressively focus the welfare state on its core purpose of getting people back into work rather than treating the benefits system as a catch-all for every social problem - such as family breakdown, child development and community cohesion. The authors and editors of the pamphlet “Liberation Welfare” argue for a welfare system that reduces dependency, empowers claimants and gets away from an old agenda based on reciprocal “rights and responsibilities”.

As the economy returns to growth and unemployment begins to fall, the focus for policy makers will soon shift from emergency response to the next phase of welfare reform. This approach recognises that people are the principal agents of change in their lives, but also that government has an essential role in shaping the conditions in which they are lived.

The Pamphlet’s editors say that the recession exposed crucial gaps in the welfare state that, if bridged, will drastically cut unemployment, poverty and the budget deficit. With 1.66 million people unemployed at the last count, the collection calls for the biggest overhaul of the £158bn welfare system for 20 years, based on the idea of ‘liberation welfare’.

The pamphlet contains ideas addressing a range of challenges including disability, families, homelessness, assets, skills, housing, benefit and addictions. What unites them all is the view that the 'rights and responsibilities' approach of the 1990s has run its course. To illustrate what Liberation Welfare could mean in practice we propose four core ideas: a job guarantee for anyone at risk of long term unemployment; a more progressive savings vehicle to encourage people to self-protect against income shocks; a commitment that no-one who works hard lives in poverty; and a more personalised approach to support and expectations in the welfare system.

Liberation Welfare is edited by Paul Gregg and Graeme Cooke, and contains a foreword by the former MP and Secretary of State at DWP, James Purnell.

The idea of a “liberation welfare” state is based on the principles of power, reciprocity, and job and income security, with people encouraged to plan and save for financial shocks like redundancy. State benefits should be higher, but harder to claim.

The main recommendations in the pamphlet are:

• ‘No claims bonuses’ for employers who rarely have staff moving onto benefits through redundancy: Employers would be incentivised and rewarded for hiring, training and retaining staff. Similarly, the national minimum wage would continue to increase and a ‘fair wage’ clause would be reintroduced in public sector contracts, so the state only does business with companies paying a decent wage.
• A lifetime savings account: Individuals must be encouraged to save money which they can draw upon in the event of unemployment. Tax relief on savings would be targeted at low- and middle-income families, rather than the very wealthy, and government would match contributions to the savings account, with the proportion matched decreasing as contributions rise.
• A work guarantee for the long-term unemployed: People who have been out of work for two years would be guaranteed a job from the state. They would be unable to chose to refuse this job and stay on benefits. There would also be increased expectations on disabled jobseekers.
• Simplify the state pension system: The basic state pension and the state second pension would be merged to create a single tier, non-means-tested, basic state pension of £130 to £140 per week. This basic state pension would be available to anyone who had made 30 years of contributions.
• Scrap arbitrary benefit categories: There would be one benefit for people out of work and eligibility would judged by a person’s distance from the labour market, rather than arbitrary categories like ‘disabled’, ‘lone parent’ or ‘job seeker’.

Co-editor of the collection, Graeme Cooke said: “Talk about ‘rights and responsibilities’ has passed its sell-by date. Liberation welfare is about giving people power to control their lives and increasing their security in a more risky and uncertain world. As the general election approaches, the £160bn question is, do the political parties have the vision and courage to reform welfare so that it liberates people from poverty and unemployment rather than traps them in dependency?”

One of the pamphlet’s authors is Rob Murdoch, executive director of employment contractor, A4e who contributes a chapter on Housing Benefit reform. He says that “building a welfare system that puts the customer at the heart of the process and also delivers better returns for the taxpayer are the two critical challenges for the UK. To achieve this we need to simplify the process, join up services around personal barriers not government departments, and instead of ‘doing things to people’ to emphasise personal responsibility. Making welfare personal is the key to reform.

“The pressing budget deficit will mean fundamental changes to public services and the way those services are delivered. It is important that whichever party - or parties - finds itself in Government following the next election resists the urge to 'slash and burn' or 'salami slice'. This collection of essays is a timely reminder that there are other ways forward. The essays demonstrate that re-designing services to give more control to the 'end-user' has the potential to not only drive considerable cost savings but also to support people into a more active relationship with the state.”

The pamhplet can be downloaded free from http://www.demos.co.uk/publications/libe...