Welfare (to work)?

I spent Sunday morning in a coffee shop in Bangor being interviewed by Ciaran Tracey of BBC NI Spotlight about the Stormont version of the coalition government’s welfare reforms. The interview will form part of tonight’s Spotlight investigation (BBC1 NI at 10:40pm).

So what’s my angle? Well, simply put, it’s this. The welfare reforms, as implemented in the rest of the UK, are designed to address a problem that’s particularly acute in Northern Ireland – namely non-participation in the economy. While, in GB, some 22% of the working-age population opts-out (many choosing benefits over work) the equivalent percentage in Northern Ireland is around 27%. Various departments have commissioned various reports that outline how damaging this is to the Northern Ireland economy and how various targets will need to be met to address it. But nothing really is being done.

The GB welfare reforms were designed to encourage people who can work to get (back) into work. They also address some of the fundamental issues with a system that allowed people to choose benefits for years, or even decades, rather than work. If you want to get some idea of just how big a problem this is you might want to watch an episode of Channel 5’s Benefits Britain.

But the Stormont version of the benefits reform is a cop-out. Instead of implementing a welfare-to-work programme the Executive has created a slush fund that essentially ring-fences benefits should anyone be deemed to have suffered any negative consequences of a loss of benefits. It’s not so much welfare to work as simply welfare.

Obviously this slush fund has to be paid for. In Britain there has been a considerable growth in private sector employment since the reforms were implemented – although, to be fair, in-work benefits payments have increased as well. But in Northern Ireland we face the prospect of little change – and of a continuing high rate of non-working benefits claimants, and consequently, other departmental budgets being squeezed too much on the alter of benefits protectionism.

  • OneNI

    You appear to be suggesting that the Executive are proposing to spend £100m per year ‘topping up’ benefits for the next 5 years rather than, say, investing in infrastructure?
    Every fool knows that the best way to create jobs quickly is to invest in construction – comparative low skills and a strong multiplier effect.

    Surely if one party – say SF supports these benefit top up the others – DUP, UUP or Alliance would stop such lunacy? Surely one would call for investment in infrastructure and if they failed to prevail leave the Executive?

    Surely not every single one of our local parties is economically illiterate?
    Also you are implying that none of our MLAs have an once of integrity or principle and are simply happy to sit on the Stormont gravy train and let the NI economy fall further and further behind GB (and much of the rest of the world)

    In short you are suggesting our politics is corrupted? If so why arent the local media pointing this out?

  • aber1991

    I never wanted a devolved government for Northern Ireland. I feared a return to Prod Rule and still do.

    With every passing day, I am more and more convinced that devolved government is a shambles. The devolved administration cannot provide efficient government. There is no consensus about anything and there are so many checks and safeguards, there is almost total legislative and administrative gridlock. The sooner we get rid of Stormont, the better. Direct Rule was far better than this shambles and would have been even better if the Direct Rulers had spent less time and energy trying to establish a devolved administration.

  • Old Mortality

    One NI
    ‘Surely if one party – say SF supports these benefit top up the others – DUP, UUP or Alliance would stop such lunacy?’

    They won’t because it’s an essential ingredient in yet another scrosanct ‘Agreement’ to keep the show on the road. Moreover, none of the parties have ever commended welfare reform rather than accepting it as a necessary evil. Those inactive 27% are able to vote and are a constituency substantial enough for most politicians to want to avoid offending, especially SF. I’d be pretty certain that they have more than 50% of that vote. They also suffered the shock of losing a seat in West Belfast to a genuine leftie in the council elections.
    When you add the 27% to the unemployed and those who are employed by the state, you have a majority of the electorate. NI has passed the tipping point of democracy where, if people vote purely out of self interest, no party which advocates a shrinking of the state can be elected.
    The real guilty party is Westminster which has feared to tighten the financial screws sufficiently.

  • Séamus

    DETI’s Labour Market Report for February 2015 puts the number of unemployed people at 50,000. There are also another 53,000 people who want work but have been labelled as ‘economically inactive’ for whatever reason. According to the same report there were a total of 12,039 notified vacancies in the same period (full-time, part-time and casual).

    That’s one vacancy for every 8.5 people seeking work. And almost half of those jobs are part-time or casual, meaning anyone who gets them will likely still be entitled to some kind of benefit.

    So let’s not kid ourselves that slashing benefits has anything to do with forcing lazy layabouts into work, when the work just does not exist. It’s about punishing the poor, plain and simple. It’s about slashing state spending at the bottom of society in order to keep financing the corporate welfare system that exists for those at the top.

  • chrisjones2

    not every single one of our local parties is economically illiterate

    Nor are they electorally illiterate so they are in hock to the welfare vote

  • chrisjones2

    Amen brother!!!! I think we have different perspectives but a shared appreciation of the state the country is in ad the causes

  • chrisjones2

    Your figures may be OK but your analysis is wrong. Many of those out of work are temporarily out while they move jobs. The true level of unemployment is dramatically lower.

    There is also a huge level of fraud. Working the double is endemic in some areas and some sectors and there is almost a complete absence of investigation and enforcement by HMRC.

    HMRCs RTI system now catches some of it on much faster but its still there. Many of those squeezed out of the double have simply stopped working not stopped claiming benefits.

    I know that will produce howls of rage here but sadly it is true and many of our MLAs seem to see their main job as getting benefits or a wee DLA claim for the workshy. Its just buying votes

  • Kevin Breslin

    Did you tip the coffee shop workers Jeffrey?

    Solidarity with those who make the effort to get jobs and all.

  • OneNI

    Slashing benefits? Welfare reform is about making work pay.
    Typically Seamus you have missed the point! How many jobs could be created by spending this ‘top up’ money building infrastructure we need?

    Re; punishing the poor. Of course the local parties care about the poor. They care so deeply they have spent years working out their own detail proposals on welfare reform.

    No actually. not. One. single. proposal. The SF, SDLP, DUP, UUP and Alliance laugh at the poor, and pray on them for votes

  • Am Ghobsmacht

    How’s about something different?

    Although no doubt laden with impracticalities and the odd bit of EU “nein! Das ist verboten” but is the following suggestion utterly outrageous:

    1/ All manufacturing companies in NI become exempt from min wage (have it lowered to 3 quid an hour or so). OR if possible even become tax free completely (as long as we don’t have to sell off yet more assets to pay for this).

    2/ All those employed under by such companies who earn the sub-min wage will be allowed to RETAIN their housing benefits (or something similar).

    3/ People near these workshops/factories who have been on the JSA for say 10 years plus will be ‘invited’ to work there.

    (Failure to give it a go will result in lost benefits.)

    A bit cruel I know but it addresses most of the concerns mentioned on here from time to time regarding this topic:

    * Jobs are created (factories, workshops and complexes require white collar staff too e.g. HR management, accountants, managers, engineers, product design etc)

    * It takes people off the dole and gives them a greater income (even at 3 quid an hour that’s more than JSA plus they don’t have to worry about rent)

    * The new jobs will mean more money spent in the retail & hospitality sectors which will in turn create more jobs and fill up some of the empty shops dotted across the land

    *Perhaps it would even slightly reduce the benefits bill slightly.

    A bit of a rough plan but we need to do something…

  • Old Mortality

    Seamus
    With so few jobs apparently, it’s a wonder there are so many migrant workers around the place.

  • Old Mortality

    And you failed to notice from the Labour Market Report that the NI unemployment rate of 5.7% is the same as the UK average.

  • Surveyor

    Any evidence and figures to back up those claims Chris?

  • notimetoshine

    There isn’t a place for them to go to. Take for example those who are relatively unskilled. The government schemes in place for them to get experience and skills are laughable. I have volunteered at a well known charity for years and we often get people either sent to us or on their own initiative doing voluntary work to improve their prospects. The laughable stories they tell us and the sheer incompetence of the agencies supposed to be helping them are astounding. There are many people unemployed who are currently unemployable but the help they require in terms of basic skills and so on is completely lacking. Even if the private sector was big enough to accomodate them why would they?

  • Surveyor

    What about the people already employed in these factories who have a mortgage to pay? There is an element of skilled work involved in manufacturing believe it or not, so I don’t think a proposal which could see wages in some cases reduced by a third every week going down very well with the current employee’s.

    If you want to save money you could start by culling some of the tax payer funded admin jobs in the health, education and arts sectors.

  • chrisjones2
  • chrisjones2

    The claimed level of fraud is £19m pa. That’s the fraud the Government knows about.

    JSA is £75 a week for the over 25s so lets assume the average fraudster is screwing £100 / week from the system – say £5000 a year. The £19m of KNOWN fraud then amounts to around 3800 fraudsters. I personally believe that the true figure could well be 2 x that but that’s just my bias.

    Based on your own link to The Detail’s analysis above DSD prosecute around 600 fraudsters a year with each fraud committed over multiple years worth around £7000 each on average. If we use my estimate above that would suggest each prosecution covers perhaps around 18 months of back fraud at £100 / week

    So at any time in any year there are around 3200 fraudsters out there screwing the system and getting away with it. At a prosecution rate of just 600 a year that would suggest they will continue to do so for around 6 years on average and when they get caught end up paying back a fraction of what they stole – indeed many will pay back nothing at all.

    I accept that less than 1% of the benefits budget but 1% of a huge budget is still a huge amount

  • Am Ghobsmacht

    Howdy Surveyor

    My thinking (such as it was) runs along these lines:

    Should the scheme take off to the extent that people on min wage in factories are in jeopardy of losing out it would be a safe(ish) bet to assume that by the time it gets to this stage (maybe a decade) the knock-on effect should have propagated into the private sector e.g. retail and construction should be growing by that point.

    As these jobs would not be sub-min wage it does give people a safety net of sorts.

    As for the skilled workers, I doubt they would be in min-wage jobs in the first place.

    Market forces should sort that out e.g. a CNC operator (to randomly pick a worker ) would be in even greater demand should manufacturing take off, if anything his/her wages would go up.

    I’m sure there’s a lot of holes in my grand scheme and comments like this are welcome (it goes into my big book of “when I’m in charge”)

  • Practically_Family

    Pressed labour is very seldom cost effective, most workfare schemes actually involve companies being paid to have “trainees” on staff. Free labour isn’t usually incentive enough. This is particulaly applicable in the industrial
    /manufacturing sector where a (de)motivated “employee” can, with a modicum of knowledge and a degree of spite, wreck the place. Equally the hospitality sector depends upon… Hospitality and it doesn’t tend to come from those who’re having their arms twisted into playing.

    The labour market is such that employers pick & choose. They aren’t going to pick Billy Dole or Paddy D’La Payment just because they’re getting him at knockdown rates… At least not for long.

  • Practically_Family

    I established many years ago that the last people onbenefits here or anywhere else in the world, will not actually need them. If you can invest the equivalent of full time working hours in ensuring that you meet the criteria necessary to garner benefits you will meet them. If your only task in life is to jump through welfare hoops, you will jump through more than anyone who is in genuine need will be able to.

    And so on & so forth, what we end up with is the small band of ne’er do wells who are the price for having a functioning welfare state. I tend to think it’s worth it.

  • Practically_Family

    No matter what criteria you lay down for access to benefits, a skilled professional claimant will meet them, no matter what the actual level of fraud (or is that fraud & error?) the professional pub bore will complain about it.

  • Am Ghobsmacht

    Hmmmm

    Valid point there PF.

    The way I see it, I doubt if we’re going to have benefits forever, something has to go at some point.

    Having said that, when I worked as a railway labourer there were quite a few lads who were ‘press ganged’ into it by the benefits office.

    Some (after a period of reluctance) flourished and did quite well once they had a sense of purpose. Others, not so much…

    As for the hospitality sector, my way of looking at it was those who sought to flee from the low paid manufacturing sectors would have to ‘up their game’ to get a (now overly competitive) hospitality job.

    A very valid point about the disgruntled employee though, I’ll get back to the drawing board on that one….