Dead Men Left

Friday, February 04, 2005

Incapacity benefits: "fingers crossed"

The infuriatingly productive Lenin has the brief on incapacity benefit. The government has now clarified its intentions:

Alan Johnson, the work and pensions secretary, described the changes yesterday as the most radical benefit reform for sick and disabled people since the Beveridge report, and said the were designed to help a million people back into work...

Under the main reform, the present incapacity benefit (IB) system will be scrapped. IB is currently received by 2.7 million claimants.

Initially, people will be put on a holding benefit paid at the jobseekers' allowance rate of £55 a week until they face a proper medical assessment, probably within 12 weeks.

The majority will receive a rehabilitation support allowance set at just above the current long-term IB rate of £74 a week. But this allowance will be cut back to jobseeker levels - about £20 a week less - if they do not take steps, including regular work-focused interviews, to get them back to work

William Beveridge would be spinning in his grave: it is unlikely anyone will be slaying the "Giant Evil" of Want on £55 a week. The miserliness of the benefits system can be quite breathtaking.

Nor is it clear how "Idleness" will be slain through the current proposals. When surveying the wreckage economy of the 1930s, with its prolonged mass unemployment, Beveridge recommended the achievement of full employment as a matter of urgency. Work for all was to be reinforced by a comprehensive system of social insurance.

What we now get is full employment in rhetoric, and a threadbare safety-net social insurance. As is widely acknowledged, the Tories deliberately used incapacity benefit to disguise unemployment during their period in office. As a result, the numbers on IB rocketed to just shy of 3m; in the absence of available jobs, this represented a huge chunk of the unemployed helpfully removed from the unemployment count.

But to then presume that this hidden unemployment can be simply shaken out of the system with a few cuts - and without any cost to those who are wholly dependent on IB - is to drift off into a peculiar New Labour fantasy land. As blogged previously on DML, the government's attempts to create jobs have been dismal. Its flagship scheme, the much-heralded New Deal for Young People, when subjected to rigorous scrutiny has meant only 17,000 additional 18-24 year olds have found work - in four years, and at great cost.

For the rest, the government has simply got lucky; after inheriting a booming economy from the Tories, they have floated on the back of expansion in the US, reinforced by a loan-driven property boom over here. New jobs have appeared, but they have little to do with explicit government policy.

Even if the government's plans to target incapacity benefits work, they mean that those currently in disguised unemployment, often in the areas hardest-hit by deindustrialisation under the Conservatives, will be expected to find essentially non-existent jobs. Many will either be forced into the grey and illegal economies, or they will be reduced to the most abject penury.

Without tackling the structural causes of regional unemployment, there is no reason to think these people will be able to find meaningful work. New Labour, naturally, has set itself dead against such policies. Its nearest substitutes have been often ill-conceived "regeneration" schemes, in which block grants are lavished for specific tasks in specific areas with little thought as to how they integrate into the wider economy. (Hilary Wainwright, in Reclaim the State, presents a critique of the East Manchester scheme along these lines.)

The IB reforms will not begin to bite before 2008. The government's desperately optimistic forecasts for economic growth are meant to show that one million extra workers entering the labour market then will happily absorbed over the five years from then. "Fingers crossed," seems to be New Labour's core message here. Inspiring stuff.