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Do your hearts bleed for them?


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[quote user="woolybanana"]Nor am I sure that the threat of "I'll turn to crime if you cut me benefit" is a reason for abandoning attempts to get the wilfully unemployed into work of some sort;[/quote]

Not its not a threat , but if you leave people with no money to exist on what are they likely to do? It is an easy knee jerk reaction pandering to the rightwing tabloid readership but the devil is in the detail . The idea to cut child benefit for people over a certain income , a good idea , but they have made a hash of if and now are looking at ways at penalising ( fining or jailing people ) who get it wrong, when they could have made it workable and practical.

Working for nothing is not going to help these people get a job, it is just a means for the government to get a workforce on the very cheap and drive the esteeem of people at rock bottom even lower. The 'wilfully' unemployed need more than threats, they need real support, solutions and help and I don't think this government is capable of that. Not sure the last one was either but at least they gave a bit to live on.
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[quote user="Patf"]Another way of looking at it:
If a minimum wage is set at a level above the maximum benefit income available, more people would be tempted to take a low-paid job.
I think governments have been frightened off this idea because of the difficulty of enforcing a higher minimum wage. They don't want to antagonise employers.
They are also frightened  of taking on landlords to reduce rents to conform to the new cap on housing benefits.
It's easier to put the blame on the inarticulate people at the lower end of the social scale.
[/quote]

Pat, I fear your comment is far too sensible for any government to take on board.

I particularly agree with your last sentence.

BTW, are both side of the coalition agreed on the proposal?

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[quote user="Patf"]Another way of looking at it:

If a minimum wage is set at a level above the maximum benefit income available, more people would be tempted to take a low-paid job.

I think governments have been frightened off this idea because of the difficulty of enforcing a higher minimum wage. They don't want to antagonise employers.

They are also frightened  of taking on landlords to reduce rents to conform to the new cap on housing benefits.

It's easier to put the blame on the inarticulate people at the lower end of the social scale.

[/quote]

The reality is that we are already overpaid relative to others, hence the falling value of Sterling. Increasing the minimum wage while supporting the unemployable (either by choice or the fact that they are priced out of the market) will just hasten the day when historians will have one more country to compare with the Weimar Republic.
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From Yes Prime Minister...

Sir Humprey Appleton has just finished a radio interview with Ludovic Kennedy but hasn't realised that the microphone is still live (a touch of  Gordon Brown)...

Sir Humphrey: Was I alright?

Mr Kennedy: Couldn't you have said a bit more, especially about

unemployment.

Sir Humphrey: Such as?

Mr Kennedy: Well the truth.

Sir Humphrey: (laughs)

Mr Kennedy: Why do you laugh?

Sir Humphrey: My dear Ludo nobody tells the truth about unemployment.

Mr Kennedy: Oh, why not.

Sir Humphrey: Because everybody knows you can halve it in a few weeks.

Mr Kennedy: But how?

Sir Humphrey: Cut off all social security to any claimants who refuses two job

offers, there's genuine unemployment in the north but the south of England is

awash with layabouts, many of them graduates, living off the dole and housing

benefit. Plus quite a lot of cash that they pick up without telling

anybody.

Mr Kennedy: You mean moonlighting.

Sir Humphrey: Well sunlighting really. Most employers will tell you they're

short staffed, but offer the unemployed a street sweeping job or a dish washing

job they'd be off the register before you could say parasite. Frankly this

country can have as much unemployment as it's prepared to pay for in social

security. And no politicians have got the guts to do anything about it.

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Interestingly, for a specific project I have just written an analysis on this topic.

It is quite broad-based and interestingly, covers the history and background to a small degree.

If members might like it, I will add a synopsis here.

I ask, simply because the synopsis is quite long and I am conscious of forum bandwidth.

For the Mod's concern I own the IPR (Copyright), so no problems in this area.

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Then for you Sweets.

It is an extract.

_____________________________________________

This thorny topic has many issues in common with the other topic regarding pensions and the French social unrest.

However and as always, it is perhaps critical to examine history and how Britain arrived at the present position.

After the People's Budget (1911) Asquith's government rolled out the precursor to the modern welfare state: in the economic crisis following WWI, paying the unemployed a fixed sum led to serious and significant hardship.

"In the 1920s and 1930s, Britain had a relatively advanced welfare system compared to many of the industrialised countries. In 1911, a compulsory national unemployment and health insurance scheme had been put in place by the Liberal government of Herbert Henry Asquith (see Liberal reforms). This scheme had been funded through contributions from the government, the employers and the workers. At first, the scheme only applied to certain trades but, in 1920, it was expanded to include most manual workers.[4]

However, the scheme only paid out according to the level of contributions made rather than according to need, and was only payable for 15 weeks. Anyone unemployed for longer than that had to rely on poor law relief paid by their local authority. In effect, millions of workers who had been too poorly paid to make contributions, or who had been unemployed long term, were left destitute by the scheme. With the mass unemployment of the 1930s, contributions to the insurance scheme dried up, resulting in a funding crisis.

In August 1931, the 1911 scheme was replaced by a fully government-funded unemployment benefit system[8]. This system, for the first time, paid out according to need rather than the level of contributions. This unemployment benefit was subject to a strict means test, and anyone applying for unemployment pay had to have an inspection by a government official to make sure that they had no hidden earnings or savings, undisclosed source(s) of income or other means of support. For many poor people, this was a humiliating experience and was much resented."

See here:

http://en.wikipedia.org/wiki/Great_Depression_in_the_United_Kingdom

Reading Eric Arthur Blair's (George Orwell) books "Down and Out In Paris And London" and "The Road To Wigan Pier", provides excellent social commentary: As does Neville Shute Norway's (Neville Shute) book " Ruined City": Shute's part auto-biography, "Slide Rule" tabulates the huge problems in raising finance for industrial activity, as he struggled to found his new aviation firm, Airspeed Ltd in the 1930s: sufficient to say that when eventually established this company went on to be chosen to equip The King's Flight and make valuable contribution to the war effort post 1939. Nothing much changes then!

Surprising to realise, perhaps, that Workhouses still existed in the late 1930s: and that the unemployed, walking the roads from the North to the South and desperate for work were treated as tramps, under the successors to the Poor Law.

In 1948 under Clem Atlee's Labour Government the National Assistance Act came onto statute: it meant that relief was still means tested, however.

It was not until the 1960s that Harold Wilson's Labour government created the British Social State: hereafter, contributions were income related and scaled up accordingly; previously the NIC (national Insurance Contributions) "Stamp" was set at a single rate, depending on class (i.e. employed, self-employed, unemployed but making contributions etc). As part of the deal, graduated benefits were related to graduated contributions.

Thatcher changed all this: hitherto, whilst graduated contributions remained, graduated benefits were no more (With the single exception of SERPS: State Earnings Related Pension Scheme).

Thus the worker whether earning wages or salaries, was charged for graduated benefits: but they were cancelled!

Additionally, and punitively, Thatcher introduced Class IV NIC: this is simply a tax on self-employment: it is charged according to profit. It carried absolutely no accruing benefit. How dare the self-employed be self-employed and endeavour to create wealth and employment.

Since this time, NIC has escalated for both Employees and Employers: it is a punitive tax on business. For example, over current retirement age, employees pay no NIC: employers, however do still: and whilst NIC Caps out at a maximum contributions level for employees, it is just levied on employers as a percentage of gross salary paid. (there are some basic differences however, these are not worth citing since they complicate the issue and do not affect the core reality).

Since Thatcher's raid on Social Security two realities have happened: first, benefit levels were capped some time back at the same rate as Social Security benefits: trouble here is the old DHSS scales for payment were for "Urgent need": not term survival. Additionally and perhaps worse, successive Chancellors have treated NIC as a simple way to raise extra taxes for them to waste on their latest ideological fantasy.

NIC or if you like, Social Insurance, is levied and paid to cover potential exigencies: now, government wish to take the insurance premiums and whine like stuck pigs when people want to claim!

Imagine the furore if a major insurer took your motor premiums for a few years and then screamed "Rape!" when you actually suffered an accident!

Then we must inevitably progress to jobs: it is all well a good to try and compel the unemployed to take jobs: but what jobs, one must ask?

Reading about graduates who are unable to obtain jobs, begs the question "What did they graduate in?"

Unfortunately, far too many read pointless majors which fail to meld with forward work demands.

Again, one can thank Thatcher; since it was she who "Solved" the problems of youth unemployment by ramping up HFE and upgrading technical colleges to polytech university status. NuLab simply followed on.

Thatcher destroyed whole communities with her disastrous policies on coal, shipping, heavy industry and the like: men were condemned to never ever work meaningfully again. Apart from lip service, little was practically achieved in re-establishing employment. And as those unemployed moved off of unemployment benefit and onto social security benefit (As it was then called), many GPs faced with surgeries full of depressed unemployed men, whose personal dignity was shattered and lost, well they took pity and signed them off as sick: to receive what was then called Sickness Benefit. Which became long term Invalidity Benefit.

Yes of course, there are scroungers and the indolent; the workshy and lazy: they need to be addressed.

Minimum Wage means a huge body of workers become automatic benefit dependents: thus the tax payer - that's you and I - are subsidising businesses who determine to pay too little in operating their business. If their business is non-viable if they paid a living wage, then close it and do something else!

It is a further fact that circa 80% of social housing tenants claim Housing Benefit: simply because rents are far too high.

Thatcher - again - sold off council housing stock and insisted councils kept the receipts in a ring fenced account, only to be used to pay down local authority debt: the capital could not be employed to build more houses.

The slack in supply and the soaring demand was taken up by Housing Associations: which were funded by government via the Housing Corporation and what is called HAG (Housing Aid grant): Capital Sums non-repayable and awarded from 1979 on at up to 80% of the total capital cost of new house stock.

So, having paid 70-80% of the capital cost, ever since, government have been abusing tax income to pay housing benefit so tenants can afford to live in the houses which government mainly paid for in the first place! Which are almost exclusively run by registered charities and thus pay no taxes.

Make much sense?

No: not a lot.

Yet now, government wish to bear down on housing benefit which has soared out of control!

The very problem which they created.

And further, escalate Housing Association and Council rents to private sector level.

If IDS and Call me Dave are at all serious, then simply, they need to address one socio-economic dynamic alone: create a booming economic base, rather than yet another reprise of as before, Smoke and Mirrors:  create an economic base, which itself creates real, fresh new jobs which pay a living wage and allow the workers to achieve progress: rather than survival.

If jobs were unfilled then wage rates would rise (Simple economic law of Supply and Demand), tax incomes would rocket. The Budget could be restored to some level of equilibrium and the vast British National Debt could be paid down.

It is significant that post Clem Attlee's disastrous rampage through Britain, supported as he was by fire breathing ideoloques (following the dreams ignited by Ramsey McDonald), Britain, already effectively insolvent from World War Two, was returned to reasonable fiscal health, after Churchill regained power in 1951. This was not because the Tory party were some kind of miracle workers: it was simply because Britain manufactured and exported its way back to solvency.

Until and unless a similar reality is achieved, then government ministers will simply twiddle around the edges as they have been doing since 1960: and Britain will continue its descent into effective Third World Statedom.

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http://www.telegraph.co.uk/comment/columnists/maryriddell/8118454/Iain-Duncan-Smith-the-man-in-chains-who-seeks-to-liberate-the-poor-and-needy.html

Perhaps a recession is precisely the time when welfare reforms are needed?

But, I don't think that you can compare present-day Britain to Britain in the 1930s.  Thank goodness that those Bad Old Days are gone forever.

I do not want the poor and the disadvantaged to have to bear the brunt of the hardship.  I certainly do not think it fair that they are targeted disproportionately when things are difficult.

No good talking about our trade deficit with China when they are the manufacturers and we merely have the service industries to depend on.  No good, IMHO, to be the financial capital of the world, or whatever it is that they call London, when our wealth is not based on the making and selling of things that people want and need.

It is all a chimera and the sooner we wake up to that realisation the better.

 

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My father was one of those who walked, from Sunderland to Croydon in 1931 at the age of 15, he was supported along the way and especially when he arrived by the Salvation Army who found digs for him..

Re NIC, its been some years since I ran my UK businesses, back then I was paying IIRC 9 or 9.5% employees and 11% employers contribution, what are they now? And havnt the tax rates been reduced during that time?

You say that it is very high and I do agree re the class IV contributions or the employers NIC charged to a one man Ltd Co but they pale into insignificance compared to French social contributions as witnessed by the many companies operating in France but from an English base where they can swing it.

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A very interesting post.

Your comment ‘descent into effective Third World Statedom’ is probably a lot nearer than most realise. Tomorrow Hertfordshire County Councillors meet to start the process of implementing highways cuts. On the agenda among other possible cuts is the possibility of switching off the vast majority of street lighting with a view to save the grand total of £6m to £8m pa.

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[quote user="sweet 17"]

http://www.telegraph.co.uk/comment/columnists/maryriddell/8118454/Iain-Duncan-Smith-the-man-in-chains-who-seeks-to-liberate-the-poor-and-needy.html

Perhaps a recession is precisely the time when welfare reforms are needed?

But, I don't think that you can compare present-day Britain to Britain in the 1930s.  Thank goodness that those Bad Old Days are gone forever.

I do not want the poor and the disadvantaged to have to bear the brunt of the hardship.  I certainly do not think it fair that they are targeted disproportionately when things are difficult.

No good talking about our trade deficit with China when they are the manufacturers and we merely have the service industries to depend on.  No good, IMHO, to be the financial capital of the world, or whatever it is that they call London, when our wealth is not based on the making and selling of things that people want and need.

It is all a chimera and the sooner we wake up to that realisation the better.

 

[/quote]

It is not quite as simple as that, Sweets.

(Edit: P.S. I tabulated the historical time line of events, purely since it is always important, I believe, to see how any government-led system of taxes/benefits evolved: politicians all too often forget - expediently! - the original "Deal" and tend to renege on commitments and what a tax or contribution was originally charged for and cancel the benefit, yet still take the tax! As did Thatcher with graduated Contributions/Benefits.)

The much vaunted "Service Industries", which Thatcher relied on are pretty much an illusion: the term in any case is oxymoronic. Service Activities is nearer the truth.

Since the Heath-Barber fiasco (Early 1970s) and Thatcher-Lawson (mid 1980s to 1989/90), each successive Boom- Bust relied on boosting money supply and more critically credit, simultaneously with insane property price escalation. And each synthetic Boom was immediately followed by bust: the Blair-Brown "Miracle Economy" was precisely identical: excepting credit was created as never before.

By 2003, ONS (Government stats) in their annual statement on Britain's capital wealth, stated residential house prices had reached 56% of Britain's total wealth!

Since the economy was failing to throw of surplus as fresh, new real wealth, capital had to be imported via the global interbank market. This led to what Robert Peston neatly described as "Funding Overhang", since much of this capital had been rapidly repatriated.

There has been no capital for risk investment in the very area it was and is urgently required: technology.

Allowing emergent IDCs (Industrialised Developing Countries) to manufacture high volume low tech and medium tech goods, because their cost base is far lower is fine: all provided a nation state has switched its economic model to low volume very high cost manufacture.

This is where Britain failed: and still fails.

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[quote user="Braco"]A very interesting post.

Your comment ‘descent into effective Third World Statedom’ is probably a lot nearer than most realise. Tomorrow Hertfordshire County Councillors meet to start the process of implementing highways cuts. On the agenda among other possible cuts is the possibility of switching off the vast majority of street lighting with a view to save the grand total of £6m to £8m pa.[/quote]

Adam Smith, the father of economics as a science said something like (I paraphrase) "Poverty is relative to other's wealth."

Globally, Britain has failed to create and maintain what is called Competitive Advantage. And the new global war is all about the fight for resources.

No or low capital and one cannot compete in this battle.

Also, it is very well worthwhile comparing total annual government spend expressed as a percentage of GDP.

(When considering the numbers it is also important to remember that in any case, since 1945, Britain's economy is many times larger than it then was; since the activity base is incomparable, more people have been enfranchised as spenders and thus contributors to that economy. Thus even if government had maintained its take at say, 35% of GDP, it would have had a vastly increased sum to actually spend!)

Evaluating the numbers, Britain is now spending as much as it was in the post WWII years: when it was paying for the war!

Thus accordingly, one might be forgiven for feeling instead of street lights being turned off to save a few pennies, the very streets by now should be paved with gold!

What gives?

See here:

Interesting also to carry out the same exercise for the USA: same problem.

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[quote user="Braco"]

What gives?

 

The road to economic hell is paved with government good intentions and interference in the workings of a free market.

[/quote]

If you don't object, Braco, I will rephrase that to:

"The road to economic hell is perfidious government enacting policies and strategies masquerading as good intentions!"

Perhaps it can be summed up by plagerising  a critical part of Lincoln's Gettysburg address as:

"Government of the People: by the Government: and for the good of the Government!"

Incidentally, personally I don't buy-in to the "Free Market is the solution to all fiscal and economic ills" paradigm either.

What is needed is a balance between necessary government intervention and restrained capitalism: unfettered and poorly controlled capitalism as we have recently seen is the root cause of most current Western fiscal, economic and financial problems.

Another argument for another day!

[:)]

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[quote user="Chancer"]

Re NIC, its been some years since I ran my UK businesses, back then I was paying IIRC 9 or 9.5% employees and 11% employers contribution, what are they now? And havnt the tax rates been reduced during that time?

You say that it is very high and I do agree re the class IV contributions or the employers NIC charged to a one man Ltd Co but they pale into insignificance compared to French social contributions as witnessed by the many companies operating in France but from an English base where they can swing it.

[/quote]

NIC is now somewhat complicated!

See here:

Naturally, I concur that Cotisations in la belle France are higher: however, the benefits are somewhat higher too.

My own experience of the French health services, to date, is it has been similar to our local BUPA private service in UK: but the French system is better, in many ways, mainly since the BUPA consultants are simply NHS employees "Moonlighting". Which ought not to be permitted. Anymore than ought it to be with firefighters, policemen and etc.

Interestingly the last stats I saw clearly showed France has a far higher ratio of qualified staff to patient than the UK: and at the point of delivery, the French service is cheaper than the NHS.

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[quote user="Chancer"]

Looks like the NIC for employees and employers has risen and the higher tax rate comes in at a lowe level than I recall, in fact it is close to what it was 20 years ago is it not?

Also what groups pay class 1 contributions, class 2 and class 4 ?

[/quote]

National Insurance Contributions are divided into classes

  • Class 1 payable by employers and employees on

    earnings from employment and usually collected alongside PAYE
  • Class 1A payable only by employers on most taxable

    benefits provided to employees
  • Class 1B payable by employers, as part of PAYE

    Settlement Agreement (PSA)
  • Class 2 a flat rate contribution payable by the

    self-employed
  • Class 3 a voluntary contribution to preserve or

    enhance entitlement to certain benefits
  • Class 4 payable by the self-employed and based on

    a percentage of profits between a lower and upper limit.

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[quote user="Gardener"]So where are you politically GS.? I have always thought you to be quite RW and borderline racist at times but in your 'essay' , the only person you refer to by surnme consistently is Lady Thatcher, not a fan either.[/quote]

I'm ana-political: if anything, perhaps centrist in latent volition.

Personally, I have little if any time for modern politicians: bunch of self-serving, egoistic BS artists and professional calumnists, IMHO.

I can be to the left of Marx on certain issues: and to the right of Genghis Khan on others!

[:)]

Interesting how you suggest I am "Borderline Racist". Which I object to most strongly.

Simply because one draws attention to certain realities and social dynamics, and questions the status quo, its validity, justification and integrity then all too often today the PC mentality kicks into gear and the tired old cliches are trotted out.

Same with Climate Change "Deniers": as Quillan and I were agreeing on another thread today.

Not  an "Essay" BTW: that's what one does at school. It was an edited  and much truncated extract from a published article, since I felt it might be useful to assist a wider background knowledge of the whole thorny topic.

Unfortunately, with such, the media, politicians themselves and more critically their PR men and Spin Doctors distort fact; which then tends to be accepted as received wisdom and thus populist opinion and "Facts" are formed.

Which, naturally, is precisely what politicians exploit, expediently, to achieve their own rather distorted objectives.

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