Thursday, 18 September 2008

Is there a benefits trap?

It seems to be accepted wisdom that some people living on benefits are trapped by their dependency on welfare. As I understand it two situations exemplify the benefits trap: (i) those who could not earn as much as they receive from the State and (ii) those who could earn a little more but so little that it is not worth the effort. Commonly the latter category are seen as less worthy than the former because they would receive a modest financial gain by working rather than sitting around the house. Little discussion surfaces from the political parties about the former category, it seems to be accepted that because they cannot earn more than they get on welfare so they are justified in remaining on benefits. From time to time suggestions are made about having to undertake some modest form of work to retain an entitlement to benefits, but such suggestions bear all the hallmarks of headline grabbing sops to the taxpayer rather than anything substantive.

My question is: what about those who do work for less than they could get on benefits? Because, you see, there are people like that. Some have always been in very low paid work and others have seen better times but through illness or bad luck find their opportunities restricted. What distinguishes these people from the worthy welfareists, why is it that they choose to work when a cushier option is available? It seems obvious to me that it is all a matter of personal standards. The same explains why some people on low incomes steal things and others say they would rather be poor but proud than engage in dishonesty. It also explains why council estates contain many houses with well tended gardens and clean curtains in the window while others are just storage areas for junk. The standards we have, usually learned from our parents, dictate much of our behaviour and they set the scene for how we live our lives.

The benefits trap is only a trap for those for those who wish to use it as an excuse for idleness. It is certainly a ridiculous state of affairs that anyone should receive so much in State handouts that it could be said to be a disincentive to self-support, but it is wrong to believe that it is a disincentive. It is nothing of the sort unless you choose to treat it as such. Until someone can persuade me that sitting around doing nothing should be the default position and work is just an optional extra, I will not accept that the benefit trap exists at all.

We can look at the position from a different angle. Take the person who would receive, say, £25 more a week on welfare compared to the amount he could earn for the work available to him. Just looking at that sad statistic only tells part of the story. Once he is in work and has a record for honest toil he is better placed to find something that pays more or to seek a raise. Those of us who live in the real world know that employers often take someone on at the minimum wage to undertake a menial task and then increase that person's pay, often through a loyalty bonus or a birthday or Christmas gift, it happens in small businesses up and down the country. The going rate for the job is still the minimum wage but the person doing it with dedication receives a little more. The so-called benefit trap is not a trap at all when one takes into account the increased opportunities that being in work provides. Some will not be able to turn any of those opportunities into more cash, but I can be sure they go home each evening with a great sense of self-worth because they have done a day's work.

It is not the money that traps people on benefits it is their personal attitude, the standards they set for themselves. Any attempt to tackle the problem of the long-term unemployed with no qualifications and no drive must address the issue of standards and then the issue of money will disappear.


Mark Wadsworth said...

That may well be true.

But as long as welfare claimants face average marginal deduction rates of up to 80% on incomes up to £20,000 a year, to deny that there is a welfare trap (even if it only 'traps' people without drive or ambition) is just silly.

TheFatBigot said...

You can't have it both ways, Mr Wadsworth. Either the point I make "may well be true" or it is "just silly".

The point you make is that the way welfare works in practice can act as a disincentive. I couldn't agree more. That is my point - it can be a a disincentive but it only will be if someone chooses to treat it as such.

The ever increasing tax on ciggies can be a disincentive to the weak-willed, but a determined smoker of moral fortitude will make other sacrifices.

In any event, as Connie Francis used to say, "it's my blog and I'll be silly if I want to". After all, you keep going on about Land Value Tax. (tee hee)

Mark Wadsworth said...

What I meant was:

It is true that people of a certain moral fibre will find a job rather then claim welfare.

It is silly to deny that the bulk of people do not have this moral fibre (I'm not sure that I do, for example).

Ergo, reducing means testing/withdrawal rates will benefit the former category (the low paid) and motivate the latter category (the idle) to find work.

fewqwer said...

Over-generalization and a failure of empathy here IMHO.