This year will go down as the year when the government’s much vaunted welfare revolution descended into chaos – and working families were asked to pick up the tab of spiralling welfare costs.
Once upon a time we were promised a revolution. Universal Credit was going to make sure everyone was better off in work. The Work Programme was supposed to match the unemployed to jobs. And the benefit cap would make sure no-one was better off on benefits.
But policy after policy is collapsing. Privately Cabinet ministers are calling the universal credit is ‘a disaster in the making’ and saying the IT system ‘nowhere near ready’. The Work Programme is only succeeding in getting two out of every 100 people on it, into work. That’s actually a worse performance than doing nothing. And now we hear the benefit cap is being delayed because the Department for Work and Pensions has just realised that thousands of people will be made homeless and have to be put up in expensive bed and breakfast.
You couldn’t make it up.
On top of this, the government’s failure to get Britain back to work is costing us a fortune. After the Autumn Statement, George Osborne’s independent budget watch-dog dialled up its forecast for unemployment – by a third of a million. That’s going to push up the welfare bill by £6 billion – and to pay for that, the government is planning a huge new strivers’ tax – slicing another £4 billion off tax credits.
The tragedy is there is a simple alternative.
I know the jobs market is tough out there – I represent the constituency with the second highest unemployment in Britain. That’s why Ed Balls and I are proposing a tough but fair compulsory jobs guarantee. That means for anyone looking for a job for more than two years, we’ll invest in making sure there’s one to go to.
We can’t do this for free. But to pay for the wage and training subsidy needed we think we should reduce the generous tax breaks enjoyed by those on £150,000 a year saving for their pension. We think they should have the same tax break as every other basic rate taxpayer – and no more.
Welfare reform is important but it’s never easy. Labour wants the welfare bill to come down. But we know the best way to do that is to get to the unemployed into jobs paying taxes – not desperately raid tax credits that working families have paid in for.