Iain Duncan Smith defies all logic (again). And then there’s Liam Byrne…

Iain Duncan Smith was interviewed for today’s Sunday Telegraph, and is sounding increasingly deranged. Under ever increasing pressure to reduce the welfare bill (an impossible task given the Coalition’s fiscal stance), Smith appealed to wealthy pensioners to ‘hand back their benefits’ if they didn’t need them. So rather than changing the rule on universal benefits (which is a bad idea in itself), he is resorting to trying to make little old ladies feel guilty about their winter fuel payments as though it is costing the nation billions (it’s not). That’s not what I wanted to write about today though. Duncan Smith also said this:

“We want to say to people, you’re claiming unemployment benefit but you’re actually in work paid for by the state: you’re in work to find work. That’s your job from now on: to find work.”

Duncan Smith’s tried this line before. We people objected to job seekers being forced to work for nothing in Poundland he said (of Caitlin Reilly):

“She was being paid for it (working at Poundland), what do you think the taxpayer was paying her for God’s sake? Her job seekers allowance. The taxpayer is paying her wages.”

IDS persists with this idea that the unemployed need to be constantly harassed to get off their lazy arses and look for work, and it informs every aspect of the Coalition’s employment policy. The elephant in the room though is always the tyranny of the maths – 2.5 million unemployed is a much bigger number than the (less than) 500,000 vacancies currently available.

Duncan Smith’s views on unemployment and the unemployed just doesn’t stand up to more than 5 seconds scrutiny, so it got me wondering if maybe he just hasn’t met many unemployed people, and I thought I’d see if there was a negative correlation between an MPs view on unemployment and the unemployment rate in their constituency. Maybe if unemployment is very low where your voters live, it informs your view on the problem and those who are unemployed? So I downloaded the March 2013 JSA claimant rates from Nomis by constituency to see how much of an issue unemployment is in the constituencies of Cabinet and Shadow Cabinet MPs. Here’s the average claimant rate in Cabinet and Labour front-bench constituencies:

The claimant rate nationally is currently 3.9%, but in the constituencies of the Coalition “Cabinet of millionaires”, the average rate is just 2.2%, while in the constituencies of Labour front-benchers the average rate is 5.2%, much higher than the national average. Looking at the rates in individual Cabinet Minister’s constituencies we see a pretty common pattern. Unemployment in the constituencies of Cabinet members is typically very low – David Cameron, 1.4%; Nick Clegg, 1.5%; George Obsorne, 2.0%; Theresa May, 1.8%; Michael Gove 1.7% etc. So it may be that in these parts of the country the issue of unemployment is secondary to other issues like planning, wind farms etc. So my hypothesis that low unemployment at home leads to skewed attitudes towards the issue looks plausible.

There are in fact only two members of the Cabinet who have above average levels of unemployment in their constituencies – Welsh Secretary David Jones (who he?) and – wait for it – Iain Duncan Smith! I was surprised to discover that in Chingford and Woodford Green, 4.2% of the working age population are in receipt of JSA. So if Duncan Smith spends any time in his constituency at all, it must be obvious that not all of these people can be lazy scroungers and that there must be an issue around a lack of jobs. Does he think the people of Witney (Cameron’s constituency) are all “hard-working families who want to get on”, while his constituents are all skivers and scroungers? Only someone wilfully blind could dismiss the lack of jobs as the problem and instead blame the attitude of individuals couldn’t they?

But what of Labour? We saw above that unemployment is significantly higher in Labour constituencies than Coalition ones. Does that mean they have more empathy with those who are unemployed and a better understanding of the issue? Ed Miliband (5.9% JSA rate) has talked about returning to the idea of full employment, while Ed Balls (3.2% JSA rate) proposes a new jobs programme for young people. Labour’s ideas are timid and also place a too much of a focus on the individual, but they at least acknowledge the need to actually create jobs. Again then, there’s an argument that higher unemployment in Labour seats makes them more attuned the problem of unemployment.

But there’s one front-bencher’s constituency that has much higher unemployment than any others, with a whopping 9.6% of working age adults claiming Jobseeker’s Allowance. He more than any other must understand that is a chronic lack of jobs that has kept unemployment high surely? So who is this person? Step forward MP for Birmingham Hodge Hill Liam Byrne. This is the man who led Labour’s decision to abstain from the Bill retroactively made legal the Government’s sanctioning regime and consistently tries to ‘talk tough’ on welfare, giving credence to the idea that there are hundreds of thousands out there who are on the take. How can he come out with this garbage representing the constituency he does?

So what can we conclude? In general we might think that if an MP’s constituents are unemployed in greater numbers, the greater will their concern be for the unemployment issue and vice versa. If you are a welfare spokesman though, it seems you have to check your brains in at the door, and compete to see who can talk the toughest. Is that what they mean by good politics?

APPENDIX

JSA Claimant Rates by Constituency March 2013

LABOUR
MP	Constituency	Number of Claimants	Claimant Rate
Ed Miliband	Doncaster North	3,594	5.9
Harriet Harman	Camberwell and Peckham	5,403	6.2
Ed Balls	Morley and Outwood	2,159	3.2
Douglas Alexander	Paisley and Renfrewshire South	3,294	6.0
Yvette Cooper	Normanton, Pontefract and Castleford	3,475	5.0
Sadiq Khan	Tooting	2,329	3.2
Rosie Winterton	Doncaster Central	4,354	6.8
Andy Burnham	Leigh	3,030	4.7
Stephen Twigg	Enfield, Southgate	2,015	3.4
Chuka Umunna	Streatham	4,158	5.3
Jim Murphy	East Renfrewshire	1,340	2.4
Hilary Benn	Leeds Central	7,521	7.0
Angela Eagle	Wallasey	2,719	4.9
Caroline Flint	Don Valley	2,761	4.6
Maria Eagle	Garston and Halewood	3,474	5.5
Liam Byrne	Birmingham, Hodge Hill	6,810	9.6
Ivan Lewis	Bury South	2,567	4.1
Mary Creagh	Wakefield	3,301	5.3
Jon Trickett	Hemsworth	2,849	4.7
Tom Watson	West Bromwich East	3,907	7.6
Vernon Coaker	Gedling	2,215	3.7
Margaret Curren	Glasgow East	3,811	6.7
Owen Smith	Pontypridd	1,932	3.6

COALITION
MP	Constituency	Number of Claimants	Claimant Rate
David Cameron	Witney	920	1.4
Nick Clegg	Sheffield, Hallam	944	1.5
William Hague	Richmond (Yorks)	1,208	1.8
George Osborne	Tatton	995	2.0
Danny Alexander	Inverness, Nairn, Badenoch and Strathspey	1,738	2.8
Theresa May	Maidenhead	1,194	1.8
Philip Hammond	Runnymede and Weybridge	968	1.4
Vince Cable	Twickenham	1,283	1.7
Iain Duncan Smith	Chingford and Woodford Green	2,151	4.2
Chris Grayling	Epsom and Ewell	1,010	1.5
Michael Gove	Surrey Heath	1,121	1.7
Eric Pickles	Brentwood and Ongar	1,194	2.0
Jeremy Hunt	South West Surrey	876	1.4
Owen Paterson	North Shropshire	1,954	3.1
Justine Greening	Putney	1,772	2.6
Michael Moore	Berwickshire, Roxburgh and Selkirk	1,962	3.4
Ed Davey	Kingston and Surbiton	1,525	1.7
Patrick McLoughlin	Derbyshire Dales	675	1.4
Maria Miller	Basingstoke	1,825	2.6
Theresa Villiers	Chipping Barnet	1,986	2.6
David Jones	Clwyd West	1,722	4.1
Kenneth Clarke	Rushcliffe	1,180	1.9
George Young	North West Hampshire	1,124	1.8
Francis Maude	North Warwickshire	1,585	2.8
Oliver Letwin	West Dorset	688	1.3
Grant Shapps	Welwyn Hatfield	1,758	2.4

Advertisement

Iain Duncan Smith sends a message to welfare claimants – “Know your place”. Sadly, it seems Labour agrees

After the courts ruled DWPs workfare regulations were illegal, Ian Duncan Smith quickly introduced new ones to ensure his spiteful and counter-productive welfare to work schemes could continue unabated. This still left his department open to claims for back-payment of benefits which had been stripped of claimants following them being sanctioned for “not doing enough to find work”. Reportedly, the claims could have amounted to as much as £130m, which assuming an average back-payment of £500, implies that as many as 260,000 people have had their benefits sanctioned illegally.

Rather than do the right thing after months and months of doing the wrong thing, IDS has decided to stick two fingers up to all those people who were given benefits sanctions unlawfully, and is introducing retroactive legislation to ensure DWP is no longer liable to repay any monies to claimants who suffered as a consequence of his department’s incompetence.

The reason given for doing this is to protect taxpayers and also to avoid further welfare cuts to make up the shortfall. This is false though, because we know that nearly every pound going to those at the bottom is spent, and every pound that is spent eventually comes back to the Treasury as tax. There would be no loss to the taxpayer.

No, the real reason for this legislation is to say to those on welfare: “Know your place. You will do what to tell you to do, no matter how unreasonable, and if you don’t like it just stop claiming. We don’t care if you find work or not, just stop being a burden. And don’t try to fight back, you will never win.”

The actions of Cait Reilly and others were heroic, and clearly got IDS rattled. The last thing he and the Government want to see is those at the bottom standing up for their rights and challenging what is being done to them in the name of deficit reduction. It sets a dangerous precedent, and so any means to shut it down becomes necessary, even the introduction of unprecedented emergency laws.

The most shameful part of this story seems to be that the Labour Party looks set to vote through this terrible bill on the nod. After all their bluster about condemning bedroom taxes and other welfare cuts, when it comes to the crunch, it seems like Labour are more than willing to line up behind the establishment and vote against those they were put in Parliament to represent. I hope I am wrong about this and Labour politicians have an attack of the conscience between now and the time of the vote, but I won’t hold my breath.

UPDATE: It now looks as though Labour might abstain in the vote on the legislation, which has the same effect as voting for it, so not a particularly bold move from the official opposition. Sitting on the fence will do nothing for those being screwed by this latest Government shambles.

The Work Programme Part 3 – Payment by Results and Unpaid Work Experience

“Payment by results”. It sounds good. Firms only get paid if they do well, so there is a powerful incentive for them to act in the best interests of the individual. Something is going very wrong though. About £4 in every £5 paid out to Work Programme providers is not being paid because a ‘result’ has been achieved. It is being paid for an ‘attachment’ to the Work Programme i.e. when an unemployed person starts the programme. Only £1 in £5 constitutes ‘payment by results’, and even then as we have seen, the value of these results is somewhat dubious.

The Government has actually taken these poor results and tried to spin it into a story about value for money for the taxpayer. Responding to the dire figures published in November, Work and Pensions Secretary Iain Duncan Smith said:

“I think we are on track. Payment by results is about saying the taxpayers need not foot the risk.”

In other words, he’s saying that even if the Work Programme providers performance is abysmal, it’s OK because the taxpayer only pays for results. Leaving aside the fact that that is just not true, as we’ve already seen, the idea that all that matters is value for money for the taxpayer is frankly bonkers.

We have an unemployment crisis in this country and every day we are forgoing millions of pounds in lost income because we have millions of people unable to find work. We are not making use of all these people’s skills and experience while they languish on benefits through no fault of their own. The idea that it’s OK that we are not finding work for these people because the taxpayer is not on the hook is crazy.

The Future Jobs Fund was scrapped by the Government because it cost too much. A cost of over £7,000 per job is widely cited, but a recently completed evaluation of the programme came up with somewhat different numbers. The programme was found to have a net cost to the Exchequer of £3,100, but provided a net benefit to society of £7,800 per participant.

The idea that the only thing government’s should be concerned about is value for money, that cheaper means better is just illogical. It’s what society gains from spending by the government that really matters. The Work Programme may be cheaper than previous schemes (debatable I think), but the return on the government’s investment in the Work Programme looks like being very low (and maybe even negative) at this point. That makes no sense at all. Far better to spend more on a programme that will generate a greater return for society.

Payment by results is supposed to incentivise excellence, but achieving excellence is hard, even more so in an economy where there is a shortage of jobs. So instead of promoting excellence among Work Programme providers, payment by results seems to be promoting cheating or corner cutting (read part 2 for more on this). The result of this is that, far from creating an effective, unemployment reducing programme, it has created one which is barely (if at all) better than nothing.

Knock-on effects

Going hand-in-hand with the Work Programme appears to be the beginnings of a worrying trend in the labour market –  a growing casualisation of the workforce and – even more worrying – the rise of the unpaid work placement.

Casualisation

Casualisation, manifesting itself in the form of temporary, zero-hour or self-employment has exploded to such an extent that 3 million people now say they are underemployed, up by 1 million since the economic downturn began in 2008. So while Coalition ministers crow about falling unemployment, and 1 million new private sector jobs, it’s right to question just what sort of jobs they are, and what sort of precedent does this set for the future?

That’s not to say there is no place for zero hour contracts and temporary work. The key though is that there is a strong backstop in place to catch those who fall out of the system. Temporary work or zero-hour contracts are not so bad if there is a strong welfare state to fall back on (or a guaranteed state-funded job as I would like to see), but at the same time as the labour market remains weak, the Government are also weakening the welfare state at the same time by cutting working age benefits in real terms. Done in the name of deficit reduction, it’s the ultimate false economy. Cutting the incomes of those who spend most of their incomes mean less sales for businesses and less income overall. As Paul Krugman says:

“Your spending is my income, and my spending is your income. So what happens if everyone simultaneously slashes spending in an attempt to pay down debt? The answer is that everyone’s income falls — my income falls because you’re spending less, and your income falls because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.”

Unpaid Work Experience (Or Workfare)

Wrapped up with the Work Programme has been the rise of mandatory unpaid work experience. Work experience has gained a lot of negative coverage in the media in recent years. A lot of this has focused on schemes outside of the Work Programme, but it is less known that it is very common for Work Programme participants to be mandated to do unpaid work experience.

The Work Programme uses the ethos of the ‘black box’ approach. This means providers have the freedom to do whatever they feel necessary to help a Work Programme participant get back to work. Often, it seems, this takes the form of unpaid work experience. This is mandatory. If participants refuse to take part, they can have their benefits sanctioned.

This practise of sending benefit claimants is growing in scope. It was recently announced that ESA claimants (those deemed unfit for work, but placed in the work-related activity group) can be mandated to do unpaid work experience for a time period without limit.

This phenomenon of unpaid work experience has now become so prevalent that private firms, with the collaboration of Jobcentre Plus and the DWP are now advertising ‘job vacancies’ that are actually unpaid placements. Here’s 2 examples:

WORK EXPERIENCE PLACEMENT WITH A POTENTIAL JOB-ARGOS- Speak to an adviser about YLY/37795

— YARDLEYJCP (@YARDLEYJCP) December 7, 2012

A tweet by #ShrewsburyJCP says 'We advertise paid employment through Universal Jobmatch ' hmm what is this then? : https://t.co/AR8EqAxA 😀

— David Smith (@davesmith40uk) December 10, 2012

There is a real danger I feel that this can become so normalised, that it becomes standard practise for certain employers to only hire on a ‘try before you buy basis’. This is just wrong in my view, but it just seems to have almost passed unnoticed in the press. It just shows how bad things have got when things most people would usually balk at just become the new normal. All decent people should oppose this in the strongest terms.

This post has strayed somewhat from its original theme, but just to try to draw the 3 parts of this series together. Here are the key points:

• The Work Programme is an expensive failure. If we didn’t have a Work Programme, we would have expected more long term unemployed to have found work.
• Work Programme providers are providing very little of value for the millions they are being paid. Instead, they are using a number of techniques to extract additional cash from the public purse.
• Payment by results just doesn’t work
• The Work Programme is giving rise to all sorts worrying trends, notably unpaid work experience.
• It seems to be becoming normal for employers to expect jobseekers to work for them for free for a period before offering them a paid role. This can only displace paid employees. It needs to stop.
• Real terms benefit cut and benefit sanctions are pure false economies. They will ensure unemployment rises, not falls and will bequeath a smaller economy than would otherwise be the case. It will end up costing us all more.