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Roula Khalaf, editor of FT, chooses her favorite story in this weekly newsletter.
If you are a new government who is desperately looking for money, then there may be several more attractive goals than the British welfare system. The only points in the history of the United Kingdom that consumption for well-being have been higher than in recent years have been grave economic disabilities-recession in the early 1980s and 1990s, the immediate consequences of the financial crisis and recession indoors closed in 2020, nor did anyone who generally saw that they could be nearby.
Mature for reform then? Maybe they won’t show up so easily to reduce – nor find sustainable savings.
The purpose of a good social welfare system is to protect people from destruction and help them in some form of employment, education or training. But a decade and a half of reform attempts have been able to provide something that is mostly weaker performance compared to 2007. In terms of fulfilling these goals – while costing more as a share of GDP.
Even before the economic circumstances in the UK got worse or secondly agreed from NATO, Donald Trump, demanded an increase in defense spending, Liz Kendall, a British secretary for well-being, had a warning for the Keira Starmer cabinet. Without bigger changes, the consumption of her department “would eat” her colleagues’ budgets. There are real options to spend less money and achieve better results, but only if it avoids the mistakes of your predecessors in the role.
Part of the story of how and why the Social Welfare System in the UK has become expensive failure is that consecutive governments have prioritized priority to a reduction in the costs in the cost of changing the way of working. One aspect of this continuous failure was the least discussed and the largest line of the line in the social welfare system – a state pension.
Triple locks, which protects pensions, increases from inflation and increases in average earnings (from 2.5 percent per year) is the cheapest solution to a double problem: the state pension is lower than those comparable countries, and the death of the pension schemes defined compensation means that the state assumes higher proportions in the hold.
Using this mechanism for a gradual increase in pension values over time, ministers in the last government avoided any, forced, significant increase. But now the mechanism risks to becoming increasing responsibility, and at the same time it becomes politically harder and harder to go out.
The amount that someone gets if he loses his job in the UK is incredibly low – most of which claims that the job seeker can seek £ 4,700 a year. Compared to 2010 or 2015, the number of people who claim that it has not increased significantly. The “applicant’s number” is higher because universal loan has individuals, not households as in the old system.
The increase in the fee law is encouraged by a growing number of people who require health benefits, many of whom are young. And this is a product in the part of the simple fact: that the upper limit that one gets on health benefits may still be far from generous, but it is much more than unemployment fee.
The incentives and the consequences are obvious. As Kendall herself mentioned, the obsession with the use of a stick (firmer fulfillment of conditions and better checks) as the only way to distract the exceeding. But changing behavior has launched people to the applicant’s list that it is much more likely that they will never leave.
It is true that some increase in people who claim that health benefits are the result of true needs. And raising the age of state pension (which makes sense given that most of us live and work longer) has created a new request: and two or three years below a new state pension age because of physical problems.
But there are few reasons to believe that increasing people in working age now classified as a long -term patient is a product of a health problem that uniquely affects the UK (in other developed economies, the level of health -related fees has fallen or other straight), not a product of a poorly designed system.
There is an obvious and sustainable savings of the future here: moving people in favor that allows them to look for or even be a u-honorant job without losing, plus finding courses for young people, not supervise a Increasing number “NEET” under 25 (those who are not in education, employment or training). In the long run, this can reduce the account in the UK for growing benefits.
An additional problem is that a fiscal guard, a budget responsibility office, It’s harder to believe Only in savings secured by cutting rights – although in practice this approach was tested for destruction.
The current mess itself is a product of desire to prioritize the savings of the title saving compared to the design of a well -thought -out system benefits. This did not provide any result.
Work has the right opportunity to build a cheaper and better system for the end of this decade. It is unlikely to reach that point if at the end of the flank into the same hunt for illusory savings that characterized the recent past. But the better outcome requires that Kendall’s department and treasury be reconciled with an unpleasant fact: this approach to one of the most striking problems in the UK failed. We no longer require the same.
