Sunday, 18 July 2010

Reform don't come cheap!

Browsing my copy of the Observer today with a relaxing cup of tea I found this article.

In summary it speaks of the tensions arising from the short-term costs of reforming parts of the benefits system. Reform, unless it is simply a term applied to mask slash-and-burn policy, is a costly process.

Interestingly and worryingly the article points out that the aim of policy (to make work pay) can only be achieved without additional costs by cutting the benefits paid to the most vulnerable. Thankfully at the time being an option which will be politically difficult - unless the govt. succeeds in further demonising anyone in receipt of benefits.

I could write a whole post about the folly of a policy like Tax Credits which in effect subsidises employers who choose to profit from paying low wages. The other alternative on offer is to make employers cover costs of living, food, housing, transport etc by compelling them to pay a living wage. The chances of this coming from the Conservatives is however, very remote. No doubt they would cite job losses arising from an enhanced minimum wage, but could the reality simply be a redistribution within companies, less executive pay and fewer bonuses in favour of a living wage on the shop floor?

Now, where was I? Well, the article I think confirms many of the suspicions around IBs that the money needed in the short-term to make the scheme a success isn't going to be forthcoming. The problem then is not simply that the policy will have failed, but its potential to cause real damage to the very people for whom it purports to represent a new dawn.

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