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Published on November 18th, 2011 | by Ben Mansfield
Image © [caption id="" align="alignleft" width="388" caption="Rising youth unemployment sits uncomfortably with the government's 'Benefits Britain' agenda © Ellie Casson"][/caption]

This week has seen unemployment reach new heights, with youth unemployment of approximately 1.02 million  raising particular concern across the country. This is bad news for the recovery of the economy, but it also undermines the tough rhetoric behind the government’s welfare reform policy. The ‘benefits culture’ of the long term unemployed is deeply unpopular, but it is not something which these young people, or the others who have become unemployed since the financial crisis began, can reasonably be accused of.

Yet a recent article in the Financial Times reveals that the Chancellor George Osborne is looking to make changes to the ways benefit entitlements are calculated, which would see their purchasing power lowered considerably over the coming years. The rate of increase in benefits when the Coalition came into power of 5.6% ensured that the real value of payouts did not depreciate relative to the price of household goods, i.e. the value of what was received stayed the same over time. This figure was lowered to 5.2% when the Coalition came into office, which is already a significant decrease, and if the news about the Chancellor’s intentions are accurate, it may soon be lowered again more drastically.

What does this mean for the government’s policy? Polls indicate that while 92% of the public believe in a comprehensive system of benefits to act as a safety net for those that need it, 3 in 4 back stricter rules on who receives benefits, and would like to see reductions in benefits for those who are able to work but choose not to. It is these latter sentiments, held by the significant majority of those polled, which Mr Osborne is basing his reforms on. However, whether these tougher proposals would in fact be catering to public opinion is not as straightforward as it might seem. In this form, cuts to benefits are not selective but across the board. Cutting the incomes of everyone on benefits rather than distinguishing between a “deserving” and “undeserving” poor could prove a grave error for the Tory brand, when it is clear that many of those who have recently become unemployed are not responsible for their situation. This is a point not lost on some of Mr Osborne’s colleagues. The Financial Times article goes on to describe how:

“Iain Duncan Smith, work and pensions secretary, is said to be highly concerned about some of the proposals, especially if it appeared that the government were picking an arbitrary new model or unfairly hitting poor households.”

If the Treasury goes ahead with indiscriminate cuts to welfare at a time when unemployment (and especially youth unemployment) is rising, it will surely be seized upon by the opposition as evidence that the old, nasty faction of the Tory Party is alive and well. It can also be expected to put considerable strain upon their coalition with the Lib Dems, making it not just a very bad policy, but also one which could do serious damage to the Tory’s public image if it is not reconsidered.

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Osborne’s plan to end ‘Benefits Britain’ faces difficulties as unemployment rises

Rising youth unemployment sits uncomfortably with the government's 'Benefits Britain' agenda © Ellie Casson

This week has seen unemployment reach new heights, with youth unemployment of approximately 1.02 million  raising particular concern across the country. This is bad news for the recovery of the economy, but it also undermines the tough rhetoric behind the government’s welfare reform policy. The ‘benefits culture’ of the long term unemployed is deeply unpopular, but it is not something which these young people, or the others who have become unemployed since the financial crisis began, can reasonably be accused of.

Yet a recent article in the Financial Times reveals that the Chancellor George Osborne is looking to make changes to the ways benefit entitlements are calculated, which would see their purchasing power lowered considerably over the coming years. The rate of increase in benefits when the Coalition came into power of 5.6% ensured that the real value of payouts did not depreciate relative to the price of household goods, i.e. the value of what was received stayed the same over time. This figure was lowered to 5.2% when the Coalition came into office, which is already a significant decrease, and if the news about the Chancellor’s intentions are accurate, it may soon be lowered again more drastically.

What does this mean for the government’s policy? Polls indicate that while 92% of the public believe in a comprehensive system of benefits to act as a safety net for those that need it, 3 in 4 back stricter rules on who receives benefits, and would like to see reductions in benefits for those who are able to work but choose not to. It is these latter sentiments, held by the significant majority of those polled, which Mr Osborne is basing his reforms on. However, whether these tougher proposals would in fact be catering to public opinion is not as straightforward as it might seem. In this form, cuts to benefits are not selective but across the board. Cutting the incomes of everyone on benefits rather than distinguishing between a “deserving” and “undeserving” poor could prove a grave error for the Tory brand, when it is clear that many of those who have recently become unemployed are not responsible for their situation. This is a point not lost on some of Mr Osborne’s colleagues. The Financial Times article goes on to describe how:

“Iain Duncan Smith, work and pensions secretary, is said to be highly concerned about some of the proposals, especially if it appeared that the government were picking an arbitrary new model or unfairly hitting poor households.”

If the Treasury goes ahead with indiscriminate cuts to welfare at a time when unemployment (and especially youth unemployment) is rising, it will surely be seized upon by the opposition as evidence that the old, nasty faction of the Tory Party is alive and well. It can also be expected to put considerable strain upon their coalition with the Lib Dems, making it not just a very bad policy, but also one which could do serious damage to the Tory’s public image if it is not reconsidered.

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