John Humphrys asks: are the Tories right to want to curb youth benefits?
The party conference season is over and the outlines of the next general election battle are now clear. The Liberal Democrats will preach the virtues of coalition government with their party as the vital moderating force, curbing the extremes of the bigger parties. Labour will campaign on the ‘cost of living crisis’ and how it can help the many millions who may not benefit directly from the slowly recovering economy. And the Tories will want to extend the period of austerity well into the next parliament in order to strengthen the public finances. To this end they will have to go on cutting public spending. In particular they have welfare benefits paid to the young in their sights. Are they right to want to curb youth benefits?
In his speech to the party faithful David Cameron was keen not to present his party as simply tough and unfeeling. He painted an optimistic picture of the Britain he wanted to create as a ‘land of opportunity’ and claimed that only a pro-business Conservative Party that wanted to help people help themselves could bring it about. It was not so much that he just wanted to get tough on the idle young, living off state benefits. He wanted to help them to a better life, he said.
Here’s part of his message: “Today it is still possible to leave school, sign on, find a flat, start claiming housing benefit and opt for a life on benefits. It’s time for bold action here. We should ask, as we write our next manifesto, if that option should really exist at all.” He went on: “Think about it: with your children, would you dream of just leaving them to their own devices, not getting a job, not training, nothing? No, you’d nag and push and guide and do anything to get them on their way … and so must we.”
The young people Mr Cameron has in mind are the so-called ‘Neets’ – eighteen-to-twenty-four year-olds who are neither in employment, education nor training. There are estimated to be 1.09 million of them, or 15% of their age group. According to the Institute for Fiscal Studies, 410,000 of them receive Job Seekers’ Allowance (costing the state £1.2bn a year) and 380,000 receive housing benefit (costing £1.8bn). It is these two benefits the Prime Minister was suggesting might be denied to them. Housing benefit would go on being available to some young people in work or training. Single mothers and young people in care would be exempt from any clampdown.
Mr Cameron was floating a broad idea that clearly still needs to be worked out in detail. Some commentators point out that it is already more difficult for young people to claim these benefits than the Prime Minister may have implied. What is clear, though, is that existing policies affecting this group are not working as hoped.
Earlier this summer Nick Clegg, the deputy prime minister, acknowledged that the youth contract scheme, which gives employers subsidies when they offer placements to young ‘neets’, was not delivering because too few employers were willing to take advantage of the scheme. The government has asked the Cabinet Secretary, Sir Jeremy Heywood, to inquire into the problem and come up with a better plan. The Prime Minister’s ideas come in the context of the Heywood review but are clearly intended to offer a distinctively Conservative answer for the voters to consider at the next election.
Some sceptics see these ideas as more politics than policy. They interpret them as being simply a piece of red meat offered to the party’s right wing and as a ploy to wrong-foot the Labour Party which would be likely to feel the need to oppose the plan, even though public opinion is tougher now on welfare benefits than it has been for many years.
But whether or not the idea is primarily politically inspired it will still have to be worked out as policy and this may be easier said than done. Many attempts by governments of all persuasions have been made to reduce the number of ‘neets’ but with very limited success. Job subsidies to create more jobs than the market would provide anyway have tended to be extremely expensive and in the end not cost-effective. In other words, governments have real difficulty in reducing the number of ‘neets’ by artificially trying to increase the number of jobs. Providing more education is itself expensive and getting the private sector to help out by increasing the availability of training, such as through apprenticeship schemes, have never been sufficient to fill the gap.
What this means is that though Mr Cameron may imagine that withdrawing benefit is a good way to force young people into work, education or training, the opportunities for them to do so may simply not be there. Taking away their benefits in that environment may simply plunge them into poverty.
Another approach may be the one floated by George Osborne, the Chancellor, in his speech to the conference. He suggested that long-term recipients of benefits might be required to do some sort of community work in return for their benefits. This idea, based on the American ‘workfare’ policies, has been floated many times before but the practical problems have often made them seem far less attractive in practice than they may be in theory. Making ‘neets’ pick up litter if they want to go on getting their benefits might satisfy one of the Prime Minister’s concerns but might not be too easy to implement.
What is clear, though, is that if Mr Osborne is serious in his intention to extend his austerity policy well into the next parliament in order to create a surplus on government spending by 2020, then he will need to cut the welfare budget much more than is already planned. That almost certainly means denying under-25s some of the benefits now available to them. Do you think this would be the right policy? Or do you think it would simply add to the problems of a generation already faced with a future less prosperous than that of their parents?
