Keeping an eye on a company whose business is government contracts.
Saturday, 2 October 2010
The "universal benefit"
News that Iain Duncan Smith has reached an agreement with the Treasury for his "universal benefit" plan is encouraging. But a lot of questions arise. For one thing, there are people saying that it will take a decade to bring the scheme completely into effect. Partial or gradual implementation could be a mess. While we agree that the system should guarantee that someone is better off in work than out of it, there's a big risk that it will just encourage even lower wages. We've seen that happen with tax credits; why should bad employers pay more than the pittance of the minimum wage when many people will get that topped up by the taxpayer? Employers may well seek to take on more part-timers and temporary workers because it's cheaper for them, and the people they take on won't lose their benefits entirely. Even more worrying is that the new system can be used to time-limit benefits. We've made it so much easier for you, they'll say, so if you still won't work you're not going to get anything at all. That's certainly one way of saving money.
And what about the Work Programme? Payments to providers are supposed to depend on full-time, permanent jobs, while the new system will encourage part-time, temporary work. Will that change?