Welfare and Unemployment


When Labour came to office in 1997, unemployment across the U.K. was close to 2 million. In 2004 the Government was claiming that unemployment was down to less than a million, the lowest for 29 years. In April 2004, government figures put the unemployment rate, which counts those claiming jobless benefits, at just 2.9 percent. This enabled the Government to claim that unemployment was at the lowest level for almost three decades. However, this figure of 2.9 percent did not match with the 4.7 percent calculation made by the International Labour Organization. There was certainly no shortage of people in work; according to U.K. government statistics, total employment had reached a record 28.4 million in 2003.

This was no economic miracle; the 2.9 percent unemployed claimed by the Government was simply a manipulation of statistical data. Unemployment was redefined rather than reduced. As the unemployment rate went down, disability cases rose. A paper published in 2004 by the Centre for Regional Economic and Social Research, reported that Britain had more than 2.5 million non-employed adults of working age who claimed sickness-related benefits. This total questioned the contemporary perceptions of the UK labour market and indicated a high level of hidden unemployment.

The report stated that the numbers claiming incapacity benefit for more than six months was 570,000 in 1981, by 2003, that figure had risen to 2.13 million. In addition, there were 300,000 recipients of the Severe Disablement Allowance, and 200,000 short-term claimants of the incapacity benefit. The sum total of those non- employed people of working age who were receiving sickness-related benefits in August 2003 was almost 2.7 million, nearly a 500 percent increase on 1981. This figure was closer to 10 percent of the 28 million employed people in the U.K at the time. A significantly increase over the 2.9 percent unemployment rate, stated by the Government. Of course some, or all of those claiming incapacity benefit may be genuine cases, but a government welfare advisor has suggested in a recent report, that less than a third of the claimants are genuine

So here we are in 2008 with the Government now recognising that this high level of incapacity benefit payment, which is costing £12 billion per year, cannot be sustained. The Government Welfare Reform Bill comes into effect this year, which is an effective admission by the Government of another flawed policy. This Bill is meeting strong opposition from associations and pressure groups representing those who are incapacitated in some form or other. The opposition is not without some justification, like the recent 10p income tax fiasco, it indiscriminately penalises some of society’s most needy. Like many of the schemes introduced by this government, it is likely to cost more to implement than it will save. Taxpayers may welcome the initiative to reform this part of the welfare system, but any rejoicing may be premature. This is yet another indication that this government cannot continue with its policy of welfare largesse. More significantly, we now have a national spend and debt repayment economy. Yet even here, the Government is using data manipulation to disguise the true size of the debt, while promising increased public expenditure. Where is the money going to come from to service both needs? If you are a taxpayer, you know the answer.

3 responses to “Welfare and Unemployment

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