“Benefits Street” has thrown down the gauntlet. Whatever your reaction to the programme, you must want a response. We can’t go on like this. Some viewers are absolutely outraged at the residents. Some are profoundly moved by their circumstances. But there is no doubt that many of the residents are leading miserable lives and that the current system is neither forcing nor helping them out of their desperate circumstances. The longer people fall out of the mainstream world of going to work and earning their own living, the harder it is for them to get back into it. We need a new approach to stop people falling away and to help those who have fallen away some time ago to get back into the world and re-establish themselves.
A new approach to assisting the unemployed must tackle the following 5 issues:
1) For unemployed people who want to work but can’t find work, or are even unemployable, it is deeply upsetting and frustrating to be labelled as idle and scrounging. A new scheme must give these (many) people the chance to prove beyond doubt that they are willing to work and to improve their employability.
2) Being out of work for more than a few months is scarring. Individuals lose confidence, health deteriorates and working habits are lost. Biological research shows that long-term unemployment shortens life – the telomeres which prevent our genetic code degrading are shortened. Employment prospects drop. As employment in the economy grows it does not mean that all unemployed people will find a job. Whilst 450,000 more people are in employment in the UK than a year ago (Nov 2012-Nov 2013), unemployment only dropped by 172,000. The good news is that 50% of unemployment claimants get a job within 96 days. The bad news is that 50% don’t. A third of the unemployed have been out of work for more than a year and a fifth for more than 2 years. A new scheme must ensure that no unemployment claimants have to spend more than 3 months out of the workforce.
3) Unemployment is a revolving door. In 2012, over 40% of new claims for JSA where from people who had claimed it in the previous 6 months and 50% had claimed it in the last year. Any new scheme needs to recognise this by incentivising people to stay in employment.
4) We need to end the opportunity for fraud in unemployment benefits where claimants are working in the grey economy. The DWP estimates that less 3% of spending on unemployment benefits is fraudulent. Anecdotal and tabloid arguments imply that this figure is 10 times higher. The truth is that no-one knows – or they would act on it. One way to tackle this would be to have a scheme for the unemployed which prevented work in the grey economy by occupying their time doing something different.
5) The reductions in public spending have squeezed the ability of local authorities and the funded voluntary sector to tackle important local community issues. There is less money for adult social care, youth services, libraries, sports and leisure services, environmental maintenance, litter collection, etc. A new scheme for the unemployed should help put people to work in these areas.
My proposal is called “Community Shifts”. It is about unemployed people being able to say that they “have put in a shift for the benefit of their local community” and are therefore entitled to that community’s financial support. The scheme has these features:
a) Unemployment benefits would only be paid for 3 months (in any 12 month period).
b) After 3 months, claimants would earn their monthly benefits by completing a number of “Shifts” within that month. A Shift would be an 8 hour day of supervised work.
c) To achieve their full benefits, people would need to complete 15 Shifts per month. They would be paid per Shift.
d) They would have the opportunity to complete more Shifts. If they complete 20 per month (i.e. 5 more days), they will earn a bonus worth one-third of their benefits. They can do this for up to 3 months. The total bonus would therefore be equivalent to one month’s benefits. However, they would only be paid this bonus once they have a proper job and stay in it for 12 months.
e) The Shifts would be made available by their Local Authority, which would have a statutory duty to provide sufficient Shifts to meet the needs of all claimants who have been out of work for more than 3 months.
f) The Shifts could only be for public sector or not-for-profit organisations. It is expected that people delivering the Shifts would be working within the existing management structure of an organisation. This would keep the cost of the new scheme very low.
g) Local Authorities would consult widely on what work the local community most wants to see happen.
h) Welfare to Work providers would provide job-search and up-skilling to be accessed outside the working time devoted to the 15 Shifts.
i) Lone parents would have the same access to childcare support as those in low-paid work. This includes both school and nursery guarantees, but also the monthly allowances for childcare payments.
Why 15 Shifts per month? Let’s assume that unemployed people could be working 4 days per week (leaving at one day for job search and up-skilling, on top of evenings and weekends) and for 45 weeks of the year (an equivalent working year to most people in jobs). That would total 180 days. If those days were worked over a 12 month calendar year, that would mean that people did 15 days per month. In an average calendar month there are 22 working days (assuming a 5 day working week). So this leaves 7 days for job search, improving skills and or breaks from work. Giving a monthly figure aligns with the new monthly approach to paying benefits under Universal Credit. The 15 days could be worked in different patterns – e.g 3 weeks of 5 day weeks, followed by 1 week doing something different; or 3 weeks at 4 days and 1 week at 3 days; etc.
How does the money work for an individual or family? To work out some simple figures, let’s take advantage of the simplification coming in through Universal Credit and look at those rates. The figures include standard allowances and housing benefit. A single person over 35 in the private rented sector in the Midlands will receive about £650 per month. A lone parent with 2 children in a social home in London will get about £1200 per month. A couple with 1 child in the private rented sector in Newcastle will get about £1400 per month. Each Shift would be worth 1/15 of their assessed benefit entitlement. In very simple terms, a couple with children on £1500 per month, would earn £100 for each Shift completed. A single person over 25 would get more like £50 for each Shift. If they worked less than 15 Shifts, they would lose £100 (family) or £50 (single person) for each shift not completed. (Clearly, they would not lose money if they were sick and unable to do their Shift). To get their bonus, people have to complete an extra 5 shifts per month. For the couple getting £100 per Shift, that would be an additional £500 for that month, However, this would not be paid to them during unemployment. Instead, it would be retained by DWP. The person would be allowed to earn this bonus for up to 3 months, giving a total for our couple of £1500. The single person in our example could earn £750. The sum would be paid to them when the claimant has been in employment for 12 months. This would create an incentive to take a job, stay in the job for a year and then, perhaps, pay for a holiday.
What does it look like for a local authority? Let’s assume that it requires 1m places every year. (Roughly half of the unemployed). There are 430 local authorities. So each authority would need to provide about 2,000 places per year. It might mean 1,000 people in their area on the scheme at any one time. The authority would have a statutory duty to have a sufficient supply of places available. This would require a major dialogue across their local area to create and maintain places, involving the public sector (schools, civil service, council departments, health bodies, fire safety, etc) and the not-for-profit sector (housing associations, charities, voluntary groups, etc). There could be a wide range of white collar and blue collar Shifts available, ranging from basic manual work to highly skilled professional and managerial roles. Authorities would receive funding to manage the scheme and pay out-of-pocket expenses to claimants. This would be diverted from existing welfare programmes which would have much less to do once the unemployed were completing 15 Shifts per month.
What would be the impacts? The number of claimants of out-of-work benefits would fall substantially. It is clear that some unemployed claimants who are working in the grey economy would stop claiming, as the 15 shifts would make it hard to hold down most jobs. There would be another group who currently find the jobs on offer in their local area unattractive, perhaps because of pay or job type, but who may change their mind and take these jobs because they would prefer it to doing Community Shifts for just their benefits. There would be large numbers of individuals who were able to re-enter the labour market and get jobs because their Community Shifts had given them new work experience and a track record of work. But as well as reducing unemployment benefit costs and helping people to get back into employment, it would also help to restore public confidence in the welfare system. There is no place for idleness in this system and little for fraud. Communities would know that people on out of work benefits were “putting in a shift” – and they would see the benefits of this in the improvements in their local community services.
Personally, I found the human stories in Benefit Street profoundly moving. Equally, I found it infuriating that people could have drifted / been allowed to drift so far away from a normal working life, where they would be making a contribution rather than just taking from others. But worst of all are the reactions to the programme. The resentment is mutual and uncomprehending – the outraged taxpayers resenting the apparent idleness and easy money of the Benefit Street residents; the outraged benefit claimants wanting taxpayers to know that they are not idle or living an easy life. Whatever the current truth, Community Shifts is a way to abolish this resentment and make welfare support self-evidently a “something for something” culture, not a world of “something for nothing”.