Problems in Brief
The system has become unaffordable.
The hard-working are often penalized for working compared to the many drawing benefits.
There is too much fraud in the system, both in tax evasion and benefit claiming.
There is too much bureaucracy involved in collecting taxes and distributing benefits.
Our welfare state acts as an immigration magnet.
Married couples and single non-parent workers are disadvantaged.
No incentive for many to work. They are better off doing nothing or working in the black economy and claiming benefits.
PA Solutions in brief
The underlying principle is to reward work, reward honesty and encourage a partnership between individual, family and government.
Increase the threshold to £15,000 per annum before income tax is paid.
Reform the tax credit and benefit system so it is only available to those who are genuinely in need.
Stricter controls on entitlement to disability benefit.
Greater emphasis on eliminating fraud with more severe punishments.
Offer better incentives to employers to take on long term unemployed.
Problems:
Currently in Britain we have the scenario where we collect large amounts of tax revenue (£154 billion of Income Tax alone) and spend a large amount of money in doing so. We then spend another large amount of money re-distributing it. Both the collecting and the distributing are widely open to abuse. This cannot represent good value for money for the hard working British taxpayer.
The welfare state was designed to protect the vulnerable not provide an opt out for those who want to take rather than give. It should be a safety net but has become more of a fishing net, ensnaring more and more people.
It is important to remember that we cannot go on increasing taxes on hard working Britain because this is unsustainable. The demands on the Health Service and Pensions due to both the age and size of the population will be huge.
Therefore we must ensure that work pays and that benefits are carefully targeted.
There are a number of failing policies that highlight the governments flawed approach to welfare, such as:
Tax Credits and Child Poverty:
The Government will miss its key target of halving child poverty in 2010-11 unless it falls at a rate eight times greater than the fall in each of the past five years. This is despite spending the equivalent of 4p on the standard rate of tax each year on its tax credit and benefit strategy. In those five years tax credit spending has gone up from £5.7 billion a year in 2002-2003 to £14.9 billion in 2007-2008. (An increase of almost 160% in 5 years)
The tax credit strategy is also massively biased against married couples.
A single mother working 16 hours a week, after tax credits, gains a total income of £487 a week. A two parent family earning the minimum wage has to work 116 hours to gain the same income. This discrimination helps to explain why children in working two parent families now make up the single most important group of poor children. A single woman without a child would have to earn over £35,000 to take home the same amount. ( N.B There are 200,000 more single parents claiming tax credit than the Office of National Statistics believe are in existence.)
Disability Benefits:
We currently spend £9.1 billion on 2.3 million people claiming Incapacity Benefit. How many of these people truly cannot work. How many choose not to work or work in the black economy avoiding taxes and claiming benefits.
PA Solutions
The underlying principle is to reward work, reward honesty and encourage a partnership between individual, family and government.
We would advocate smaller taxes (see tax policy), smaller amounts spent on bureaucracy and a system of benefits payments designed to protect those in genuine need only.
We would also want to massively reduce the tax burden on the lower paid, maintain it or slightly reduce for the middle wage earners and increase it for those earning over £125,000 a year. This would be done by raising the tax thresholds for employees to start at £15,000. There would then be a graduated scale of tax which would make sure that those earning under £100,000 per year would be no worse off than now. For those who earn over £125,000 a higher tax rate band would be introduced of 48%.
Less tax revenue would be received but we would not need to spend as much on benefits for the lower paid as their take home income would be higher.
The combined effect of these two measures would be to reduce the incentive of working in the black economy and reduce the amount of potential money lost to fraudulent benefit claims. A win for the government , the country and the hard working honest person.
Disability Benefits only to be paid to those incapable of work as verified by two doctors. We would wish those truly in need to receive a level of benefit that reflects their condition.
Fraudulent disability benefit claimants would be barred from making further claims for a period of 12 months.
Put a time limit on benefits. This was a reform that Bill Clinton introduced in America and it has transformed welfare rolls there – down by 60 per cent. Claimants who knew that their time on benefit was limited have moved into work or, because they are already living with a partner, ceased claiming benefit. Such a programme should be enacted in Britain.
Provide a real incentive for employers to employ people out of work. Allow employers 80% government funding arrangement for the first three months then a 50/50 split for the next nine months.
We would favour a part-time job share arrangement for those on Incapacity benefits who are incapable of working full time. They would not lose their ability to claim benefits by working part-time, only the proportion for the day that they worked, when they would be paid by the employer. This helps those who cannot work full-time to contribute and not become completely reliant on benefits.
We will remove any automatic entitlement to social security and housing from non-UK citizens, scrapping any Human Rights legislation that may act as a hindrance to this.
Anti-fraud measures/ resources to be increased to severely curtail the current levels of abuse.
Our tax policy would support married couples through an increased tax allowance thus reducing reliance on benefits.
Enforce maintenance payments through their workplace from fathers who make no contribution towards children living with single mothers.
SUMMARY
The vision is to abolish welfare as we know it by getting millions of claimants into work, reduce fraud and represent value for taxpayers.
The welfare system would be set up so it could not become a life choice.
Work would be made to be worthwhile rather than claiming benefits.
Fraud would be massively reduced by minimising tax evasion and bogus benefit claims.
We must ensure that we can afford to pay a decent living pension and support those in genuine need. If we continue to waste and misdirect money as we do currently then the government will have to raise taxes forcing more people to decide they are better off on benefits or alternatively reduce the benefits from those who are genuine and deserve them.
The Popular Alliance aims for a system that rewards work, honesty and encourages a responsible partnership between individual, family and government.
