UK Poverty Post

Should Darling raise Jobseeker’s Allowance?

Wednesday is Budget day. Normally a day of great excitement for nerds and political anoraks, the fact that it takes place in the midst of recession means this year’s Budget will be watched anxiously up and down the country. For FREDs, more than anyone, Budget 2009 is a day of reckoning.

It’s timely, then, that the JRF have just produced a report asking should adult benefit for unemployment now be raised? It will come as no great surprise to hear that my answer would be a resounding ‘yes’. Indeed, raising benefits right now was part of Oxfam’s six-point plan for the recession.

In what is an interesting report, the key message I take is how strong a case there is for raising unemployment benefits right now. A simple but devastating
graph shows how the gap between unemployment benefit and average spending has doubled in thirty years – after the two rose together for the first thirty years of the welfare state. Unemployment benefit was quietly allowed to dwindle by successive governments. What we’re asking for is a £15 increase to take us back to where we were in 1997. But it would take a significantly bigger increase – not much shy of a doubling of JSA, to £113 a week – to restore unemployment benefit to a fifth of average earnings, where it was in 1980.

The killer facts, however, are in how affordable it is. Even if you accept the most dramatic estimates of how much raising benefits will discourage people from working, increasing JSA by 50% would see government spending an extra £2.2 billion a year – or just 0.5% of government spending. To put that into context, that’s less than a fifth of the cost of the 2.5% cut in VAT. And of course, with unemployment being one of the worst effects of a recession, the amounts spent will automatically go up in a recession and down when the economy’s growing – making them automatic stabilisers of government spending across the economic cycle, and helping to get money circulating in the economy right away.

Finally, one thing that the report really brings home is how much has changed during the recession. Last time Alistair Darling stood outside Number 11 with his big red briefcase, the financial crisis was something of an abstract storm on a far-off horizon (unless you were unlucky enough to hold shares in Northern Rock). Now, the fact that unemployment hasn’t gone away, and was never the fault of the individual, has hit home for far more people. This has blown away a few myths – like the one that said we needed to run down benefits, otherwise people wouldn’t want to work. The reality is that we’ve ended as a society which pays poverty benefits, which can turn the crisis of losing a job into the catastrophe of sickness and long-term unemployment.

The recession has brought to the fore some of the more uncomfortable truths about poverty in the UK. We can only hope that the government has been listening – and uses this week’s Budget to show that…