There is a structural malaise in the UK labour market, There always has been, yet it has now been both exacerbated and consolidated by Covid. The attempted reforms to the Government’s prime disability benefit, the Personal Independence Payment (PIP), which is facing stumbling blocks as it limps its way through Parliament, doesn’t actually address the broader point: that so many people transition from Universal Credit – the UK working age Benefit, primarily intended for people who lose their jobs – onto PIP, and other elements of disability benefit, as the sums paid for Universal Credit are impoverishing.
The United Kingdom has perhaps the lowest rate of Unemployment Benefit across the G7 (excluding the US but notably including Italy) and the EU more broadly. The lowness of this figure is specifically designed as a disincentive to claim it in the first place, not least with the onerous and astonishingly intrusive questioning that accompanies any claim. However what it doesn’t acknowledge, is that the United Kingdom labour market more broadly is both unbalanced towards lower productivity output, utilising less investment heavy technology, and therefore more basic in the doing of so very many jobs. This simply means that the lower skilled trades are easily replaceable, and when one loses work, it can be really rather difficult to get back in. And so the financial disincentive of having a low paying Unemployment Benefit almost directly funnels people into claiming additional support, via seeking disability or ill health supplementary payments – such as PIP.
Given the structural malaise in the broader market, as initially outlined, once they have secured some element of additional payments, a number of recipients of these now combined benefits, can actually just about manage to pay their bills. And boy do they not want to come off – particularly post-Covid.
And so rather than being a disincentive to claim in the first place, the United Kingdom Benefits system has a powerful incentive to dig yourself deeper into the system in order to avoid penury level basic Benefits.
This is an atrocious outcome for the individual, as they quite simply get stuck in the “Benefits Trap”. The UK actually ends up on a low growth, low output increasingly tight spiral, which if we are lucky, flatlines – rather than actually deflates – the economy. It’s bad for the individual, and it’s bad for society…
I propose higher Benefits, easier to claim, and a stronger firewall between Universal Benefit, and access onto life sucking sickness benefits such as PIP, may help. Whilst undertaking attempts to structurally alter the labour market, making more rigorous training courses in all of the manual trades. Also the adoption of a higher investment spend per worker – may well shorten the time and capture of unemployment, also promoting a more skilled manual working sector, providing the bedrock of the economy, and achieving that elusive growth in the UK.
#PIP #Government
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