Cut taxes and benefits to solve the work crisis, says IMF
SLASHING taxes and benefits would encourage millions of out- of-work men to find a job and help solve the worklessness crisis, a leading economic think-tank said yesterday.
In a hard-hitting report, the International Monetary Fund (IMF) said there is an ‘urgent need for policies’ to get more people working and boost growth.
Shocking figures last month showed the number of Britons who are unemployed but not seeking a job has soared to a record high of 9.25million.
More than a fifth of UK adults aged between 16 and 64 are economically inactive, according to the Office for National Statistics (ONS).
The IMF said men would be encouraged back into the workforce by cutting state benefits and reducing tax on earnings.
Research also showed that improved childcare and training would boost the number of women in jobs, while increasing the retirement age would keep older workers in employment for longer.
The IMF report was not specifically about the UK and high levels of economic inactivity is a global problem.
In the past the think-tank has been blasted for being downbeat about Britain’s economy.
But its latest findings could be seen to be relevant to the UK given the millions of Britons who are out of work.
‘It’s nice to see some actual sense from the IMF for a change,’ former Conservative party deputy chairman Brendan Clarke-Smith said. ‘I couldn’t agree more with the idea of tackling worklessness by cutting benefits and our own reforms from the Department of Work and Pensions have certainly been very welcome.’
Of the 9.25million people who are economically inactive in the UK, 2.8million are signed off due to long-term sickness – the most since the 1990s. Students account for 2.6million, 1.6milbuilding lion people are looking after their home or family and 1.1million Britons have retired early.
An Institute of Economic Affairs spokesman said: ‘Since Covid we seem to have been experiencing a benefits-enabled disengagement from work from some groups.
‘Changing the incentives could well induce many to put aside worries about personal problems and actively seek work.’
There are around 700,000 more claiming benefits than before the pandemic, the ONS figures published last month showed.
The fastest growing cohort are those suffering from mental health problems – accounting for around half the jump in numbers since the pandemic.
Work and Pensions secretary Mel Stride last month announced plans to get 150,000 people signed off with mild mental health problems back into work.
He said that the nation’s response to tackling mental health issues may have ‘ gone too far’ with the ‘normal anxieties of life’ being labelled as illnesses.
‘Perhaps it’s an old-fashioned belief – but I think it’s one that needs to come back into fashion – is that work is good for you,’ he told Radio 4’ s Today programme.
The Taxpayers’ Alliance said: ‘The UK’s tax system reduces the incentive to work hard for everyone: young and old, male and female.
‘Frozen tax thresholds combined with crippling levels of taxation on businesses and persistent inflation mean that pay packets seem to be shrinking.’
Sir John Redwood said the IMF was right to call for lower taxes – but not to cut benefits.
The veteran Tory MP said: ‘I would agree that we need to cut taxes to get men back into work but not by reducing benefits.
‘We need to reduce the reliance on low-wage immigration and increase wages to get local people into jobs.’
‘Normal anxieties of life’