Fixing welfare is an economic and moral imperative
Tackling dependency will bring us closer to Brexit’s promise: lower migration and helping UK workers
Leaving the EU provided an opportunity to pursue a fundamentally different economic model. A chance to wean the British economy off its chronic dependency on cheap foreign labour and force businesses to invest in British workers and technology. An ability to move Britain ahead in the industries of the future such as AI through smarter regulation.
Brexit was a promise of a higher wage, higher productivity economy. One that focused more on growing the size of the slice for the British worker – GDP per capita – than the overall size of the pie – GDP. And it was an emphatic rejection of the broken economic model of mass migration, deindustrialisation and hyper-globalisation.
As time has passed, that vote has been vindicated. As just one example, the evidence of the costs of mass migration continues to grow. This week analysis by the Centre for Migration Control showed the total cost to the taxpayer from jobless legal migrants has been £24 billion since 2020. That figure comes as little surprise when you consider that, during the past five years, just 15 per cent of non-eu nationals migrating to the UK actually came here to work. Although the ineffectual Rwanda Bill was the final straw that triggered my resignation, I have always argued that our uber-liberal legal migration system is the bigger problem that needs urgent and significant interventions.
Our immigration system has, in effect, become a bloated social safety net for the rest of the world. Meanwhile, our own welfare system has ballooned to support more Brits out-of-work than ever before. Unprecedented legal migration has massaged unemployment figures and masked a vast welfare dependency that exploded during the pandemic and has yet to recover.
The scale of the problem hasn’t fully entered the public consciousness. It should be a national scandal that in Britain’s major cities – Birmingham, Glasgow, Liverpool – 20 per cent of the working-age population are on out-of-work benefits.
Last week, I visited the local job centre in my Nottinghamshire constituency where almost 2,000 people are claiming benefits. But, just as nationally, there are plenty of unfilled vacancies locally. Faced with a shortage of workers, one large employer buses them in from an hour away in Sheffield.
Our strong unemployment statistics – only covering those looking for work – are a comfort blanket that masks an epidemic of long-term sickness claims. Since the pandemic, we haven’t become dramatically sicker as a country, yet we now have a record 2.8 million people out of work on long-term sickness, with 4,000 being signed off every day. That’s 700,000 more than before the pandemic. The official forecasts indicate the numbers – and the benefits bill – for those out of work will rise. This is a drag on our economic recovery and feeds the appetite for yet more immigration which the public have emphatically rejected.
But this isn’t just a huge economic challenge – it’s also a moral imperative. Those deprived of the dignity of work are being consigned to dependency, loneliness and insecurity. Children that grow up in workless households have lower educational chances and are more likely to be workless themselves. What is particularly striking today is the increase in the number of young people claiming long-term sickness whose lives are being written off before they have even begun. This is a human and public policy catastrophe.
It’s clear we must return to the welfare reforms driven by the Conservative Party throughout the 2010s. The tax system was rebalanced in favour of work. A permissive sick note culture was confronted. Greater obligations were placed on those out of work to seek employment. The result? On the eve of the first lockdown, UK workforce participation was at its highest level since records began.
The Work and Pensions Secretary Mel Stride has already made progress in getting Britons back into employment. Narrowing the gateway to long-term sickness will reduce the welfare bill by more than £1billion a year and increase the supply of labour. But it’s clear we need to go much further, including scrutinising the vast increase in those claiming mental ill-health to disaggregate those with genuine conditions from those medicalising normal human stress.
Anecdotally, a low bar is applied – understandably, poor mental health is hard to prove or disprove – but this is wrong on many levels, not least because worklessness is actually predictive of poor psychological well-being.
The upcoming Budget is an opportune moment to bring forward further reforms. It’s clear that the fiscal headroom is tight, squeezed by high interest rates and vast Covid debts, which makes significant tax cuts difficult right now. That leaves big supply-side reforms, such as welfare reform, crucial to escaping the cycle of low growth.
More fundamentally, a reformed welfare programme will bring us closer to the promise of Brexit – finally recognising the potential of British workers and prioritising them over the careless dependence upon the global labour market.