IEA: Right analysis, wrong solution
Mark Littlewood, director general of the Institute of Economic Affairs comments on Iain Duncan Smith:
“Iain Duncan Smith has rightly analysed the welfare problem, but is only part of the way to a welfare solution.
“Of course, we need to ensure that it pays to work. It’s insane that it can be more profitable to be on welfare than in employment. But even under these new proposals, some people entering the workforce will face effective tax rates of 65%. Is keeping just 35p in every pond of wages really enough of an incentive?
“Much more clarity is needed on the workfare proposals. It’s not enough to ensure that work pays, we also need to be conscious of the greater benefit of leisure time that is gained by those who don’t work.
“A localised, decentralised approach to workfare schemes would allow councils to experiment with a range of schemes for getting people back into work – and to learn from best practices, it would also provide a strong incentive for local councils to succeed. If run centrally from Whitehall, the plan will be a mess.”
