Listening to the post-CSR comment it was difficult not to think I was living in a parallel universe. On the one side the public sector unions were complaining that the cuts would cost half a million jobs, on the other side people were saying Osborne had not gone far enough in addressing the benefits system and making bigger strides with reducing the deficit.
One union leader was dismissive of the suggestion that jobs in the private sector would make a difference, saying that most of the million jobs created in the past few years went to foreigners. If it pays to be on benefits rather than in work that is not surprising. Foreigners coming here from countries with poor benefits and no work must find the UK an attractive place to work.
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Perhaps the changes in benefits will make working seem more attractive to our own population.
I also wonder whether the other scare stories doing the rounds will prove to be true. It’s been suggested, for example, that thousands of people might have to leave their homes because the new levels of housing benefit will not cover the rent.
It may be that rental levels will fall towards the new level of housing benefit as evidence suggests that benefit-supported rents are higher than those not supported by benefit.
The effect of this might be to reduce the overall level of rents and bring the market value down. With new rents being based on higher proportion of a lower market value the negative impact might not be so great.
No one can agree that we should have a system where some people are better off not working. The benefit system should be a safety net, not an alternative lifestyle option. Too many people have allowed themselves to become trapped in the system and have little incentive to get out of it.
Making the best of this difficult situation will be a challenge for the industry. Innovation will be key — doing things in different ways and ensuring that these improvements are used again and again.
New skills will be required to deal with new technologies, but that will be a small part of the skill mix. What we want is old skills used in new ways — that is the real innovation.
Paradoxically the CSR asks those questions of the whole country, so it is interesting to see that some London local authorities are considering sharing services. This is the sort of thinking needed.
