Youth on Welfare: The New Tax?
A review by a Youth Ambassador, Jack Welch
In a difficult jobs market, where regardless of improvements in overall unemployment trends, I find it is imperative to remind all policy makers and employers that without being ‘Youth Friendly’ in the wider sense, many young people will face a continuing uphill struggle to find a stable working life.
As the new Conservative government begins to set out its wider programme and put its manifesto pledges into action, a number of MPs have recently introduced new ideas to reduce the number of young people claiming Job Seekers Allowance and pay back into the Treasury. In a book titled ‘A Time For Choosing: Free Enterprise in Twenty-First Century Britain’, which sets out new proposals led by MP Kwasi Kwarteng, it recommends “Young individuals who have not yet paid national insurance contributions for a certain period, five years say, could receive their unemployment benefit in the form of a repayable loan.” In principal, the idea is similar to that of a student loan, where graduates now will now gradually pay back that loan after earning £21,000 or over.
That is where the similarities end though. Unlike students, the remaining Jobseekers aged 18-24 include many of the most vulnerable, with as many as 188,000 according to the ONS unemployed for 12-months or longer. According to the Intergenerational Foundation (IF), this cases a ‘wage scar’ where many of those unemployed for long periods will have to catch up and face greater difficulties saving for retirement, besides being paid on no higher than a minimum wage. Although these ideas are not official Conservative policy, their manifesto has already pledged to ensure those unemployed for over six months will have to work in the community at least to continue earning the benefits, rebranded as the ‘Youth Allowance’. The book indicates that where young people who have not contributed in tax should have to repay their benefit claims once in employment, which claims to return to findings in Beveridge report which set out what became the welfare state; you get out from what you put in.
As indicated by Full Fact, the lowest earning 20% currently pay as much as nearly 25% in indirect taxes and with the present sanctions on JSA, young people who do claim are unlikely to claim they have an easy ride within the welfare system. Questions also on what threshold young people begin paying back on their claims and whether it is appropriate if they are earning the minimum wage or on a Zero Hours Contract do not appear to have been sufficiently factored in these recommendations. It is important to remember too that out of the 734,000 recorded as NEET, the number of claimants aged 18-24 has fallen by 38% since 2010. While this might look like good news, it is likely to hide the scale of those unemployed and not willing to claim welfare.
These ideas drawn out in this book cannot represent government policy as is stands, given the great upheaval that is still yet to come in the £12 billion pledged cuts and cuts to access of certain payments, like housing benefit.
