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Monday 26 July 2010

Picking On The Poorest – 4

The report into reform of the welfare system by the so-called Taxpayers’ Alliance contains lots of figures. The impression given – probably deliberately – is that this report is therefore authoritative. However, this is another area where a little examination suggests otherwise.

And one area where scepticism can be easily aroused is when the authors, more or less, tell their readers “trust us”. Near the top of Page 19, we are given a superb example of this: a figure on “non-pension benefit expenditure” turns out, when the footnote is consulted, to be from “Authors’ calculations”. Nobody familiar with the output of the TPA’s so-called “research fellow” Mike Denham will be surprised: he does rather a lot of this. And, without some further explanation, this kind of thing must be disregarded.

The cost of implementing the TPA’s solution is also on shaky ground: here we are introduced to something called “back-to-work providers”. These, the report tells, may be “public, private or voluntary organisations”. Sounds interesting. They may be rewarded by results. Yet nowhere in the report does the cost of these bodies get so much as a mention. They are most unlikely to do the work for nothing.

There is, however, some mention of administrative cost in Appendix B, table B.1: here it is stated that a 50% reduction in costs is assumed. The amount saved would be over a billion and a half notes, so if possible, it would be a useful saving. But then there would be expenditure on all the “back-to-work providers”, the benefits system would still be there and would still need administering, and there would be transitional costs associated with any new scheme, which are either ignored, omitted, or assumed to be part of the amount allocated.

As with the work on incentives, so it is with the figures. That is not to say that there is merit in looking afresh at the benefits system, but the TPA approach can be seen to be flawed. It is as if there was a component missing from their jigsaw.

However, thanks to the candour of one of the report’s authors, we can now find that missing piece. That comes next.

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