Friday 28 October 2016

Raising child benefit won't tackle real poverty problems

Published 01/10/2015 | 02:30

ALWAYS expect the unexpected, the old advice runs. But what if the unexpected does not come? Always finding the expected is a very dull business.

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Hence the pleasure - the unexpected pleasure - in hearing Fergus Finlay, chief executive of the children's charity Barnardo's, arguing against an increase in child benefit in this month's Budget.

Instead, he said, the annual €70 million which a €5 increase will cost could do more good for children if spent on services for them. It was all done in the most civilised fashion, which also makes a nice change, but the real point was that here was an argument that was neither crude nor obvious - and that is unexpected.

To a depressing degree, for nigh-on 30 years, politics has revolved around three things; tax cuts, social welfare increases and pay.

The main reason is that, while it is possible to argue, say, that Mr Finlay is wrong, such arguments are hard to follow. There will be no difficulty following the details of a fiver a month.

As luck would have it, Tanaiste Joan Burton, whose Department is responsible for child benefit, were involved last month in something as complicated as anyone could wish for, and the stuff of which real politics ought to be made. This is the issue of household joblessness, where Ireland has a remarkable, and at first sight remarkably depressing, record.

The rate of jobless households - those where no one is in work - is well above the EU average. There was particular shock at the finding that this was the case even at the height of the bubble, when unemployment was 6pc.

The reasons why this might be so - in so far as we know them - are neither simple nor expected. In an effort to learn more, the ESRI has been working with the Department of Social and Family Affairs to analyse the changes in household joblessness - when it happens, and when it ends as one household member finds work. The results were presented to a recent seminar.

It is important to distinguish between unemployment, which gets a monthly airing in the Live Register, and household joblessness, where statistics are harder come by. Those which have been mined show that, in 2010, over half of the unemployed adults in Ireland lived in a household where at least one adult was at work. But that means almost a half were in a household where no-one had a job.

That was in the depths of the depression. Not surprisingly, household joblessness increased in those years but the patterns are not quite what might be expected. In the rare 'oul times of 2004-6, someone found work in around 10pc of jobless households each quarter. This fell to 7pc during the downturn and rose again to between 8-10pc. Even at the worst of times, there was significant movement out of household joblessness as one or more adults in the household found employment.

Less unexpected is the finding that adults in jobless households tend to have lower levels of education and are more likely to have never worked.

This means that the creation of highly skilled jobs is unlikely to benefit them directly. Yet this rarely seems to be reflected in policy. Indeed, some of the policies being touted around as a way of reducing poverty seem tailor-made to eliminate low-skill employment.

The analysis provides valuable insights into the thorny issue of work and welfare. Take rent supplement, so much in the headlines now. This benefit, inadequate though it is now held to be, is not available to people in full-time employment and can therefore be a significant barrier to taking-up employment.

It is gradually being replaced by a Housing Assistance Payment, the rules of which are less likely to act as a disincentive to work, but this is the kind of complication which is difficult to incorporate into debate and decisions on welfare policy.

The report demonstrates once again how effective the Irish social welfare system is in alleviating poverty, despite the constant clamour which portrays it as a modern version of the workhouse.

So effective that, at the height of the boom, more than a third of the population was in receipt of weekly benefits, rising to a half from 2011-13.

Nowhere is there a bigger gap between media chatter and cold reality. One could have considerable debate about whether those figures represent something wonderful or something alarming, but not if they are generally treated as if they did not exist.

In diplomatic language, the report does maintain that the welfare system can erect substantial financial disincentive to taking up a job. The biggest problem, though, is also unexpected. Children.

Households with children are more likely to be jobless, and less likely to have an adult member enter employment. In Ireland and the UK the jobless rate is substantially higher for such households than in other EU countries. It is highest of all for lone-parent households, but such parents have just as good a chance of taking up employment as do couples.

There are all kinds of things going on here, including some element of choice, by women especially, as to whether to look for a job. There is a moral difficulty in equating caring for a family at home with joblessness, as the statistics do.

Nevertheless, the analysts say, elements of the benefit system do militate against paid employment. In particular, payments increase for those with children, while wages do not. Lone parents have a tapered reduction of payments if they take a job, while couples do not. It is too simplistic just to say that benefits do not pay better than work.

There are various schemes to improve matters. One already in place, the Family Income Supplement, simply has not taken off as it should. The new Back to Work Dividend is designed to offer some tapering to jobless couples taking up employment.

More sophisticated ideas, such as child benefit integrated with the system, or the two-tier child income support recommended three years ago by the Tax and Social Welfare advisory group remain in the realm of ideas. We will get an increase in child benefit in a couple of weeks but it remains to be seen whether anything more targeted or sophisticated accompanies it.

The important thing is that issues which are difficult and complicated, even when backed with hard evidence, become the stuff of political discourse, instead of the guff about how many are getting how much. This is not just infantile politics; it may also feed into the depressing tendency for new ideas and new arrangements to have less official and political backing than the old tried, tested, and failed, ones.

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