There is an element of wishful thinking in the latest round of cuts. As part of the Spending Review, George Osborne has announced a series of measures intended to penalise people looking for work:
the Spending Round announces a significant reform package that increases the support and requirements placed upon claimants by:
• introducing upfront work search, requiring all claimants to prepare for work and search for jobs right from the start of their claim;
• introducing weekly rather than fortnightly visits to Jobcentres for half of all jobseekers;
• requiring all unemployed claimants, and those earning less than the Government expects them to, to wait seven days before becoming eligible for financial support;
• requiring all claimants who are subject to conditionality to verify their claim every year;
• requiring all claimants whose poor spoken English is a barrier to work to improve their English language skills; and
• requiring lone parents who are not working to prepare for work once the youngest child turns three.
Together these reforms will deliver over £350 million in annual savings, including savings from claimants leaving welfare more quickly. (Spending Review, pages 7-8)
One has to ask what there is in these reforms that could possibly save £350 million. There is only one measure in the list which will save money immediately, which is the introduction of four extra waiting days on the first claim – but for people moving in and out of work, there are linking rules which lead to the later claims being treated as the first, and that is essential to avoid disincentives to accepting short-term work. Any further savings would have to come from deterrence and sanctions for non-compliance.
There is also a theoretical cap on benefits expenditure, which has the same kind of enforcement as the cap on inflation: when it is breached, the OBR will write to the government about it. The cap is to be set at £100 billion, excluding the State Pension (estimated at £83.4 billion in the current year) and JSA (£5.3 billion). Currently expenditure on DWP and HMRC benefits for this year is estimated at £204 billion, so the current bill comes out at something in the range of £15 billion more than the cap. There will no doubt be extensive jiggery-pokery with the figures to make the sums work.