With welfare a hot issue, I thought it might be helpful to summarise my tactical ideas on this topic. Note that the focus of these ideas is on long term joblessness, although various other problems could be solved the same way.
A reminder of what I was trying to achieve:
Turning off the welfare taps would not happen, and if it did there would be social unrest like you have never seen. [..] a reformer needs to provide some level of service of the existing kind and either reduce it slowly, introduce healthy incentives, or both. The services would need to include job seekers allowance, disability benefit and practical assistance programs such as job centres and training programs, but would need to be slowly changed to ensure recipients are genuine and that the schemes really work cost effectively.
And here in bullet point form are the key steps and details of the plan:
- make welfare a hyper local service – still state run and state funded but run at the parish or borough level. Because we basically cannot get this right and to incentivise market based restructuring later, we deliberately choose to make each provider a little too small to be self-sustaining.
- change funding flows to cut out middlemen – payments would start to flow direct from payroll departments to local providers. A tapering subsidy would ensure stability. The choice of provider would follow a simple rule e.g. based on your postcode. The payments would be treated as deductable, since they replace a tax, and the scheme is therefore revenue neutral.
- make the choice of provider free – this allows competition and new innovative market participants to enter, with some stability ensured by the subsidies and the fact payments are still compulsory. Failing providers would be allowed to go bankrupt. Frankly, things would already be a lot better if you stopped here and you might certainly leave things alone for a bit.
- make payments voluntary – including higher and lower amounts. The scale of payments would then always be proportionate to need as perceived by the payer. I’m certain the media (and trade associations) would ensure payers are well informed as to that level.
What has been done at this point is a transition back to voluntary Friendly Societies as the main service provider, but we have also achieved a “big bang” that opens up the market to all sorts of innovate players, including for profit welfare providers, non-geographic providers, the whole lot. There would be no restrictions on who provided welfare.
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Alternatively, if you think there is something wrong with this proposal, say so in the comments. It’s important we have well-formed alternatives rather than just being grouchy.