Copyright © David Hart

Thanks in part to the current controversy over benefit caps there has been a lot of discussion at Libertarian Home about how and whether Welfare fits in with the ideology, and it became clear how varied the views are within the movement.

Representing the objectivist corner, I made my position clear that I consider Welfare – the mandatory bailing out the unfortunate or feckless – as neither a moral duty nor a proper role for the state. Paul Marks contributed a clear vocabulary, so I’ll use it and call myself a “minarchist” at least with reference to this issue.

On Sunday, we also heard from Steven Stewart who advocated a more “limited state” position, defending a role for Government in organising a system of social insurance as long as there was no state monopoly, and sensible incentives were preserved.

I’d like to now present an idea I’ve fostered for a while which might turn the above theoretical discussion into a concrete policy proposal. The problem, as Ken Ferguson reminded us, is that we are all here to make a difference in society and what we need is a credible political solution that we could proudly add to the manifesto of a notional party at a future election.

Turning off the welfare taps would not happen, and if it did there would be social unrest like you have never seen. Pragmatically, 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.

I am, therefore, obliged to borrow an idea from David Cameron’s school of thought and propose to nudge people into giving voluntarily, while adding brutal incentives, including the profit motive, to the system. I’m also borrowing from Dan Hannan and Douglas Carswell’s The Plan: Twelve Months to Renew Britain which advocates a move to local providers with local policies. If you do not already understand why that works, then the book will be well worth a read.

This would be the program for the Simonetarian Party’s first term in office:

• Restructure the welfare organisations – I will make them as small as I can get away with, let’s say parish level. They will be simple non-profit entities no different from others in any field with no legal privilege or obligations except a contract to administer the existing services and prepare for the next steps. Immediately, the groups will be free to innovate in assistance programs and existing claimants will receive money direct from these groups, giving them a reason to get on and innovate rapidly.
• Restructure taxes – if National Insurance has been merged it will need to be de-merged and the level will need to be set such that 100% of welfare spending comes from the one tax. Not more or less.
• Restructure the money flows – rather than going via central funds PAYE is reformed so that money flows directly from the employer directly to the local group nearest to the employees workplace. That group will be obligated to provide welfare to that person in the event they loose their job or need assistance for any other reason. National Insurance is renamed Local Insurance.
• Freedom for payers – at this point money is already coming direct from pay-roll to local groups then out to welfare payment recipients. Payers should now be given a choice about whether to pay into the predetermined local association or choose another, perhaps a neighbouring group that offers better service, is nearer home, solves a certain welfare problem more effectively, or it could be a new entrant such as an commercial insurance company or non-profit friendly society. There will be cracks, such as a welfare arrangement for long distance commuters, or for workers in problem industries, where new entrants will offer innovative solutions.
• Freedom for providers – By now we are a couple of years in and the local managers will have full visibility of their costs and revenues, competition will be starting to bite even though the industry as a whole has a guaranteed revenue stream. If some providers need to merge and become larger, then they can do so at this point. That was the idea of starting them small, so that they can grow if necessary but there is maximum competition. Importantly, providers will now be free to set their own policies for claims and the levels of payment they will make. Welfare levels might go up or down to suit the circumstances of the area.
• Freedom of participation – at about year 4 or 5 the level of contribution becomes voluntary. There is no automatic decrease, but you can choose your own level of Local Insurance “tax”. By now the media have been anticipating this for perhaps 10 or 15 years and the worry on the street and the topic of focus for media columnists is all about what rate people will choose to contribute at, if at all? How many will leave their neighbours to die of starvation? Will there be a riot? Who would people target in a riot, the local job centre or their own neighbours? The media’s role will be to ensure that everybody will have gathered, by now, that it is in their interests to maintain some payment level if they can. Some will have planned to increase payments, knowing there are particular problems in their area or industry. Nothing much will actually occur but lots of media people will make a lot of money watching the very little that does occur.
• Freedom for companies – ending compulsory participation means we can end the obligation on corporations to administer welfare funding through PAYE. People who wish to maintain payments and work for a company that wishes to close it’s Local Insurance function can simply set up a direct debit to their friendly society (or whatever it is). Compared to 2012 this is one less burden on companies implying a small net increase in economic growth, especially for small companies.

At this point in time, the entire population has been nudged onto a voluntary system of welfare provision by default their payments remain unchanged, but they are in fact optional. By starting with ultra-local providers the industry will dominated by organisations with a particular geographic focus. Welfare recipients will now be connected locally to the people they rely on. New providers will connect people by their faith, or along train routes, or along industry lines and there may be a few national societies open to all.

There will be a new dawn for personal accountability and self-reliance, but also a new trend for keeping an eye on the welfare of those around you, if only for your own well-being. Over all, I think this would be much better.