Iain Duncan Smith deserves credit for fully understanding the nature and scale of the welfare problem. But that’s the easy bit. Finding a solution with the right balance of carrot and stick and making it somehow affordable in these austere times is the tougher part of the equation. And it’s not at all clear that the IDS proposals have either enough carrot or enough stick.

He has certainly gone some way to tackling the lunacy of huge withdrawal rates – if by entering the workforce your new post-tax pay packet is less than the benefits you stand to lose, then don’t be surprised when an entrepreneurial work ethic fails to emerge in some of the country’s poorest areas. However, even under these new reforms, effective tax rates of 65 percent will be fairly standard. How much of an incentive does this really provide? If you’re only going to be trousering thirty five pence from each additional pound you earn, is this really enough to encourage someone to make a herculean effort to secure gainful employment rather than remaining on state hand-outs? You wouldn’t actually be worse off, but being very marginally better off by taking a relatively boring or unfulfilling full time job…

Read the rest of the article on The Spectator’s Coffee House blog.

Director General, IEA

Mark Littlewood is the Director General of the Institute of Economic Affairs and the IEA’s Ralph Harris Fellow. Under his leadership, the IEA has continued to communicate the benefits of free markets to an even wider audience around the world. In 2014, Mark was ranked 38th on The Times’ ‘Right-wing Power List’, and in 2011 was named ‘Liberal Voice of the Year’ by the Liberal Democrat Voice. Mark frequently comments on political and economic issues on television and radio including BBC Question Time, Any Questions, Newsnight, Channel 4 News, Sky News, Radio 4's Today Programme and LBC. Prior to the IEA, Mark was Head of Media for the Liberal Democrats before going on to found Progressive Vision, a classical liberal think tank. Mark was educated at Balliol College, Oxford.

1 thought on “Going beyond the IDS reforms”

  1. Posted 15/11/2010 at 13:47 | Permalink

    IDS must have been chuffed sitting in Mass yesterday morning listening to the following reading (which will have been read in all Catholic churches throughout the world): “we were not idle when we were with you. We did not eat any one’s bread without paying, but with toil and labour we worked night and day, that we might not burden any of you. For even when we were with you, we gave you this command: if any one will not work, LET HIM NOT EAT. For we hear that some of you are living in idleness, mere busybodies not doing any work. Obviously, the Archbishop of Canterbury does not agree.

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