Poverty has many causes. The subject is studied by economists, sociologists, historians and epidemiologists, as well as increasingly, psychologists, cognitive scientists and even geneticists. And the idea that the government has to do more than redistribute income to improve children’s “life chances” has been apparent for a long time, too. Under Tony Blair, the UK set up task forces and policy units charged with addressing the “multidimensional” nature of poverty in 21st century Britain.
I think one reason why Iain Duncan Smith irks many policy wonks is that it can often seem that he believes he was the first politician to figure out that poverty is about more than money. That, and because having a deep belief in the rightness of one’s cause is not the same as being right about one’s policies. (A very lefty error, that.) Read more
Iain Duncan Smith has said he wants employers to pay higher wages to employees who receive tax credits. Like other critics of the current system of topping up pay, the work and pensions secretary suggests that tax credits are “subsidies” for employers who would otherwise pay employees higher wages. At the Budget next week, George Osborne, chancellor, is widely expected to announce cuts to spending on tax credits.
In his analysis, Mr Duncan Smith implicitly makes a couple of assumptions. The first is that tax credits suppress wages. This might be the case when employers are so powerful that they can keep wages down. It might also be the case if tax credits were to lead companies to spend less on capital that could help increase productivity. These are not mad ideas; the story of the minimum wage in the UK suggests that simple economic models cannot fully explain the relationship between employers and employees. Fewer jobs were lost than many economists predicted at the time. Read more
Universal Credit is the government’s flagship reform to the benefits system. It is also in complete disarray, according to a National Audit Office report released on Thursday. The document is perhaps the most scathing NAO verdict I have read on a large public project. Read more