1 February 2010

Tory ideas on localising benefits will punish people in Cornwall

Last September I wrote on Conservative ideas about localising benefits which for Cornwall looked to mean lower benefits than elsewhere.

Now comes a variation or addition to that story. This time the report is that the Conservatives may give local councils the power to set lower benefits where jobs are easier to find. A council would have the power to set the level of job seekers allowance, for example, in its area.

Is this merely relating benefit rates to local labour markets? Hmm. Philip Hammond, the Tory shadow chief secretary to the treasury, said there were “huge potential savings” to be made. We lack details but that has to mean in some areas lower benefit payment than a uniform, national standard would set or a reduction in the number of benefit recipients, or indeed both, as well as infrastructural improvements.

Taken together the Observer and Guardian reports suggest that the Conservatives appear to be seriously thinking about the localisation of some benefits, administered by councils not central government, and matching them to the local availability of jobs and local living costs; and I think local wage levels too would inevitably be included in the matching criteria. What would the abandonment of uniform, national levels of benefit payments mean for Cornwall? We might escape the ‘easier to find work’ criterion but certainly local wages and probably living costs would mean lower benefit payments here than in many other areas. It is unclear to me whether it would mean lower benefits than now, an absolute cut, or a lower rate of future benefit increases. The result either way would be in effect a reduced income for many people in Cornwall, a falling below national standards.

It isn’t just benefits. The localisation of benefits and the consequent saving of money may encourage the localisation of public service pay. In Cornwall we should then see pay in education and healthcare, for example, matched to local circumstances, local wage rates, rather than set nationally. The mandatory, national minimum wage also looks vulnerable to Conservative ideas: see this post.

We may not have before the general election the details of what the Conservatives plan for the localisation of benefits, indeed they are still exploring the topic, but the direction of their thinking is very clear. Many people in Cornwall stand to lose out.