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Europe Tries Welfare Reform

October 16, 2013 in Economics

By Michael D. Tanner

Michael D. Tanner

If Congress — once it reopens the government and gets back to its usual business of redistributing taxpayers’ money — has any interest in reforming our burgeoning welfare state, they might look, of all places, to Europe, where serious reforms are underway.

Leading the way is Great Britain. While in the United States the federal government funds 126 separate anti-poverty programs, 72 of which provide cash or in-kind benefits to individuals, Britain is consolidating its six major welfare programs (the jobseeker’s allowance, the income-support allowance, the employment-support allowance, the child tax credit, the working tax credit, and housing benefits) into a single grant.

While someone receiving the seven most common U.S. benefits (Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, housing assistance, utilities assistance, and free commodities) rakes in more than $35,600 in benefits in the ten most generous states, Britain has now capped the new consolidated grant at no more than £500 per week (about $40,000 a year) for a family, and just £350 (about $29,000 a year) for single individuals. It is estimated that as many as 40,000 households — about 1.6 percent of those receiving benefits — will have their total benefits reduced as a result of the benefit cap.

Even Scandinavians want to cut back on benefits to encourage growth.”

The idea, according to welfare secretary Ian Duncan Smith, is that “benefits should be a safety net — but not something that gives claimants an income out of reach of many hard-working families.”

At the same time, by moving away from a patchwork of different programs to a single universal credit, Britain will shift welfare payments to put a greater emphasis on children. It is estimated that the consolidation means some 2.8 million British households, mostly couples without children, will eventually receive lower benefits (although current recipients are being held harmless during the transition), while some 3.1 million households will actually get more money.

Moreover, the benefits will now be paid in a monthly lump sum, rather than weekly or biweekly, and paid directly to the recipient rather than to intermediaries like landlords. The poor will be treated like adults, with responsibility for their own finances, rather than childlike wards of the state.

And there will be a greater overall emphasis on moving recipients from welfare to work. “We want to help people find a job and move away from benefits,” Duncan Smith explained.

Meanwhile …read more

Source: OP-EDS

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