UK: The priorities facing John Major. (2 of 2)

UK: The priorities facing John Major. (2 of 2) - John Major, an outstanding example of labour mobility in his own right, should be drawing on his experience of the dole to examine ways of reforming unemployment benefits. Workfare, where benefit is only g

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Last Updated: 31 Aug 2010

John Major, an outstanding example of labour mobility in his own right, should be drawing on his experience of the dole to examine ways of reforming unemployment benefits. Workfare, where benefit is only given in return for some worthwhile community work (as opposed to spurious time-filling activity), is an idea that has come of its time, as has the urgent need to harmonise taxation and benefits. The notion of taxing away any incentive to work while on the dole is absurd.

As a first step the Government should resist siren calls to lower the standard rate of tax from 25p to 20p in the pound, and instead concentrate all of its efforts on raising the tax thresholds to knock as many of the low-paid out of the Inland Revenue's grasp as possible. Such a move would be a fitting sequel to the Lawson tax cuts which reduced the top tax rates from 60p to 40p in the pound. Ideally, anyone earning, say, £8,000 a year or less should pay no tax at all.

Labour mobility would also be helped if the Major government became less concerned with concentrating power at the centre, which means in effect the South-east. Whitehall is still full of large government departments, while the South-east remains the military's favoured area for barracks. In the era of telecommunicating and European peace, all should be moved northwards lock, stock and barrel, releasing development land for housing, perhaps the biggest stumbling block to labour mobility.

A radical government, as Management Today has argued, would also cease the absurd subsidy on homeowners via mortgage income relief. This penalises the one third of the population in rented accommodation, who effectively subsidise the two thirds who are homeowners. The money saved could be used to push the tax thresholds higher.

But the sooner the British adopt the European attitude to housing, the better. A European sees a house, rightly, as a necessity. A Briton sees it as a passport to a casino economy. Saving and productive investment are discouraged in this environment.

Such a move would probably cause near riot in Fulham or Chelsea where the smart City types congregate. Many have done particularly well out of the huge rise in their house prices in the '80s (though somewhat dampened of late by high interest rates). If those prices fell or at least were pegged by these measures, one effect could be to bring housing in London within the affordable scales of average salaries. There might then be enough train drivers to take the Fulham and Chelsea types to work.

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