Tuesday, 18 September 2012

Populist posturing on benefits or a worthy crackdown on the undeserving?

A post today on something non-electoral reform related, just to prove I'm not a one trick pony!

We have the news that the Social Security department, led by Minister Senator Le Gresley, is contemplating tougher crackdowns on people who do not actively seek out work whilst claiming benefits.

I recently volunteered for a year at a Citizens Advice Bureau in a poor part of London where a large part of what I did was benefits casework. This meant helping people with their problems claiming benefits, appealing against decisions to cut their benefits and sometimes working on ways to get people off relying on the state. So I have some understanding of the sorts of issues that affect people on benefits, what they are like and how the system works (albeit the UK system, not the Jersey system).

Most will know that Senator Le Gresley made his name as the manager of the CAB in Jersey and so I would like to presume that he is someone with a good knowledge of the benefits system in Jersey, someone who has had lots of contact with the sorts of people that go on benefits and so he would be well placed to lead any reforms on the system whilst hopefully being compassionate and understanding. But being involved in an organisation that Senator Le Gresley was involved with, I do have some issues with what he is saying.

When I see articles like the one in the JEP with the rather ominous picture of the minister with a headline like "Benefits threat for jobless who don’t try to find work" I do worry about populist posturing and scapegoating. I want to be convinced that the minister is genuinely making sensible attempts to improve the islands welfare system, in line with the values of a modern social democratic society and not just trying to appease the more right-wing of his colleagues and try and score some cheap votes from the public.

Benefits are an easy target. All you have to do is check any online message board to see the comments using words like "spongers", "lazy" and all sorts of misguided statements about foreigners claiming benefits (which, by the way they can't do until they have lived and worked here for 5 years). People get wound up (sometimes very understandably) when they see people who they believe have a cushy lifestyle that is paid for by their hard earned tax pounds.

But this is exactly why it is so important for people to be well informed and understand the realities and the implications. As a socialist, I just don't like the idea of kicking someone that is already down. I believe in siding with the oppressed, and if you are unemployed you are oppressed.

The problem with attacking unemployed people is that for the vast majority of them it is not their fault.

If every job vacancy in Jersey were filled tomorrow by local unemployed people, there would still be hundreds left on the dole queues, because there just aren't enough jobs and the economy is not doing well. The idea that people should be penalised for not having jobs that don't exist just seems perverse to me. Cutting unemployment benefits (which the minister isn't suggesting yet) will not incentivise people into work, because lack of incentive is not the problem. The problem is the lack of opportunities.

I've been lucky as a student to not experience unemployment (by definition, it's impossible for me to be unemployed) but I have a lot of friends that I have witnessed really struggle both financially and emotionally with unemployment. I saw close friends be made redundant several times in the space of a few months, some spent months unemployed even though they were up every day applying for whatever job they could find (many minimum waged unskilled jobs) yet still got turned away. These were not lazy people who were abusing an overly generous system. These were people who were desperate to find jobs but just couldn't do it.

These people went on benefits during that time because without the money they would have lost their livelihood. They would have become social recluses, lost further motivation and that would have done nobody any favours. So making conditions worse for the unemployed will not help us.

But I'm not actually sure exactly what the minister is planning to do to crack down on this. As it stands, each person on unemployment benefits is given a little log book which they have to fill out every time they apply for a job and have it verified otherwise they don't get their benefits. What more could they do to ensure they aren't giving money to those that aren't seeking work? If anything, some people who have failed time and time again to secure work should be encouraged maybe to give it a bit of a rest and instead focus on volunteering for a worthy organisation, just to keep them in the swing of a work based routine and involved with society.

But don't mistake my sympathy for the unemployed as in anyway condoning people who deliberately play the system. I believe in being a good community that looks after those less well off and those that have run into trouble, but the other side to that is that people must be willing to engage with that community and not exploit that generosity. I say to everyone, if you are aware of people that are cheating the system, instead of going online to moan about it, pick up your telephone and call the police. Cheating the system is a crime and those that commit it should be prosecuted and demanded to pay the money back. Whilst I don't want changes in the system to hurt unemployed people, I equally don't want to reward genuinely lazy people.

The overall point I am making here is that the solutions to these problems do not lie in a rearrangement of our welfare system. The solutions lie in fixing our deeper economic problems.

I've often been accused (unfairly in my unbiased opinion) of focusing too much on things like electoral reform which do not directly impact on peoples living standards and that I'd be better off spending my time talking about the issues that really matter.

So here is the Sam Mézec 5 point plan to get us out of this mess -

  1. The government should invest in projects that will encourage economic growth in the sectors likely to create employment opportunities suitable for local unemployed people.

  2. At the same time as investing in worthwhile projects, the government should cease unnecessary and wasteful spending on projects that are not value for money and do not help government finances (e.g. fee paying schools subsidies should be halved). The money should be reallocated to better schemes.

  3. A temporary GST "holiday" by reducing the rate to 0% will let shops lower their prices and boost consumption in the island which will stimulate some economic activity. At the same time, a way must be found to stop non-local businesses charging VAT to islanders. We are not a part of the UK and it is harmful to our economy to have prices artificially increased by UK companies not taking off VAT.

  4. The government should introduce serious incentives for businesses to employ locally based people, and train those that are already employed here rather than importing people from outside the island to do jobs that local people could do, or could be trained to do.

  5. Lastly, and perhaps most vaguely, Jersey has become too reliant on one industry that a vast amount of Jersey people are just not suitable to work in and so we need diversification. 

Now, some will criticise that as something Jersey can't afford. But I say Jersey can't afford not to do it. Yesterday was the BBC2 documentary on John Maynard Keynes, perhaps one of the top 3 most influential economists of all time (along with my heroes Adam Smith and Karl Marx). Keynes broke the consensus that existed up until the great depression that the "invisible hand" in economics would guide everything to it's natural equilibrium and economic crises would solve themselves, but instead what was important in tough economic times was for the state to actively intervene to fix the crisis.

The neoliberal understanding of economics (which for some inexplicable reason still persists as a large part of mainstream politics in the 21st century) was that in a recession, the free market would naturally adjust itself to the conditions and, crucially, prices would inevitably come down because of a lack of consumption and that would solve everything. But the problem was very simple, it just didn't happen. Governments didn't understand economics well enough in those days to realise, like Keynes later pointed out, that the state is the only thing that can put the economy back on track, by doing what the free market wasn't naturally doing and kick starting growth. This mistake led to the great depression which saw mass unemployment, inflation and the rise of the Nazis.

It is worrying today to see how governments have not learnt the lesson from history. In the UK we have a government blinded by an out of date and out of touch ideology based on economics textbooks from the 1920s and has consequently made a bad situation even worse. The people of France have already rejected that view and Jersey does not have to follow what our counterparts in the UK are doing.

Our attitude to economics needs to change and the post Thatcher/ Reagen consensus needs to be smashed.

Thanks folks,


Slightly off topic, but those that care about democracy and the freedom of journalists to work unharassed by the authorities would do well to sign Deputy Pitmans petition to allow Leah McGrath Goodman back into the UK and Jersey.



  1. Try 'tax break threat for capitalists who do no look to employ'. Always interesting to see the absurdity in a mirror. MF

    1. Stop looking in the mirror then!

  2. Sir

    Lowering GST in Jersey would not work because unlike the UK or USA we do not make what we consume. We import almost everything. It would have a small effect on the retail industry but a negative effect overall.

  3. Don't make the mistake of thinking that those that ignore Keynesian economics are stupid. There are great economists in the world today (and I don't mean politicians) who simply don't agree with your preferred course of action. The world today is a vastly different place to the one Keynes knew.

    1. Agreed, I'm not having a go at the economists, I'm having a go at the politicians (in conservative parties across Europe and America) that haven't updated their economics books since Keynes. The world is vastly different, and these people need to understand that.

    2. They do understand that and they have moved beyond Keynes to current thinking. We don't live in the same world that Keynes knew with low government and private debt. The politicians are following the advice of today's economists, their national banks and organisations like the IMF etc.

  4. Great blog but your dropping GST idea to boost the economy is deeply flawed for the following reasons:

    - shops will not drop their prices. Why would they? even if they did, then;
    - we import almost everything, extra money spent flows out of the island.
    - many people in debt simply pay off more debt which does not boost consumption.
    - those with savings already buy all they need so they just save more, which doesn't boost consumption.

  5. Not sure you're right about only being able to claim benefits after 5 years.

    1. As I said at the start, its the UK system I'm more familiar for having worked in it, and it is definitely the case in the UK. For Jersey I'm not 100% sure, though I do recall hearing a politician mention it once. I'll look into it.

    2. Speaking to a Polish friend of mine who recently started a finance degree at Highlands told me she hadn't been able to claim any financial help for her studies because she hasn't been resident in Jersey for 5 years.

      Given that her intention is to stay and work in Jersey, I think that's unfair and she should be helped.

      But I also asked a States Member who confirmed that you can't claim anything if you haven't been here for 5 years, but the exception is income support where there is a dependent, because that is done on family income.

  6. You should focus more on political reform :0)

  7. Why follow France? It's early days for Hollande. The last French Socialist President that embraced Keynes screwed the economy and reversed all his policies to avert disaster.

    The UK are seeking the confidence of investors. France is doing the opposite. It's a long game. Let us see where we are 3 years from now.

    1. The UK is currently doing its damnedest to ensure sensible investors will give it a wide berth - all it's going to attract is the wideboys and loansharks.

  8. Jersey's economy is almost totally dependant on exports, the main ones being Finance, Tourism and Agriculture. The only way to create meaningful sustainable long term growth and jobs is to increase these exports. Very little we do internally will have any effect on this. Increasing consumption may have a tiny effect on the retail sector but probably too small to measure.

    Our economy is almost totally dependant on non-domestic factors.

    To boost the economy we need finance to attract more customers, Tourism to attract more visitors and agriculture (and fisheries) to export more produce.

    Finance are very organised and well funded. Tourism is a complete mess. I don't know about agriculture.

    Dropping GST will simply put more pressure on these industries just to maintain the status-quo.

    Any initiatives need to come from the industries themselves with, possible, Government funding.

    Problem is, the public would welcome a drop in GST and would not welcome money being given to industry bodies.

  9. Good comments on GST. I'll response in a few hours, got some lectures in the meantime!

  10. Well done young man, hope you stand for election one day, agree with everything (except the school subsidies - all pupils should be funded the same regardless of whether their parents pay more for a 'better' service).
    Keep up the good work.

  11. the rise of the neoliberals is not a rejection of keynesian economics but something far more sinister and cynical, it simply exists to transfer wealth from public ownership to private profit, it will cost us our standards of living and eventually the earth itself, and all in the name of PROFIT. the corporate world cares nothing for society or morality, and this cancerous ideology must be resisted with every fibre of our humanity.

  12. Why not build a new hospital? That would do it!

    1. Agreed, great idea. So long as those contracted to carrying out the construction are forced to hire locally, not import their own people.

  13. Regarding point 4, what serious incentives? care to expand?

    1. Good question.

      Maybe a social security break for businesses that take on local unemployed people. But as well as incentives, there should be disincentives for bringing in people from outside of Jersey. Businesses should have a limit of how many people they can bring in, and should only be allowed to bring someone in if there is literally no way of getting a Jersey person to do it.

      As well as encouraging business to hire local people, it will also encourage them to actually invest in training local people to take on higher positions, instead of just importing someone that already has the qualifications.

  14. You are training to become a lawyer Sam but I would urge everyone in Jersey to spend s few hours listening to and observing some of the commercial cases that are heard here in the Royal Courts.
    Millions of pounds, dollars or euros are being shuffled around the world and it is not unusual to see six to twelve lawyers engaged here (besides the Judges) on a single case at enormous fees running up bills for many, many thousands, if not millions.

    This is the hidden background to the sudden concern for abuse of Jersey's SS /Income Support system. The UK government is engaged upon a similar campaign too against the so called cheats whilst the real finance criminals - professional people or otherwise - are raking it in for doing very little of substantial use to society.

    The latest reward of £1.2 millions brought to Jersey from the US out of a Colombian drug trafficking business says it all really. How did this money (presumably just a part of the whole fund) ever get into Jersey and shall any local accountants or lawyers be prosecuted for their roles in assisting its route around the world's tax havens?

    As always, the money was found here ONLY because of legal actions taken in jurisdictions far far away - it was not found as a a result of any investigative or regulatory actions by the Jersey authorities.

    Where is the morality in pursuing petty (usually poor) criminals whilst multi-millions trading(which might have drugs or arms dealing at its core) is embraced here as "good business" year after year.

    So far as the Social Security Department of Jersey is concerned - the real scandal is the large number of claimants who are denied ALL the Income Support or other benefits that they should receive due to the complexity and obscurity of the rules and procedures. The probably deliberate actions of officers to deny payments to claimants and the ever increasing policy of frightening people or shaming them so that they do not puruse perfectly legitimate claims is another real deterrent. It seems that no letters or forms can be issued by this department without at least two or more threats to prosecute for giving incorrent iformation whereas almost every member of staff at the SS Department seems to work to a different set of rules.....

    The rest of this comment has been removed to comply with site rules on space but SSTAG is trying to address the unfairness of the Social Security, Health and Houisng system in Jersey and welcomes information or offers of support
    Contact sstagjsy.blogspot.com

  15. It is somewhat romantic to believe that Jersey’s welfare system is based on “values of a modern social democratic society”. It has only in the last decade moved away from Parish Welfare, that 19th century abomination, with its arbitrary and judgmental assessment of the deserving and undeserving poor.

    These anti welfare claimant headlines appear regularly in the JEP and one would like to know their origin. Do they come from a press release issued by the SS Department or is it an agenda being pushed by the editors? It matters not since it is all ideological propaganda designed to humiliate those forced to seek benefits. The political elite that own and run Jersey despise such people but know that for reasons of social peace they must provide welfare and housing to the poor. Current plans to move rents in the social housing and housing trusts from 60% to 90% of private market rents is designed to cajole the slightly more affluent tenants into the private sector and leave a residue exclusively of the poor. The state can then withdraw further from the provision of housing, not that there is any statutory obligation to house the population (remember 10,000 unqualified persons are ignored entirely).

    Alas,but not unsurprisingly, Senator Le Gresley has become a mouthpiece for the civil servants of the Department and in any event is disciplined by membership of a right-wing Council of Ministers whose views on social provision are minimalist. The very last CAB Bulletin before his elevation to Senator contained sentiment that was overtly anti immigrant on welfare entitlement. Yes, he has seen all the problems that the system generates, yet once elected does virtually nothing to campaign against those injustices. Another Jersey Boy running the system.

    Incidentally to be eligible for benefits one most certainly has to have been resident five years. All part of the political economy designed to drive out surplus labour when not required - its work or starve.

    Keep up the good work.

    1. You need to chill out. Overall the government in Jersey does a fantastic job of providing healthcare, welfare and education. It generally looks after its old people and those that cannot afford to house themselves. I have experience of all these things and there is nowhere in the world I would rather live.

    2. Jersey may well be an excellent place to live, but that doesn't mean it couldn't be better and everyone has a right to complain and suggest better ways of doing things.

  16. Why would the editors of the JEP push an agenda? They are a business (not owned locally) and their only agenda is to sell newspapers and advertising space.

    1. The point of them just trying to sell papers is exactly the point.

      The headline "We're all going to die!" is going to sell a lot more than "Everything is A-okay", isn't it?

      Papers have a tendency to sensationalise things to get people to buy them. If there was no news one day, because the paper is desperate to sell as many copies, they'd come up with something.

      Jersey has a particular problem because we only have one newspaper so despite it's sometimes incredibly poor journalist standards people aren't able to vote with their wallets and buy another paper.

    2. wow...i thought journalism was about reporting news and serving the wider community through unbiased reporting of local issues etc. are you seriously suggesting the JEP meets this criteria or are you stupid?

    3. If we had more than one paper then surely they would compete to come up with even more sensationalist headlines? A race to the bottom?

    4. It's a commercial world. Journalism, like music and art, is about making money.

  17. Some good comments on my GST point.

    One of the things to say is that GST is a goods and SERVICES tax. So lots of services have the GST added on at the end, and not put on a label. So, those people (often sole traders) will have to take that tax off anyway, so their services will be cheaper. No way for them to get around that.

    The difference will be in shops where GST is included in the price label (and thus the reduction will mean having to relabel everything). Even if they don't lower their prices and just bag the extra profit, they'll pay corporation tax on it (if they're a local company) and keep the rest to use for either wage increases or employing more people.

    Obviously that poses the problem for foreign companies which don't pay tax here and will just send out the dividends out the island. But that's why I've also said that foreign businesses should not be able to keep their VAT prices. They should HAVE to take off that 20%. That way, their goods will be cheaper too.

    The point on some people just using the extra cash to pay off their debts instead of consume more, well that's not a bad use of that extra money. Lowering private debt is surely a good thing.

    A large number of people in Jersey, particularly working class people, spend all the money they get. They don't make enough to save a lot of it. So, the GST cut (which would help these people most) would give those that spend the most, more money to spend.

    It's an issue that isn't clear cut, but on balance I think it would help.

    1. Shops won't pay corporation tax on the extra profit as the rate is 0%. As I said in an earlier post, there may be a small effect on the retail sector but not a great return on £80M pound a year, which is what it would cost.

      Taking off VAT is a difficult one as for many goods there simply is no set price.

      Lowering debt may be a good thing but it doesn't improve the economy and create jobs etc (which is the objective here).

      Boosting consumption in Jersey will also not boost the economy. It works in the USA because if you buy a microwave meal the food is grown in the US, packaged in the US, the tractors are built in the US etc etc. That isn't the case in Jersey. Giving people more money to spend would not boost our economy in the same way it would in non-export dominated economies.

      Surely if you want the less well off to have more money to spend then a more targeted approach would be to increase income support and increase tax thresholds?

      In fact, the above could be paid for by increasing GST so that the more well off pay for it?

    2. How and when would you pay back the lost revenue?

    3. Sir

      When economists talk of boosting consumption to help the economy they are partly relying on the 'multiplier effect' where 1 pound spent results in more than 1 pound added to GDP.

      However, the multiplier is dampened by how much people save (and pay back debt) and by how much of what they spend is imported. Both of these factors are high in jersey, the first because we have a relatively wealthy population and good access to credit, the second because we import just about everything.

      That means I'm afraid that increasing consumption may not be the answer in Jersey, and may actually dampen the economy even further.

    4. There is no corporation tax on local companies except for the finance industry. That's what 0/10 is.

  18. Many sole traders, especially those providing labour only, will be GST exempt because their turnover is below the GST threshold of £300,000.

  19. The JEP front page article (not available on line via your link) is said to be based on a Scrutiny meeting (Friday 14/09/2012) attended by the journalist, but having checked with several in attendance (the podcast and transcript will confirm), it is evident that Senator Le Gresley has been misrepresented.

    There was no mention in the meeting of a deducting or denying benefits to the unemployed that had failed to hold down a job for more than a few days. The journalism might be described as a mensonge or perhaps a blancmange, having been cobbled together from a possible press release by the Social Security Department and comments after the meeting by the Minister. At any rate it is not an accurate report of the meeting.

    A good journalist might have picked up on the Minister considering the opening of a Job Club (as was done in the early 1990’s) where the unemployed could mingle, drink coffee, write CV’s, and get general help and advice on job hunting.

    When asked by a panel member if there was an obligation on the long term unemployed and under 25’s to do charity or voluntary work, the Minister confirmed it was not a condition of receiving income support. Another example of a liberal approach by the Minister was his rejection of any suggestion that the period of entitlement for welfare should increase from 5 to 10 years residence and that the Council of Ministers were not actively considering such. Again, this had been recent sensational headlines in the JEP. Its effect is to fuel anti immigrant sentiment.

    So overall it was a sensational article that did not reflect the content or tone of the meeting at which the headlines were purported to have come. It appears to be a simple anti welfare claimant article designed to appeal to base prejudice amongst its readership. As usual, its blame the victims and the helpless.