A group of Tory MP’s have called for young people’s unemployment benefits to be turned into repayable loans.
They claim that the move would provide young people with “an additional incentive to find work rather than allow the debt to build up”.
The suggestion is included in a book setting out a “radical” free market agenda for the Conservative government by the right-wing Conservative MP, Kwasi Kwarteng.
The BBC reports:
Author Kwasi Kwarteng is seen as a rising star on the right of the party.
The Conservative MP and junior ministerial aide argues that free enterprise – rather than government interference – is the answer to the problems facing Britain.
Chancellor George Osborne is understood to be considering reducing tax credits for millions of working families in his July Budget, as part of the government’s efforts to “make work pay”, although critics accuse him of making the poor pay for the mistakes of bankers.
Mr Kwarteng’s book argues for a more radical shrinking of the welfare state to return it to the contributory principle envisioned by its founder Sir William Beveridge – that you only get out what you have paid in.
It says: “Strains on the welfare state are often blamed on benefits being too generous, but the truth is that welfare is so expensive – over £90bn for working-age benefits alone – because too many people are eligible.
“In fact, JSA – the main out-of-work benefit – is fairly stingy for those who have contributed to the tax system for years and find themselves out of work for the first time.”
The book says the government should “look at other ways to encourage work – while making sure that the system is not cruel to those who have simply been unlucky”.
“Young individuals who have not yet paid national insurance contributions for a certain period, five years say, could receive their unemployment benefit in the form of a repayable loan.
“An unemployed teenager would still receive the same amount of cash as now, for example, but they would be expected to repay the value once in work.
“Turning an entitlement into a loan would mean that people would still be supported while out of work, but would have an additional incentive to find work rather than allow the debt to build up.”
Even if someone was out of work for the entire seven years between 18 and 25, “the total sum repayable would be £20,475 – considerably less than the tuition fees loan repayable by many of his or her peers”.
At the same time, those who have paid into the system for many years should get a “fairer deal” if they unexpectedly lose their job later in life.
Other ideas in the book include scrapping maternity and paternity pay to ease the burden on business. Instead, new parents would get a flat rate “baby bonus” paid directly by central government.
It also calls for the scrapping of some government departments, tax raising powers for local authorities, a regional minimum wage, allowing free schools to generate a profit, encouraging banks to use a common IT system allowing “portable” bank accounts and scrapping the BBC licence fee.
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