The Week, 18 February 2022
With Parliament on half-term, it’s been a quiet week. The Ministry of Justice announced 4,000 new prison places (part of the Government’s existing commitment to increase capacity) and some prison refurb allocations; the Education Secretary published new guidance to protect political impartiality in schools; and the Home Secretary has announced a “wide-ranging”, independent review of the Border Force. Recess ‘red meat’.
The most interesting policy news this week was in Wales, where the Welsh Government announced that its Basic Income Pilot for care leavers will begin later this year, paying £1,600 a month for 24 months. Around 500 care leavers who turn 18 over the course of the 12-month pilot are expected to receive the payments. The Minister for Social Justice said: “Additional support at this age could provide a more solid foundation for care experienced young people to build their adult lives from. We want to assist these young people in finding financial independence and want to allow them to thrive not merely survive.”
We at Reform have been critical of the idea of a U(niversal)BI, but we welcome this highly targeted pilot. Why? Firstly, care leavers are one of the most vulnerable and disadvantaged groups, with high rates of homelessness, unemployment, and ill-health. Providing significant additional support to help avoid these outcomes is a good thing.
Secondly, the Welsh Government is pledging to accompany the financial support with “system re-engineering”. We don't yet know what that actually means, but we’re hoping it will include additional personalised support to better equip the BI recipients for adulthood (for example addressing barriers to good work such as low qualification and skill levels, which are common among care leavers). Which links to the third reason that we like the pilot: it’s temporary. That may simply be the result of it being a pilot, but it helps address two key criticisms of a UBI, affordability and disincentives to work. We’re excited to see the results.
As we batten down the hatches, here are our recommended reads from the week:
First up, the Economist’s Bagehot column this week is on the “shrinkflation state”: “The logic of shrinkflation is that consumers are less likely to notice it than its alternative: higher prices. For years, the government has worked on the same principle. Taxpayers paid roughly the same, but state services withered.” Apart from taxes are about go up, it points out, and at best that might stem some of the shrinkage. But unless you’re a pensioner, you’ll be wondering what exactly you’re getting for the increased tax burden. As the author brilliantly puts it: “The British state will increasingly resemble a health-care system with nukes.”
Next up is this Pro Bono Economics blog on “the paradox of a labour market that is simultaneously tight and subdued.” A big rise in inactivity is the explanation, and more specifically — and worryingly — long-term sickness. “Long-term sickness now accounts for 26% of all inactivity — the largest single reason cited and heading back towards shares last recorded at the turn of the century.” And, as we have known for some time, depression and mental illness is the leading driver. This is precisely why the Government’s Way to Work scheme is the wrong answer.
Finally, this study looking at the causal impact of fast Internet on social capital is fascinating. It finds that “fast Internet substantially displaced several dimensions of social capital in the UK. After broadband take-up, civic and political engagement started to systematically decline with inhabitants’ proximity to the network node serving the area, i.e. with the speed of the Internet connection.” There was a “statistically significant and sizeable” impact on participation in such ‘bridging’ activities... food for ‘levelling up’ thought.