By Peter Hoskin
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If you feel like starting your day off with 36 pages of tax reform proposals, then can I recommend this new report from the Resolution Foundation? It's written by the director of the Institute for Fiscal Studies, Paul Johnson, and is a submission to a wider investigation into living standards. Its purpose is to propose a few measures by which the tax and benefits system could be made more efficient for low to middle income-earners, such that it costs less and supports them into work better.
I won't sift through the fine print of the report here, but it's worth pulling out some of Mr Johnson's proposals from the summary…
- For mothers of school age children, cash benefits could be made more generous for younger children and less generous for older children when mothers are more likely to want to work.
- For second earners, the proposed Universal Credit system could introduce a separate disregard for second earners, allowing them to keep more of the money they earn.
- For older workers, National Insurance Contributions (NICs) could be reduced by either bringing forward the age at which people stop paying NICs to 55 or by or increasing the NICs threshold past this age.
…as these help demonstrate two significant political truths. First, that the debate around welfare is now mostly about getting people back into work (which may sound obvious, but it wasn’t so obvious several years ago). And, second, that achieving that goal isn’t always about cutting people’s benefits.
It was a single report, the Centre for Social Justice’s Dynamic Benefits, that set much of this political framework in place — not least by inspiring Iain Duncan Smith’s Universal Credit system. And it contained various proposals for smoothing the path to work that were more effective, although more expensive, than that which is being implemented. George Osborne was said to be put off by their cost at the time.
The reason I mention this is because we’re hearing a lot this morning about how the Lib Dems are opposed to George Osborne's proposal for £10 billion extra of welfare cuts after the next election. But it could well be that welfare — how the cuts are implemented, whether more money should go towards encouraging work, etc. — becomes one of the main Conservative talking points ahead of 2015.