CHANGES to benefits will ensure that it doesn’t pay to stay on the dole – and prevent our young people becoming a ‘lost generation’.
Targeting so-called NEETS – those not in employment, education or training – Treasury Minister Eddie Teare announced that benefits to the under-25s would be cut to encourage them into work.
He told reporters at a Budget press conference that the aim was to make sure that those on benefits got no more than 90 per cent of the minimum wage.
Social Care Minister Chris Robertshaw MHK told Tynwald during the Budget debate that currently young people under-17 on benefits can receive 120 per cent of what they would get if working full time on a minimum wage and even for the those over 18 this figure would be over 90 per cent.
‘This is sending out completely the wrong message and a totally unacceptable one,’ he said.
‘When does a safety net become a blanket that is too easy to fall into and hard to get out?’ asked the Treasury Minister.
Despite the cut in benefits for the under-25s, the overall benefits bill will be going up – by £12 million.
This is because most benefits increase in line with inflation or at least in line with average earnings, and because there are more people claiming them.
Unemployment in the island at the end of January rose to 1,100, a rate of 2.5 per cent.
In another move designed to remove disincentives to taking employment, Mr Teare revealed that Personal Allowance Credit for those on low incomes would be reduced from £700 to £500.
Back in 2009, the then Treasury Minister Allan Bell MHK – now Chief Minister – had hailed Personal Allowance Credits, saying he was proud of the help they had given to the less well off since they were introduced in 2002.
Credits are paid to some 11,000 people at a cost to the taxpayer – even after the £200 reduction – of more than £5.5 million.
Mr Teare said the rising cost of the Personal Allowance Credit system had to be halted. He said: ‘It’s not that it isn’t working, but I believe it is inherently unfair. If your income is just inside £9,300 you get it, if it’s a penny over you don’t. I am also aware of the distorting effect when compared with those earning the minimum wage.’
He said fundamental changes to the system could follow pending a wide-ranging review of the whole benefits system.
In another measure designed to tackle the growing problem of unemployment, Mr Teare unveiled National Insurance payment ‘holidays’ for employers taking on additional staff such as NEETS, the long-term jobless, Manx graduates and ex-public sector workers.
‘I do not intend letting our young people become a lost generation and the changes to National Insurance are specifically designed to ensure they get the work experience they need.’