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Coffee House

Brits are not idle – they’re just taxed to death

4 December 2013

8:47 AM

4 December 2013

8:47 AM

Today’s Times has a headline designed, I suspect, to make the blood boil. “Idle Britons are allowing Romanians to take jobs,” it says – paraphrasing the conclusion of Mariana Câmpeanu, Romania’s labour minister. This echoes a widespread idea repeated even by some British politicians. Especially those who argue that we need mass immigration to grow the economy because our own people won’t do the jobs.

It’s true that many Brits don’t work: the number on out-of-work benefits never fell below four million during the Labour boom years and 99.9 per cent of the rise in employment during 1997-2010 can be accounted for by extra immigration. The same is also true under the Tories: most of the employment rise that George Osborne will boast about tomorrow is accounted for by more foreign-born workers (see below).

Screen Shot 2013-12-04 at 08.40.03

Buy how many members of parliament – in Romania or Britain – would work at an 84 per cent tax rate? I certainly wouldn’t. It’s sad to see that even Romania’s ministers are making this point: Brits are giving up on their own people. The ‘idle Brit’ slur is widespread, even amongst some British employers – locals just won’t work, runs the argument, so can they complain about immigrants? The question is why they are reluctant to work. The answer is because they many would not really be paid. Here’s what Ms Câmpeanu says:-

“I do not know in depth the British social welfare system, this is an internal issue of the British Government how generous it can be in its welfare system towards its citizens,” Mrs Campeanu said in an interview in Bucharest. “This should maybe be a reason why many British people do not access the vacancies on the labour market for which Romanian citizens, for example, are going to apply. If there are any vacancies, somebody will fill them, whether they are from Romania, Italy, Spain or wherever.”

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There certainly is a reason. The below explains the mismatch between British jobs and British workers – an unreformed welfare state robs work of its economic function. And who would slog their guts out on the minimum wage for fun?

Screen-Shot-2012-12-16-at-12.18.45-582x400-2Screen-Shot-2012-12-16-at-12.18.38-574x400-2

So the same low-paid job will be worth far, far more to a Romanian than a Brit on benefits. That explains why so many foreign workers are happier, keener, more likely to apply – they actually get to keep all of the extra money they earn, while Brits have to sacrifice up to 84 per cent of it. Again, who’d be all zip-a-dee-doo-dah turning up at work when you keep just 16p in every pound you earn? Certainly not me.

So there is nothing lazy about Brits. The problem lies not with our people, but an still-unreformed  welfare system. Iain Duncan Smith’s revolutionary Universal Credit would lower the top rate of effective tax to 65 per cent – still too high, but a vast improvement. When it’s up an running, the Chancellor should say in every budget what this top rate would be, and aim to lower it to 40 per cent.

The top rates of tax in this country are not paid by millionaires. They’re paid by the millions who are caught in a welfare trap. That’s why the Romanians spot such an opportunity here. And that’s why IDS’s Universal Credit cannot come fast enough.

CORRECTION Since posting this blog, I checked and update the figures on employment. The last data series shows a surge in the number of non-immigrants in work – so immigrants now account for a minority of the rise in employment. Rather than swap the graphs, I thought I’d run both (the updated version below). It  looks like this is linked to the robust Work Programme which the government is undertaking. Of course, the Q3 data could be a blip. But if it’s the start of a trend that continues until the election, then that will be a substantial economic accomplishment.

Screen Shot 2013-12-04 at 10.20.29

 

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