Local benefit levels? Using data to see if it's sensible
Thursday 4 February 2010 | By Mike LowensteinThe other day the Conservative Party was reported to be considering approaches to welfare benefits. It was considering allowing Local Authorities to set benefits levels, the argument being that they would be able to set them according to local conditions.
The idea was originally raised by Conservative Local Leaders (especially Essex and Kent) a couple of years ago.
I’m not going to argue the toss about it – it just set me thinking about the fact that in the past we worked where we lived, and now we don’t.
If we look at the first chart, we can see that Essex is a net exporter of workers. In all occupations, more people live in Essex than work there. Given how close Essex is to London, this is hardly surprising, nor is the fact that the difference is greatest for Managers, for whom commuting is most advantageous. What is surprising is that even in poorly paid work like Elementary Occupations, and Personal and Customer Service Workers, more people live in Essex than work in Essex.
The second chart shows , with actual numbers of people, unemployment compared to jobs. Note that many unemployed people do not receive Job Seekers’ Allowance. The ‘occupation’ of the unemployed here is their usual one.
Essex is, because of it’s being close to but outside of London, arguably non-typical. The problem is that the practise of (particularly the wealthy) living outside of a city, and working in it, is pretty common. One solution is to find a place inside a city.
Islington has pretty much the same number of people working there as living there, by occupation. It is in fact quite unusual. It is also, as I remarked in an earlier blog, pretty deprived. Compare the level of unemployment (job seekers’ allowance) to employment with that for Essex. You need to exercise caution, as lots more people live and work in Essex compared to Islington, so the numbers are bigger to start with, but proportionately it appears Islington’s unemployment is higher.
One way of looking at this is to say that Essex is “spongeing” off London by taking jobs it has not provided. Another is to say that Islington residents, who after all live in London, are better placed to avail themselves of these jobs. In practise people tend to seek what work they can, where they can.
Look at the direct comparison.Islington has two to three times the unemployment compared to Essex. The situation is worse in the least highly qualified occupations, but it is true in all occupations. Why is this?
One possibility is that Londoners do not seek jobs outside London, whilst job seekers in Essex seek both local and London jobs. Another may relate to levels of qualification.
If people from Essex are generally more qualified than people from Islington, they will be at a comparative advantage at all levels of occupation when it comes to seeking a job.
The problem is that Islington residents are much more qualified than Essex ones. (Doubtless a huge relief to all stand-up comedians). Almost half the population of Islington are educated to NVQ level 4 (degree level) or higher.
As can be seen, the difference in unemployment as measured by Job Seekers’ Allowance is a real one, even if it may not be as great as the earlier chart suggests. Moreover, the claimant rate for other benefits; Income Support, Disability Living Allowance, Incapacity Benefit, all show rates of claim in Islington that are much higher than Essex (although I haven’t reproduced them here).
I did pose the possible solution, that Essex people seek jobs in Essex and London, and London (Islington) people seek jobs only in London. That is not to say Londoners are lazy – to find a local job requires accessing local sources – in London that means London jobs. In Essex, it is also likely to be possible to access sources of work in London, whilst the opposite may well not be the case.
There is one obvious remaining explanation. Essex is a nice place to live. Villages, countryside, all that. People who have well paid jobs may well move to Essex, taking their (London) jobs with them. Meanwhile, people from Essex, seeking work, may move to London. That would explain the fact that unemployment amongst older people (and young ones) is so much higher in Islington.
I propose to look at this in more detail next week.
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