Government must Remove Barriers to Aspiration or We end Up all The Same.

I've long since said that one of the consequences of Labour party policies is keeping people in poverty, rather than raise them out of it. Despite the intention to do more for the poor of the country, their policies have the opposite effect. It's also the bulwarks of a Conservative government to facilitate aspiration, investment and entrepreneurship, but of late their policies have had the opposite effect.

I can't see it's intended that Socialist policies keep people from working, or wages suppressed, I'm sure the opposite intention was true. But the outcomes don't always follow the intention and one of the worst things about governments of any hue is the inability to monitor the affects of legislation to see if they track the intended plan.

So for instance minimum wage: Since it's inception we've seen a rush to the bottom. Many employers that paid higher than the minimum wage before legislation ended up eventually paying it because all their competitors did as a way of maximising profits.

In-work benefits like tax credits are a nice idea, but allow employers to suppress wages and hide the real scandal of employers reducing wage costs as government handouts offset the inability of wages to support a family.

Of course then the other scandal is poverty or "just managing" people that don't qualify for benefits that have to suffer being paid these ludicrously low wages, in fact they get a double whammy of lower wages than would be the case and a higher tax take to pay for all these in-work benefits.

I've also mentioned before about the cost of moving from not working to working. For instance I think the benefits cap is currently set at an effective pre-tax wage of around £35K, which is ludicrous. It's way higher than the national average wage and no-one is going to work for minimum wage, lose all the perks and side-benefits of being on the dole if they are getting the effective wage value of £20-30K. They would be stupid to do that.

So at the bottom end of the ladder, there is a huge step to be overcome moving from being out of work and on benefits, to being in work that needs to be addressed.

So let's now say we close the gap between wages and benefits and you're in a job... working up the greasy promotional ladder and you eventually get to a position where you want to be your own boss.

Here historically the Tory party should be your friend, allowing tax breaks and incentives to new businesses. After all that's where the core Tory vote comes from: aspirational business owners and the self-employed in general.

There is a huge risk in moving from employment to self-emoployment, but the current government is making the distinction between the two increasingly blurred. I'm sure deliberately. Most likely as a carry-over from the Blair years and Dawn Primirolo and IR35. The Tories have failed to roll back that regressive legislation.

For instance if you go self-employed you don't get paid holiday, you have to earn enough profit to pay for time off. You also have to pay for professional indemnity insurance, illness and sickness insurance, pensions, etc.

In recent times the government have been trying to make it more difficult to make the jump to self-employment. The IR35 tax rule is being employed ever more ruthlessly, court cases around the "gig" economy are deciding that a deliveroo rider for instance is a disguised employee, despite there being decades of precedence set by dispatch riders. With Uber, the courts and government again pushing the agenda that working self-employed under the umbrella of Uber is actually employment.

Of course there are advantages to this for the government in the form of extra employer's National Insurance Contributions and higher rate income tax.

There is also the new poeple's pension, where everyone contributes, including the self-employed. Where before a self-employed person would just jump to a personal pension scheme, they have to now also pay into the government scheme both as emplioyee and employer.

The burden of self-employment is now making the reward not worth the risk. The extra burdens mean the reward is minimised to the point you might as well just plod on.

It all creates a fuzzy barrier to self-employment because unless you can make the jump across the hurdles the government puts in your way and can make a clear distinction.

Just as with the leap from benefits to work, there is a huge gap now between work and self-emplyment.

They are both deterrents to aspire to something better.

It should not be the work of government to put barriers in the way of aspiration. Government should be facilitating aspiration and promoting entrepreneurship, not stifling it. Otherwise how else is the economy supposed to grow? It's not for no reason that wages have declined and the economy has flatlined.

So to summarise:

I would lower the cap for benefits to a reasonable level, removing the incentive to become baby factories and restrict benefits to the first two children.

I would at the same time make sure those without children are not left in poverty. Children should not be bargaining chips for benefits and people should not be penalised for not having them. Benefits are universal and everyone deserved to be housed.

But by the same token, those on benefits should not see it as a lifestyle choice. There should be an easy path to work and it should pay more than benefits once there.

I see it unfair that those without children have to effectively pay more tax than those with them. In work benefits just cover the gaping hole in wages. It's not the job of government to bolster wages.
I would taper off in-work benefits until they are gone completely.

I would scrap the IR35 tax rules. Employees should have the freedom to take the risk to work self-employed even if it means working in their ex-employer's premises. That's a deal done between the two parties and government should not be involved. As long as the self-employed person is totally independent, holds indemnity insurance, pays for their own pension, does not get paid for absence and all the other things that denote a self-employed person then the government should not be involved.

Where companies force workers into self-employment and then insist on them wearing company uniforms, bedges,  etc. then the company should be forced to employ the person and pay minimum wage, National Insurance, pension etc.  This would allow freelance workers freedom whilst catching the likes of Uber, Deliveroo, etc who demand control of the look and feel of the service being delivered. The elemnt of coersion is the main force here.

In essence the conveyor belt of life should always be upwards. There should be no benefit in being backward-looking.