Welfare reform is sometimes seen as taboo on the centre left, however it shouldn’t be seen as incompatible with social democratic values. The ideals of social justice and fairness inherent in the centre-left critique have much to contribute to discussion on the future of the welfare state.
In the financial year 2009-2010 government social security spending stood at £192bn, in comparison to £50bn on education and £98bn on health. The world financial crisis and the failing economic policies of the coalition government have played their part in increasing unemployment. However this figure represents an unsustainable increase of 45% over a decade characterised by sustained economic growth and prosperity.
Recently Shadow Secretary for Work and Pensions, Liam Byrne, wrote for the guardian about the need for a ‘tough-minded social revolution’. A call for radical reform to the welfare system, restoring the contributory principle at the heart of the Beveridge report published 70 years ago but also creating a system suitable for 21st century challenges. This debate should be welcomed. Whilst it doesn’t mean falling into unhelpful ‘scroungers’ rhetoric, it does mean ensuring that work is incentivised by the welfare system and identifying the causes where this isn’t the case. At a time when hard working people are under increasing financial pressure, a fair system is vital to restore trust and confidence.
The coalition’s benefit cap in the Welfare Reform Bill currently in the House of Lords is broadly in line with the fairness principle; if work is to pay then the total amount of state support receivable must be below this. However an arbitrary cap has flaws; if such a measure increases poverty, particularly child poverty, and threatens some families with homelessness then it is counterproductive. The government’s own figures suggest that up to 100,000 people could be driven into poverty. Furthermore the policy is likely to have a greater impact on those in work, mainly hitting stable families on low incomes rather than those who don’t work at all. The government’s impact assessment indicates a couple working up to 23 hours a week will still be affected. This policy hasn’t been thought through. Labours plan to vote for the cap when the bill returns to the Commons provided it is localised to take into account regional variation in living costs would alleviate some of these concerns.
Where the government have crossed the line however is on support for the disabled and the sick. The decision to place time limits on access to Employment and Support Allowance (ESA) for cancer patients and young people with disabilities or illness is immoral. If the welfare system is to stick to its founding principles then it should be there to help people who really need it, especially for those who have contributed. No aspect of the welfare system should be off the table, radical reform is needed, but it should provide security and uphold dignity for those who simple cannot work.
One of the ‘great evils’ that Beveridge set out to address in his report was idleness. In restoring the ‘something for something’ principle to the welfare system, ensuring that the recipients are making every effort to find work is important. In this respect we shouldn’t be afraid to talk of the undeserving, those who turn down work when it is available are undermining its role as a safety net. In this sense it is not unfair to restrict or freeze entitlements in much the same way Labour’s Future Jobs Fund did if opportunities were refused. Not doing so is unfair on the taxpayer, but it is also unfair on the claimant. While a member of the Bank of England’s Monetary Policy Committee, David Blanchflower noted the serious psychological and social implications of unemployment. Youth unemployment in particular has the potential to damage productivity and aspiration. Therefore ignoring worklessness is a disservice to the individual and society.
Making work pay however is dependent on the availability of jobs. The stagnation in the British economy as a result of decisions taken by the current government isn’t going to provide work for the long term unemployed. Recent analysis of the government’s work programme by the National Audit Office for example, suggested that its predictions were over-optimistic. A fair welfare system must go hand in hand with a recovering economy if unemployment and therefore social security spending are to be reduced. The decision to scrap schemes like the Future Jobs Fund at a time when youth unemployment is at a record high undermines any efforts made to reform the welfare system.
Beyond the Department of Work and Pensions, education has much to offer in ensuring the development of skills required to fulfill demand. Coordination across government would allow the causes of worklessness as well as the consequences to be targeted. The pupil premium focuses extra resources at the most disadvantaged children; this would have the potential to prevent intergenerational problems if not for the biggest cuts in education spending since the 1950s. Ensuring social circumstances don’t hinder academic success and identifying issues early is key to preventing the perpetuation of low aspiration.
To address the problem of long term unemployment in Britain and to reduce the burden of swelling social security expenditure radical reform is needed. With fairness at the heart of any solution, a welfare system fit for the 21st century should be there for society’s poorest and most vulnerable whilst ensuring that working is always a better option for those who can. However fairness at the bottom of society goes hand in hand with fairness at the top. In a week when the chief of a bailed out bank is set to receive a bonus near on a £1m this issue is all too relevant. If David Cameron wants to deliver on his fairness rhetoric then the richest should also be paying their fair share.
Evading tax is equally as much a disservice to society.
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