Welfare must liberate
by Graeme Cooke
Figures out today show that 2.5m people are looking for work – while rising unemployment over the last couple of years has contributed to the large budget deficit. Given this, it’s surprising that there has been so little focus on welfare policy during the election campaign. That was until yesterday, when the Tories announced a ‘new’ policy – that people who refuse work will lose their benefits – which has been the law since the National Insurance Act of 1911 (with the exception of a period from the mid 1980’s when the Tories reduced conditions on benefits).
Anyway, to help fill the substance gap , the Open Left project at Demos is today publishing a new collection of papers confronting some of the big challenges facing the welfare system in the years ahead – whoever forms the next government. The central argument is that the ‘rights and responsibilities’ paradigm has run its course. It’s not just that the phrase now sounds horribly tired and dated; the philosophy it encapsulates needs recasting too. In it’s place, we argue for an ethos of Liberation Welfare – where people are the primary agents of change in their lives, but in the conditions shaped for them by society.
So how would Liberation Welfare be different? The animating ideas would be power, security and reciprocity – raising expectations on both state and citizen. Greater power in the hands of citizens – rather than a passive and paternalistic approach. Greater security against risks and better incentives for self-protection – rather than accepting market outcomes and regressive incentives. And stronger reciprocal relationships between citizens and practitioners at the frontline, based around individual needs – rather than a highly prescriptive, rules-based system of support. In short, the welfare state should be more empowering and more demanding. It should offer more and ask more. Rather than a mutual stand off; mutual engagement and expectations.
Our collection sets out a wide range of ideas to illustrate how Liberation Welfare could work in practice. Here are four big ideas that speak to this new philosophy:
• First, anyone at risk of long-term unemployment should be guaranteed decent paid work, and be expected to take it up.
• Second, the incentive to self-protect against income shocks should be transformed, by shifting state support for savings to people on low incomes and reducing the penalty for doing so in the benefits system.
• Third, we should ensure that no one who works hard ends up in poverty, through a combination of the minimum wage, a living wage in the public sector and campaigns for one in the private sector, and wage supplements (such as through the Working Tax Credit).
• Fourth, the package of support and conditions for people looking for, or preparing for, work should be more tailored to their personal circumstances.
So what of the party’s election pledges? Labour is at it’s best when it champions radical reform of both the market and the state. It’s manifesto commitments to a job guarantee for anyone unemployed for two years, to a living wage for all Whitehall staff and a rising minimum wage are shining examples of this. Significantly, the Tories back none of these measures. Welfare is rarely a hot button election issue. But given the linked challenges of unemployment and the deficit, it absolutely should be.
Graeme
Adam
The job guarantee would be for people out of work for a year, paid for by diverting resources from the adult skills budget. It's the government's current policy for young people and the Labour manifesto proposes to extend it to anyone out of work for two years.
The improved savings incentive would be paid for by shifting state subsidy for savings towards those on low income - for a start by restricting pension tax relief to the basic rate (which is in the Lib Dems manifesto).
A living wage in the public sector would be paid for by restricting wage awards for the highest public sector workers. This is in the Labour manifesto, and a cap on top pay is in the Tory manifesto. Labour are also committed to increasing the minimum wage in line with earnings. This wouldn't end in-work poverty, but would be a step towards it.
Making support and conditions more tailored to individuals is about not simply giving the same 'dose' to everyone on benefits, as much of the current system continues to do. This approach was set out in the Gregg Review for DWP, but hasn't been fully embraced.
Hope that helps
Graeme
Adam
So the four main practical recommendations are:
1) Guaranteed work
2) Shift saving incentives to the poor
3) Higher wages in work, especially in the public sector
4) "Tailored" support
I imagine these suggestions didn't form a part of any manifestos because they will be extremely expensive - the first and third would explode the size and cost of the public sector, respectively, and the second would essentially involve raising taxes significantly (by removing tax incentives on ISAs, pensions, etc.) and paying out the gains in match funding (since tax incentives to save won't mean much to people who need insulation from income shocks as they pass in and out of benefits). I'm not sure what the fourth entails, but I'm guessing it won't be free.
But besides the issue of increasing the size of the benefits system, where is the liberation? Where is the reciprocity? In the expectation to take up work and save? How is this position (summarised in the report as "The right to work and the obligation to work should both be at the heart of the welfare state") different from the outmoded "rights and responsibilities paradigm"?
I also wonder how different this is from conservative thought which, as James Purnell points out in the introduction, has for some time promoted asset welfare and dynamic benefits that focus on making work rational, as well as the living wage?