Reforming welfare

Who benefits? Who pays?

Adrian Sinfield

adrian.sinfield@ed.ac.uk

19 September 2012

What does ‘reforming welfare’ mean

in the context of a very unequal society?

amid ‘austerity’ budgets cutting at least £18,000,000,000 from public spending?

with falling demand, a Eurozone crisis & a privatising propaganda, weakening solidarity and collective planning?

“We’re all in this together” - but some of us much more than others!

Beveridge 1942 ‘Social insurance’

‘Universal’ coverage simplified: flat-rate benefits & flat-rate contributions to tackle and prevent ‘Want’, lifting out of means-tested Poor Law.

‘Abolish want by ensuring that every citizen willing to serve according to his powers has at all times an income sufficient to meet his responsibilities’ (Beveridge Report, 1942).

Economic & social stabiliser - male breadwinner focus but, despite initial cuts, a real advance in poorer, war-torn society & neglected today.

Full employment for Beveridge

decent jobs, fair wages, of such a kind, and so located that the unemployed can reasonably be expected to take them’

(Full Employment in a Free Society, 1944).

But now poor benefits combined with more conditionality weakens the economic and social stabilisers. What sorts of jobs in a growing low-pay no-pay sector result? What protection for those furthest from work?

A modern society needs social security.

In comparative perspective

Of 24 EU countries in 2007 the risk of poverty

for those aged 18-64 in UK was

58% for unemployed - only 1 worse

37% all not employed - only 1 worse

8% those employed - only 7 worse

18% all 18-64 - only 6 worse

Workless-poverty link NOT inevitable,

increasing problems, public & personal

(Eurostat 2010 report, Table 1)

Rich Democracies Poor Societies

Why do ‘some affluent Western democracies maintain substantial poverty’ while ‘others are more egalitarian and accomplish low levels of poverty’? In affluent Western democracies the more generous the welfare state, the less poverty there is. David Brady, Rich Democracies Poor Societies: how politics explain poverty, 2009 - analysing 18 countries with 30 years’ evidence.

Words do hurt - Stigma helps cutsRights too much, ‘a culture of entitlement’, ‘resting/languishing on benefits’ - at £71 basic a week? ‘People who have been out of work all their lives & have never seen a family or even a community member in work’ (Iain Duncan-Smith, 2011). What evidence for such a claim?Such talk “others” people in poverty, increasing their social exclusion, delegitimising a system we all need against risks, new and old.Propaganda closes off policy debate on take-up, adequacy and well-being of those receiving benefits. This would have shocked Beveridge.

“CURE” STRIPPED OF CONTEXTSupply-side focus badly neglects demand, but it is both cause of need and means of cure.

Area variations in demand explain claim rates, not behaviour of claimants - as you well know.

‘Loss of employment … single most significant cause of entry to poverty’.

‘Poverty in turn makes it more difficult for people to return to work’ (EU household panel survey), especially with poor take-up & poor benefits.

PERCENTAGE CHANGE 1970 - 2010(a) average earnings(b) NI Unemployment Benefit/ Jobseeker’s Allowance(c) FTSE 100 CEO remuneration

Note: only end points plotted

(a) Average earnings

(b) JSA down 50%

(c) CEO up 1,000%,if not much more

1970

Ex-banker ‘Welfare Expert’, now Minister for Welfare Reform

‘If the rest of the country knew what we were being paid, there would be tumbrels in the street and heads carried round on pikes’ (Freud in the City, 2008, when investment banker planning his team’s bonuses in mid-1990s). Lord (David) Freud, since ennobled, the last government’s adviser, Reducing Dependency, Increasing Opportunity: Options for the Future of Welfare to Work (2007). now Coalition Minister for Welfare Reform and arguing definitions of homelessness are too wide and need to be made more ‘realistic’.

‘First things first’ Beveridge, 1948

‘Beveridge with a hint of Tebbit’, Iain Duncan Smith to Daily Telegraph on ‘Universal Credit’, praising Beveridge, Voluntary Action, 1948. Last chapter, ‘First things first’, begins:The 1942 Beveridge Report ‘set out a practical programme for putting first things first. There was to be bread and health for all at all times before cake and circuses for anybody at any time, so far as this order of priority could be enforced by redistribution of money.’ William Beveridge, Voluntary Action, 1948.

‘Increase fairness between recipients & taxpayers’Third Principle of 21st Century Welfare

All UK Taxes % Gross Income, 2010-11

Income tax & NI contri %

Council

tax %

Indirect

tax %

All Taxes

%

All 16.9 2.8 13.9 33.7

Top fifth 21.8 1.8 10.0 33.6

Bottom fifth

4.9 5.6 27.7 38.2

Diminished societal concern

‘Poverty is a crime, and the only question is, who is the criminal? Not, I suggest, the poor man, but the society which permits needless poverty’, William Beveridge, 1946, who in 1944 noted the high costs of ‘the evil of inequality’.Policy has shifted against evidence, from structure & demand to focus on individual pauperism, not poverty.Reduced stabilisers risk destabilising.Remember the lessons of the 1980s - and work

to maintain collective support.

Or prepare to return to the Poor LawMore poverty - from cuts in jobs, benefits &

services - acc IFS studies.Deeper poverty - unless better jobs?Harsher poverty - tighter controls, less optionsOn-line benefits + HMRC computer risks real life

poverty & insecurity - DWP aim for 80% on-line - at whose cost? Publish reports

Worse stigma - unless we can build on

Scotland’s Stick Your Labels! campaign

Towards Welfare that Works Better,

restoring ‘the guarantee of security’

Well-being ‘cannot be built upon unemployment and social exclusion, nor on an inadequate sense of citizenship’ (Comité des Sages, 1996).

‘Why more equal societies almost always do better’ - for everyone and for the poorest best of all (subtitle to Wilkinson & Pickett’s Spirit Level, 2009).

‘Bread and health for all at all times before cake and circuses for anybody at any time’ (Beveridge, 1948).