In June, Liam Byrne set out what he styled ‘Labour’s New Bargain’ on welfare. In a speech to Progress, he described the need to respond to conversations on the doorstep, to reconnect with the public and show Labour ‘gets it’. He talked about the new politics of responsibility, what the public want and how Labour needs to radically renew its policies for the welfare state.
It was refreshing to hear Liam talk about a welfare state that’s about family security and meeting risks and not merely a safety net for the poorest. He outlined a welcome renewal of the ‘welfare’ bargain – to help those aspiring to do well with the risks they confront in life. In my view, to this life-cycle perspective we can usefully add the extra costs people face. For example, child benefit plays a key role in meeting some of the costs of a child – a key factor in child poverty. I was very glad to hear Ed Miliband’s defence of it in this context – it’s the only benefit that supports aspiration and aids social mobility. The cost of childcare is also key – these costs arise for young families before they’ve had a chance to save and at a time when parents are working fewer hours and childcare costs are at their highest. Housing costs and the cost of disability are also key.
Liam talked about benefits relating to previous income (as was the case before 1979). This sounds good – but once this runs out, ordinary benefit levels need to be decent – and this is where we have fallen down in the UK for many years. We also need to beware of the flipside to all this which could mean tougher rules for those who have poor work records. Here, it is crucial we avoid the mistakes made by Beveridge, whose male breadwinner model meant those unable to contribute missed out especially women and disabled people. This led to our complicated welfare state, forever patching-up the gaps left behind.
Liam’s argument implied that public discontent with ‘welfare’ is new – I am not so sure. Arguably, the public has taken its lead from successive governments keen to emphasise fraud and so-called ‘benefit dependency’. There is now a pressing need to rehabilitate the idea of ‘social security’. British social attitudes consistently show the public’s concern about inequality and the gap between rich and poor and the feeling that resources are not shared fairly. Yet, decreasing numbers support investing in benefits. We need to address this, not just agree with it. In my view, the use of the term ‘welfare’ to denote all forms of social security speaks volumes about the way this debate has been going (borrowed as it is from descriptions of sub-poverty level social assistance benefits in the US). We need a language that encourages support for a decent system and here I agree with Liam. We have been missing a trick on the idea of social insurance – it is well understood by the public paying in, to take out so long as we devise a social insurance model that doesn’t exclude those who contribute in other ways like carers.
He is right to find the current welfare reform bill is flawed. It is a mixed bag and there has been very little public debate. It does repeat the mistakes of Beveridge by assuming once again a male breadwinner model – the means-test will disadvantage second earners and lone parents and the default payment to the main carer will end. Child maintenance help is weakened and watered down. And, the absence of an adequate proposal for childcare costs means it can no longer be claimed that UC will make work pay for all. It is right for Labour to focus on this – this is an area where the system is so out of step with the realities families face.
Eroding benefits that help to prevent poverty, like child benefit, exposes people to the harsh realities of means-testing – it won’t work. A single means-test is, after all, a long-held economists’ pipe dream and was championed by Ted Heath when he introduced FIS in the 1970s. In addition, the bill introduces caps and cuts (10 per cent off CTB and 20 per cent off DLA) and revives the ‘wage stop’ of the 1970s through its benefit cap. The localisation of the social fund and council tax benefit add complexity, along with new savings rules for families in paid work and a monthly means-test – this could result in a real bureaucratic nightmare for working families. As Liam rightly points out, the answer offered to this is a computer passing on ‘real-time’ earnings information – but this cannot help the self-employed and there are serious doubts about whether the IT is going to work.
It was good to hear Liam focus on the child poverty targets – Labour’s targets helped lift 900,000 children out of poverty and prevented millions from falling into it. Families with children were better-off by £2,000 a year by 2010 compared to 1997; with the poorest fifth better-off by £4,500 a year. Lone parent employment rose 45-57 per cent and worklessness fell 5 per cent between 1997 and 2007-2008 – all mainly due to tax credits, welfare to work and the childcare strategy. But Liam is also right to say tackling poverty is not just about income and social security – it is also about the labour market – work-life balance, our childcare infrastructure, housing, health and education. It is good to know that this breadth of action is already properly reflected in the Child Poverty Act.
Tackling child poverty is not just about compassion – it’s also about our ambition for our children, excellent public services and creating jobs in the economy. We all agree we need to cut the costs of unemployment, but we need to be aware that most children in poverty have a working parent – six out of 10. So we need to take care with the language we use around work habits – and the idea of passing these from one generation to another. This ‘transmission of deprivation’ argument has a poor history. Keith Joseph, for example, tried to provide evidence of it in the 1970s and 1980s and failed. The government’s child poverty strategy falls into a similar trap trying to blame poverty on family breakdown and drugs – when these are as much effects as causes. Parental drug abuse affects less than 1 per cent of children. And in those countries, like Sweden, with progressive family policies such as universal childcare, guaranteed maintenance and high levels of female labour market participation, lone parents are not poor. It is our inadequate policy response to lone-parenthood that results in child poverty. And we must not use the language of ‘responsibility’ to paint a false picture of benefit claimants refusing to work when the vast majority, 80-90 per cent, leaves JSA in six months (or at least they did before unemployment rose in the recession). You would be seriously hard-pressed to find the families oft referred to where no one has worked for generations – if they exist, they are a very tiny group.
The child poverty strategy published this year contains no indication of what progress is to be expected as a result of its measures. The Child Poverty Action Group thinks this is unlawful – where’s the noise? We now face £18 billion in benefit cuts with £5.6 billion of this down to linking benefits to CPI after 2013. The incomes of our poorest families will be sliding on a downwards escalator just as prices soar. The poorest 20 percent will be hit eight times harder than the richest and poverty is due to rise after 2013. The government response is that universal credit is the answer – but it is complex and unproven. We surely need a debate now more than ever to rehabilitate the idea of social security for all.
Alison Garnham is chief executive of the Child Poverty Action Group
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