The next Labour government needs to make sure that the costs of reducing the deficit are spread more fairly. We also need to forward a plan for the additional cost of our ageing population. But how do we win support for this if people see welfare spending as for ‘them’ not ‘us’? John Hills’ book should be compulsory reading not just for politicians and journalists, but for us all. It draws together a mass of numbers and research into a graphic and points a very accessible picture of ‘what the welfare state does for us’.
Each chapter starts by following the experiences of two families, at various stages of the life cycle. In a snap shot in their late twenties, each with one child, middle class solicitor Henry pays a net £16,100 to the state this year, while supermarket worker Michelle gains a net £16,000. So far, so redistributive.
But in the UK redistribution has to work especially hard because before redistribution income inequality is greater than in many other countries. Therefore despite considerable redistribution, the UK remains very unequal.
This book looks at the various ways in which the complexities of real lives interact with the welfare state.
We are most familiar with the ‘cradle to grave’ view, but is this something people have forgotten or value less? Does it still apply?
Taking two families and their lifetime gains from the welfare state, including education and the NHS, as well as pensions, tax relief and other benefits, the one with lifetime earnings of £2.7 million gets £754,000 in total, and the family with £1 million lifetime earnings gets £541,000. Looking then to what they ‘paid in’ the better off family has a net ‘loss’ of £140,000, and the less well off family has a net gain of £200,000. So some redistribution, but not the stark differences some people assume.
However, fortune does vary during a single lifetime and even within a single year. This is especially the case for those in lower paid jobs, where earnings and hours can fluctuate substantially. Our middle class couple can also see income drop when the husband suffers a heart attack and downsizes his work commitments, but with the resilience provided by home ownership and pension provision, the impact is limited.
In the narrower context of spending on out of work benefits, this book provides clear ammunition against the view that the unemployed are a static group. In May 2013, half of jobseekers allowance claimants had been on it for less than six months. Not only is JSA only 4 per cent of DWP spending; only 3 per cent of claimants had been on the benefit for five or more years.
At this point in the debate people often exclaim ‘what about those who haven’t worked for years because of so-called illness?’ But here, change too is much greater than most people realise. Fewer than half of those who started to claim incapacity benefit in 2004 and 2007 were still in receipt of it 12 months later. Two thirds had ended their claim in two years, and three quarters after four.
The trouble is that the image of a huge number of people ‘parked’ on incapacity benefit for life has taken a deep root, and is constantly wheeled out to justify welfare ‘reforms’. The most recent floating proposal suggested by some members of the government: to reduce weekly payments of its successor employment and support allowance by £30 a week!
So if you are a member of parliament or parliamentary candidate next year, keep this volume by your side when preparing for hustings or writing for your local paper!
Sheila Gilmore is member of parliament for Edinburgh East. She tweets @SheilaGilmoreMP
Good Times – Bad Times: The Welfare Myth of Them and Us
Policy Press | 336pp | £12.99
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