The antics roadshow: the value of welfare reform

Robert Deans, North East Cambs CLP, rejects notions that we cannot afford the welfare state.

The forced intervention by Tony Blair to set up and chair a cabinet committee on welfare reform and to launch personally a national roadshow to convince a sceptical public of its necessity are signs that the Government's flagship policy is in crisis. Harriet Harman has been sidelined following her ineffectual handling of the cuts in single parent benefits and her subsequent inability to allay fears that the sick and disabled are the next in line. As for the Green Paper, there are rumours that Frank Field completed it some time ago and that it is being withheld by Tony Blair until he judges it safe to hazard its release. The "unthinkable" has for the moment become the "unpublishable".

In an attempt to deflect criticism and restore confidence New Labour has embarked on a nationwide hearts and minds campaign to win support for its proposals. However, given what has already happened to single parents and the leaks concerning sickness and disability benefits, New Labour should not be surprised that it is accused of shutting the stable door long after the horse has bolted. It also highlights the growing tendency of the Government to exclude health and education from the definition of the welfare state by referring solely to social security expenditure when talking about welfare reform.

The danger in splitting health and education from social security is that if the middle classes, as it looks increasingly likely, are forced to make their own provision through personal insurance, or do not qualify due to the imposition of an "affluence test", there is a danger that as voters they will withdraw their support for a social security system which they are expected to pay for, but whose beneficiaries are primarily limited to the poor. The Government further exacerbates this situation by continually using offensive terms such as "dependency culture" and "underclass" to stigmatise social security claimants.

To coincide with the launch of the national roadshow the DSS has produced a briefing entitled Case for Welfare Reform. This two page document sets out the guiding principles of the Government's review:

• Society has a responsibility to help people in genuine need who are unable to look after themselves;
• Individuals have a responsibility to help provide for themselves when they can do so;
• Work is the best route out of poverty for people who are able to work.

The statement has been carefully worded to ensure that most people, whatever their political persuasion, will find it hard to disagree with. Consequently, the document says nothing about what these principles actually mean or how they should be achieved. Nor does it begin to get to grips with the difficult problems that any reform of the social security system will have to face.

Should there be individual or collective responsibility for protecting against the risks and costs of unemployment, sickness, disability and old age? What benefits should be provided for those who are unable or fail to protect themselves adequately against these risks and costs; whether there should be other citizenship benefits provided above this last resort safety-net; whether benefits should be means tested and paid for out of taxation or be universal and paid for by social insurance contributions; whether benefits should be set at levels which are redist-ributive and reduce income inequalities or should be restricted to meeting subsistence needs and relieving hardship; and whether such benefits should be increased in line with earnings or be restricted solely to inflation.

Until these matters are properly acknowledged it is impossible to place any of the Government's proposals for welfare reform within any rational context. The principles it has announced only serve to beg questions, not answer any. Sadly, there is nothing in the rhetoric so far that indicates it is seeking to stimulate and lead an informed debate on welfare reform. With an obstinacy bordering on the pathological, the Government refuses to confront publicly the issues that should be central to any discussion on the future of the social security system.

Due to New Labour's lack of a coherent ideology it continues to pass off moral imperatives as policy: asserting commonly held values at the expense of polemical clarity and detailed explanation. It is a tactic designed to build consensus and avoid confrontation, but it does so only if contentious disputes can be avoided. The Government states that it "wants the debate [on welfare reform] to be based on facts, not scaremongering". It could start by showing that it understands the complex issues involved and by being more open.

Also produced by the DSS were seven Welfare Focus Files. They contain the facts and figures the Government thinks need to be known and cover such topics as: Social Security Overview; The Evolution of Social Security; Unemployment and Access to Work; Benefits for Sick and Disabled People; Social Security Support for Housing Costs; Pensioners' Incomes; and Children and Families. The conclusion of the focus files is that the social security system is failing to alleviate poverty and inequality; costs are spiralling out of control; and the country cannot afford to sustain current and projected levels of expenditure.

As with the statement on principles, it is what is not discussed which is perhaps most revealing about the Government's agenda. The welfare state has been the subject of extensive research yet, disturbingly, this work has not been thought relevant enough to be quoted. For example, two recent reports published by the Joseph Rowntree Foundation: Inquiry into Income and Wealth (1995) and The Future of Welfare: A Guide to the Debate (1997) found that:

• over the last 20 years Britain has experienced the greatest increase in inequality of the most advanced industrial countries with the single exception of New Zealand. In this period the poorest 20-30% of the population have failed to benefit at all from economic growth and at the same time the number of households receiving less than half average income (used as a definition of official poverty) has more than trebled.
• over the last 20 years the share of GDP spent by government on welfare (education, health, social security, personal social services and housing) has not been inexorably rising or declining, but has levelled out at approximately 25%.
• Britain's welfare state is smaller than that of most advanced industrialised countries -- 13th out of 19 in 1993, falling from 11th out of 18 in 1981. Within the European Union only Portugal, Ireland and Greece are lower down the table.

Another recent study from the Joseph Rowntree Foundation, Social Protection and Inclusion: European Challenges for the United Kingdom (1997) found that:

• inequality within the United Kingdom has greatly increased in the past two decades roughly cancelling out the previous four decades of narrowing.
• the social security system in the United Kingdom is less generous in its provision and less effective in reducing inequality and poverty than most other European Union countries.
• the proportion of GDP taken in taxation in the United Kingdom has stabilised at a time when in other advanced industrialised countries it has risen.
• the United Kingdom -- a medium tax country in 1978 -- was imposing a lower relative tax burden on its population than any other European Union country except Greece in 1995.

The latest edition of Social Trends (1998) found that:

• Britain was 9th out of 11 European Union countries ranked by expenditure on social protection benefits, spending only 50-60% of the per capita figure of most other member states. Only the countries of Southern Europe spent less.
• of the G7 countries only Japan had a lower rate of direct tax and social security contributions.

OECD statistics published in 1994 comparing the level of taxation (direct and indirect) and social security contributions as a percentage of GDP of the 20 most advanced industrial countries found that:

• the United Kingdom had fallen from 8th place in 1983 at 37.3% to 12th place in 1988 at 37.1% and then to 17th place in 1993 at 33.6%.

The inescapable conclusion is that there is no crisis of funding; rather there is a crisis of commitment. Costs are not spiralling out of control and the country can afford existing and projected levels of expenditure. The United Kingdom spends less on the welfare state and raises less in taxes and social security contributions than most other advanced industrial countries. Perhaps the Government should start here in looking for an explanation of the unprecedented increases in inequality and poverty that the poor have endured over the last 20 years.

It could also consider the effects of macroeconomic policies that have willingly sacrificed the unemployed on an altar of monetary and fiscal rectitude and the increase in underemployment, marked by part time, low wage and insecure jobs, that has resulted from the relentless drive towards labour market flexibility.

There is undoubtedly a connection between New Labour's economic policy and its social policy. It is not just that the latter is a hostage to the fortune of the former, but that there is an inherent antipathy towards welfare spending (on social security benefits as opposed to health and education).

New Labour mixes economic liberalism, social conservatism and political authoritarianism into a noxious brew that threatens to poison the Labour Party's traditional egalitarian and redistributive concerns. Monetarism and communitarianism have united in New Labour: the first requiring that cuts be made to government expenditure and taxation; the second providing the justification for attacking social security benefits in order to reassert individual responsibility and social obligations.

New Labour is acting just like the characters we have all seen on a certain TV programme who bring along for valuation a family heirloom discovered while clearing out a deceased relative's attic. While desperately trying to appear sincere by saying how sentimentally attached they are to the heirloom and how they could never bear to part with it, we all know that they are itching to find out how much it is worth so they can flog it off at the earliest opportunity.

In New Labour's case the deceased relative is the Conservative Party, the family heirloom is the welfare state and the valuation sought is the magnitude of the expenditure cuts that its proposals for reform can achieve.

previous article ·  March '98 index of LLB ·  write to LLB ·  LLB home page ·  next article