Welfare Reform

Contrary to popular opinion there are some sensible voices inside the Labour Party when it comes to welfare reform - here's one by a chap called Hopi Sen whose views on the subject were published by the Guardian a while back.

The key, as ever, is whether welfare benefits are really acting as a hand-up that helps  people get back on their feet and into work - because, by and large, such a system has strong public support.

Whereas state hand-outs to the same individuals over many years - who apparently will neither work nor want - is something that makes ordinary, decent people hopping mad. 

The Department of Work and Pensions (DWP) released figures the other day to confirm that  more than 18,000 households have had benefits capped - including 300 claimants who were receiving more than £40,000 a year and apparently dozens of families were receiving benefit payments equivalent to a salary of almost £70,000 a year.

If benefits are paid at that level for years on end, the obvious question is what is the incentive for people to work - if they would have to earn almost three times the average salary ( at around £25,000 a year) just to maintain their benefits lifestyle.   

Labour should embrace welfare reform

Tory jibes about 'the welfare party' chime with voters. But if Labour is clever and hard-headed it can reap the rewards of a shakeup that's popular and fair


By Hopi Sen


Swing voters' picture of typical Labour supporters. Photograph: Murdo MacLeod for the Guardian

Labour advisers sometimes tell a cautionary that illustrates how voters view Labour on welfare. Asked to pick an image to represent the Labour party, swing voters picked a picture of a fat man, sitting on a sofa, watching telly and drinking beer, the classic "scrounger" of popular imagination.

So when Labour pollster James Morris told a Trades Union Congress meeting that the Tory welfare changes were popular with the voters Labour needs to win the next election and that the Tories had a significant lead over Labour on welfare, he was merely telling leftish types an uncomfortable truth.

I'd be worried if Labour pollsters weren't spreading gloom among the left on this issue. The evidence is overwhelming that Morris is right. Look at any recent poll on the issue, and you find the same story.

Nor is there much comfort for Labour in less political research. Ipsos-Mori and Demos recently published research into generational attitudes to social security. They conclude that "successive generations are less supportive of the welfare state and welfare spending".

Within each cohort, support for spending more on "benefits for the poor" is declining over time.

The annual British Social Attitudes survey makes the point starkly. Last year's data showed a softening in attitudes but the long-term trend in support for benefits is down, with support for welfare spending below where it was under both Margaret Thatcher and Tony Blair.

When you ask which benefits should be prioritised, you see ever less support for spending on the unemployed than in previous recessions. More than half of people believe "that around here, most unemployed people could find a job if they really wanted one".

Want to know why David Cameron likes to call Labour "the welfare party"? That's why. Tory strategists believe that an election campaign saying "Labour wants to put up your taxes to pay for welfare" will peel off a large chunk of unsure Labour voters.

Yet if it were true that welfare spending was massively slanted to support indolence and laziness, the political move for Labour would be simple: change it. The problem is, it's not.

Welfare economists make the point again and again that in reality, work incentives are high, jobless benefits have been declining in value, that spending doesn't go on the unemployed. Such "mythbusting" has become an unsuccessful branch of all leftish welfare policy work.

This leaves Labour trapped between a public perception of high spending on the feckless and the bone-idle, and a reality of a welfare system that spends mostly on pensions, child support, help for working families and disability.

Worse, if we are going to hit any deficit reduction targets, then the Institute for Fiscal Studies has made clear there will soon be a stark choice between 25 billion quid in tax increases, public spending cuts or reducing the welfare budget further.

So is all this a counsel of despair?

Not a bit of it. Knowing the extent of the problem is merely the first step in finding the right answer.

Where might Labour look for these answers?

First, specificity. While there is broad scepticism about welfare spending as a whole, support for help for pensioners, working parents, those who are looking for work remains healthy. Backing for benefits aimed at children has even increased over the last decade.

People dislike welfare in general, but support a helping hand in particular, so it's essential to move the political debate from "welfare" to specifics.

Second, embrace reform, but define what it means. People's assumptions are that the welfare system is broken at a basic level. They're not wrong, as anyone who has claimed jobseeker's allowance recently will tell you. (Personal experience of this colours my view!)

So Labour should not be afraid to shout about making the welfare system work better. Are jobcentres doing a good job in helping people? Is the Work Programme doing any good at all? What can we do better to help the disabled be welcome in workplaces?

The final area will require major policy action.

It's to transform who gets what benefit, and why. This is what politicians mean when they talk about "something for something" welfare policy. The two keys are "contribution" and "condition".

On contribution, should we be doing more to help those who have paid into the welfare system when they need something from it? Today, If you pay national insurance for a lifetime, you get little more than someone who has rarely worked. This could be expensive, but there are interesting ideas from the IPPR about ways to help people who regularly contribute in taxes when they need a helping hand.

On condition, when do we feel comfortable telling someone they need to do more for benefits, and even when they no longer deserve them? This includes cutting benefits for people who don't look for work, or who refuse training opportunities. Crucially, this doesn't just mean "stopping benefits", but can be a way to move people, especially those with what are euphemistically called "chaotic lifestyles" into more structured and intensive intervention. Bluntly, the deal could be: you lose the right to cash, but get help in sorting yourself out.

Welfare is unpopular, Labour's position electorally tricky, the fiscal situation grim.

Far from giving up and going home, the challenge for Labour politicians is to find ways to be the pragmatic, effective, hard-headed reformers of the system, helping those who need a hand and have contributed, and imposing conditions on those who need extended support.

That's not an easy task. I didn't envy Liam Byrne, and I don't envy Rachel Reeves. Done right, though, Labour could be the real reformers of welfare, and ditch the crude caricature voters have of us.