In a study report that was published today – Fixing Broken Britain? An audit of working-age welfare reform since 2010, Labour MP Frank Field and co-author Andrew Forsey argue that:
The Department for Business, Innovation and Skills should take a lead role in tackling the dependence of employers and landlords, whose subsidies in the form of tax credits and Housing Benefit have grown exponentially, by raising wages and productivity.
… the next front in welfare reform will see a fundamental switch from the Department for Work and Pensions – historically always responsible for welfare reform – to the Department for Business, Innovation and Skills, reflecting the new reform agenda.
Field and Forsey, writing for the cross-party think tank Civitas, propose that the next step of welfare reform:
… involves a renewed drive to help those who have not yet been found a job under the Work Programme – principally the over-50s and the disabled. This should involve weighting the payment-by-results systems further in favour of those claimants facing the steepest barriers to work. This major task, and the prompt and efficient payment of benefits, should be the primary objective of the Department for Work and Pensions.
We believe the payment-by-results system the government introduced now requires a significant recalibration to give the most disadvantaged participants a fighting chance of getting and keeping a job.
The language used in the publication is controversial and I was both concerned and disappointed to see the phrase “welfare dependency” used more than once. It alludes to the Conservative claims of a so-called “culture of dependency”, for which there has never been any supportive empirical evidence presented, (and that’s despite Sir Keith Joseph’s notorious best efforts and meticulous but ultimately forlorn research into a neoliberal New Right myth.)
However, there is much empirical evidence to support structural explanations of unemployment and poverty, but the current government has tended to psychopoliticise these issues, blaming the character and attitudes of unemployed people, reflected in language shifts – for example, the frequent use of words such as “worklessness” which implies responsibility and choice – making unfortunate circumstances a very personal burden – as opposed to “unemployment”, which at least accommodates factors such as labour market constraints, economic conditions, structural inequalities, state responsibilities and the consequences of political decision-making.
Field and Forsey also recommend “identifying claimants’ strengths and difficulties” as early as possible once they begin claiming benefit; early referrals to the new Work and Health Programme for those on any benefit in most need of support; and lifting the cap on numbers who can enrol on the voluntary welfare-to-work programme for claimants with disabilities, and extending the time for which they can participate.
The problem is that referrals are unlikely to be on a voluntary basis. One of the aims of the Work and Health Programme is to enlist the support of GPs in “prescribing” work coaches to sick and disabled people. Given the confidential nature of the patient/doctor relationship, such an intrusive measure is likely to ultimately undermine people’s trust in their GP, and leave sick people who genuinely cannot work feeling harrassed and coerced by the state. There is good evidence that the work programme has not increased sustainable employment outcomes, and furthermore, it has harmed people with mental health problems.
In fairness to Field and Dorsey, they do accommodate some structural factors in their analysis. They say:
A second major new front against benefit dependency involves raising the earnings of low-paid workers, which requires a national productivity strategy that can be built around the new National Living Wage. The major objective here is to prevent yesterday’s workless poor becoming today’s working poor.
The conditionality attached to the receipt of benefit may have made work an easier option, but real wage growth at the bottom end of the labour market has been the missing piece of the government’s welfare reform puzzle.
In order to enshrine work as the best route out of poverty, the next front in welfare reform must build upon the National Living Wage to deliver the higher productivity that can sustain rising real incomes across the board. This policy needs to be driven by the Secretary of State for Business, Innovation and Skills.
Field and Forsey criticise Universal Credit, stating that if it is ever rolled out nationally, it will not “incentivise” work. They go on to say:
The government’s flagship welfare scheme will only deliver a lower marginal tax rate for certain groups of claimants and even for them it will be undermined by Universal Credit’s failure to encompass council tax support and free school meals.
Because of Universal Credit’s higher taper rate for many claimants the strategy of fixing “broken Britain” by offering lower withdrawal rates than the current system lies in ruins.
If creating an incentive to work is the goal the present system for the vast majority of claimants meets that goal more effectively. Any reduction in the marginal tax rate will only come for particular groups of Universal Credit claimants should the benefit be introduced.
But then, the failure of Universal Credit to encompass also Council Tax support and free school meals will throw all of these calculations into a mild chaos, to put it at its gentlest.
However, it’s clear that the whole point of Universal Credit is to facilitate a further withdrawal of funding for welfare support.
Field and Forsey argue in the report that because there is little prospect of Universal Credit being rolled out fully by 2020, George Osborne should act now to “protect lower-paid families with children within the framework of the welfare cuts he is planning.”
They formulate a five-point plan for in-work benefit reform in the current parliament:
- The tax credit system should be centred on lower-paid workers with children, with entitlements to families earning up to twice the level of the National Living Wage, a ceiling of £32,000.
- By 2020, childless couples and single workers without children should no longer be eligible for support from the tax credit system.
- Jobcentre Plus should be revamped so that staff have the skills to help claimants in work increase their hours and/or pay, either in their current job or by finding a new one.
- Tax credit claimants should be allowed to increase their earnings by up to £5,000 in any 18-month period without any clawback of entitlement, so that they do not lose large chunks of income for working more or for better pay.
- Vulnerable workers who cannot currently work a full week should be allowed to work up to 24 hours a week and claim Jobseeker’s Allowance or Employment and Support Allowance, rather than the current 16-hour maximum.
These five reforms would be much more effective in protecting those in work on modest earnings than anything the government is proposing. They build around the revolutionary idea the chancellor has introduced into British politics, particularly welfare reform, namely of introducing a National Living Wage.
This move begins the process of transferring the responsibility for lower earners’ welfare to employers and the Department for Business, Innovation and Skills, and away from the Department for Work and Pensions and Her Majesty’s Revenue and Customs.
However, this is a heavily corporate-sponsored “business friendly” neoliberal government with a clear anti-welfare agenda. What could possibly go right?
This post was written for Welfare Weekly, which is a socially responsible and ethical news provider, specialising in social welfare related news and opinion.