Labour’s welfare dilemma

November 15, 2012 9:10 am

Ed Miliband has argued that Labour’s position on welfare should do more to demand responsibility and reward contribution, sparking a revival of interest in the notion of ‘contributory welfare’. This can be traced to the coming together of two forces over the last couple of years. On the one hand, the realisation that the welfare state offers minimal protection for those who have paid into the system at moments when disaster strikes. On the other, the hardening of attitudes towards those on welfare, in particular the widespread fear that the system offers a ‘free ride’ for people who do not work.

These forces pose new opportunities for Labour, but also constraints. So what might ‘contributory welfare’ mean in practice as the political framework of One Nation evolves?

Let’s start with an uncomfortable truth: David Cameron sees only political upsides – and votes – in further steps to cut benefits. Back in June the Prime Minister made a speech setting out seventeen ideas for doing just that, ranging from removing Housing Benefit from the under 25s to limiting Child Benefit for larger families. The policies were not tied together by any sort of coherent principle other than drawing some pretty crude and populist diving lines. Expect the Chancellor to move on some of these ideas – including freezing some or all benefits – at next months Autumn Statement on the way to cutting 10 billion from social security expenditure. Watch him then challenge Labour to back him or defend even bigger cuts to public services or higher borrowing. Then wait for the Tories to make Labour’s vote in Parliament against the benefits cap a centre-piece of its election campaign.

This is not attractive politics – nor particularly good policy – but, like it or not, it is the battleground on welfare. Trying to ‘change the conversation’ won’t work: only the voters get to do that. So moves toward more ‘contributory welfare’ must start with this crucial spending question. It could do this by contrasting cuts with reform.

In essence the Tories are searching for unpopular bits of the system to chop off, while offering no strategy or sense of priorities and neglecting the reasons expenditure has been rising. In contrast Labour should focus on switching spending to boost employment (such as from Child Benefit or Child Tax Credit into high quality, affordable childcare) and advancing reforms to reduce demand pressures on the benefits bill (in areas like low pay, energy bills and private sector rents). It will also have to make difficult decisions on areas of spending to cut back – starting with scaling back the Winter Fuel Allowance and free TV licences to those on Pension Credit.

Having confronted the expenditure question, moves towards more ‘contributory welfare’ could carve out a new ethical position as well. This would have to be different from the traditional model of Lloyd-George and Beveridge – because major shifts in the worlds of work and family life dictate it – but could be developed in three types of directions.

The first would be to provide greater protection to people who have contributed into the system. This most closely reflects the traditional model of social insurance, still embodied in the basic state pension. A higher rate of JSA/ESA (or Universal credit in time) for those who have recently worked would strengthen it further. Given the cost implications of such a move, an alternative would be to offer significantly greater financial support on a short term basis for people who have paid in, but with the money recouped once they are back in work.

The second direction would be to expect greater contributions from people in receipt of support. There have been a number of extensions of such ‘conditionality’ over the last 15 years, but the principle could be further entrenched by guaranteeing work for anyone at risk of long term unemployment – and expecting them to take it up – as proved so successful under the Future Jobs Fund. For those who are not ready for paid work yet, it could focus on way to counter the isolation and loneliness of unemployment

The third area for developing the notion of contribution would be in the relationships and acts of reciprocity among those involved in delivering or experiencing the welfare system. This is generating fascinating new insights, such as those discussed by Hilary Cottam in a previous post. Thinking about the social connections of unemployed people, not just their CV, is vital given how many job opportunities never get registered with JobcentrePlus. And getting people who have successfully moved off benefits into employment to mentor those who are chasing vacancies might be much more effective than identikit, generic training.

Much further thinking, analysis and discussion is needed on each of these fronts – but they demonstrate the potential for a distinctive One Nation story on welfare, alongside a strategy for full employment (and a proper stock take and re-think on the Work Capability Assessment, which is clearly not working as it should). David Cameron seems set on a divisive, tactical and narrow approach to the politics of welfare. One Nation Labour can advance an compassionate, strategic and majoritarian response.

Graeme Cooke is Research Director at IPPR

This piece forms part of Jon Cruddas’s Guest Edit of LabourList

  • Louise McCudden

    This is a very interesting post. I would be comfortable with the whole ‘contributory principle’ thing if it’s part of a broader societal/cultural shift – it could be tied in with policies on tax avoidance and environmentalism (for example) as well. If everyone is expected to contribute and see themselves as part of society as a whole, then it seems reasonably fair. What makes me nervous is the idea that we will end up continuing a situation where if you’re unlucky enough to need benefits or support you get heaps of lectures about your responsibilities to the other taxpayers and how you should be living, how many kids you can have, whether you should get married, etc etc etc – but those with a hell of a lot more actual control over their own circumstances, and a hell of a lot of more power, can carry on doing exactly as they please for fear of encroaching on their “freedom” to pay poverty wages and dodge tax etc.

    This may all be part of what is intended I’m just sharing my initial reaction as a voter :)

  • SR819

    If we simply respond to voters’ current preferences, we’d have to support policies like cutting all overseas aid, reducing net migration to zero, being much stricter on welfare and cutting income taxes across every income group, which would lead to poorer public services. What is particularly “Labour” about any of those policies, and indeed a lot of them are infeasible.

  • AlanGiles

    ” On the other, the hardening of attitudes towards those on welfare, in particular the widespread fear that the system offers a ‘free ride’ for people who do not work.”

    Something the New Labour rabble, including Blair, Field, Blunkett, Johnson, Darling and Purnell, did virtually nothing to contest, because they want and wanted to pander to the tabloids.

    I find it risible, Mr Cooke when people like you try to pretend that you are outraged by what is now happening, since it was Labour that introduced Freud (your pal Purnell in fact) and if you remember, Purnell said the full effects of his “reforms” would not be seen until 2013/14 – a statement much more honest than his expenses claims.

  • Paul Cotterill

    “Trying to ‘change the conversation’ won’t work: only the voters get to do that.”

    Sorry, Graeme, I know it’s only a blogpost so space for justification of underlying assumptions is very limited, but that’s incorrect. The rest of the argument flows from that statement, making the rest of the argument incorrect.

    • Graeme Cooke

      Of course politicians and political parties can affect public attitudes on issues – including welfare – but I think we tend to massively over emphasise their capacity to do so. In a democracy surely you should start with some consideration for what voters actually think – not be imprisoned by it, or slavishly follow it, or never try to change it – but to take it seriously. And the revealed view of a significant majority of the public is that they are worried about the costs and rules of the benefits system. You and i might not agree with that, but it is fairly elitist and arrogant to totally ignore those views or think they are so thinly or mistakenly held that if only a politician had the courage to fight them they would crumble.

  • Spannered Books

    “Trying to ‘change the conversation’ won’t work: only the voters get to do that.”

    And right there you concede defeat before you have even started.

    The current hatred of people who claim benefits (even among many people who claim benefits – it is always the ‘other’ who can be blamed for our woes) has been fed for years by politicians *of all stripes* abusing statistics, denying the reality of low-income-living, and trying to curry favour with a right-wing press that will never support any agenda that doesn’t ultimately benefit their wealthy owners. Grow a spine and make the argument, over and over again: benefits are the way society supports each other, fraud and playing the system is minimal, and the amounts people get to live on are, in reality, pitiful.

  • Serbitar

    So Labour’s welfare policy is to be based around pandering to and attempting to sate prejudices based on urban myths because it is easier to curse in the darkness than stand up and strike a light. How cowardly. What a little thing the Labour Party has become.

  • jip

    Thanks for this thoughtful piece Graham. I think welfare is a symptom, the problem being jobs and skills. If you have an area of high unemployment and low skills, then a life on benefits will be the only valid option for some. So you can punish these people by reducing their meagre benefits, or you can help them back to work, personally by improving their skills, and as a group by reforming the economy.

    Personally what I would like an Ed Miliband government to do on the jobs front is bring competition back into commercial life. Britain is now a country overrun by monopolies (or maybe oligopolies if we’re getting technical). The supermarkets are the most visible culprits (I’ve seen statistics which say that whenever a new supermarket is built, an area suffers something like a net loss of 10 jobs), but the banks also deserve an honourable mention.

    Chuka Umunna talks about small businesses being the lifeblood of the UK economy (I paraphrase), but if Labour doesn’t stand up to the vested interests of the large corporations, small businesses haven’t a chance of creating jobs and wealth.

  • AlanGiles

    Mr Cooke, Perhaps you were spending too many hours with your head in the clouds with your directing a research group, but did you never notice just how much the ministers I mentioned above actually ENCOURAGED the “work-shy/feckless” smears in the popular press – aided and abbetted by loyal little backbench voting fodder, who would have voted to send their own grannies to the knackers yard to please the leadership?

    Many of the problems being faced by the sick and unemployed today was because of the right-wing Labour administrations we saw from 1997 onwards and it is intelectually dishonest to try to pretend otherwise.

    If politicians took seriously everything the tabloid reading public wanted we would long ago have reintroduced capital punishment and corpral punishment – some times it is more courageous to fight ignorance than to pander to it, but hell, why would you care – I doubt you have evr been in the situation benefit claimants find themselves in – there is always some nice little quango or “research” group that will give you a job, however otiose it might be.

  • Monkey_Bach


    Blaming everything on the Jews worked politically for Hitler in pre-war Germany and Joseph Raymond McCarthy as far as Communists went in America, during a climate of fear, for a while, although, as I remember it, things turned out rather unhappily for for both fanatical scumbuckets at the end of the day. In Great Britain, to a lesser extent, demonising benefit claimants of all kinds has worked well for both the Tories and the Labour Party, for a while, although as mentioned earlier history shows that people who pursue false agendas based on persecuting selected minorities tend not to do so well in the long run.

    Have Labour politicians and their unelected advisers been drinking water from the Lethe?

    Why doesn’t any in the upper echelons of the Labour Party remember that it was the Labour Party itself which convulsed millions of lives and contributed to the premature deaths of many men and women in the recent past by means of its own programme of incompetent welfare change?

    If it can’t do better than that in the future we might as well stick with the Conservatives!

    At least the Tories aren’t gunning to strip benefits from the elderly!

    (For the moment.)


  • Jayne Linney

    Once again another commenter who is only to happy to perpetuate the notion that people claiming benefits do so out of choice. Having been forced into that very situation due to ill health, I’m subjected to the associated abuse that goes with this myth.

    It’s not enough to say Labour would ‘protect’ me as I’ve worked for the past 30 years; I have during the past 3 years, had to fight my way through the ESA system being compelled to attend ‘assessments’ by a private Company paid by the Tax Payer, then to challenge the DWP in its decisions through the Tribunal service, win and then be thrown back into the cycle again.

    I’ve no idea what this has cost the Treasury but I estimate it was much more then I actually receive!

    I’m not alone in this situation by any means so I suggest scrapping the numerous contracts with Private Companies (all of them) and returning the jobs back to the Public Services -a practical example is scrap ATOS and reinvest in the NHS.

    Labour needs to do this along with challenging the abusive rhetoric spewed out currently; if we the people being attacked because of his had the finances, I wonder how much we’d win in damages from the State for the discrimination we experience from it?

  • Serbitar

    And so the tide begins gradually to turn…

    “I tell you that in the same way there will be more rejoicing in heaven over one sinner who repents than over ninety-nine righteous persons who do not. “ (Luke 15:7 )

    Of course if Sarah Teather hadn’t got the sack and was still a minister in the Coalition government the story might be different!

  • Serbitar

    Weak, weak, weak – intellectually, morally, and politically.


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