5 things Liam Byrne should focus on

Liam Byrne was right to remind us a few weeks ago that Beveridge’s system was fundamentally one of insurance, where people make payments in order to be protected against events outside their control; he’d have been horrified at the thought that its very existence could distort work incentives.

Regardless of whether you agree with that analysis, this is a good time to reconsider what our benefits system is actually for. As he develops his arguments, here are five things Liam Byrne should focus on:

1. Like saving for retirement, unemployment insurance should be funded as much as possible through the private market. That would place less of a burden on taxpayers to fork out in a downturn and create a City of London that was more useful to us. It’d also incentivise a whole industry focused on providing the personalised help and support that individuals need to get them back to work faster.

2. The experience of the last ten years is that those furthest from the labour market usually face a multitude of issues that cannot easily be sorted out by Jobcentre Plus advisors. We need to put far more effort and imagination into supporting such people to be able to take control of their lives including through work.

3. This is not cheap, which is why, particularly when there isn’t enough money and resource to go around, it is a cardinal error to be wedded to the idea of universality in benefit payments. It makes me weep that we are taking from the average to give winter fuel allowances and free bus passes who many whose lives would not change if they were removed. And let’s face it, if you were designing from scratch in the 21st century a policy to ensure all children had sufficient food and clothing, would you really re-introduce a blanket child benefit system for everyone?

4. While the state should always provide some kind of backstop, the contributory principle should be at the forefront of any reform. At the very least, feeling that your hard work is rewarded, as the recent literature on wellbeing shows, bestows a greater sense of control, dignity and empowerment.

5. We are paying private landlords too much in housing benefit, particularly in areas with high property prices. In parts of London people are fearful of earning more money in case they have to pay more rent. This has to stop. The solution is to licence landlords with strict quality and rent controls, and if they won’t play ball, find a way in the government accounting system to purchase the properties, lower the rents and reap a financial reward over time through a lower housing benefit bill that supports more people into work.

Faced with today’s circumstances, I’d be interested to know which parts of this Beveridge would have disagreed with.

Kitty Ussher is a former Economic Secretary to the Treasury.