Renewing the Reward for Responsibility

As we mark the 70^th anniversary of the Beveridge Report, I want to show how the contributory principle can be not murdered; but modernised for new times.

But why is it under threat? Two years ago we were promised a revolution. Universal Credit and the Work Programme together were billed as the be all and end all to welfare reform.

In November 2010 Iain Duncan Smith said this:

“We will introduce a comprehensive work programme, which will support people going back to work in a way that has never been done before; we will build a universal credit system to ensure work pays; and we will get welfare spending under control to regain economic credibility and stability.”

That was the hype. Now, the reality.

We have long term unemployment rising as the Work Programme fails to stem the tide. Long-term youth unemployment quadrupled in the last year – quadrupled. Thanks to changes to Tax Credits we have thousands of families who are now better off on benefits than in work. We have Universal Credit disappearing over the horizon, late and over budget. And we have a bill for Job Seekers Allowance and Housing Benefit that is rocketing £9 billion higher than forecast to pay the cost of this government’s failed policies.

What happened to the revolution? It has failed.

And frankly it’s no surprise the revolution is in trouble when the revolutionaries in charge couldn’t organise the lightest of refreshments in a brewery.

In December, the DWP said a million more unemployed people would flow through the Work Programme. Last week, they said it was a million less. What on earth is going on? In the House, IDS says Universal Credit is on time and on budget. Yet his ministers say, its £100 million over budget. And his staff newsletter says its 9 months late.

The tragedy is that to pay for this crumbling revolution, the government is reducing the welfare state, leaving working people with what Brendan Barber calls ‘nothing for something’. Working people pay in. But they get nothing out.

I think we have to break out of this trap. We have to offer another way. A different approach.

Crucially we have to think how we help workers, carers and savers, deal with the eventualities that life today throws at them. The challenge of getting a job, or setting up a home,  of being a working parent, or falling sick. The challenge of caring for another, or saving for the future.

The truth that explains why confidence in social security has fallen is simple: Britain’s social security system did not keep up as these challenges changed. The job for life has gone. Women go out to work. We built and sold off all the council houses and didn’t build anymore. We’re aging; this month’s census revealed there are more people over 65 than ever. What we learn at school is not enough to last a lifetime at work. On average, most people will now work 11 different jobs over the course of their lives.

That’s why working people need ideas like Labour’s Real Jobs Guarantee.

Female employment has risen by over 50% since 1971 – 4.5 million more women work than when my mum had me – and went back out to work. There’s now a chronic new need for childcare because two thirds of couples are now dual earning and second earners are crucial to raising family living standards.

That’s why working people need ideas like the Danish Day Care system, which we’re studying so hard.

We now have over a million living in the private rented sector where the cost of renting is at an all time high. That’s why we need to look at how we build more houses to bring  down the housing benefit bill.

Back in 1901, there were just 60,000 people were over 85. Now over 85s number 1.5million, That’s why working people need our plans for private pension reform, so they go into retirement with as big a private pension pot as possible.

Together, this is an agenda for making sure people can get into jobs – and work the hours they want, save for a home, and save for a decent retirement. It’s an agenda that means people who go to work won’t be worse off – it’s about rewarding responsibility. This is an agenda for workers, for parents, for carers and savers.

And it has never been more important.

Because there is one challenge more. In the future, we will have fewer people in work to pay to resolve these problems. That is why we need a high growth, high employment welfare state that gets as many people into work as possible and keeps them there.

If we got 150,000 off the dole – a modest target of getting back to the levels of September 2010, we’d save the exchequer more than £1.3billion. If we had as many women in work as Denmark, we’d have a million extra workers, and £4.5 billion in extra tax receipts each year. If we help pensioners save now for the future, we save billions in the years to come in the bills of pensioner poverty.

This why policies like job guarantees, child care, social care, new homes, and a private pension system you can trust are so vital.

The case for social insurance today is as strong and clear as it was set out by the Commission on Social Justice; It protects people more cheaply, more efficiently and more fairly than anything else;It helps people redistribute income over complicated lives

And it represents an expression of social citizenship in its balance of rights and responsibilities through an ethic of mutuality— a spirit of contract. A contract we need to renew if we’re to rebuild Britain as did in the 1940s.

It’s a contract that must once again, reward responsibility.