Soft on welfare? The challenge of a popular welfare policy that works

We are being told that Labour lost votes through being seen as “too soft” on welfare. But we must understand the complexity of public attitudes in this area, and the difficulties of reconciling these attitudes with policy that works, and with the reality of the hardship caused by a “tough” policy.

It must be Labour’s role to lead the debate on benefits, as well as follow public opinion. We can challenge the misinformation behind policies like Universal Credit and the Benefit Cap, including the myths that Labour presided over a rise in welfare “dependancy” and that work doesn’t pay. We should proudly defend our record, before the crash, of shifting people from unemployment benefits into work, especially single parents, and reducing social security spending as a share of GDP, whilst seeing huge reductions in child poverty.

This record, due to the Minimum Wage, New Deal programmes, and most of all tax credits, is not seen as the model for successful policy that it was and could be again. Tax credits also meant that other than in a few exceptional cases, people are better off in work than on benefits – a reality that the rhetoric obscures from many claimants as well as from the wider public. Work incentives have, however, been undermined by changes under the Coalition Government to how tax credits are calculated, and will be at risk for many groups under Universal Credit.

The Benefit Cap is great politics but a terrible policy. Its purpose is largely to reflect, and feed, a view that claimants get too much money. A more targeted alternative could be to progressively reduce personal allowances for each additional child. The cap, the Bedroom Tax, and proposed housing benefit restrictions for young people, merely tinker with the edges of the system, creating devastating impacts for those affected whilst the little money they save is all but cancelled out by extra costs elsewhere. Overall, social security spending has barely fallen despite all the recent cuts. Other than measures which will sink millions into deeper poverty, it is almost impossible to cut welfare spending without tackling structural factors such as low wages, high housing costs, and employment barriers for people with disabilities.

Means-testing enables resources to be targeted where they are most needed. If there is less money to spend, what role is there for universal benefits? One controversial option could be to abolish Child Benefit and instead incorporate it into the more targeted tax credits system. The loss of contributory benefits, though, is unpopular, and further undermines public trust in the system, as we recognised with our manifesto pledge for a higher contributory Jobseeker’s Allowance. There is a mismatch between targeting spending where it is needed and a public sense that money should go to people who deserve it as they have paid in.

Public attitudes are not the same towards all aspects of the benefits system. By leading the debate and mounting strong opposition, we won the argument on the bedroom tax. Headlines about people with disabilities being refused benefits and being sanctioned are the counterpart to the stories about “scroungers” and strike a chord with people. There will be ever-increasing numbers of such cases. Whilst people with disabilities have been worst affected by welfare reform, particularly when social care cuts are also factored in, public attitudes are more sympathetic towards disability benefits. Huge cuts to benefits for people with disabilities, which are hidden in Universal Credit through removing and reducing premiums, are still to be implemented.

Levels of poverty and even destitution will be far higher in 2020 than they are now, with many of the Coalition cuts and “reforms” still to come, the tailing off of discretionary housing payments which have masked the effect of housing benefit changes, and the anticipated £12 billion welfare cuts round the corner. The landscape of ever more prevalent foodbanks, homelessness, and cold and hungry children may well bring about a shift in public attitudes and push child poverty back up the agenda.