‘There is cross-party consensus for reforming our benefits system’

Too many people with mental and physical health problems are not in work. If the Labour Government is to reduce the UK’s unique post-pandemic spike in health-related inactivity, the Department for Work and Pensions (DWP) now needs to be in mission-mode, not just administration-mode. 

Reducing economic inactivity was a top priority for the DWP during the previous Conservative government. It now is under this new Labour administration too, as the launch of the new white paper Get Britain Working shows.

The centre-right and the centre-left do have some different priorities for social security reform, however. The instinct of Conservative ministers was to manage down the benefit caseload by reforming health assessments and toughening conditions on those judged well enough to prepare for work. 

Labour tried the same when it was last in power but these days it is more sceptical. Labour politicians think that tighter policing of the system has not helped people into jobs, even if it has sometimes driven them away from jobseeker benefits.

‘There is more agreement on the need for prevention’

As with their Conservative predecessors, Labour’s new DWP ministers believe that claimants have a responsibility to engage with employment support where they can. But they also want jobcentres to be much more about personalised and empathic assistance, with sanctions playing much less of a role. Indeed, if this happens, there is an opportunity to bring more people on disability benefits voluntarily into the orbit of employment support services. 

There is more agreement between left and right on the need for prevention. It is far better to reduce illness and to help people with health problems keep their jobs than to spend more on working-aged benefits. Similarly, both camps see that it is preferable to build more affordable homes to tackle high rents, rather than let housing-related benefits take all the strain created by soaring housing costs. Many in both main political parties also want to see devolved and innovative employment support services, working collaboratively and creatively with locally commissioned partners in the private and voluntary sectors.

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‘Universal Credit was an evolution of Brown’s welfare system’

Labour quietly backs many of the Conservative reforms to social security from the last few years. The early implementation of Universal Credit was challenging, but its technology stood the test of Covid and now supports millions of people each year. Labour supports the design principles behind the new benefit, especially its simplicity and its guarantee that working more will always pay.

Really, Universal Credit itself was an evolution not a rupture from Gordon Brown’s welfare system, being one big tax credit.  Right now, UC does not need wholesale reform but practical changes to sharpen work incentives, support people facing benefit debt, and enable more personalised and easy usage.

Further embedding of technology offers opportunities to deliver social security in a much more accurate, efficient and innovative way, for both state and citizen. Big data and AI could help improve benefit take-up while reducing fraud and error. The priority should be applying technology to make the claimant experience easier – though not losing helpful human interactions that some people will always need.

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‘We need some brave and bold rebalancing’

In recent years the Conservatives ended up spending a lot on social security, through temporary measures during the Covid and cost-of-living crises, as well as in response to rising sickness levels. But before the pandemic they also cut and froze core working-age benefits for years, in the belief that high employment and the National Living Wage would fill the gap.

Now it is the turn of a Labour government to face huge fiscal pressures. After the chancellor’s controversial decision to cut the winter fuel payment for pensioners no one is expecting big rises in working-age benefits soon. But over five years we can expect Labour to make more permanent, planned increases to social security spending than was the case under the Conservatives. This is the inevitable logic of the party’s manifesto commitments to end mass dependence on food banks and reduce child poverty. 

There is also deep and cross-party concern about fewer people starting families, and falling into poverty when they do have children. Our ageing society means there is a growing imbalance between public spending on the old relative to the younger, working-aged population. We need some brave and bold rebalancing – not just for the sake of intergenerational justice, but also for creating a much more family-friendly country. To complement the extension of government subsidies for formal childcare in recent years, better financial support is needed for parents who are caring not working during the first year or so of a child’s life. 

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‘More common ground than meets the eye’

As thinkers from the centre-left and the centre-right, we believe there is significant scope for agreement on the principles and policies of future social security reform. No one in Britain – especially the disabled and carers – should have to live in destitution.  Everyone who works significant hours each week should be able to escape impoverishment. New families need and deserve better support in the critical early years of a child’s life.  Those who have contributed much to our society and economy should be able to access suitable support when times are tough.  Claimants need a relational, not just a transactional, interaction with the social security system.  

These are not outcomes that will be achieved quickly as they will inevitably require extra public spending. Both Bright Blue and the Fabians have therefore called for a new independent and expert arms-length body to officially advise on gradual improvements to benefit design and payment levels, based on extensive consultation and research. 

There is also room for left and right to agree on restoring a contributory element to social security. Apart from the state pension, most social security is means-tested and there is no prospect of that changing fundamentally. But there should be a better deal for middle and higher earners if they lose a job after many years of paying taxes. Both our organisations have called for insurance-style payments on top of Universal Credit in the initial months after people leave work involuntarily, modelled on the success of the Covid furlough scheme. This would give people the buffer they need to find a job that best matches their skills, which will support higher productivity. 

Labour and Conservative politicians will always want to accentuate their differences. They will always have competing priorities for tax and spend. But on the principles and policies for the next chapter of social security reform, there is much more common ground than meets the eye.

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