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How Labour got welfare wrong - and how it can put it right

Labour opened the welfare system up to profiteering and unaccountable corporate power and confused the sick and disabled with the unemployed.

By Jonathan Rutherford Published 15 June 2011 12:43

The speeches by Ed Miliband and Liam Byrne begin to frame Labour's approach to a new social settlement. Within Labour there is a growing debate about how the party got welfare wrong while in government. The assumption is that it wasn't conditional enough. As the debate develops about the kind of social settlement Labour wants for the future there are three problems with the welfare reforms that Labour in government implemented that need to be addressed. Labour has to first get a hearing in the country and then crucially it has to transform the terms of debate about welfare.To do this requires confronting some home truths.

First, the methodologies which underpinned much of Labour's argument about welfare reform are questionable. In 2008 David Freud was interviewed by the Telegraph weeks after he'd started as an adviser on welfare reform to the DWP, a subject he admitted he knew nothing about. Despite this, Freud claimed: "There are about 3.1 million people not working, I think we can get about 1.4 million back to work". The number appears to have been plucked out of thin air. It was never corrected in public but it was eventually reduced to 1m. This new figure was the product of research at Sheffield Hallam University. In a 2010 paper the researchers explained their methodology which led to their claim that approximately one million on incapacity benefit were "hidden unemployed". The majority live in former industrial areas and poor working class areas of the country. How did they arrive at this figure?

They claimed that this figure is the number of IB Claimants who might reasonably be expected to have been in work in a genuinely fully employed economy. They are not shirking. "Their benefit claims are legitimate and their health problems and disabilities are real." But if they had lived for example in Surrey they would certainly be in work.

How do the researchers know that this would be the case? The answer is that they don't know, because the research does not address the issue of health. It takes no account of regional and class inequalities in health. It ignores the evidence that inequality creates illness and it ignores the detrimental impact of poverty on mental and physical health. It also fails to take into account the high numbers of people with limiting long term illness. The figure of 1 million fit to work is unproven.

The first problem with Labour's welfare reforms was that they effectively removed the issue of limiting long term illnesses from the debate in favour of the spurious concept of a "dependency culture". Labour's welfare reform which is being implemented by the coalition misjudges the levels of chronic illness that actually exist. Not only is it causing considerable suffering, it is also going to be very expensive as people who are unfit to work are pushed off IB onto Job Seekers Allowance where they will either fall by the wayside, be caught in a revolving door of employment and unemployment or end up claiming ESA again.

Second, the Work Capability Assessment (WCA) introduced by the 2009 Welfare Reform Bill is poorly designed and does not accurately assess a claimants everyday incapacity over time. People who are mentally ill, parents of adult children with an Autism Spectrum Condition, and literally hundreds of thousands of others with complex and intermittent illnesses who want to work but know that they cannot in the way expected of them by employers and the state, know the WCA is not fit for purpose. Medical expertise is not central to its functioning and decision making. It is a tick box computer programme run by ATOS employees which lacks the capacity to pick up complex illnesses, particularly mental health issues and Autism Spectrum Conditions.

Policy consultant Steve Griffiths has used tribunal data and estimates that since the introduction of Incapacity Benefit in 1995, "at a very conservative estimate" 500,000 people have been wrongly disallowed Incapacity Benefit, or more recently ESA. More than 300,000 have had their benefit restored at huge cost to the tax payer. Many never reach a tribunal. Richard Thomas, Chair of the Administrative Justice and Tribunals Council has said that the cases heard by tribunals are probably the "tip of the iceberg".

The second problem, which was a consequence of the first, is that Labour ended up with a harsh and punitive approach to people who were sick and disabled.

Third, Labour has opened the door to the private sector and so introduced into the welfare system the commodification of people who are sick and disabled. It will prove to be a costly mistake. The Work Capability Assessment is a case in point.

In 1992 the giant US insurance company Unumprovident was brought in by the then Secretary of State for Social Security, Peter Lilley to help tighten up access to Invalidity Benefit. In April 1997, when the new All Work Test was introduced, the company launched an expensive campaign. One ad ran: "April 13, unlucky for some. Because tomorrow the new rules on state incapacity benefit announced in the 1993 autumn budget come into effect. Which means that if you fall ill and have to rely on state incapacity benefit, you could be in serious trouble." At the time Private Eye pointed out the conflict of interest involved in the company's advertising campaign. The company denied it but its chairman, Ward E. Graffam, did acknowledge the "exciting developments" in Britain: "The impending changes to the State ill-health benefits system will create unique sales opportunities across the entire disability market and we will be launching a concerted effort to harness the potential in these."

Meanwhile in the US the company was involved in large scale malpractice and was subject to investigation and an increasing number of class actions. It changed its name to Unum and here in the UK retained its connection to the DWP. It continued to help shape the argument for welfare reform, sponsoring conferences, paying for research, funding a centre at Cardiff University where former DWP senior personnel wrote the framework for the Green Paper for the 2009 Welfare Reform Act.

Unum has been a principal mover in constructing a new market in income protection through its lobbying activity and involvement in tightening up the various tests. It has been a long term strategy that it is now exploiting. And it clearly has longer term ambitions to see the wholesale marketisation of health and welfare. When the national roll out of the new ESA began in April, Zurich insurance company was advertising its income protection scheme. Zurich's income protection business is owned by Unum.

The third problem was that Labour opened the welfare system up to profiteering and unaccountable corporate power.

The old system of welfare could not cope with the social catastrophe created by Thatcherism, deindustrialisation and globalisation. But Labour confused the sick and disabled with the unemployed. It underestimated the enormous difficulty getting people people who are chronically sick into a worthwhile occupation. It was naive about the corporate interests that are staking out new markets. The Coalition is now implementing Labour's welfare reforms and they are a social policy disaster in the making.

Labour has to face this and acknowledge what it got wrong and then it needs construct a more democratic, compassionate and relational approach to welfare. A covenant around welfare begins with a contributory insurance principle that protects everyone against the risks of unemployment, illness, disability. It is the best chance of sustaining a public universal welfare system in which everyone has a stake. It has to be a system that is based on responsibility and compassion and it must support those who are unable to contribute due to disability or long term illness without subjecting them to a punitive regime of endless testing and sanctions. A social insurance system does not resolve the massive inequalities in income, wealth and opportunity that divides the country and so a new welfare settlement has to be part of much broader economic reforms that distribute capital, decent jobs and productive wealth creation across the whole country.

Ed Miliband's speech points in this direction and it is the way we need to go.

Jonathan Rutherford is a co-author of The Labour Tradition and the Politics of Paradox, along with Maurice Glasman, Marc Stears and Stuart White.

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20 comments

Tue, 2011-10-25 12:32 — Catherine Geldart (not verified)

Neurodegenerative disease precludes eloquence but I am frightened, very frightened for the first time ever of going out, starving, cold physical attack. Ed the Duck shouldn't duck his moral duty. I find his performance so far disgusting.

Wed, 2011-06-15 23:36 — Anfortas Fisher (not verified)

I actually found your article genuinely informative & helpful in understanding how we (Labour) got to where we are.
However, you lost me with your last line!
Ed Miliband, in his 'Responsibility' speech set-out to deliberately and calculatingly raise public hostility towards EVERY person on Incapacity Benefit!
As is being pointed-out by all the Disability Bloggers (i.e. those with direct experience), Mili-E somehow, without the benefit of detailed information about the Man's medical problems, summarily judged him 'fit-for-work'!
He then, scandalously for a member (far less the 'Leader') of the Labour Party, went on to Demonise this Incapacity Benefit 'Everyman', calling him 'Irresponsible', a 'Bad Citizen', trying to 'get one over on his neighbour', saying "it’s just not right for the country to be supporting him". Just in case his message of HATE towards the Incapacity Benefit Claimant hadn't yet got through to the public-at-large, he then, sickeningly, tried to equate the Incapacity Benefit Claimant to the executives of the most disgusting and heinous Public Health scandal in recent UK history - the Southern Cross abomination!! This was an outrageous non sequitur linking of a person, who had been judged by Medical Professionals as validly unable to work at that time, with an image fresh in the mind of the public as completely disgusting and contemptible.
This was an image Ed Miliband constructed in a calculated and deliberate way - and he should be roundly condemned for doing so!
He then today, in a cynical, opportunistic and hypocritical way, decided that SOME people who were claiming Incapacity Benefit WERE worthy of support! No doubt advised by his Spin Doctors & Focus Groups, he decided if he 'championed' Cancer sufferers (genuinely, no-one in their right mind would deny most Cancer sufferers were worthy recipients of IB), he could score some political points against the Conservatives.
So what happened to his demonising of ALL IB Claimants?? Some cancer sufferers (I have tragically known many personally) are often highly mobile and compos mentis even up to only a few weeks from tragically dying. They would (and do) fail the current Work Capability Assessment test, as currently implemented by the Tories. And yet Ed has, up 'til now, not said a peep against this draconian WCA. He even ordered his Front Bench to abstain during critical votes on the Welfare Reform Bill!!
So when did he have his 'Road to Damascus' moment, and why does it only apply to Cancer sufferers? There are MANY long-term, debilitating, even life-threatening, illnesses which result in people becoming unfit for work and eligible for IB - but Ed, after demonising all the rest, strangely recants on exclusively Cancer sufferers!
As i said, cynical, opportunistic, and hypocritical!
The final chapter in this disgusting scandal came today when Ed trumpeted a Twitter 'web-chat', no doubt expecting to receive all the plaudits his spin-doctors and focus group advisers had told him to expect!
Instead, faced with a blistering barrage of intelligent, informed, detailed, perceptive challenges about the events I narrate above, 'Ed' (for no doubt he was surrounded by advisers!) seemed for all the world like a rabbit caught in headlights! He did not respond for long moments of time! Of the few responses he 'chose' to respond to, they included comments about Cheryl Cole, Blueberry Muffins, the white streak in his hair - but NOTHING, ABSOLUTELY NOTHING, in response to the questions concerning his speech!
After 30 mins of only a few, intermittent, nonsensical half-replies to obscure questions, Ed realised his audience was not the fawning sycophantic fans he had hoped for, but a mobilised group of perceptive and upset members of the public who had seen through his opportunistic hypocritical hate-filled cynicism, and were not having it!
He 'bottled it' and signed off!
Labour expects better from its 'Leader' - MUCH better! If she can't get it with Ed Miliband, we should look elsewhere - we still have 4 years before the next election!!

Wed, 2011-06-15 23:51 — sinner (not verified)

Good article. Thanks.

Ed needs to make up his mind and stop trying to be all things to all people.

In his speech he is able to just tell a man on IB is capable of work - just by looking - just like ATOS does. And yet it was Ed who started the Early Day Motion 1651 to have the Work Capability test legislation annulled.

He knows the Atos computer medical is unfit for purpose. He knows it is causing thousands of horrific cases of very sick people being designated as fit for work, soley to save the extra payment of £25 per week. He knows the sick and disabled are being forced to live in poverty and fear.

How can he sponsor an EDM in March to have the current test stopped as unfit yet make a speech implying everyone on IB is a fake 3 months later?

He is trying to convince the disabled that he understands the medical is a dangerous farce on one hand and yet still appeal to the Daily Mail mentality at the same time. It won't work, Ed.

Wed, 2011-06-15 23:56 — sinner (not verified)

Date tabled: 23.03.2011
Primary sponsor: Miliband, Edward
Sponsors:Byrne, Liam
Curran, Margaret
Healey, John
Timms, Stephen
Winterton, Rosie

That an humble Address be presented to Her Majesty, praying that theEmployment and Support Allowance (Limited Capability for Work and Limited Capability for Work-Related Activity) (Amendment) Regulations 2011(S.I., 2011, No. 228), dated 8 February 2011, a copy of which was laid before this House on 16 February, be ANNULLED.

http://www.parliament.uk/edm/2010-11/1651

Thu, 2011-06-16 01:21 — Maggie Wallace (not verified)

Ed Miliband's speech points in this direction and it is the way we need to go

Yet more attacks from Ed on the disabled. He should be ashamed of himself.

Thu, 2011-06-16 02:12 — Call me irresponsible (not verified)

There is little I can add here except to echo what has been said above. Is there anything more rank than singling out the sick and disabled for political points?

I suspect many vulnerable people were clinging to the hope that Ed was going to ride to the rescue against a wilfully cruel government. I know I was.

Well. More fool me, eh?

Thu, 2011-06-16 08:50 — Steve Griffiths (not verified)

I too read the last line of Jonathan Rutherford's article and my jaw dropped - particularly as his coruscating critique of what Labour did used my work, and I'm grateful for that. It made me go back to Ed M's speech. It really is risibly (and worst of all, calculatingly) ignorant, patronising, contributing to the malign myth-making of this and so many other fields of politics. One line struck me particularly: 'And there is a link between the man on incapacity benefit and those executives at Southern Cross'. Yes, there is, Ed. It is called the global marketisation complex - as Jonathan points out well before he runs off the road. It governs all of us. Ed Miliband may know this: you don't have to be stupid to spread ignorance. But standing inside it, as all three major parties currently do, the view of the daily struggle of ordinary lives is going to be imperfect, to say the least. I too voted for Ed Miliband, and am remaining inside the Labour Party, having rejoined - already more than semi-detached. For a while I thought he was the prisoner of a New Labour Shadow Cabinet. No longer.

Wed, 2011-06-15 12:55 — Lou (not verified)

Ed M showed clearly the direction he is going with welfare reform in his audition for a job with Atos at his speech the other day when he said he had met a guy called Tom unable to work following an accident but Ed 'came away thinking he could do something'

Since when has Ed been medically qualified to make an assessment of someone's medical condition on a two minute interaction with someone? That's exactly the kind of appraisal the sick and seriously ill are getting off Atos and the like.

He then went on to place welfare claimants and the very top of society in the same sentence and aligned welfare claimants with bankers and tax avoiders.

He agrees with the Welfare Bill. His rhetoric in his speech the other day clearly showed how much.

He's got it wrong but I don't expect him to put it right anytime soon.

Wed, 2011-06-15 12:58 — Paul McCrystal (not verified)

"Jonathan Rutherford is a co-author of The Labour Tradition and the Politics of Paradox, along with Maurice Glasman, Marc Stears and Stuart White."

You could have saved me a lot of time by informing me earlier that the author has co-written an e-book with Maurice Glasman.

Wed, 2011-06-15 13:40 — frances smith (not verified)

this more or less sums up the problems of changes to incapacity benefit, and why so many of us former labour voters hate new labour.

however it does not address the issue of the way in which people on jsa were treated under new labour.

when it seems that they preferred to blame those who found themselves unemployed, and accuse them of being workshy, and thereby deny responsiblity for unemployment.

the labour party really can't afford to lose any more natural centre left supporters, if they are going to compete for right wing voters we will have to seriously look at creating our own alternatives.

they seem to be attempting to become the new bnp, rather than a centre left policy.

shameful!

Thu, 2011-06-16 14:19 — DeusExMacintosh (not verified)

A covenant around welfare begins with a contributory insurance principle that protects everyone against the risks of unemployment, illness, disability. It is the best chance of sustaining a public universal welfare system in which everyone has a stake.

Yes, we HAD that. It was called INCAPACITY BENEFIT. It was the last of the contributions-based benefits and it was the last LABOUR government that chose to dishonour its National Insurance covenant by abolishing it. Well done Labour, you probably killed the State Pension right along with it (because if "paying your stamp" no longer guarantees incapacity coverage for workers due to ill health or disability, why would it guarantee a pension either?).

If your party has such a huge investment in the contributions principle I **challenge** you to put your hands up, admit to being wrong and campaign to 'grandfather' those of us receiving Incapacity Benefit rather than forcing us through the farcical migration to ESA. IB stops at pension age so 1 million of us will have aged off the benefit within a decade anyway (by Freud's own figures). It is likely to be cheaper than reassessing us all for ESA.

Then you can explain why such strong supporters of the contributions-basis hasn't said anything about contributions-based ESA being limited to 12 months.

An unusually thoughtful article, most interesting until the final conclusion where I naturally part company with you as someone from more to the right ('capital' is quite capable of redistributing itself and it is usually cheaper to allow it to do so).

Thu, 2011-06-16 14:31 — Robert Reynolds (not verified)

Very helpful in the review of the relevant experience of others, of the system.

Naively over-ambitious trying to bridge de-bunking New Labour and backing-up an as yet incoherent New Old Labour.

"A covenant around welfare begins with a contributory insurance principle that protects everyone against the risks of unemployment, illness, disability."

What of the primary injustice, the preclusion of working democracy: inequality?

What of those born disabled, or disabled with only months of 'contribution'?

We have to address false assumptions and false reasoning:

To Iain Duncan Smith, Secretary of State for Work and Pensions:
Thank you for continued address of social breakdown, of our collective self-neglect.
We are all diminished, and our future may even be lost, by the harming of the least.
In the address of this far greater problem lies escape from the 'shadow of the deficit'.
A perversity within progress has seen children degraded from earning to attending.
Universal experience of work and reward has been replaced by compulsory failure.
Mass-inclusion called-for, not further institutionalised abuse 'to find the worst-off'.
Growing-up is enough challenge without family finance inequality and insecurity.
It will be folly to dictate to the weakest, the worst situated, the fullest 'cooperation'.
Whatever levels of prevention and rescue can be envisaged, be now well advised:
The established vulnerable should be left in peace, doing what they can for others;
For the able, no fear: with full employment on full equal shares, ambition will call.
Critical to the democratic allocation of labour. leading capital, is freedom to move.

The NHS saved? YES BUT:

Original problems of NHS remain, from democratic deficit / corruption of motivations.

We remain vulnerable, as patients, as citizens: care dependent on secret-battle outcomes.

'Priority for integration' may curb worst not preclude failures: function/finance, public/private.

Services will reflect societies, vocations helped or hindered.

We need universal freedom of conscience.

There is a skewed judgement, dominant, on tax and spend, public and private, sensible and hot-money attraction: a race to the bottom.

By the prevailing logic, to attract the highest foreign investment, we should vote for slavery!

The graduate with £30K debt is grateful for work. With a family. he or she is a virtual slave.

Against plutocracy / slavery, I would prefer 'the democratic gamble', making our own luck!

WHAT kind of 'democracy' is sustainable, proof against descent into mob-rule chaos?

Look at the fate of 'democracy' in countries unable to stave-off fear and desperation.

No security in 'the vote and little-relevant parties'.

To be free, free beyond the instant, the gesture, we need to allow ourselves security.

No real freedom if some ruled by greed, some by fear and greed, and some by just fear.

We need universal freedom of conscience,

THINK how different would be an equal income-share, compared to a greasy-pole average income...

'Doctors supported by bureaucrats': some hope but not enough from Cameron's claimed turn.

To avoid disappointment, not just over local healthcare but over global survival, time to choose equality.

No moral basis for the radiation of fear in some families, the risk of corruption in others.

EVERY reason to set example here, to contribute to Global Spring: share, improve, save our one world!

To gain sustainable democracy, to choose secure equality, we have first to understand our choice.

38-degrees might make the difference...

Secure democracy, to secure all else?

Like nuclear disaster, like climate catastrophe, lack of democracy might seem low-risk from day to day… but given time… our children might live to curse our folly.

I commend democracy, the preclusion of dictatorship, the visibility of any corruption, the rule of care such as upheld by the NHS.

To Gordon Brown, Prime Minister 2007-2010
Thank you for all of your efforts to bring justice without frightening the City,
Sadly though doomed from our inherited failure to educate our real masters.
It is well said: 'When first we practice to deceive… Oh, what a tangled web!'
So tricky to have an open adult debate without telling or scaring the children.
Now is 'exposed', in small part, the 'misalignment ' of 'economy' and 'values',
But we have long known, or should have known: 'Who pays, calls the tune!'
For a century Labour has colluded with the primary injustice of inequality:
Setting children against each other, bribing workers with their own produce,
Bestowing charity on the poor from the proceeds of their impoverishment,
Now having to face a globalised 'moral failure', the betrayal of a generation.
It is surely time to dig deep into whatever might be our redemptive 'faiths',
To now come to the rescue of the much more than economically 'scarred'?
Enough of 'anger': we all need forgiveness, having looked for democracy,
And given public support, in 'sharp-edged statements', to equality as guide.
What head teachers 'now tell', and what teenagers 'now ask', gives the lie :
Even well-funded education is not 'the key' for young people as a whole.
Tram-line thinking might rejoice in hopes of '2% above projected levels',
But 'per capita income growth' can hide grotesque injustice and horror.
Gordon, there is a point to this debate even bigger than relief of poverty:
Without democracy, the rule of free conscience, we are led by Mammon,
And it should not take memories of the manse to know what that means.
May we hope for more on 'what to teach' towards 'unlocking prosperity'?

Greek or global Tragedy?

500BC the cradle of dead democracy, now the fiery crucible of uncertain rebirth.

People are in conflict, but we all share some kind of blame - for ignorance.

Care-free-ness in all: the care-free tail has wagged the dog too far.

The people turn on themselves and on their own infrastructure. lead by fear.

Taught to fear 'the spartan', universal equality equated to greasy-pole average.

Time to turn from the rule of fear and greed, negotiate this pass truly together.

Wed, 2011-06-15 16:44 — Tony Dean (not verified)

Ed Miliband said everything except "Work Makes You Free" although he did imply it.
Just what political party now is supporting the vulnerable in Britain?

Wed, 2011-06-15 16:50 — gnuneo

"3rd Way Politics":

the Left gets words,
the Right gets policy.

don't expect anything else from this "Labour" fraudulent misrepresentation.

Fri, 2011-11-18 16:40 — Parker Santiago

Mon, 2011-06-20 13:53 — AskUnum (not verified)

The article above refers to Unum and we wanted to put our position on record.

The welfare state is a great safety net in our society, that helps those in most need. But it is a safety net and not income replacement. It will help you if you get ill but it can't promise to maintain your lifestyle. Today, benefit levels are substantially lower than the vast majority of peoples' incomes, making it difficult for them to meet the fixed financial commitments they have. That's why we think Income Protection is an option people should consider, if they want to maintain a decent standard of living, if they fall ill.

The truth is that 9 out of 10 UK workers do not have a back-up plan in place, to protect their current lifestyle against illness or injury. We want to educate employers about the importance of protecting their employees. Our aim is to provide people with better protection and not to make changes to the welfare system. You can read more about Unum, and ask us your questions about Income Protection at www.askunum.co.uk

Also, for the record, Unum does not own Zurich's Income Protection business.

Tue, 2011-06-21 18:03 — Veruca (not verified)

I ralley needed to find this info, thank God!

Wed, 2011-06-15 18:16 — Seamus (not verified)

Good stuff. You've hit all the major points that have been consistently ignored by most of the print media.

It's very sad that we are going to have to see some real horror stories as a consequence of these reforms before the media is forced to take notice.

Wed, 2011-06-15 18:18 — Seamus (not verified)

However I would point out that Ed's instant judgement of a man on benefits he'd only just met is scarily reminiscent of how Atos conduct their business. I'm not convinced Ed does get it, really.

Thu, 2011-06-16 16:16 — David G (not verified)

I have to agree with the other posters expressing utter confusion that an article that gives such an informed summary of the problems faced by disabled people trying to get back into work then throws it all away by equating Ed's hateful speech with the way that we need to go.

As I said in my blog* at Where's the Benefit, Ed set out to deliberately demonise a disabled benefit claimant he is completely incompetent to judge (and through him every other disabled benefit claimant), and then proposed a policy that amounts to 'the floggings will continue until morale improves'. That isn't the way we need to go, it's the way Cameron and IDS and Grayling want us to go.

What's the point of turning Labour into Faux-Conservatives when people will simply vote for the real thing?

* http://wheresthebenefit.blogspot.com/2011/06/miliband-floggings-will-con...