A call to arms for Labour on welfare reform

Does Labour want to rebuild the model of the liberal welfare state or try something different?

Today the Welfare Reform Bill returns to the House of Commons to debate the amendments won in the Lords. To mark the occasion, Soundings journal publishes an e-book, Welfare Reform The dread of things to come. It is written by people who have spent years bringing public attention to the impact of welfare reform on the most vulnerable people in society.

Like the 1834 Poor Law Amendment Act, the Labour governments's 2009 Welfare Reform Act was provoked by a moral panic about the feckless poor, and the rising cost of welfare payments. Labour appeared unaware of the squeeze on wages for the bottom half of the working population. Globalisation and the economic boom were not trickling income and wealth down, they were spiralling upward to a small elite. Rising living standards for lower paid families were being sustained only by private borrowing and the growth in women's jobs. The result was growing indebtedness and increasing pressure on individuals and domestic life. Popular resentment toward people on benefits was being stoked by media stories of a dependency culture of welfare cheats. Rising immigration fuelled feelings of unfairness and resentment toward the political class and fed into the clamour against benefit scroungers.

Like the Poor Law, the target of welfare reform was the able-bodied worker who was considered to be shirking his or her duty to work. But Labour and coalition governments excluded the health dimension of the out of work problem. The large number of people living with limiting long term illness and its impact on individuals and their employability was not properly taken into account. It was politically expedient to focus on the supposed moral failings of the individual claimant, and the assumption that, contrary to the evidence, very large numbers were simply avoiding work.

A questionable evidence base and political calculation meant the design of welfare reform was organised around increasing conditionality. The lack of jobs, the inappropriate nature of many jobs for sick or disabled people, the considerable employer resistance to taking on the mentally or physically unwell, were downplayed in favour of a punitive approach to claimants. Like the poor law, welfare reform has ended up punishing the sick and disabled.

In the House of Lords, Labour has succeeded in defeating the government in a series of amendments. But this success masks a problem. Labour peers sprung a litany of amendments but they lacked a shared ideological project about the kind of welfare system they wanted. There was concern for fairness and compassion, a heartfelt fear of the impact on children, and awareness of the spectre of homelessness. But what kind of welfare system does Labour stand for? It seems to boil down to the Conservatives' system but a bit nicer here and there.

Whatever compromises emerge, the larger questions about the future of our welfare state remain. Labour will need to rethink its approach to welfare or risk being sucked into the political slipstream of the Conservatives. It will find itself assenting to measures and then qualifying its assent. It has a political problem because people do not know what it stands for and because it is viewed by many as being soft on welfare. It can never resolve its identity crisis nor sustain longer term popular support by trying to out-nasty the Tories.

By the time the Poor Law came into effect with its workhouses and principle of less eligibility hostility toward the poor had already peaked. Its cruelties and humiliations became notorious and it was met with considerable public resistance. A similar pattern is already emerging around welfare reform and its harsh and humiliating treatment of people who are ill or disabled.

Does Labour want to rebuild the model of the liberal welfare state or try something different? The question needs serious consideration. Beveridge's liberal legacy does not look politically robust today. It is not succeeding in protecting the most vulnerable. It risks being undermined by profit-seeking companies. Its safety net is mean and tattered. Who wants the impoverishment of the Job Seekers Allowance or the humiliation and fear of the Work Capability Assessment? Unlike the NHS, the welfare system lacks public support: in hard times and over longer periods of time, large fractions of the 80 per cent lose their sense of obligation toward paying for the needs of the twenty per cent.

In the coming period of austerity, welfare will be a critical political issue. The challenges of labour market volatility, of the soaring cost of pensions and an aging population, of a tax system in need of redesign, and of restructuring capitalism for wealth creation and jobs, might be better met with a reciprocal, contribution-based system of social insurance which ensures protection and is more politically robust. But it must be one that hard-wires compassion into its structure for those who, through no fault of their own, are unable to contribute. It will involve a massive change, perhaps one that is politically impossible given the liberal traditions of welfare in this country. But the present system is failing and the political prize for changing it would be enduring and historical. The call belongs to Labour, with its traditions of popular mutual aid and reciprocity.

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MPs Seema Malhotra and Stephen Kinnock lay out a 6-point plan for Brexit:

Time for Theresa May to lay out her priorities and explain exactly what “Brexit means Brexit” really means.

Angela Merkel has called on Theresa May to “take her time” and “take a moment to identify Britain’s interests” before invoking Article 50. We know that is code for the “clock is ticking” and also that we hardly have any idea what the Prime Minister means by “Brexit means Brexit.”

We have no time to lose to seek to safeguard what is best in from our membership of the European Union. We also need to face some uncomfortable truths.

Yes, as remain campaigners we were incredibly disappointed by the result. However we also recognise the need to move forward with the strongest possible team to negotiate the best deal for Britain and maintain positive relationships with our nearest neighbours and allies. 
 
The first step will be to define what is meant by 'the best possible deal'. This needs to be a settlement that balances the economic imperative of access to the single market and access to skills with the political imperative to respond to the level of public opinion to reduce immigration from the EU. A significant proportion of people who voted Leave on 23 June did so due to concerns about immigration. We must now acknowledge the need to review and reform. 

We know that the single market is founded upon the so-called "four freedoms", namely the free movement of goods, capital, services and people & labour. As things stand, membership of the single market is on an all-or-nothing basis. 

We believe a focus for negotiations should be reforms to how the how the single market works. This should address how the movement of people and labour across the EU can exist alongside options for greater controls on immigration for EU states. 

We believe that there is an appetite for such reforms amongst a number of EU governments, and that it is essential for keeping public confidence in how well the EU is working.

So what should Britain’s priorities be? There are six vital principles that the three Cabinet Brexit Ministers should support now:

1. The UK should remain in the single market, to the greatest possible extent.

This is essential for our future prosperity as a country. A large proportion of the £17 billion of foreign direct investment that comes into the UK every year is linked to our tariff-free access to a market of 500 million consumers. 

Rather than seeking to strike a "package deal" across all four freedoms, we should instead sequence our approach, starting with an EU-wide review of the freedom of movement of people and labour. This review should explore whether the current system provides the right balance between consistency and flexibility for member states. Indeed, for the UK this should also address the issue of better registration of EU nationals in line with other nations and enforcement of existing rules. 

If we can secure a new EU-wide system for the movement of people and labour, we should then seek to retain full access to the free movement of goods, capital and services. This is not just in our interests, but in the interests of the EU. For other nation states to play hardball with Britain after we have grappled first with the complexity of the immigration debate would be to ignore rather than act early to address an issue that could eventually lead to the end of the EU as we know it.

2. In order to retain access to the single market we believe that it will be necessary to make a contribution to the EU budget.

Norway, not an EU member but with a high degree of access to the single market, makes approximately the same per capita contribution to the EU budget as the UK currently does. We must be realistic in our approach to this issue, and we insist that those who campaigned for Leave must now level with the British people. They must accept that if the British government wishes to retain access to the single market then it must make a contribution to the EU budget.

3. The UK should establish an immigration policy which is seen as fair, demonstrates that we remain a country that is open for business, and at the same time preventing unscrupulous firms from undercutting British workers by importing cheap foreign labour.  

We also need urgent confirmation that EU nationals who were settled here before the referendum as a minimum are guaranteed the right to remain, and that the same reassurance is urgently sought for Britons living in mainland Europe. The status of foreign students from the EU at our universities must be also be clarified and a strong message sent that they are welcomed and valued. 

4. The UK should protect its financial services industry, including passporting rights, vital to our national prosperity, while ensuring that the high standards of transparency and accountability agreed at an EU level are adhered to, alongside tough new rules against tax evasion and avoidance. In addition, our relationship with the European Investment Bank should continue. Industry should have the confidence that it is business as usual.

5. The UK should continue to shadow the EU’s employment legislation. People were promised that workers’ rights would be protected in a post-Brexit Britain. We need to make sure that we do not have weaker employment legislation than the rest of Europe.

6. The UK should continue to shadow the EU’s environmental legislation.

As with workers’ rights, we were promised that this too would be protected post-Brexit.  We must make sure we do not have weaker legislation on protecting the environment and combatting climate change. We must not become the weak link in Europe.

Finally, it is vital that the voice of Parliament and is heard, loud and clear. In a letter to the Prime Minister we called for new joint structures – a Special Parliamentary Committee - involving both Houses to be set up by October alongside the establishment of the new Brexit unit. There must be a clear role for opposition parties. It will be equally important to ensure that both Remain and Leave voices are represented and with clearly agreed advisory and scrutiny roles for parliament. Representation should be in the public domain, as with Select Committees.

However, it is also clear there will be a need for confidentiality, particularly when sensitive negotiating positions are being examined by the committee. 

We call for the establishment of a special vehicle – a Conference or National Convention to facilitate broader engagement of Parliament with MEPs, business organisations, the TUC, universities, elected Mayors, local government and devolved administrations. 

The UK’s exit from the EU has dominated the political and economic landscape since 23 June, and it will continue to do so for many years to come. It is essential that we enter into these negotiations with a clear plan. There can be no cutting of corners, and no half-baked proposals masquerading as "good old British pragmatism". 

The stakes are far too high for that.