How 'Facebook welfare' could reshape the benefits system

Putting social relationships, rather than the impersonal state, at the heart of the welfare system offers a route out of the negative debate about ‘scroungers’.

Generous benefits stop people working. That view, crudely put, is at the centre of the political debate about contributory welfare and benefit ‘scroungers’. It also explains why financial support for unemployed people in the UK is among the most meagre in the developed world. Stingy benefits give people little choice other than to get back to work as quickly as possible: nine in ten unemployed people are back in work within a year.

But for many workers, meagre benefits and tough sanctions create problems. A big drop in living standards during unemployment affords skilled workers no time to find jobs that put their skills to productive use – something that would benefit them, their employer and the taxpayer. It makes little economic sense to push our computer programmers into the nearest retail job just to save the state £71.70 per week in Jobseeker’s Allowance. The trouble is that while higher benefit levels would alleviate this problem, they would compromise work incentives.

There is a way to get the best of both worlds. By 2018, tens of millions of employees will be saving in a private pension thanks to auto-enrolment. That offers an opportunity to build an integrated system of pensions and unemployment savings – one that doesn’t risk diminishing people’s already low rainy-day savings in favour of retirement saving. Let’s call it a lifecycle account.

On hitting unemployment, benefits would automatically be topped-up to 70 per cent of a person’s prior earnings for up to six months, funded from their personal lifecycle account. They would get time to look for the right job, and in spending their own retirement money, jobseekers would have strong incentives to strike the right balance between taking a job today versus a better one tomorrow.

Can this approach tackle the sense that people who’ve not worked enough get “something for nothing” from welfare? Yes, but it will mean putting social relationships – rather than the impersonal state - at the heart of the benefits system.

Account holders would have to nominate three guarantors from their friends or family. They could go into the red while unemployed, giving them a better level of financial support. But their guarantors would be liable to repay a proportion of the money borrowed if their friend failed to find work and repay the cash.

People would be better supported in early unemployment, but in return their closest friends and family would have a direct interest in their work search activities. Harnessing the power of social networks, you might even call it ‘Facebook welfare’.

There is a route out of the negative debate about ‘scroungers’ but it will take a radical rethink of contributory welfare, putting compassionate obligation at the heart of the 21st century welfare state.  

People enter the Jobcentre Plus office in Bath. Photograph: Getty Images.

Ian Mulheirn is the director of the Social Market Foundation.

Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.