Full employment and rising wages are the key to welfare reform

Iain Duncan Smith was once right about the need for drastic change - then he got everything else wrong.

When Iain Duncan Smith starting visiting to Easterhouse and steered the new Centre for Social Justice (CSJ) towards a Tory-analysis of poverty, he was hailed by many as a prophet. Finally, wrote breathless commentators, the ‘nasty party’ had found a route-map to Compassionate Converatism. Five years later, IDS is part of a government that is plunging one million children into poverty and is ramming through the House of Lords new laws that will cut help for 3.5 million disabled people. The Saint of Easterhouse has become the punch-bag of the Treasury. The route-map, is turns out, was a chimera.

But IDS is still standing in part because he stands on the foundations of the CSJ’s study. I might disagree about lots of their conclusions but I can respect the fact that they actually bothered to look at the problem. Reform of social security – currently one-third of public spending – is a big question. It demands and deserves deep thinking not a casual look. And that’s why the launch on 14 February of the Commission on the Condition of Britain is so welcome, and why I’ll be following its work so closely. Back in the 1990s, the Commission on Social Justice at the IPPR was critical to Labour’s social security reforms in office. I hope we’ll learn just as much from the IPPR’s second big look two decades later.

The truth is major reform of the welfare state is mission critical to rebuilding Britain after the global financial crash; it’s crucial to creating a country where we end the trauma of the living standards crisis, and it’s crucial to renewing a shared sense that we really are all in this together. This is the frame that Jon Cruddas set out for One Nation Labour in an important speech at the Resolution Foundation this week; ‘earning and belonging’.

When the Beveridge Report was published seventy years ago in the middle of World War Two, it was swept off the shelves by a British public thirsty for a vision of what would come when peace was won. At the heart of Beveridge’s argument was the idea we needed social insurance to help working families deal with the exigencies of life that caused new pressures (like the costs of children) or caused a loss of earnings , like the mass unemployment of the 1930s.

Today, the challenge for social security is not simply to minimise disruption to earnings, it is to help families maximise the potential of earnings. Beveridge’s world-view was set during the Devil’s Decade of the 1930s. Our world-view must be shaped by the gigantic squeeze on earnings that means living standards for ordinary working families might not recover, according to the Resolution Foundation, until the 2020s.

The reality for Britain today is that right now, productivity is going up; corporate profits are going up; companies are piling up cash in their bank accounts at a rapid rate of knots. Yet real wages are falling. In other words, workers are producing more and earning less. If we’re to reverse this giant trend, we are going to need new strategies for full employment – because full employment is the best guarantee of rising wages. We’re going to need new strategies to help working parents – especially mums – juggle childcare and sustain their careers. We need new ways to help the over 50s stay in work. And we need a radically new approach to disability policy so that government actually puts a team behind disabled people helping them get on in life, not a bureaucracy against them locking away help.

The IPPR’s work couldn’t come at a better time. Half way through the Parliament it’s now clear, the Conservatives so-called welfare revolution is collapsing in chaos. It doesn’t help working families get on. Its making poverty worse. The DWP is no longer even able to organise work experience in Poundland, never mind complex change like Universal Credit. We’re determined to offer a bold alternative, that staunches the cost of failures and puts social security once more, back on the side of working people.

The Easterhouse estate, Glasgow. Source: Getty

Liam Byrne is Labour MP for Birmingham Hodge Hill, cofounder of the UK-China Young Leaders Roundtable and author of Turning to Face the East: How Britain Prospers in the Asian Century.

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There is nothing compassionate about Britain’s Dickensian tolerance of begging

I was called “heartless” for urging police to refer beggars to support services. But funding drug habits to salve a liberal conscience is the truly cruel approach.

In Rochdale, like many other towns across the country, we’re working hard to support small businesses and make our high streets inviting places for people to visit. So it doesn’t help when growing numbers of aggressive street beggars are becoming a regular fixture on the streets, accosting shoppers.

I’ve raised this with the police on several occasions now and when I tweeted that they needed to enforce laws preventing begging and refer them to appropriate services, all hell broke loose on social media. I was condemned as heartless, evil and, of course, the favourite insult of all left-wing trolls, “a Tory”.

An article in the Guardian supported this knee-jerk consensus that I was a typically out-of-touch politician who didn’t understand the underlying reasons for begging and accused me of being “misguided” and showing “open disdain” for the poor. 

The problem is, this isn’t true, as I know plenty about begging.

Before I became an MP, I worked as a researcher for The Big Issue and went on to set up a social research company that carried out significant research on street begging, including a major report that was published by the homeless charity, Crisis.

When I worked at The Big Issue, the strapline on the magazine used to say: “Working not Begging”. This encapsulated its philosophy of dignity in work and empowering people to help themselves. I’ve seen many people’s lives transformed through the work of The Big Issue, but I’ve never seen one person’s life transformed by thrusting small change at them as they beg in the street.

The Big Issue’s founder, John Bird, has argued this position very eloquently over the years. Giving to beggars helps no one, he says. “On the contrary, it locks the beggar in a downward spiral of abject dependency and victimhood, where all self-respect, honesty and hope are lost.”

Even though he’s now doing great work in the House of Lords, much of Bird’s transformative zeal is lost on politicians. Too many on the right have no interest in helping the poor, while too many on the left are more interested in easing their conscience than grappling with the hard solutions required to turn chaotic lives around.

But a good starting point is always to examine the facts.

The Labour leader of Manchester City Council, Richard Leese, has cited evidence that suggests that 80 per cent of street beggars in Manchester are not homeless. And national police figures have shown that fewer than one in five people arrested for begging are homeless.

Further research overwhelmingly shows the most powerful motivating force behind begging is to fund drug addiction. The homeless charity, Thames Reach, estimates that 80 per cent of beggars in London do so to support a drug habit, particularly crack cocaine and heroin, while drug-testing figures by the Metropolitan Police on beggars indicated that between 70 and 80 per cent tested positive for Class A drugs.

It’s important to distinguish that homelessness and begging can be very different sets of circumstances. As Thames Reach puts it, “most rough sleepers don’t beg and most beggars aren’t rough sleepers”.

And this is why they often require different solutions.

In the case of begging, breaking a chaotic drug dependency is hard and the important first step is arrest referral – ie. the police referring beggars on to specialised support services.  The police approach to begging is inconsistent – with action often only coming after local pressure. For example, when West Midlands Police received over 1,000 complaints about street begging, a crackdown was launched. This is not the case everywhere, but only the police have the power to pick beggars up and start a process that can turn their lives around.

With drug-related deaths hitting record levels in England and Wales in recent years, combined with cuts to drug addiction services and a nine per cent cut to local authority health budgets over the next three years, all the conditions are in place for things to get a lot worse.

This week there will be an important homelessness debate in Parliament, as Bob Blackman MP's Homelessness Reduction Bill is due to come back before the House of Commons for report stage. This is welcome legislation, but until we start to properly distinguish the unique set of problems and needs that beggars have, I fear begging on the streets will increase.

Eighteen years ago, I was involved in a report called Drugs at the Sharp End, which called on the government to urgently review its drug strategy. Its findings were presented to the government’s drugs czar Keith Hellawell on Newsnight and there was a sense that the penny was finally dropping.

I feel we’ve gone backwards since then. Not just in the progress that has been undone through services being cut, but also in terms of general attitudes towards begging.

A Dickensian tolerance of begging demonstrates an appalling Victorian attitude that has no place in 21st century Britain. Do we really think it’s acceptable for our fellow citizens to live as beggars with no real way out? And well-meaning displays of “compassion” are losing touch with pragmatic policy. This well-intentioned approach is starting to become symptomatic of the shallow, placard-waving gesture politics of the left, which helps no one and has no connection to meaningful action.

If we’re going make sure begging has no place in modern Britain, then we can’t let misguided sentiment get in the way of a genuine drive to transform lives through evidenced-based effective policy.

Simon Danczuk is MP for Rochdale.