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3 January 2012

What does Labour’s new stance on welfare mean?

Liam Byrne's article is replete with generalities but short on specifics.

By George Eaton

Labour’s new approach to welfare reform could be summarised as WWBD – what would Beveridge do? Liam Byrne’s column in today’s Guardian is a paean of praise to the founder of the welfare state and a challenge to his own party. “One more heave behind our old agenda won’t do,” Byrne warns.

Anxiously advancing behind Beveridge’s ghost, he writes that the great Liberal would “scarcely have believed housing benefit alone is costing the UK over £20bn a year” and that he did not believe in unconditional benefits for the unemployed.

Beveridge would have wanted reform that was tough-minded and asked everyone to work hard to find a job. He would have worried about the ways his system had skewed social behaviour because he intended benefits to help people who had their earning power interrupted because of illness, industrial injury or the capriciousness of the trade cycle. He never foresaw unearned support as desirable.

The necessary qualification, of course, is that Beveridge’s welfare state was designed for a system of full employment (hence the title of his second report in 1944: Full Employment in a Free Society), rather than one in which an average of 23 people are chasing every new job. Byrne briefly alludes to this fact (“Beveridge’s system was built on the idea of full employment”) but says nothing about the severe implications for welfare reform. Indeed, his article is replete with generalities but painfully short on specifics. Unlike James Purnell, for instance, he refuses to say whether Labour should pare back universal or “middle class” benefits in order to fund measures such as wage protection (Purnell suggested that the unemployed could receive up to 70 per cent of previous earnings for up to six months).

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The reminder of the piece is devoted to the need to revive the contributory principle (an argument Ed Miliband has previously made at length) but, again, Byrne is unclear what this means in policy terms. Miliband cited the example of Manchester council, which gives those in work priority in the allocation of social housing, but Byrne doesn’t even note this local experiment. He does, however, hint at an attractive dividing line with the Conservatives. The Tories, he writes, are “presiding over an exploding welfare bill while cutting back on contributory benefits and services like childcare”.

But stripped of Byrne’s striking rhetoric, Labour’s welfare stance raises more questions than answers.