Beveridge would be saying 'It's the economy, stupid'

It was good to hear Jose Harris on Radio 4’s marathon programme on the welfare state yesterday morning.  She supervised the early stages of my PhD in 1977.  I was researching the origins of minimum wage legislation – not our current version but the Wages Boards which were introduced by the 1909 Trades Boards Act and abolished by the Conservative government in 1993.  Winston Churchill, as President of the Board of Trade, made the case for the 1909 legislation, saying, “It is a national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions”.

The campaigns leading to this first intervention by the State to secure a minimum level of wages were focused on women’s ‘sweated labour’ and were often dominated by the trade unions’ argument that men’s wages should be a ‘family wage’ which supported women in their role as wives and mothers. However, the most influential players at the time were in fact a small group of employers who firmly believed it was not in their own, nor in the wider society’s, interest to have large numbers of people living at subsistence level.  This was not so much because they feared social unrest but because they feared the long-term damage that subsistence wages and very poor working conditions were doing to society.  Low wages created an inefficient unhealthy workforce and unfair competition from employers who had no interest in the general modernisation of industry.

This group of mainly Quaker employers, led by George Cadbury and his newspaper the Daily News, won the argument against those who they saw as irresponsible ‘laissez faire’ employers whose actions might lead to short-term gains but which would be accompanied by increasing poverty and long-term economic disadvantage.

My thesis was that it was the influence of these employers that led to the State intervening to prevent unfettered economic forces from driving down wages to poverty levels.  And I thought of this when listening to the three hour programme on the welfare state yesterday morning.  It was admirable of the BBC to devote such time to the issue but – like almost all the current public debate on welfare reform – there was very little mention of what is arguably the most important one of Beveridge’s five pledges; the commitment to full employment. 

This commitment was crucial because without it the other four pledges become financially unsustainable.  Full employment requires the State to take responsibility for what kind of economy we have instead of leaving it to market forces. Beveridge recognised this and his 1944 report Full Employment in a Free Society proposed, as Jose Harris describes in her biography:

A totally new kind of annual budget, which would use taxation, borrowing and deficit-financing to determine the levels of public expenditure, business investment and consumer demand.

After more than 30 years of governments taking less and less responsibility for our economy, the viability of our welfare state is determined not by what we want for ourselves, our families, our communities, but by the demands of global capital which in pursuing the lowest production costs abdicates responsibility for the long-term social consequences of low waged, low tax, low regulation economies.   

It was the demands of global capital which created high levels of unemployment in areas previously dominated by industries which moved production elsewhere in pursuit of lower wages.  The same economic forces are leading to an increase in insecure, low paid work.   These are the factors which create long-term unemployment and reliance on benefits, not individual characteristics of ‘malingering’ and ‘dependency’.

Unfettered global economic forces particularly affect those who employers would not choose to employ unless there is a shortage of labour supply.  And it is therefore the behaviour of employers and investors that should be the focus of government policy, rather than the hounding of people who have no option but to depend on benefits for their survival.  

I think Beveridge, if he were alive today, would be pointing out that:

- high levels of secure employment, at wages sufficient to sustain a reasonable standard of living, are incompatible with the way our economy is currently configured

- a progressive taxation system is incompatible with both the economic reality of, and the ideology associated with, the requirements of global capital

- it is these factors which make a welfare state, based on universal principles which delivers social and economic rights, economically unviable (not the creation of a ‘dependency culture’).

Or to paraphrase an American president he would be saying ‘It’s the economy, stupid’, not the welfare state that’s the problem.

Most crucially, I think he would be demanding that we recognise, confront and reform the dysfunctional ways in which our economy is currently configured, and that he would insist that such a challenge is necessary if we are to have a society which supports people when they need it, rather than the ‘sink or swim’ kind of society which we are rapidly becoming.

Welfare reform will increase the numbers of disabled children.

A key motivation fueling welfare reform is the government’s desire to reduce the numbers of people who qualify for disability benefits – whether this is the out-of-work benefit, Employment and Support Allowance (previously Incapacity Benefit), or the additional costs benefit, Personal Independence Payment (previously Disability Living Allowance).

Yet the impact of welfare reform will also increase the numbers of children growing into adulthood with long-term impairment and/or ill health.

This is for two reasons:

1.  In spite of the recent statistical blip (caused by the reduction in median income rather than by any real decrease), child poverty is expected to rise from 2012-13 and – if nothing stops this upward trend – one in four children will be living in poverty by2020. 

2.  Children who grow up in poverty are more likely to acquire a long-term disabling condition by the time they reach adulthood.

This latter point is revealed by research carried out by the Institute of Health at the University of Warwick which asked the question: “To what extent is early social disadvantage associated with long-term disabling conditions in later childhood?”  Analysing data for 1991 and 2001 from the Office for National Statistics Longitudinal Study, they found:

•        The odds of developing chronic disabling conditions in later childhood increased as the level of household disadvantage rose

•        For children in the most disadvantaged group in 1991, the odds of developing chronic disabling conditions by 2001 were more than twice those for children living in the least disadvantaged households.[i]

In other words, a non-disabled child under the age of 10, whose parents are poor, is more likely to become disabled by the age of 20 than a child whose parents are not poor.

When this research was raised in a recent House of Lords debate, the response was: “The Government are indeed committed to tackling child poverty but believe that it is key to tackle the causes ratherthan to treat the symptoms”.  

The problem is that current welfare reform policies are based on an ideological, rather than an evidence-based, view of what the causes of poverty are (as is very evident from the consultation on changing how to measure child poverty).  At the heart of current welfare policy is the assumption that paid employment is the route – the only route – out of poverty.  This is despite evidence that there are more poor families where at least one member of the household is working than where no-one is working and 61% of children in poverty have at least one parent in work – up from 45% in the mid-nineties.

 

Rather than focus on the problem of in-work poverty, however, the government’s ideologically driven approach to policy assumes, not only that paid employment is the only route out of poverty, but that it is the motivation and behaviour of individuals that is the key barrier to getting work.  Factors over which people have no control – the number and type of jobs in their locality, ill health or impairment, the behaviour of employers – are no longer recognised.

Poverty and disadvantage are therefore to be tackled by instilling individual responsibility and effort through financial incentives delivered by the benefit system.  It is this ideology which lies behind welfare reform – the aim is that no-one will be better off on benefits than in work, and that financial sanctions will create the motivation to get into work.  This principle – rather than evidence – has driven welfare reform with the result that the legislation and its implementation takes no account of real world factors which create insuperable barriers for many people seeking work and affordable homes.

When we objected in the 1980s to Margaret Thatcher’s ‘There is no such thing as society’ stance, we were objecting to the notion that, in times of need, individuals could only rely on themselves and their families, rather than also on the wider society.  Today we have an approach which is in many ways the other side of the same ideological coin – a refusal to recognise the influence of socio-economic factors on individual life-chances. 

The refusal to acknowledge the influence of factors over which individuals have no control, is storing up significant problems for the future.  It is ruining lives and will cost our society dearly.

Nowhere is this more apparent than in the relationship between childhood disability and poverty. Current government policies, by increasing childhood poverty, will increase the numbers of children growing into adulthood affected by impairment and/or long-term ill health.  Once they reach adulthood, however, they will meet a system which tells them that their reduced employment prospects are down to their lack of motivation and their own individual failings, and condemn them to a quality of life which doesn’t really bear thinking about.

---

[i] This research was summarised by Lord Colin Low in a debate in the House of Lords on 11^th October http://www.publications.parliament.uk/pa/ld201213/ldhansrd/text/121011-0001.htm#12101112000573 .