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Welfare • Public Opinion • Contribution

Decision time for the Left on welfare

David Goodhart & Duncan O’Leary - 06 February 2013

The British public hold high notions of welfare 'benefits in return for contributions'. This gives the Left answers and headaches in equal measure

One of the features of modern politics is that all sides think they are losing the big arguments. Despite attempting the fastest fiscal consolidation in British history George Osborne is still labelled ‘continuity Brown’ by his critics on the Right; despite the opposition encountered by governments across Europe in cutting social security entitlements, many on the centre-left worry about the future viability of welfare states.

For the Left there are some reasons to worry. Polling evidence shows a decisive shift in public opinion to more sceptical view of welfare entitlements. The percentage of the population agreeing with the statement, "the government should spend more money on welfare benefits for the poor, even if it leads to higher taxes," peaked in 1989 and has been on a downward trajectory ever since. More people disagreed than agreed with the statement for the first time in 2007.

This trend pre-dates the financial crisis and may, in part, reflect the big expansion in welfare in the last two decades, something which analysts on the centre-left do not acknowledge sufficiently. In their latest paper Patrick Diamond and Guy Lodge comment that welfare states have been ‘remarkably resilient’ to attacks from the Right – in fact the UK pensions and social security budget has increased by 40 per cent since 1999.

The authors focus their attention on the contributory principle. On the centre-left, there is a widespread hunch that the decline in contributory benefits – charted in a detailed pamphlet published by the TUC last year – caused rather than just coincided with ‘the flight from welfare’. The feeling is that, 70 years on from the Beveridge report, the sense of “all in this together” engendered through ‘benefit in return for contributions’ has been lost.

Diamond and Lodge provide polling evidence showing strong support for the contributory principle in the UK. Notions of contribution are more popular with the British public than either means testing, or means-and-contribution-blind universalism (the British also tend to emphasise contribution more than either the French or the Danes – the other two nations covered in the study). As the authors put it, ‘there is little appetite for moving away from universal and broadly ‘solidaristic’ welfare systems towards ‘liberal’ regimes purely targeted at the poor. The notion that benefits and services should be available to those who have paid fairly into the system has wide currency among voters.’

The dilemma for those on the centre-left is what to do with this information. There are two basic options: shift the emphasis of current spending away from either universalism/means-testing and towards contributory benefits or find “top up” money to bolster the contributory principle.

Both options present difficulties. Shifting spending to prioritise contributory benefits might reinforce support for the welfare state in the long-run but would have negative consequences for many of the least well-off in the short-term. This, of course, is why reformers from all parties are forever tempted by greater means-testing, from Gordon Brown’s ‘progressive universalism’ to the current government’s reforms to child benefit. Changing course from the last 30 years would need a more explicit recognition that snapshots of whether a particular change is ‘progressive’ or not do not tell the whole story – and that other values such as reciprocity need to be given proper weight.

The second approach, of bringing new money into the system, also has its difficulties. The polling in the study is clear that finding more money through taxation is a politically unattractive option – only 6 per cent want the government to respond to the fiscal crisis by ‘increasing taxes to maintain benefits at their current level’. This leaves individuals or employers as the other sources of possible income. There are some potential connections here to Ed Miliband’s agenda for a more ‘responsible capitalism’, in which companies embrace wider social obligations to sit alongside the profit motive (such as protecting the financial security of their employees, in this case).

But moves towards incentivising private salary insurance, as proposed by the Progressive Conservatism project at Demos, is still largely taboo on the Left. People fear that this may further erode support for a reasonably generous and redistributive welfare system but reflex rejection on the grounds that this would create a two tier system is not sufficient. In fact, such ideas mirror pensions arrangements which already command widespread support across the political spectrum. Britain will have to examine without preconception new mixes of public and private.

This work, then, raises as many questions as it answers. It adds weight to the suspicion that the dilution of the contributory principle has itself diluted public support for the welfare state over time. And the authors are surely right in their assessment that those who predicted ‘the end of welfare’ were wrong. Notwithstanding all this, however, there are difficult decisions ahead. Everyone supports the contributory principle in practice but when it comes to the crunch, do we really mean it? 

David Goodhart and Duncan O’Leary are Director and Deputy Director of Demos  

This article is a response to European Welfare States after the Crisis: Changing public attitudes by Patrick Diamond and Guy Lodge

This is a contribution to Policy Network's work on Social Policy and Changing Welfare States.

Tags: David Goodhart , Duncan O’Leary , Patrick Diamond , Guy Lodge , Europe , Denmark , France , United Kingdom , UK , Welfare , Welfare State , Social Security , George Osborne , Gordon Brown , Left , Centre-left , Tax , Crisis , Financial Crisis , Economic Crisis , Debt Crisis , Sovereign Debt Crisis , TUC , Trade Union Congress , Contributory Principle , Welfare Benefits , Benefits , Beveridge , Beveridge Report , Universalism , Means Test , Ed Miliband , Responsible Capitalism , Progressive Conservatism , Pensions ,


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21 February 2013 21:26

James l GroveWhen David Goodheart (No longer “my” poor; March) raiess the matter of “…the decline of public housing. When in the 1970s the allocation of rules changed to prioritise need above all else, council housing ceased to cater for people with a wide range of incomes and jobs…” he omits the rather vital consideration that in the building of new houses the concept of “need” evaporated and thereafter new houses were built only in response to demand. Those in most need, being excluded from the market, did not and do not create demand. Need is still experienced by those people, many of whom cannot or do not choose to step onto the property ladder and become the pawns of a dysfunctional banking sector. The housing situation has played a large part in creating the “otherness” he complains of. It is not just the change in the rules of allocation but also the gross lack of dwellings that is to blame.When I worked in the Ministry of Housing and Local Government in the 1960s, Richard Crossman set a target of 300,000 new housing starts in a year. He did not achieve it but it was a virtuous attempt. This government and the last have allowed new housing starts to decline to a level not seen in 80 years, except for the four years of the war. This means they are in competition with the Luftwaffe as the worst providers. We need between 2 million and 4 million new houses (depending on your method of calculation), mostly for people who do not want to be home-owners. Ask the Joseph Rowntree Trust. In addition, a massive command house-building programme is an obvious way out of recession. Think of the multiplier. Governments are not only uncaring but also stupid.

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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