In opposition, the Tories show they know little about dealing with the problems of poverty and worklessness that they helped create when in power. Their response to Labour’s radical new approach to welfare, with its emphasis on creating skills, has been to become cheerleaders for the reactionary, discredited Wisconsin model of welfare reform, with its emphasis on unemployment and forcing all who can work into jobs.
As Gordon Brown signalled in a major speech on 26 November, employability rather than unemployment is the new challenge.
Over the past decade, huge progress has been made in reversing the Conservative legacy of entrenched unemployment, child poverty and benefit dependency, which tripled the numbers moving to Incapacity Benefit and cemented the “sick note” in the foundations of the economy.
Yet, behind the headlines of Iain Duncan Smith’s much-quoted “compassion” for the poor, the Tories still believe poverty and disadvantage are self-inflicted and that the way to get the most vulnerable across the high wire from benefits to work is to remove the safety net. That is why they have latched on to the sink-or-swim philosophy inherent in Wisconsin.
From the late 1980s onwards, as governor of Wisconsin, Tommy Thompson (a Republican, and until recently a presidential hopeful) introduced a system of state-funded welfare. Over time, this meant abolishing “cash assistance” for anyone without children; lone mums with children as young as 13 weeks were forced into work; a cap was put on the benefits caseload regardless of demand; there were time limits on entitlement; and the whole system, including determining welfare eligibility, was privatised.
The result was that between 1994 and 2004, both absolute and relative child poverty increased, with disproportionate impact on black and Hispanic communities. Thousands of families with no work and no welfare were left to rely on charity. Benefit entitlement and distribution had to be taken back under state control when major contractors became plagued by fraud.
It is not surprising that the Tories would ignore the social impacts of such a policy. But behind the claims that Wisconsin reduced unemployment benefit claims to the state by 80 per cent is the fact that the private contractors used were incentivised to redirect people on to federally funded sickness benefits, which increased by roughly 40 per cent during the same period.
The actual reduction in benefit claimants was 15 per cent, a lower reduction than we have achieved in the UK in the past ten years. We have also proved that you can significantly decrease the numbers of families on benefits and still cut both absolute and relative child poverty. Indeed, that has been our motivation.
Although we have got 2.8 million more people into jobs and taken a million off benefits since 1997, there are still far too many on welfare. This is not good for them – people stuck on benefits suffer very high levels of illness and de pression, and their children underachieve. And it is certainly not good for the economy.
Our approach is driven by progressive values of full employment, opportunity for all and social justice. The old definition of full employment was measured in terms of low unemployment, which William Beveridge defined as a claimant count rate of 3 per cent or less. We have hit that every month since 2002. Our new approach defines it in terms of high employment; we aim for 80 per cent from the current 74 per cent.
To achieve that, we need to do still more to help those with disabilities, single parents and the long-term unemployed into sustainable and rewarding jobs: British benefit claimants becoming British workers in British jobs.
It means calling time on our “sick note” culture. Incapacity Benefit still accounts for more than half of the 4.5 million people of working age in Britain on an “out of work” benefit. In the past, they were in effect written off, more likely to die or retire than work again. Yet, with the right help, the majority could work, and the jobs are certainly out there for them among the 660,000 vacancies.
From next year I will replace Incapacity Benefit with a new Employment and Support Allowance. It will include a more rigorous medical assessment and place the emphasis on work, identifying what someone can do, not what they cannot. Roughly half of those who take the assessment are likely to be deemed able to work. We will require people to discuss with a personal adviser what they can do to increase their chances of getting a job when the time is right.
Rightward drift
It won’t be easy: the longer people have been out of work, the more expensive, intensive and specialist is the help they need to get back into work and to make sure they can stay there. This requires considerable investment upfront and savings don’t come back for some years.
Which is why David Cameron’s October announcement that, at a stroke, £3bn can be found to fund tax cuts is fantasy. This is another black hole in Conservative spending plans. Pinning their colours to the mast of Wisconsin leaves the Tories’ welfare policy in disarray, more slick spin than substance, and underlines their rightward drift on social policy.
Meanwhile, we have signed up more than 200 firms and organisations to our Local Employment Partnerships to help recruit the long-term disadvantaged jobless – youngsters, over-fifties, the disabled and lone parents. We will ensure they get the right training to be “job-ready”. In return, employers will give them a fair shot at the job through a guaranteed interview or a work-trial.
There will be disabled people and lone parents for whom work is not an option, and I will ensure that they will be protected. But most lone parents want to work, not least because while on benefit their children are five times more likely to be in poverty, with a hugely increased risk of physical and mental illness.
Comprehensive and affordable childcare will be vital (increasingly there is provision in schools from breakfast to 6pm). We are encouraging employers to be more flexible and help employees balance work and family responsibilities. More than 80 per cent already do something towards this and our commitment to extend the right to request flexible working will boost this percentage further. We have also announced skills support for people on benefit, as there is evidence that welfare claimants frequently lack the skills to fill the jobs available.
There is a consistent vision of welfare running from Beveridge through Attlee to Gordon Brown: that a fair, prosperous and, above all, cohesive society can only be built on a system of social justice in which everyone who can work is expected to contribute to, and share in, national prosperity, while those who can’t are protected.
There were times in the past century when these principles were neglected, with oppor tunities to work in effect denied to millions. Unconditional handouts, which made for a life of stunted ambition and thwarted opportunity, were a reality for too many. Neither should be acceptable to progressives in our pursuit of full employment and abolishing child poverty in our generation.
A new, progressive vision for our welfare system must be firm, fair and effective. The prescription from the right will once again be reactionary, stigmatising and self-defeating.
The dividing line between Labour and the Conservatives could not be starker.
Peter Hain is Secretary of State for Work and Pensions and for Wales
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