16 October 2017

How to reinvent the welfare state for a new political era

Voters want both freedom and security.

The return of two-party politics provides a sense of clarity. At the next general election, we will be able to choose between a future based largely on the security of the state and one based on the freedom of the market. Yet the conclusions of a five-year programme of research by the Webb Memorial Trust suggest that unless we reform and integrate both approaches, we will not obtain the future that most people want.

The twin engines that brought social and economic advances in the postwar period have stalled since 2005. The bottom quintile of our society remains stuck in poverty, with few prospects of escape. Though employment is at a record high, too many jobs are low paid. The fastest-growing category of people in poverty are those in work.

It is hard to see how centralised state action can address this without a fundamental rethink of our priorities. While essential to prevent destitution, past policies to reduce poverty – such as tax credits, social security payments, housing benefit and childcare support – have done little to transform people’s lives. Moreover, some of these policies (most notably tax credits and housing benefit) subsidise the private sector, rather than tackling the fundamental problems of low pay and the housing shortage.

Our results suggest that we need a new story that transcends the binary narrative of “state or market” and focuses on what people want in order to live a fulfilling life. What people value above all else are their relationships. It is from them that they derive their sense of security and freedom. Money matters, but most people don’t aspire to wealth; they want enough to get by with a bit extra. This enables them to feel in control and to live a meaningful life in ways that they decide. The key word is agency.

In Britain since the Brexit vote, where contempt for the establishment is widespread, ordinary people, particularly the young, are no longer willing to accept blueprints from above passively. As Terry Pratchett wrote in his novel Witches Abroad, “You can’t go around building a better world for people. Only people can build a better world for people. Otherwise it’s just a cage.”

Nowhere is this truer than in the ending of poverty, for which the poor can and must be their own agents of change. What we need is not a set of transactional policies that shift resources but the development of transformational relationships that shift power. Such a perspective suggests a three-stage process.

1) A major devolution of powers and resources to local authorities. People care most about where they live, so this should be the main domain for intervention.

2) Devolution from local authorities to local people. Rather than running a big local state, significant power and resources should be shared with community organisations that residents commit to and support.

3) Devolution to young people. Within communities, local people should assign special responsibility to the younger generation. Our study found that the young are well equipped to play their part.

Such devolution does not absolve national government of responsibility. In addition to ensuring accountability at every level of the system, it also has responsibility for national policy, such as provision for a minimum income and decent housing. This will guarantee that everyone has an adequate standard of living. The watchword for this should be “security for all”.

To achieve this, we need to separate the idea of income from paid work. If, as the historian Yuval Noah Harari predicts, we are moving into a world driven by algorithms that divide the “super-rich” from the “useless class”, we need to consider how to use the fruits of wealth creation so that everyone has enough. Freed from the tyranny of mindless work, people can use their leisure to pursue relationships, do voluntary work, engage in lifelong learning, appreciate the arts and culture, and reach out to others to build solidarity. The watchword for this should be “freedom for all”.