What should Stephen Crabb do?

The Work and Pensions Secretary should implement two distinctly conservative welfare reforms

May 10, 2016
Work and Pensions Secretary Stephen Crabb. He replaced Iain Duncan Smith in the job in March, after the latter resigned ©Matt Cardy/PA Wire/Press Association Images
Work and Pensions Secretary Stephen Crabb. He replaced Iain Duncan Smith in the job in March, after the latter resigned ©Matt Cardy/PA Wire/Press Association Images

Read more: Iain Duncan Smith: the quest of a quiet man

In March, Iain Duncan Smith resigned, arguing that disability cuts in George Osborne's 2016 Budget were "indefensible." He was a passionate social reformer who claimed he had “no personal ambitions”; “I came into this government because I cared about welfare reform” he said when he resigned. What does his departure mean for compassionate conservatism?

His successor, Stephen Crabb, has an opportunity: to implement, rather than just talk about, a distinctly conservative agenda on welfare reform.

Yes, Duncan Smith can point to some successes since 2010: employment is at record levels; and long-term unemployment has fallen. But the tools he deployed to achieve these were largely those of previous governments: tougher conditionality and sanctioning, for example. Even his flagship Universal Credit, still gradually being rolled out, is a glorified tax credit. Duncan Smith was right to use these measures, but they are not some ground-breaking new approach to poverty reduction, despite his rhetoric.

After the EU referendum on 23rd June, the PM will want to focus on what animates him most: boosting the life chances of the least fortunate in society. Crabb therefore has a window to introduce reforms that could have considerable impact on public support for—and the effectiveness of—the UK’s welfare system.

Crabb has already indicated his two priorities: completing the rollout of Universal Credit and closing the disability employment gap. These are admirable aims. But he should be more ambitious. He should have two additional goals: significantly increasing contributory elements of the UK’s welfare system; and helping people to develop more diverse social networks. Together, these transformative, enabling Crabb to build a legacy that far surpasses his predecessor.

A more contributory system could significantly increase public support for state welfare. Attitudes towards state welfare are currently very negative indeed. As the architect of the modern welfare state, William Beveridge, argued, welfare provision needs to be rooted in “what the people of Britain desire.” When public consent is lost, it is harder for politicians to commit the necessary energy and resources to build a robust welfare system.

What might a more popular welfare system look like? The public, especially Conservative voters, tend to believe that fairness is primarily about reciprocity rather than equal outcomes: individuals receiving on the basis of what they have given or offered, rather than on the basis of need. “Something for something,” basically.

One way to do this is to focus on claimants’ past behaviour, distributing benefits on the basis of past tax or National Insurance contributions. At the moment, there are hardly any contributory elements to our welfare system: roughly 10 per cent of working-age state welfare is spent on contributory benefits, down from approximately 40 per cent in the late 1970s.

This should change. Universal Credit has no contributory elements to it. The amount households receive is entirely dependent on current means and circumstances. Government should offer a contribution supplement to all Universal Credit claimants with longer work histories. This could also be adopted with Statutory Maternity Pay. Mothers with longer National Insurance contribution histories should be eligible for additional funding on top of the base rate of £139.58 per week they receive after the first six weeks.

Such measures would not only be popular; they could bolster the financial support available during testing times to those who have paid more into the system.

But cash transfers from government alone will not transform people’s life circumstances. Our welfare system should not just be seen as transactional, involving the granting of money from government to citizens. Welfare can and should be relational, too. People, not pennies, provide the support and create opportunities that make a significant difference to our lives. As such, our welfare system should seek to both strengthen and diversify people’s social networks.

Successive governments have of course designed and implemented policies to strengthen people’s familial relationships: the rollout of the Troubled Families programme in 2011, for instance. Crabb could now do more to help people develop not only stronger relationships with people they know, but with people from different social backgrounds. There is growing academic evidence showing the power of mixed relationships: people with more friends from a different neighborhood or with different ethnicity or work status are less likely to live in poverty. In the US, a recent major study has shown that ethnic minority children from poor backgrounds are more likely to experience social mobility if they live in mixed socio-economic neighborhoods.

It is through institutions that people’s relationships are formed and formalised. Crabb should aim in his welfare agenda to develop public institutions where people from different backgrounds can come together. Those with the greatest potential for social mixing are public services that are child-centered and universal or compulsory: children’s centres, nurseries and schools. The Tories are even building new public services—such as National Citizen Service and universal parenting classes—which aim to mix people from different social backgrounds.

Crabb could introduce policies to increase the chances of social mixedness in these. Children’s Centres could deliver key services such as birth registration and English language classes. State schools, which are socially segregated because of catchment areas, could be incentivised to have fairer admission schemes—lotteries or banding, for instance.

The left has long trumpeted that an ideal welfare system is one with universal contribution (through taxpaying) and receipt (through benefits). But this is not not affordable, efficient or even necessary. The right, led by Stephen Crabb, can take a better approach. Contribution and community should be central to his new conservative agenda on welfare reform.