Labour’s thinking needs to enter a new middle-groundby Andrew Harrop / January 17, 2018 / Leave a comment
When the left talks about social security it sounds like a car being driven with no middle gears. Half the time it debates little tweaks to make Conservative policies a bit less bad and save universal credit from itself. The rest of the time it dreams of total transformation and the creation of a universal basic income paid to everyone without condition. It seems that the left can be timidly incremental or radically iconoclastic—but nothing in between.
Take the 2017 Labour manifesto. The party pledged a handful of small changes to take the edge off the most extreme Conservative reforms, but it presented no major agenda of its own. (Overall, Labour promised to spend 2 per cent more on social security than the Tories.)
Since the election, it’s been a bit better, with Labour calling for the 2015 cuts to universal credit to be reversed. But most of the party’s campaigning energy has been devoted to how the new benefit system operates and how fast it is rolled out—not on its inadequate level of payment.
Meanwhile the breathless talk of universal basic income, as a solution to a hypothetical economy with much less work, is also problematic. Even researchers who are well disposed to the idea have found that a fully-fledged UBI which replaces most means-tested benefits would increase poverty. People with the lowest living standards would be no better off than they are today and many in the middle would see their taxes rise more than their income.
Labour’s thinking needs to enter a new middle-ground, that is focused on big goals but is also practical and popular. The party needs to prioritise raising living standards, increasing protection and building public support.
This was the territory addressed during a wide-ranging debate at last weekend’s Fabian Society New Year Conference, where Debbie Abrahams, the Shadow Work and Pensions Secretary, spoke alongside reformers seeking bold but practical change.
There was agreement that the first step for Labour should be to shift the time-scale of its thinking. If the party just focuses on opposition, or the first year or so in power, then its plans will be too modest. If it looks to distant decades, it will never shift from utopian ideas. To get social security right Labour needs an agenda for five or ten years.
Then the left needs to stop conceiving of the debate on social security in binary terms. It should not be a question of accepting a highly mean-tested legacy or pushing towards a universal dream. Social security should be multi-layered.
“If Labour just focuses on opposition, or the first year in power, then its plans will be too modest”
For example, there is a very good case for more generous universal entitlements for children and disabled people, regardless of household income. But Labour should also seek to resuscitate contributory benefits during working life, which were the hallmark of the Beveridge reforms but are now all but dead.
People who pay in should expect insurance from the state without a means-test when their circumstances demand—during maternity leave, unemployment, sickness, re-training. Labour should peg earned entitlements for each of these at the level of the state pension, to send a powerful signal that the welfare system is back in the game of insuring risk for all.
More generous universal and contributory benefits will also buy permission for the left to introduce more generous means-testing where it is needed. In particular, the payments made to adults without children or serious disability and those that support private rents are far below subsistence.
This is the single largest explanation for the homelessness crisis, which this winter has broken into the public consciousness. It can only be solved by raising means-tested benefits and by policing the system less tightly. Claimants need to be paid more and they need to be treated with trust and humanity when it comes to assessments and sanctions.
These are ideas for major changes over five years or more and they will require a lot of money. But the numbers add up. For almost ten years, ministers have been paying down the deficit on the backs of the working-age poor, by deliberately shrinking the percentage of GDP spent on social security. If Labour just promised to stop this annual cut, very significant amounts would become available.
After that, even more could be freed up if the left started to look at the “middle class welfare” of tax reliefs and allowances side-by-side with benefits: higher income groups receive as much from government as the poor, when the two are taken together. Cutting or just freezing tax allowances would generate billions of savings to divert into benefits.
So the left can think big on social security, without getting sucked into distant pipe dreams. Labour is close to power. It’s time to make a plan.