Political will not economic fate shapes life chances

Report on the new Fabian Society pamphlet looking at “The Solidarity Society” - political argument, as much as the economy, shape people’s futures.

We are constantly told that we live in a new era of tough choices. The question we face is not if to cut, but what to cut, and by how much.

For the Left, it is all about the smarter use of the resources we have; for the Right, a pared-down state is also a less intrusive and morally superior form of government.

In both cases, it seems, targeting is the name of the game: fewer resources directed only at the neediest and most unfortunate members of society. Yet we should not forget that we have a choice about the level of targeting and ‘efficiency’ we pursue as a society.

A generous and inclusive welfare state relies on popular support; a deep sense of legitimacy that only comes with welfare institutions that do not divide citizens into the ‘needy’ and the ‘independent’.

This is the central lesson of our new Fabian Society report, “The Solidarity Society; Why we can afford to end poverty, and how to do it with public support” – more here.

Across a range of core services, steep targeting over the last 100 years of welfare policy has created a pervasive sense of stigma that undermines the social status of claimants, and very often deters them from claiming at all.

Today, for example, nearly one third of all pensioners entitled to Pension Credit do not claim the benefit – making a mockery of the assertion that targeting is necessarily the most efficient way to reach those most in need.

At the same time, the perception that the need is a real one is likely to be eroded by this kind of targeting. The fewer people a service is targeted at, the likelier that the recipients are to be thought undeserving, and that the level of benefits is too generous.

A startling graph – on the cover of “The Solidarity Society” – illustrates this phenomenon with another key example: as unemployment benefits have continued to fall in value since the early 1980s, the public conviction that they are too generous has risen at a corresponding rate.

Why? A large part of the answer lies in the fact that Margaret Thatcher broke the earnings link with contributory benefits, finally putting the last nail in the coffin of Beveridge’s vision of an insurance based income replacement system.

From the very start of Beveridge settlement, National Insurance contributions were always set too low to offer a meaningful insurance pay out to the middle classes; and so unemployment benefit soon came to be seen as a residual safety net only for those in poverty – for people not like ‘us’.

When this separation happens, it is all too easy to see the welfare state as an alien institution; something that we cannot afford simply because we don’t want to afford it. The Right, of course, have never wanted such a state.

That is why the language of targeting and efficiency comes so naturally to them. But we on the Left must understand that do have more choices in tough times than a received ‘common sense’ would have us believe. Smarter spending should not mean greater targeting on individuals – instead it should mean maintaining the integrity of universal welfare institutions that we know to underpin broader support for the legitimacy of a strong welfare state.

First in line here must be the universal Child Benefit, under threat from some on the Left as well as on the Right. More substantially, we need to establish National Insurance as a genuinely universal system that offers a meaningful income replacement, and thus secures the ‘buy-in’ of the middle classes – the key constituent protecting the universal Child Benefit – brings us all into the same risk-pool.

At the same time, we must dramatically increase the supply of social housing, and bring an end to the stigma that comes with it.

Of course, there is much else that can and should be done. But the key lesson remains the same: the way we structure our institutions shapes the possibilities of a progressive politics, and this shaping process is not a matter of economic fate – but of political will and argument.

Our guest writer is James Gregory, Research Fellow at the Fabian Society

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