Welfare Reform & Austerity in context

Welfare Reform & Austerity in context Adrian Sinfield University of Edinburgh Poverty and Social Justice Austerity and welfare reform; the implications for social work and society SASW Highland Region Seminar, Inverness, 2 September 2014

In this talk I want to Set the changes of ‘welfare reform’, present and coming,over time and in context; Indicate why I see priorities and needs differently from the current UK government; And discuss what is and what might be done. 'In social science there is no neutral act’ ZsuzsaFerge, A Society in the Making, 1979. So I need to set out my own biases coming into policy debates in the early 1960s. The promises of Seebohm and Kilbrandon reforms, the dream of the universal Fifth Social Service – but never a golden age for social work.

Universal Credit: Welfare that worksImpact of new Welfare Reform Act - now coming ‘to radically simplify the system to make work pay and combat worklessness & poverty’. Merge 6 main means-tested benefits into one - Income Support, income-based Jobseeker’s Allowance & Employment & Support Allowance, Housing Benefit, Child & Working Tax Credits. Single taper withdrawal at 65p per £1 and other tidying-up. Will reduce poverty, but it is predicted to rise (IFS 2013 and 2014). Why?

Main differences with Universal Credit As UC claimants move in and out of work, support can continue adjusting to household income. Most UC claimants still paid UC when they start a new job or increase part-time hours. Most apply online and manage their claim through an online account. One monthly household payment into a bank account ‘just as a monthly salary’. Housing costs paid as part this. Not paid direct to landlord.

FROM ‘UNEMPLOYED’ TO ‘WORKLESS’ ‘Our goal is a welfare state that is a way out of worklessness’, James Purnell, Labour Sec. State. Major shift under Labour to concern with ‘people of working age’ - from ‘unemployed’ to ‘workless’, now including also ‘economically inactive’. Some 1.1m JSA unemployed; 2.5m on disability benefits; 0.6m lone parents. Coalition continues vigorously. This has broken traditional deserving/undeserving divide. Much more means-testing with increasing conditionality [sanctions doubling]. A very significant shift that has special implications for those suffering some disability and their families.

‘The future is not what it used to be’Paul Valery, 1871-1945. ‘The Plan for Social Security is to abolish want by ensuring that every citizen willing to serve according to his powers has at all times an income sufficient to meet his responsibilities’ … ‘Abolition of want just before this war was easily within the economic resources of the community; want was a needless scandal due to not taking the trouble to prevent it’ (Beveridge report, 1942, paras 444 & 445). Despite faults, significant changes - but insecure.

Since 1979‘social security’ the problem ‘Public expenditure is at the heart of Britain’s economic difficulties.’ First sentence of first planning statement of the 1979 Conservative government - now central to Coalition strategy. In the same paragraph ‘social spending’ the problem, not the solution - blame-shifting. Resources, it has been constantly argued, must be targeted on ‘those in greatest need’ as opposed to the ‘indiscriminate handing-out of benefits’ that ‘builds up pools of resentment among taxpayers who are footing the bill’.

‘We the people’ and ‘them the poor’ Political powers have placed greater reliance on the market, increasingly hostile to public spending and public service. ‘Reduce state and taxes’. Massive surge in inequality in 1980s widened the gaps up the ladder; increases in poverty, deprivation and exclusion. Political re-construction of two worlds. Destruction of collective solidarity and universalism: return to ‘deserving’ and ‘undeserving’ & drive to privatise publicwelfare state. Despite some important changes since, dominant power strengthened, not significantly challenged.

‘Welfare reform’ already – only on way to UC Both adequacy & simplicity neglected: - “Bedroom tax”– but now Scottish protection. - Benefit cap at median income - £26,000. - Council tax benefit devolved & Scgov removed cuts. - Social Fund devolved, but Sc Welfare Fund stronger. • Problems of Work Capability Assessments. Not just ATOS - sacked or retired? • Sanctions doubled & longer penalties. • Extra cap on total of most benefit spending. - UC depends on fast, accurate DWP & HMRC reformed computer systems - with online applications too … Way behind schedule. - Other cuts expected - how will poverty be reduced?

More, wider changes in ‘welfare reform’, greatly reducing social security for ‘working age’ Contributory ESA, once unlimited, ends after 1 year. Contrib. UB/JSA once to 1/2+ of unemployed, now -1/5. Yet NI contribution rate up from 6.5% to 12%. Personal Independence Payment (PIP) cuts 20% Disability Living Allowance spending to those of working age. ALL within context of £22bn public spending cuts in benefits & services, + more cuts to come. Make work pay (MWP): create new culture to ensure people recognise this & their responsibilities. ‘Active’, not ‘passive’, so tighter ‘conditionality’ & tougher sanctions - doubled.

Only start of spending cuts Cuts of 1980s never fully restored. ‘Welfare’ not seen as a deserving cause, but even NHS restricted. 2010 budget cuts only started – much so far due to new, lower indexing, then freezingor limiting many benefits. Much more, already announced, to come plus others forecast. How far can a Scottish government mitigate given available resources? ‘In a situation of limited resources, quality of service comes into conflict with quantity of service’, Richard Titmuss, 1951. How should we put that today? Services for ‘the poor’ become poor services.

Already nearly 1 in 5 in poverty - & rising One million people in Scotland in poverty in 2012-13 by most commonly used definition (60% of median household disposable income adjusted for household size & afterhousing costs). Over 1 child in 5 (22%) in poverty. Where someone is disabled: 1 child in 3 (33%).Without paid work: just under 2 ch.in 3 (63%). But ‘poverty is about more than just money’. Yes, so is wealth – very much more, but we still need to measure it by resources. In a more market-dominated society, access to income vital.

Future does not look better(projected child poverty is the red line) • 210 000 (21%) children living in poverty (2010/11after housing costs – 17% or 170 000 before housing costs) • some children at particular risk • families affected by disability • one parent families • families without paid work • affects families across Scotland, but concentration and nature varies • ECP child poverty map of Scotland www.endchildpoverty.org.uk

Increase in material deprivation 1 in 3 with ‘an enforced lack of socially perceived necessities’ - only 1 in 7 in 1983 (GB - Poverty & Social Exclusion, 2012). Despite economy doubling, 1 in 6 of the employed. Note standards tightened. For the first time, ‘being able to afford to give presents to family and friends once a year’; ‘being able to spend a small amount of money on yourself’; ‘having a one week holiday away from home’ no longer seen as necessary by half the sample. Marked increase in insecurity, greater service exclusion among the poorer espec in rural areas.

Impact of poverty on child health Risk of Accidental Injury Chronic Ill Health as Toddlers Exposure to risk factors (housing, poor diet) Lower Birth Weight Mental distress and ill-health Lower life expectancy

But we are told that‘Universal Credit is about understanding that people who have been out of work all their lives & have never seen a family or even a community member in work have to see the financial benefits from taking up employment’ (Iain Duncan-Smith, 2011) – where is this? Rebutted by Tracy Shildrick et al (2012) Are‘Cultures of Worklessness’ passed down the Generations?, JRF. They asked, advertised, broadcast & interviewed, but no ‘three generations never worked’. Hard lessons from their research for us all. Their Poverty and Insecurity on the low-pay no-pay poverty cycle shows the impact of churning in and out of poorly-paid poor jobs on workers and families.

‘Let the labour market work’ policies neglect demand-side Why do they ‘rest’, ‘languish on benefits’? Higher long-term unemployment due to lower economic demand, NOTbehaviouralfailings of those out of work and their ‘welfare dependency’. Steady pattern over 55 years, David Webster, 2005, confirmed by comparative, small-area & evaluation analyses. So faith in free labour market challenged by structural evidence. Continuing lack of good data on ‘churning’ and poor quality jobs helps to conceal problems.

DECENT ‘work first’ ‘Work the best route out of poverty’- but two- thirds children in poverty have a parent in work. ‘Poor work is the big story - more‘churning’& ‘zero-hours’. Low pay a major cause of poverty: most back to wages 28% lower. Min Wage nos up 30% in 5 yrs. ‘Decent jobs…fair wages, of such a kind, and so located that the unemployed can reasonably be expected to take them’ (Beveridge, 1944). Importance of work reward, conditions and support available for preventing poverty - training and progression. Cannot leave it to the market.

Wider context neglected but influential ‘The significant contribution of low earnings to high levels of child poverty in the UK … raises some fundamental questions. ‘Due largely to the gender pay gap and to undervaluing service sector work, gender equity links to child poverty – for example, reduce lone parent job exit to average & almost meet 70% employment target’ (Harker to DWP, 2006). Too many paid less than they earn, and too many paid much more than they earn. Bonuses for top FTSE 100 bosses only£4.3m now. Average f.t. worker £26,500.

Dominant market discourse closes off other policies stigmatising & shaming Coalition analyses of ‘Broken Britain’ and‘welfare dependency’lead away from improving benefit take-up, adequacy and ending poverty - instead, arguebenefits too high and costly, weakening work incentives, ‘unfair to taxpayers’. Easier to cut benefits of those once stigmatised & demonised - ‘povertyism’ needs challenge as any other –ism. ‘We the people’, the taxpayers, the givers, versus ‘them the poor’, the takers, but … We are all taxpayers – so how much actual redistribution through taxing?

‘Increase fairness between recipients & taxpayers’Third Principle of 21st Century Welfare - BUTAll UK Taxes % Gross Income, 2012-13

‘The art of taxation … consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing’(Jean Baptiste Colbert, Finance Minister to Louis XIV of France, 1665-1683). No Scandinavian welfare possible with American taxes - but we don’t even collect all taxes due. Avoidance, evasion and ‘avoision’ galore supported by tax havens through & to companies in present and past British colonies (Richard Murphy, Tax Justice Network). There are two sides to redistribution– focus on only one weakens support for the universal welfare state, as do the benefits from its alternatives.

Other ‘welfare states’hiddenbut undermining The occupational ‘welfare state’: sick pay, canteens, pithead baths – also company cars, private health, mortgage assistance, company yachts. Helps those in work, espec. the better-paid, higher-status, securer white-collar. Can add 20, 30 % or more to top pay. Must not be ignored in debates on welfare - all the more because much company welfare subsidised by the ‘tax welfare state’. So they get more but contribute less in taxes.

The tax ‘welfare state’ Tax reliefs for company pensions, tax exemptions or limited taxes for many forms of company welfare. Much more valuable to those with higher income at greater risk of higher income tax. Some top-paid receive £25,000 + taxfree to buy financial advice to ‘avoid’ even more tax. All pension tax reliefs & subsidies add to 2% GDP. Top tenth of top 1% of taxpayers has 36 times as much income as the average, but gains 86 times as much from tax reliefs (IFS, 2008). Those without “fringe benefits” pay more tax to maintain public welfare or face cuts hitting them hardest. So ‘The Welfare State is only a way of redistributing some income without interfering with the causes of its maldistribution’ (G. D. H. Cole, 1955).

The best-off 1 per cent have 15 % of all income before tax – more than cost of NHS. Even after tax 10%. More than any other top 1% in W. Europe. Amid great recession their share rose: the rest of us lost. (Danny Dorling, Inequality and the 1%, September 25, 2014). ‘Above all, the rich feel much less need than their predecessors to account for their wealth, whether to society, to governments or to God. Their attitudes and values are not seriously challenged by anyone. The respect now shown for wealth and money-making has been the most fundamental change in Britain over four decades’ Anthony Sampson, Who Runs this Place? The Anatomy of Britain in the 21st Century, 2004

PERCENTAGE CHANGE 1970-2010 (a) average earnings (b) NI Unemployment Benefit/Jobseeker’s Allowance (a) (b) down 50% 1970 2010 Note: only end points plotted

(c) up 1,000% PERCENTAGE CHANGE 1970 - 2010 (a) average earnings of (b) NI Unemployment Benefit/ Jobseeker’s Allowance (c) FTSE 100 CEO remuneration Note: only end points plotted (a) 1970 (b) down 50%

‘If the rest of the country knew … As investment bankers decided on bonuses for their team in the mid-1990s, one said: ‘If the rest of the country knew what we were being paid, there would be tumbrels in the street and heads carried round on pikes’ - David (now Lord) Freud, Freud in the City, 2008, p. 307 - Labour DWP adviser, then ennobled; now Coalition Welfare Reform Minister. UK top bankers ‘total remuneration’ up 35 %, from £1.4m to £2m in one year, Nov. 2013 - despite all the ‘never agains’ after the credit crunch. Bonus pot now back to pre-crash levels.

How much inequality in wealth ? Greatly underestimated - in 2013 people thought the top 20% of the population owned 39% of wealth and the bottom 20% owned 10%. In fact far more unequal - the top 20% own 62%: the bottom 20% has less than 1%. Five richest UK families have more than 12 million poorest (bottom 20%). Wealthy elite’s income growing four times faster than others over 2 decades (Oxfam, March 2014). Less taxing of wealth than most countries increases problems. 2/5 estates £1m+ pay no Inheritance Tax - yet IHT taxfree band lifted again.

Less poverty than US, but much more than Norway, Sweden and Denmark - why? ‘Some affluent Western democracies maintain substantial poverty and others are more egalitarian and accomplish low levels of poverty’ - mainly due to ‘the generosity of the welfare state’ (Brady, 2009). ‘In a society where unemployment is accepted, great material and social gaps develop, resulting in the mutual isolation and alienation of different groups. Any social order not based on full employment must imply a restriction of living conditions and a squandering of human resources’ (Swedish Royal Commission on Long-term Employment, 1974.)

Not more growth vs more equality ‘Excessive inequality is corrosive to growth; it is corrosive to society: the economics profession and the policy community have downplayed inequality for too long. Now all of us - including the IMF - have a better understanding that a more equal distribution of income allows for more economic stability, more sustained economic growth, and healthier societies with stronger bonds of cohesion and trust. The research reaffirms this finding.’ Christine Lagarde, IMF, 2013 – IMF long one of the ‘market first’leaders. Redistribution good & it works.

More inequality means more poverty & social exclusion ‘What thoughtful rich people call the problem of poverty, thoughtful poor people call, with equal justice, the problem of riches’ Richard Tawney, 1913. ‘Povertyis a crime, and the only question is, who is the criminal? Not, I suggest, the poor man, but the society which permits needless poverty’, Beveridge, 1946: he also noted the high costs of ‘the evil of inequality’, 1944. ‘Inequality has a dynamic of its own’, The Irresponsible Society (Richard Titmuss,1959). ‘Upstreampolicies are needed to tackle extent of ‘inequality [that] lies at the heart of the modern free market’, Philip Augar, ex-banker,The Greed Merchants, 2006.

Today in world’s sixth richest country we need the welfare state as much as ever to support mutual interdependence, to protect us all against uncertain costs of modern society, eg ill health, accidents, disabilities, unemployment, retirement. Lack of earnings should not mean poverty. Effective and generous welfare states to which all contribute prevents it - a sadly and badly rejected goal with the new benefit spending cap. Value of universalism. Social security vital and very valuable stabiliser for the economy and society - when cut, destabilises.

A welfare state for us allredistributesresources and respect Independence debate opening issues up. • Tackle extent of inequalities - make income & tax visible. • Make redistribution fairer both in and out. • Keep asking whose interests benefit from high inequalities and at whose expense? • Make decent jobs with decent pay & progress. Vital to end dead-end jobs and lift benefits for those out of work – why should disability mean poverty?

What can The Social Worker do? 'Every social worker is almost certain to be also an agitator. If he or she learns social facts and believes that they are due to certain causes which are beyond the power of an individual to remove, it is impossible to rest contented with the limited amount of good that can be done by following old methods and agitation to get people to see a new point of view. 'The word "agitator" is distrustful to many: it calls up a picture of a person who is rather unbalanced, honest perhaps, but wrongheaded, possibly dishonest, troubling the waters with a view to fishing in them for his own benefits. This is mainly the point of view of the person who is on the whole contented with things as they are.’

From Clement Attlee, The Social Worker, 1920 • Promote inclusion: refuse to accept exclusive practices & disrespect, shaming benefit myths. ‘Stick your labels’ - Poverty Alliance. • No shaming means a common standard for us all, as we expect in health and education– not poor services for ‘the poor’. - Balance Fair ‘Rights and Responsibilities’ = Add rights to adequate resources and to citizens’ services & responsibilities of providers to provide. ‘The very first requirement in a hospital is that it should do the sick no harm’ Nightingale, 1859.

Build on Scottish progress in tackling ‘welfare reform’ - including - Cut of 10% to council tax benefit restored. - Protection against ‘bedroom tax’. - Scottish Welfare Fund: grants with enhanced budget of 40% - we must make sure it is spent. - Extra support to welfare rights and money advice - Scottish NHS plan to mitigate impact of welfare reform. Initiative in Highlands - 5 aims include: To ensure that NHS Highland recognises the effects Welfare Reform may have on its own staff and acts as an exemplar organisation in dealing with this. NB: bridges provider-recipient divide.

Readiness to engage at all levels Note the extent to which sustained collaboration has brought about these moves. Much else I am sure. ‘Poverty isn’t only about money.’ Of course, that makes social work even more important. All resources matter – e.g. welfare rights & advice - Highland Council Info letter Joined-up problems need joined-up solutions – you may have to be the joiner & mediator Feed up and out the experience of practice – evidence matters & you can interpret upwards (Attlee). ‘Social inclusion’ requires social justice

‘First things first’ Beveridge, 1948 ‘Beveridge with a hint of Tebbit’, Iain Duncan Smith to Daily Telegraph on ‘Universal Credit’, praising Beveridge, Voluntary Action, 1948. Last chapter, ‘First things first’, begins: The 1942 Beveridge Report ‘set out a practical programme for putting first things first. There was to be bread and health for all at all times before cake and circuses for anybody at any time, so far as this order of priority could be enforced by redistribution of money.’ William Beveridge, Voluntary Action, 1948.

The challenge for us all ‘Europe cannot be built upon unemployment and social exclusion, nor on an inadequate sense of citizenship. ‘Europe will be a Europe for all, or it will be nothing at all’ (Comité des Sages, 1996). More equal societies almost always work better for everyone - and for the poorest best of all Wilkinson & Pickett, Spirit Level, 2009 www.equalitytrust.org.uk

‘The need for impatience’ • ‘Patience is a minor form of despair, disguised as a virtue’ (KaziNazrul Islam, quoted by • AmartyaSen & Jean Dréze, 2013). • 'Every social worker is almost certain to be also an agitator’ or else acquiesces in • ‘things as they are’ (Attlee, 1920). • AND also a social investigator, mediator & interpreter, playing a vital part, not in keeping ‘them’ quiet, but promoting welfare and • sharing in developing • structural policy changes upstream.

Thank you Adrian Sinfield adrian.sinfield@ed.ac.uk

Sources I’vefound useful Poverty in Scotland 2014- excellent briefing athttp://www.cpag.org.uk/sites/default/files/CPAG-Scot-briefing-PiS2014March14.pdf Scottish Government (2014) Poverty and Inequality in Scotland: 2012/13, July. http://www.scotland.gov.uk/Publications/2014/07/9247/0 Tracy Shildrick et al (2012) Are there really families where three generations have never worked? JRFhttp://www.jrf.org.uk/publications/cultures-of-worklessness. The lies we tell ourselves, 2013 http://www.jointpublicissues.org.uk/wp-content/uploads/2013/02/Truth-And-Lies-Report-smaller.pdf

The blame game must stop, 2013http://www.church-poverty.org.uk/stigma/report/blamegamereport Poverty & Social Exclusion, 2012 – www.poverty.ac.uk Tracy Shildrick et al. Poverty and Insecurity: Life in LowPay, NoPay Britain - winner of British Academy Peter Townsend Memorial Prize 2013 Scottish Government, 2014, Financial Impacts of Welfare Reform on Disabled People http://www.scotland.gov.uk/Topics/People/welfarereform/disabledpeople Richard Wilkinson & Kate Pickett, Spirit Level, 2009 and updates, seehttp://equalitytrust.org.uk . DWP UC toolkit latest https://www.gov.uk/universal-credit-toolkit-for-partner-organisations

More than one century ago 'Four years at Oxford left me at twenty-two with no clear idea as to what I should do next. But of the things said to me by my elders in those years one thing above all stuck in my mind. ‘”…When you have … learned all that Oxford can teach you, " said Edward Caird, Master of Balliol, to me and to others, "then one thing that needs doing by some of you is to go and discover why, with so much wealth in Britain, there continues to be so much poverty and how poverty can be cured.”’ William Beveridge, Power and Influence, 1953, part of opening paragraphs on 1901. And today?

‘Great inequality is the scourge of modern societies’ The Spirit Level: Why More Equal Societies Almost Always Do Better, Richard Wilkinson & Kate Pickett - and for the poorest best of all. Examines 11 health and social problems: physical health - mental health - drug abuse education - imprisonment - obesity - social mobility - trust and community life violence - teenage births - child well-being. ‘For all eleven, outcomes are very substantially worse in more unequal societies.’ Centrality of structural factors and the importance of universal policies with ‘upstream’ aims & better prevention. Latest data at www.equalitytrust.org.uk

Welfare Reform & Austerity in context