Twenty-first Century Welfare
The Department for Work and Pensions has finally published a consultation document on Twenty-First Century Welfare. For a couple of weeks there have been constant will they-won’t they rumours that the Department was about to publish a White Paper on reforms to the benefits and Tax Credits system. In the end, the document that has emerged looks far more like a Green Paper, with very little detail, and a series of questions about the strategic direction for policy.
If you’ve already read the Centre for Social Justice’s Dynamic Benefits and the Coalition’s State of the Nation, then very little in today’s publication will be new to you. It seems very likely that there was a plan for a White Paper, but that it fell victim to the strains between Iain Duncan Smith and George Osborne that I discussed a couple of weeks ago.
The reasons for this tension are easily set out:
One, the government wants to simplify the benefits and tax credits system and to make moving into paid work more attractive than staying on benefits. It is possible to achieve this, but it costs a lot (pre-election, the CSJ estimated £3.6 billion – almost certainly an under-estimate).
Two, as we know, the Coalition has prioritised the deficit for resources, so the money will have to be found from somewhere else in the DWP budget. It is still possible to meet Mr. Duncan-Smith’s objectives – one way would be to produce a simpler system that paid a lot less money to people who were out of work.
Three, the Coalition has promised, “we will introduce arrangements that will protect those on low incomes from the effect of public sector pay constraint and other spending constraints.”
Four, the only source of money that might (just) be enough to pay for IDS’s ambitions without hurting the poorest is those benefits that are not means-tested – Child Benefit, Disability Living Allowance and National Insurance benefits.
Five, but that would mean taking benefits from middle-income families that are already feeling the pinch and would face real hardship. Vital media friends, like the Daily Mail, would almost certainly take up their cause and there would be a tremendous political price to pay.
Six, even if the Department can put together the cuts to pay for radical reform, the Treasury may well decide that it would rather use the savings to reduce the suffering in other Departments. George Osborne has already said that more cuts in benefits mean fewer cuts elsewhere, and Mr. Duncan Smith will find that every other member of the Cabinet is the Treasury’s ally on this.
So, my best bet is that the reason we have a document that is too green to be a White Paper is that the argument within government hasn’t yet been settled.
But that is probably for the best. Consulting civic society on the principles and the strategy for the future direction of welfare reform should have been the first step in any case. We’ll be blogging over the next few weeks about the issues raised by the consultation, including the future of universal and National Insurance benefits and whether or not a localised benefit system would be a good idea.
But what I can say right now is that, in his tussle with the Treasury, I’m rather on Iain Duncan Smith’s side. There’s a nasty strain of social conservatism that mars the Centre for Social Justice’s approach (I’m thinking, in particular, about their implications for working women and lone parents); but I confess to liking the notion of an integrated tax credit and benefit, with a single deduction rate, for all working age claimants.
The key question is the level at which the benefit is paid – and this was also my view when the last government began the debate on a single working age benefit. UK benefits are paid at such disgracefully low rates that increasing them (or at least stopping them deteriorating further) is far more important to fighting poverty than any question about structure.
If the Secretary of State can pull off the trick of increasing support for people in low paid work without harming the benefits of anyone else he will deserve everyone’s thanks.
But I’ve got to say that the odds are against this.