From the TUC

Contributory benefits and social security policy

02 May 2012, by in Society & Welfare

Could a revived National Insurance system help win back support for the welfare state and address key economic and social changes? That is the question addressed in a forthcoming Touchstone pamphlet, Making a Contribution by Kate Bell and Declan Gaffney; Kate and Declan will be presenting their research in a seminar on Friday, with responses by Matthew Oakley of Policy Exchange and yours truly.

In a recent opinion poll, 74% of British people agreed that “the government pays out too much in benefits; welfare levels overall should be reduced.” And yet as recently as 1996, 52% said that benefit levels were “too low and cause hardship.”

What has happened? The last government’s emphasis on the commitment to fighting fraud and not tolerating work avoiders may or may not have worked at neutralising welfare as a reason why people didn’t vote Labour, but it certainly didn’t help maintain support for benefits. The British Social Attitudes Survey has been asking people whether they think benefits are too low or too high for nearly thirty years and there’s a real difference between the results before and after 1997:

Benefits too low

Benefits too high

Average 1983 – 97

45.5%

30.5%

Average 1997 – 2010

26.0%

48.5%

Of course, the stance of the last government isn’t the only relevant factor, there’s also been an astonishingly vituperative press. We’ve had that before (I’m old enough to remember headlines in the Sun about ‘scroungers’ in the 1970s) but what is new is the TV joining in. Many people assume that broadcast media are less biased and more likely to be truthful than the newspapers so the 30 minutes hates directed at unemployed and disabled people are bound to have taken their toll. Just today, we learn from the MS Society that 24% of non-disabled people think disabled people “often exaggerate the extent of their physical limitations” and last year Scope reported that two-thirds of disabled people said they had experienced aggression, hostility and name-calling, with 47% saying this had got worse over the previous 12 months.

How can we turn this round? The ‘othering’ of people on benefits would not have developed such momentum if it hadn’t reflected the reality of the changing welfare state. Over the last 30 years, the benefits system has become more and more means-tested, with the result that there is very little in common between the people who receive benefits and the people who pay for them.

When people think about the taxes they pay that fund the welfare state and the people who rely on it their thoughts will develop on very different lines according to whether they think of this transfer as simply money out of their pocket or as an insurance policy they may need to use themselves one day. A generation of reforms has chipped away at the notion that social security is there for everyone – thirty years ago, most workers paid 6½% of their earnings in Contributions. In return, they qualified for benefits that could include an earnings-related supplement and extra payments for dependent children and adults, as well as access to a system of reduced benefits for workers with an incomplete Contributions record.

All these enhancements have now gone and the rules on who qualifies for NI benefits have got tougher and tougher. During the recession, many people who needed benefits for the first time found that they did not qualify or that the benefits were shockingly low. Workers who had thought their NI Contributions (now nearly double, at 12 per cent) were paying for an insurance policy they might use one day were utterly disillusioned.

As Kate and Declan argue, the claims that we have a “something for nothing” welfare state are precisely wrong – part of the reason for the crisis in support for social security is the rise of the “nothing for something” system. A strategy for reviving support for decent benefits must tackle this. Workers will support a generous welfare state – but part of the deal must be a promise of security for all.

4 Responses to Contributory benefits and social security policy

  1. John
    May 3rd 2012, 1:55 am

    Thankyou for this good article. Some immediate questions come to my mind:
    • Do we know for sure that everything we pay as NI goes into the Benefits System or like with our other taxes does the taxed money go at any time to where it is needed? Invisible transfers e.g. Car Road Tax!
    • What happened with rescinding Child Benefits for those ‘’well off ‘’? In other words, Child Benefits to them can no longer be justified? Has this changed yet?
    • Finally how do uk benefits compare with other countries in Northern Europe & Scandinavia? If there is a huge difference in there favour, then why?
    I hope that the seminar goes well on Friday.

  2. Could a new national insurance system protect the welfare state? | Liberal Conspiracy
    May 3rd 2012, 10:58 am

    [...] An extended version of this post is here [...]

  3. LIVE webinar – Making a Contribution: Social security for the future | ToUChstone blog: A public policy blog from the TUC
    May 4th 2012, 2:55 pm

    [...] Contributory benefits and social security policy Related posts (automatically generated): [...]

  4. Something for nothing or nothing for something? | ToUChstone blog: A public policy blog from the TUC
    May 25th 2012, 11:35 am

    [...] Post from Matt Oakley of Policy Exchange – see also the contributions by Richard Exell and Declan Gaffney and Kate [...]

TUC