Something for nothing or nothing for something?
Two weeks ago the TUC launched the pamphlet Making a Contribution: social security for the future, introducing the concept of the “nothing for something” welfare state and arguing that we should return to a system which is based more strongly on the contributory principle.
Many readers of this blog may be surprised to hear that Policy Exchange completely agrees: the welfare system must be made to better reflect contribution.
Our report, No rights without responsibility: rebalancing the welfare state, showed that there is still widespread public support for the contributory principle in welfare. We highlighted evidence from a poll on the attitudes of the public towards the welfare state and fairness that showed that 51% of people thought that benefits should only be paid to those who had contributed in tax and NICs. That is a startling result. Over half of those questioned thought that no benefits at all should be paid out unless a contribution had been made.
However, despite this support for the contributory principle, successive Governments have undermined the principle to a situation where there is barely a distinction between those who have contributed all of their lives and those who have not. This means that those who have paid in, expecting to see the rewards of their contributions should they fall on hard times, do not get back what they expected.
In this respect the pamphlet is right to say that a “nothing for something” situation has arisen. However, No rights without responsibility also outlined that a parallel situation of “something for nothing” has also arisen. This means that those who have not paid in receive much the same benefits as those who have and that the system does not do enough to ensure that all jobseekers are fulfilling their obligations to actively seek work: an obligation that the vast majority of jobseekers take very seriously.
These joint problems of “something for nothing” and “nothing for something” mean that widespread disillusionment with the welfare state has grown. This is unsurprising: those in work on low incomes and those on benefits struggling to make ends meet and doing all they can to find work now see that their previous contributions count for nothing. Others who have not contributed and do not try, can enjoy a better lifestyle than they do. These are the reasons that attitudes towards welfare and benefit recipients have hardened.
A return to the contributory principle can tackle these issues. By distinguishing benefit levels and conditionality requirements between those who have contributed and those who have not, the system can both recognise and encourage contribution. This would reward personal responsibility as well as building a strong sense of reciprocity into the welfare system.
The TUC pamphlet contributes to a growing discussion of how this could operate and Policy Exchange will publish our own thoughts later this year. Until then, continuing this debate around the return of the contributory principle will be key to ensuring that welfare system protects the vulnerable while incentivising and rewarding the right behaviour.