Four facts about welfare reform

2:17 am - December 4th 2008

by Don Paskini    

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Progress online features an incredibly smug article by David Coats about how the ‘Government must not step back from welfare reform’.

I met David Coats last year at a seminar which discussed this very subject. And I remember him explaining to me that, of course, the whole basis for the welfare reform proposals was that the number of jobs available would continue to increase, and that the model didn’t work if that stopped being the case.

Funnily enough, Coats doesn’t mention that now. Instead, like James Purnell, he attempts to frame the debate in the following, superficially plausible, way: “At this time it is important to provide more support to help people get jobs, and it is only right that in exchange for more support we expect them to take greater responsibility themselves. Of course, there are some well-meaning people who oppose these difficult but necessary reforms, but they are wrong to argue for the status quo.”

If the debate just gets framed as ‘more support vs status quo’, then the measure will pass easily. But if you are supporting these welfare reform proposals because you think that people who are out of work should get some extra help in finding a job, you might be surprised to find out that you’re also supporting the following:

1. Cutting people’s benefits on the say so of a bureaucrat, with very limited right of appeal. Research by the government found this had a “negligible effect” on whether people tried to find jobs, but obviously makes life harder for children whose parents are punished in this way, and will increase child and family poverty.

2. The creation of a ‘multi-billion pound market’ in welfare services, in which companies from all over the world will be able to bid to receive government handouts of ‘up to £50,000’ per claimant who gets a job.

3. Making it much harder for small, community-based voluntary sector groups which work with the most disadvantaged people to get funding to help support them to get jobs and skills. It will be almost impossible for these groups to compete with private companies for funding to deliver welfare support services.

4. A report written in three weeks by an investment banker who boasted that before writing the report ‘I knew nothing about welfare’, and whose report claims amongst other things that the cost of housing is not a barrier to people finding a job.

Rather than simply opposing the welfare reform bill when it was announced in the Queen’s Speech yesterday, I hope lefties will support putting amendments to it which would make it more effective at doing what we all agree is needed – providing support for people to get jobs and allowing community-based voluntary groups to help deliver services and get funding to help the people in their communities.

After James Purnell has spent a few months giving speeches about how the status quo is not an option and how we need to be more radical in removing the barriers which stop people getting jobs, let’s see how he votes on, say, an amendment to make childcare free and more widely available for working parents, or to reduce the cost of transport or housing, or to make work pay with a ‘living wage’ for all workers, or to tackle discrimination amongst employers against disabled people, or any of the other sensible and moderate ideas which would remove some of the barriers to work which people experience.

There are better and more popular ways of reforming the welfare state then handing over billions of pounds of taxpayers’ money to firms which are dependent on corporate welfare in the form of government handouts while at the same time taking from the very poorest in our society. I do think it is possible to get a majority of Labour MPs to understand this over the next few weeks and months and to persuade them to support some genuinely radical welfare reform, rather than playing ‘follow the banker’ and implementing David “I knew nothing about welfare” Freud’s proposals.

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Story Filed Under: Blog ,Economy ,Labour party ,Westminster

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Reader comments

I agree, though probably from a very different perspective. Welfare needs reforming but corporate welfare isn’t the solution. I would suggest lowering taxes for low income workers so that people actually feel a real benefit when moving into work.

2. dreamingspire

Hearing the banker and other reports about his report yesterday, I had two immediate thoughts. One was: “Will they make use of the voluntary sector?”, and, Don, you feature that very well. The other was “How different things are from 20 years ago” – that is because the Trades Unions did not yesterday immediately point out (to be polite about them) that having people who are on benefits doing community work takes away “real jobs” from other people. But yesterday afternoon, after coming out of a meeting with civil servants (on a topic completely different from this one), I mused on how much our society has changed as we move through the post-industrial wilderness, wondering where we are going next. I also had a belief reinforced: much of our public sector has become emasculated, or alternatively is like the rabbit caught in the headlights of the service provider who is delivering (or not) privatised services. The civil servants that an associate and I met appeared to know nothing of the economics of service provision, or of the legal relationships with and between various players in the market that we were discussing in that meeting yesterday. As for being able to manage the partnerships that they should (as a result of govt policy) have with the service providers, they were nowhere.
But it is not all gloom and doom, for we are seeing that, a bit at a time, the elected govt is finding the good bits of the unelected government and helping them to forge ahead, and is also focussing here and there on fairness in the delivery of services.
Where are we going next? This mid-Atlantic island is shifting back towards the European model. That model needs competence in the executive branch of govt, from top to bottom. The good that is there needs to be harnessed, with the dinosaurs quietly retired.

3. Alisdair Cameron

Spot on Don. With this Purnell has shown what a bloody (Thatcherite) disgrace he is. I’ve penned screeds whenever this topic appears on CiF, as I work in mental health and can see the impacts already of simply the changes in tone towards my clients who are scrimping along on benefits to which they are indubitably entitled (very sever and enduring MH problems of the most debilitating types). The measures will simply make things infinitely worse.

4. dreamingspire

Alisdair, what you say is the reason why the voluntary sector must be involved. Earlier this year I was invited to the formal opening of a garden created by volunteers with the aid of a BBC Breathing Places grant (National Lottery money). Some of the volunteers were organisers (at least one with technical qualifications relevant to the task), and others were people with mental health problems (living in sheltered accommodation supported by the local Council), working on the garden as they worked their way through their problems.
The new programme must not be a reign of terror – I’m certain that we can avoid that, and that the current team at the top doesn’t want that.

5. Mike Killingworth

Well, as far as single mothers are concerned, presumably a significant proportion of them (perhaps up to a quarter) could be trained as childminders, for which they presumably have the necessary skills base.

What continues to appal me is that this Government has swallowed whole the line that unless something is done for profit, it can’t be done efficiently. Let’s be clear that either supporting or opposing this proposition is a matter of ideology: empirical investigation cannot answer the question. Sure, loads of examples can be given in both directions, but the reality is that a government contractor is spending taxes every bit as much as a state official does. It is simply a piece of accounting ideology that says that a private sector optician creates wealth, but a GP employed by the NHS doesn’t.

I agree with the strategy Don suggests, and would like to propose an amendment of my own to address this question:

– that the implementation of the reforms be subject to Parliamentary approval of a framework document detailing the principles on which contracts will be awarded relatively to private companies and not-for-profit organisations, and creating an effective regulatory régime, to cover inter alia

(i) all tenders to show why their business model is appropriate to the service they propose to deliver;
(ii) local authorities to produce an analysis of the job market in their area to include a profile of the kind of job-skeers are looking for in terms of their age, health (both physical and mental), family responsibilities, work history and educational attainment;*
(ii) rigorous compliance with all equal-opportunities legislation.

*The obvious point being that even where jobs exist, employers want childless well-educated single 20-somethings to do them, a profile which hardly any claimants meet.

6. dreamingspire

Mike K, interesting that you come up with the framework agreement concept, for I only yesterday I heard that same concept mentioned in a different public sector context. (It seems to have replaced ‘partnership agreement’, a term being used 10 years ago.) But I’m convinced that many of central govt’s service oriented depts just do not have the ability to put those agreements in place (certainly not in the case of the dept that I was talking to yesterday).

(Sorry: not trying to monopolise this comment list…)

Article: “The creation of a ‘multi-billion pound market’ in welfare services, in which companies from all over the world will be able to bid to receive government handouts of ‘up to £50,000? per claimant who gets a job.”

I *KNEW* there had to be some stuff like this hidden away behind the headline-grabbing “we’re so tough on scrounger scum” posturing. If they’d proposed this market mechanism on its’ own (guaranteed, like all other fake markets they’ve created, to be hideously inefficient but highly lucrative for all involved), they would never have got it past the backbenchers or public.

Instead, they hide it in a pile of draconian “anti-scrounger” measures – guaranteed to enrage their left wing opponents, and ensuring they concentrate on attacking the bill on those issues. Meanwhile they can quietly slip through yet another method of hosing taxpayers’ money into the pockets of their friends and ex-colleagues in the various PFI related industries.

8. Alisdair Cameron

I agree re the vol/com sector (have worked in it, am on some boards, do vol work myself etc), dreamingspire, but am slightly chary of the whole poisoned chalice scenario: vol sector groups being asked to do the dirty work as directed by Govt, leveraging via contracts, rather than doing things in truer accordance with their principles.
There’s also the slightly vexed issue of the corporatisation of some of the larger vol/com providers. There’s a difference between being business-like/efficient (good) and aping the bullshit managerialisim of big business (bad).

Mike Killingworth: “What continues to appal me is that this Government has swallowed whole the line that unless something is done for profit, it can’t be done efficiently.”

I agree – although I do suspect that other factors come into it (personal loyalties, the off-balance sheet issue etc)

The problem is that the mechanism that creates efficiencies in the private sector is an open, flexible and competitive market. This does not apply in any of these fake markets where the only customer is government, and where contracting procedures are anything but simple.

The key method of increasing profit in an open market (in theory) is to provide a better product at a lower cost – i.e. efficiency.

In a PFI contract, the best method of increasing profit – something corporations are obliged to do by law – is to hire a lot of lawyers and use them to direct as much taxpayers money down your throat as possible, pleading poverty and rising costs at every opportunity, while simultaneously reducing quality and reliability on any factor not measured by an actively and legally enforced ‘performance indicator’. It’s actually the opposite of efficiency – artificially inflating prices while providing a worse product.

It just doesn’t work, as the effect on NHS cleaning and a thousand other public services should have been telling them since day one.

10. Mike Killingworth

[7][9] Many thanks. Yes, the problem is that the customer is the government, not the (hopefully soon to be ex-) claimant.

The patronage issue is I think very serious. A minimum performance standard, and another possible subject for a constructive amendment in Committee, would be to prohibit any contractor, or any director or senior manager thereof, from making any donation to a political party during the period of the contract. In fact this should apply generally to government contractors, can there be an argument against it?

The £50,000 thing fascinates me. Incapacity benefit is worth £4,400 a year so someone would have to stay off benefits for over 11 years so there’s bugger all chance of the State saving any money on anyone over 55 for a start!

Wouldn’t it be simpler and quicker to pay local Councils £10,000 a year for five years for every claimant they hire?

Jungle, I completely agree with you about your take on:

“The creation of a ‘multi-billion pound market’ in welfare services, in which companies from all over the world will be able to bid to receive government handouts of ‘up to £50,000? per claimant who gets a job.”

But if you have half the population thinking that the other half is taking them for a ride and living of their hard work then you will get the above scenario of private sector trying to get in there first.

However I think the real reason that the government feels the need to throw as much money as necessary to get people off of benefits into work – is that they don’t know how to do it and haven’t realised that there is no way to actually do it. People work from need – if there isn’t a need then there won’t be work.

Why don’t we just get rid of the benefits and those government and private workers involved with benefits and use that money to find greener energy sources and give to charity that can help the really destitute.

Purnell really is insufferable, I agree.

I do think it is possible to get a majority of Labour MPs to understand this over the next few weeks and months and to persuade them to support some genuinely radical welfare reform….

the question is – how do we do this?

There are better and more popular ways of reforming the welfare state then…

What are they, and where are the links to articles describing them?

14. dreamingspire

First, didn’t Frank Field put forward serious ideas for welfare reform? Can someone reprise them here, please?
This discussion is rubbing up against common themes that I have for some years been seeing across numerous areas of govt and society.
Public administration lacks competence to work with the changes in society, yet determines it necessary to impose common methods at the national level (which on many topics is not the principle that the senior civil servants were taught). From 6 years ago, I was seeing proposals to improve the competence of the public sector turned down – but no longer (not since mid 2007). The problem is that, like a massive cargo ship, it takes a long time to change course – but govt is not a monolith, so individual parts change course at different times (and some legislation is better then other legislation).
And, over that same 6 year period and maybe longer, we have dramatically lost confidence in govt, both nationally and in some geographical areas locally – yet (as Burning Our Money chronicles, they grab and then spend vast amounts of our money).
Now I see central and local govt officers scared to get out and challenge so many others in service delivery to do better. Thus the financial incentives continue to be offered, but with contractual terms continuing to be too minimal, so that service delivery is not what we need. I’m likely to say to public servants: You are the government, so govern – and doing that includes persuasion from a position of knowledge and conviction.

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  1. sunny hundal

    @Disraelismears because it didn't work. If you're for evidence policy, you'd heed it too /

  2. Jo C

    Four facts about welfare reform | Liberal Conspiracy via @libcon
    >an old article but has some interesting points

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