What should be in Labour’s welfare state review?


10:00 am - March 20th 2011

by Don Paskini    


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Labour is currently conducting a policy review of its employment, welfare and pensions policies.

There isn’t actually any official mechanism by which members, supporters or the general public can contribute to this process, but they’ve got a “wide range of experts and politicians” advising them, so I’m guessing Liberal Conspiracy’s invite to be part of the review is probably on its way. So I thought I’d put down some ideas here, and encourage anyone else who is interested in doing so to leave their own ideas in the comments or on your own blogs about what you think should be done in this area.

Affordable universal childcare

I was doing some work earlier this year helping families living in poverty to contribute to a strategy for reducing child poverty. Every single group mentioned the cost of childcare as a key barrier which keeps people out of work and in poverty even if they do work. What’s needed is a simple, universal programme which extends and modernises the welfare state to make childcare affordable for all families.

To give an idea of costs and benefits, research from Pricewaterhouse Coopers suggests that childcare subsidies which cover 80% of the costs of childcare and make places available for all 1-4 year olds would increase GDP by approximately 3.5%, increase employment by up to 1 million and reduce child poverty, at a cost of approximately £3 billion per year.

Early Action Jobs Fund

There is widespread agreement that “prevention is better than the cure” when it comes to tackling social problems. But government cuts are targeting precisely those services which prevent problems. From youth clubs which prevent anti-social behaviour to social care services for disabled or elderly people with moderate support needs – if it is a service which isn’t required by law, then it’s been cut back – despite the fact that short term savings will be outweighed by long term costs in extra crime, poor health, lower educational attainment and so on.

One of the biggest social problems comes from high levels of unemployment. There is a desperate need for people to do socially useful work in early action to prevent problems, and there are hundreds of thousands of people who want to work but can’t. So what’s needed is for employers to be able to access a fund to help them hire people to work on socially useful jobs preventing Britain’s biggest social problems – from cutting crime and anti-social behaviour to helping young people get the best start in life to supporting elderly and disabled people to be able to live with dignity.

The net cost of creating 100,000 jobs at minimum wage is approximately £400 million. One option could be to explore how the long term savings from reduced crime, better care, higher educational attainment and so on could fund this kind of early action, so that rather than “cut now, pay later”, government invests now to save later.

Dignity for those who can’t work, and a living wage for all that do

It’s all very well for politicians to give speeches about how “work is the best route out of poverty”, and universal childcare and an Early Action Jobs Fund which over time expanded to guarantee everyone the offer of a job would help to turn some of those warm words into reality. But millions of working people are still living in poverty, and people who can’t work deserve an equal right to be able to live with dignity and free from poverty.

This means a whole range of policies are needed, from extending the living wage, to work capability assessments which aren’t hopelessly inaccurate and dehumanising, increasing access to crisis loans and credit unions to help beat the loan sharks, reversing some of the most vindicative cuts to financial support for disabled people and building a lot more homes to end overcrowding and homelessness.

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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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Reader comments


1. So Much For Subtlety

“But millions of working people are still living in poverty, and people who can’t work deserve an equal right to be able to live with dignity and free from poverty.”

I know this is a foolish question here, but why? We now define poverty in relative terms. Anyone earning less than, what is it now? 60% of average income. It follows that people who do not work will always fall under this limit unless we tax the working poor until they do. That would be foolish. So how do we lift them above an ever-changing average and which groups in society do you nominate to be “poor” in their place? Because someone has to be.

As for dignity, why should this be an aim at all? What right does anyone have to it? Are you justifying those thugs who shoot people because they do not give them enough respec’ and hence infringe their right to dignity?

2. So Much For Subtlety

“One of the biggest social problems comes from high levels of unemployment. There is a desperate need for people to do socially useful work in early action to prevent problems, and there are hundreds of thousands of people who want to work but can’t. So what’s needed is for employers to be able to access a fund to help them hire people to work on socially useful jobs preventing Britain’s biggest social problems”

So basically they would have to work for the dole? Nice to see an area of agreement between us. I have often said as much.

Those all sound very good ideas. Do you have a cost-benefit for the childcare one though? It sounds a bit expensive, and I’m leery of ‘it’ll increase GDP’ as an argument, as part of that increase is a move from unpaid to paid child care, which isn’t in and of itself a good thing.

“Every single group mentioned the cost of childcare as a key barrier which keeps people out of work and in poverty even if they do work.”

So why not work to reduce the cost of childcare? Like, you know, lifting some of the more absurd regulations piled onto childcarers by the last government?

My stepdaughter quite happily did childcare when her own were small. She’s looked into going back to it now, just recently…..the costs of getting inspected, approved, just make it not worth it.

So, why not a supply side solution instead of your usual tax the shit out of everyone to pay for what you want?

@ 4 Tim

Your step-daughter might be a latter day saint, but presumably there are plenty that aren’t?

Surely if the economic advantages are there, it is at least worth looking at the kind of system they have in France of “maternelles”….. or of course we could just have a free for all where any Tom Dick or Harry could set themselves up as a carer with absolutely no state intervention or checks at all.

I know what kind of place I’d rather leave my children.

Tim W @ 4

This rather neatly explains why the ‘Right’ get so much wrong, so much of the time. You come to this with little or no concept of ‘society’ and how it works.

My current partner became a ‘single mother’ after her partner (not me I hasten to add) walked out on her. Those circumstances are for a different thread. The point is, she could not afford childcare and was forced to sign on. Of course, her siblings started to have kids of their own and ‘Ms Jim’ become the de facto baby sitter for her nieces and nephews. Of course she was given ‘a couple of quid’ for the trouble, and had the Daily Hate found out…

The upshot being that she contributed, DIRECTLY to the economy and the brothers/sisters as partners all went on to have successful careers and at least one small business was set up and at least two of those children went on to study at University.

Had she been forced to ‘stack shelves’ for Boots for her benefit payments, boots would have gained about a fivers worth of labour an hour, but the rest of the economy would have lost, just about a half a million quid in three years.

No doubt that story is replicated via brothers/sisters/parents on ‘early retirement’ etc. The welfare State is not only for those who get a giro, you know.

Starter for three.

1) Housing, I think, we need to reconsider in a fairly fundamental way. The provision of it, mix of it, funding of it – it’s the single biggest expense for most people, and while there’s no right answer, it has bedevilled the welfare state since Beveridge and only got worse. Let’s at least have some ideas.

2) Reciprocity and contribution. Osborne is rumoured to be planning to do away with national insurance. I imagine that means playing around with age-related elements of the personal allowance too.

Still, there’s a significant strand in public opinion that still sees part of the welfare state as an insurance model. Accepting that, and looking at the collapse in the rate of temporary out of work benefits relative to wages, there’s a case for people between living wage level and higher rate tax to be given an option (opt in, opt out, that’s all up for debate) to pay slightly more and get enhanced benefits relative to their contribution during the first, contribution-based, period out of work. There will be a huge backlash at perceived unfairness if the proposal to means-test far earlier, and at a low level of savings, goes ahead – and an increasingly residual welfare state would be harder to defend in the long-term.

3) Jobs. The coalition’s policies seem to be based around a theory of dynamic welfare effects that says people won’t get poorer if you cut welfare, because they’ll work (harder / at all). Not sure why they will do so at a tax rate of between 65 and 85% if bankers are presumed not to at only 50%, but never mind.

Of course we know that sufficient jobs don’t exist. We should be unashamed at ensuring that jobs do, for those who could work. That means becoming slightly less obsessed with being a “high-skill economy” and accepting that we also need jobs at a decent wage for people who have relatively low skills, and economic policy should also consider their needs.

Down the line, I personally think the state should guarantee jobs; if Ed wants to court controversy he can try selling it to the Mail and Express as workfare (though of course it should be with some pay, not just ‘work for benefits’, and include training and support towards a longer-term solution). I imagine some would shout ‘workhouse’, but I’ve never been comfortable opposing full employment – the era of a welfare state as an alternative to the labour market is over, even in countries where it existed in the first place, of which we aren’t one.

Housing is one area of domestic policy that the Sixth Labour Government got totally wrong for all but the last few years of its existence. It’s also, quite clearly, an issue that cost us a great deal of support, not to other large parties but to apathy and (though on a much smaller scale) to protest parties. So it’s something that Labour has to get right this time.

More comments later, unless I forget. Which is likely.

9. So Much For Subtlety

6. Jim – “This rather neatly explains why the ‘Right’ get so much wrong, so much of the time. You come to this with little or no concept of ‘society’ and how it works. …. Had she been forced to ‘stack shelves’ for Boots for her benefit payments, boots would have gained about a fivers worth of labour an hour, but the rest of the economy would have lost, just about a half a million quid in three years.”

I am not sure what point you’re making but surely you are simply defending Tim Worstall’s point? He wants the burden of regulation lifted – so your partner could have done what she did legally. Maybe taken in some other people’s children and so contributed more to the economy. But of course she did not because the regulatory burden is too high. She was forced to work illegally. It seems to me your story simply proves his point. Why do you think it doesn’t?

SFMS @ 10

No, you miss the point. What she done, like so many other people was not a ‘job’ she did not get paid directly for her services. She did not earn anything like enough to make a living from it. Had she tried to do this with with any kind of formality, say charging a couple of quid an hour for example, no-one would have been able to afford that at the time, not until they got further up the career ladder or her sister in law got her business off the ground at least. She wasn’t doing this for money, she did it for love of her family, something the Tories instinctively hate.

The point being that ‘childcare’ can be an informal affair between sibblings/parents and nothing to do markets etc. Many people’s childcare comes via otherwise unemployed people. Not only childcare as my partner also looked after her infirm mother at the time too.

Tim was attempting to make the point that we could marketise childcare to make it ‘cheaper’, but all millions of really need a sense of family.

@Jim:

Actually, you’ve completely misinterpreted Tim, and demonstrated his point quite forcefully. Let me show you how.

Let X equal the value of your partner’s labour as determined by the market – in this case, your family members. Let Y equal the current market rate for childcare. Clearly, Y>X. Let Z equal the fraction of Y imposed by the burden of regulation. X = Y – Z. This is, of course, assuming that your family members were not exploiting your partner, which is a fair assumption.

The point Tim is making is that the labour of many people will be worth less than Y, and so removing Z would allow them them to take up employment in childcare, at the same time as allowing more people to purchase it. This, de facto, is what your partner did.

Adam @11

What the fuck are you talking about? My partner wasn’t working as ‘childminder’, she was merely being a sister and an auntie. Christ, no-one is competing with playschools, childminders etc. Why make something that is so simple to undrstand into a question of markets? Any ‘childcare’ that was being administered was on an ad hoc basis. There is not a ‘market’ for being an aunty, granny or a sister, for that matter. A nanny or a childcarer (whatever) is not the same thing or does the same ‘job’. She was given a ‘couple of quid’ to buy food, sweets etc, she was not making a living doing it, nor was she even close to making a living doing it.

Once you move it away from that family connection it DOES require regulation, because it becomes a formal business agreement. It becomes a business and part of the service industry. Not one single regulation prevents ‘your sister’ looking after ‘your child’. ‘Your sister’ does not have to comply with health and safety, nor does your parents need CRB checks and nor do they need to be VAT registered either. This is just families doing what families do and have done for as long as families have existed.

What you and Tim are talking about is a service carried out by trained, (self)-employed staff. That service is nothing to do with blood ties etc. When that is the case, then it becomes a formal, legally binding contract.


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  3. Tim Nicholls

    “@libcon: What should be in Labour's welfare state review? http://t.co/ncIlqJt” < good point on WCA. …

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    RT @BrokenOfBritain: RT @CarerWatch: What should be in Labour’s welfare state review? http://t.co/b6WIQWE via @libcon

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    What should be in Labour's welfare state review? | Liberal Conspiracy: Early Action Jobs Fund. There is widespre… http://bit.ly/htZL2X

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    What should be in Labour's welfare state review? | Liberal Conspiracy: There isn't actually any official mechani… http://bit.ly/dOyz0M

  17. Libertarians attack #ukuncut | Liberal Conspiracy

    […] There are about eight people who would support a demonstration to abolish corporation tax, and seven of them would be too busy sitting at a computer typing another hilarious snarky comment on Polly Toynbee’s most recent article to turn up. It’s another public policy winner on a par with “solve the lack of affordable childcare by scrapping child protection regulations”. […]

  18. Don Paskini

    to be fair, good to see @jimpurnell backing two and a half out of three pts of the paskini welfare reform plan http://t.co/0OgJISq

  19. paulstpancras

    to be fair, good to see @jimpurnell backing two and a half out of three pts of the paskini welfare reform plan http://t.co/0OgJISq





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