Friday 5 June 2020

Labour Should Reject Contributory Benefits

I'm going to tell you a story about social security. After leaving university I went on the dole. The advisor at the job centre handed over a huge wodge of paper work to fill out. Because I was living with my girlfriend, the advisor told me to put a claim in as a couple. For the next few months I went along to the job centre showing proof of my interviews and job applications, and each month the letter would come through saying my dole was being cut. It went down to £50/week, then £20, then five quid, and finally the utterly princely zero pounds. Thanks to receiving this generous entitlement I didn't bother going to the Job Centre again, and to top it off they sent me a letter saying they were terminating my receipt of sweet Fanny Adams because I hadn't abided by the rules. Why the reductions? Because, occasionally, my significant other would do more than 16 hours a week working in a local pub. The perversity of the system, brought in under the Tories but left alone by Labour, meant zero help for me and the millions of other young people who've experienced unemployment for any period of time.

Therefore when a politician, someone like Jonathan Reynolds who holds the shadow work and pensions brief, for example, says they want to do something about social security I'm listening. Because there's no beating about the bush. Labour under Blair and Brown not only failed our people when it came to welfare, they happily kicked those dependent on it in the teeth. The workfare policies they criticised the Tories for wanting to implement when in opposition got a new lease of life with the so-called New Deal of the late 90s, and the demonisation of people on benefits passed into the common sense of Blairism and the Labour right. MPs like the thankfully defenestrated Caroline Flint, who wanted to throw unemployed people out of their council homes, Rachel Reeves who said Labour was not for people on benefits, or Harriet Harman's failure to oppose cuts to benefit caps and child benefit, all of whom would be stains on the parliamentary party if it wasn't already stuffed to the gills with people who are as bad. And in some cases worse. And so we have the first problem when it comes to popular support for social security: the Tories and Labour have spent 40 years thinking up ways of excluding people from the system entirely.

This strand of policy thinking, a term used lightly here, on the Labour right is driven by pure triangulation. Kick those on benefits because they don't vote anyway/have nowhere else to go, and we might win over a few Tory voters jealous of the Wayne and Waynetta Slobs living a life of riley on £117/week in their heads. Not the wisest given how the party needs to win back seats with high levels of welfare dependency next time, this approach to social security by the last Labour government compounded the problems of social security: its inefficiency, its failure to be even a residual safety net, its punitive and disempowering character. There is, however, another tradition on the right. Which is where Jonny Reynolds comes in.

The much-discussed, to put it euphemistically, interview for The House magazine sees him set out some principles and thinking about welfare. He would like to see the £20 increase to Universal Credit brought in by the government at the onset of this crisis continue and have it apply to Jobseekers' and Employment Support Allowance too. The five-week wait for benefits should also be abolished - a move originally introduced by Dave and Osborne to try and force claimants to accept any job as they suffer an income-free gap between application and receipt of payment. He also thinks the case for limiting child benefit and the cap on support has been destroyed by the crisis. A positive move, albeit one sounding more like the contact with everyday reality seeping through rather than a more principled position. He would also like to see the expansion of statutory sick pay and it increased by an unspecified amount.

Where's the controversy?
“When you’re looking at how you design or change the system going forward, certainly I feel if you have made greater contributions to the system, there is an argument that you should receive more out of that system. It doesn’t mean that you will ever be leaving people without support or leaving them destitute. But I simply feel that that lack of a connection between what you put in and what you get out has become a major problem of social security and the political support for it.”
Ah, there it is.

There's this thing a bit like the internet's wayback machine called memory, and digging deep you'll find the last time this was floated. In a major speech to try and cohere the Labour right behind a political critique of Corbynism back in 2015, Liam Byrne set out his stall. Among which was the application of the contributory principle to welfare. Leaving the problems with this for a moment, it was something he flirted with under Ed Miliband as part of a limited attempt to rethink welfare and results from trying to stand on two horses. One wants to gallop toward helping people in need by providing a new settlement worthy of the name 'social security', and the other is merrily cantering toward appeasing the (contrived) public appetite for walloping scroungers. Despite their antagonism, the idea was about giving everyone a stake in the system, which is a sound principle for building any welfare system. That's why generous and universal benefits are the way to go. One reason the progressive removal of universalism and going down the route of residual welfare didn't attract major protests or thrust a militant claimants' movement to the fore wasn't just because of the accumulating weight of scrounger rhetoric, but because the payments were pretty poor in the first place.

Unfortunately, Jonny's preference for reasserting a contributory principle introduces a division between deserving and undeserving claimants. This would lend itself to a new round of divide-and-rule politicking by the right around benefits, and therefore undermines the universalism of the non-contributory floor. ABC stuff, you would think. And far from simplifying matters, it creates more admin as new sets of means tests are introduced and it stores up rows over eligibility, leaving Labour open to the accusation it wants to impoverish middle class people by setting the criteria too stringently and the payments too low. A whole world of political pain awaits that, in the end, won't do much to build a consensus around the sort of system we need.

Again, it's not perfect but a generous and unconditional basic income is the simplest way of building a welfare system in which jobs are under permanent threat from automation and, without a decent programme of state-led investment, where the UK labour market has a miserable history of low paid and insecure jobs. Knowing that the wolf will not be at the door if your job evaporates would transform the life chances of millions, improve the take up of education and retraining, and a whole host of other benefits besides. As an ideas man, Jonny has shown interest in the basic income in the past though others on Labour's right hate it so much they have to lie about it. Yet even if this is a non-starter in these days of ever-so-responsible opposition a Labour position on welfare has to ask itself two questions. Does it adequately support our people because, contra the likes of Caroline Flint, the poorest are our people and, duh, Labour has a clear political interest in consolidating our constituencies. And does welfare help collectively empower our people in the context of a wages system in which the pressure on incomes from employers is structurally downward. A contributions-based system, even if it is grafted on top of a universalist system and affords special privileges to those who've worked longest or have paid more tax thanks to higher salaries cuts against the second principle, and sets the stage for an attack on the first.

6 comments:

Braingrass said...

The sheer lack of ideas of the Labour right is depressing. They just keep returning to the same ideas that have never been popular and have never got them anywhere close to power since 2005. The biggest myth here is that government spending is paid for by taxes, so that the rich are somehow paying for the less well off. It is pure Tory ideology. It is depressing that Starmer's Labour seems to be rapidly transforming itself into a tepid version of New Labour.

Pilurini said...

I dont think they need to think - the media will get them elected they are establishment stooges - it’s a never ending circle - pretend socialism leading to alienation and nationalism and back to Tory thugs - they are useless now

Anonymous said...

This compares the worst take on a contribution based system with most optimistic take on UBI sysyem. We currently have weak insurance benefits. High point of Labour militancy in UK coincided with the high point
of Insurance based unemployment benefits few and less conditional assistance benefits. First target of Thatcher government was scrapping Employment related supplement to widen the divide. Now many do not bother claiming JSA Contribution based. No reason reinvigorated insurance benefits could not be complemented by better child benefit; new Citizens Pension and removal of conditionality in UC. Insurance benefits maybe be route to actually consolidating support and moving towards more rather than less universalism.

Blissex said...

«preference for reasserting a contributory principle introduces a division between deserving and undeserving claimants. This would lend itself to a new round of divide-and-rule politicking by the right around benefits, [...] Again, it's not perfect but a generous and unconditional basic income is the simplest way of building a welfare system in which jobs are under permanent threat»

That to me seems like "kumbaya" proudhonism, and as a previous commenter remembers, it was socialdemocratic governments that created a system in which "unemployment insurance" was paid out as a percentage of previous income (as a proxy for contributions), and after that the "Thatcher government was scrapping Employment related supplement to widen the divide", with the result that "Now many do not bother claiming" which means that, as intended by the thatcherites, social insurance is no more relevant to mid-income voters, and it is seen by them as mere "charity" to "someone else", to be minimized.

Anyhow the move by the thatcherite wing of Labour is anti-immigrant, not anti-"scrounger" more generally; many benefit recipients are thatcherite themselves, proudly regard themselves as "scroungers" living off "suckers", whether it is cash benefits or low-rent council housing, and don't want to dilute what they manage to scrounge from the suckers by sharing the loot with immigrants.

So it is aimed not at "Telegraph" or "Mail" reading middle class tory voters, but at working class and underclass "Sun" reading ones.

Blissex said...

«This strand of policy thinking, a term used lightly here, on the Labour right is driven by pure triangulation. Kick those on benefits because they don't vote anyway/have nowhere else to go, and we might win over a few Tory voters»

But the worst thing about that triangulation is that its purpose is not to build a voter coalition that is say 80-90% labour, 10-20% "progressive" tory, that then in government has policies that are 80-90% labour, but to build one that then in government enacts 80-90% tory policies, with the excuse that unless the policies are 80-90% tory that 10-20% of "progressive" tory votes will disappear. After all Peter Mandelson long ago argued publicly that "we are all thatcherites now".

Ah another quote that is relevant, from J Hutton, at the time New Labour secretary of state for Work And Pensions:

https://www.theguardian.com/politics/2006/dec/18/workandcareers.immigrationpolicy
«The staunchly Blairite cabinet minister John Hutton will today argue that the government should consider withdrawing all benefits from the long-term unemployed who "can work, but won't". [...] "Economic migration from the EU has only served to highlight this issue. If workers from Poland can take advantage of these vacancies in our major cities, why can't our own people do so as well?" he will ask. [...] "We cannot reasonably ask hard-working families to pay for the unwillingness of some to take responsibility to engage in the labour market." [...] An aide said that at present around 2% of claimants have had it withdrawn for a short time, but added: "We want to look at whether there is a case for making [the rules] more stringent or applying them more rigidly."»

Blissex said...

«The sheer lack of ideas of the Labour right is depressing. They just keep returning to the same ideas that have never been popular and have never got them anywhere close to power since 2005.»

Actually the Tony Blair driven collapse in the Labour vote began in 1997 itself, when New Labour got a chunk less votes with T Blair than the polls had given J Smith only a few years before, but New Labour stayed in power despite losing a lot more voters in later elections because they went to abstentions or the LibDems instead of the Conservatives, as New Labour was pumping up property prices and rents, and voters remebered the Conservative property crash of the 1990s.

As to ideas, it is not just the thatcherites, whether LibDem, New Labour, or Conservative, who have no new ideas, but it is also the "kumbaya leftoids" who cling desperately to unpopular ideas, and can't recognize that there is indeed a "Southern Discomfort" issue, even if the Mandelson Tendency solution to turn thatcherite is the wrong one.

To put it briefly, the problem is that many voters don't like the principle of "solidariety", as they confuse it with pure-and-simple redistribution from A to B.

My suggestion is to talk about "reciprocity", which most people think is the foundation of fairness, and thus to emphasize the *insurance* aspect of socialdemocratic policies.

For example the way I explain the NHS is that it provides two types of insurance, by charging a premium that is a percentage of income:

* Insurance against the risk of becoming sick and needing to pay healtcare.
* Insurance against the risk of becoming too poor to pay healthcare insurance premiums.

So for example if the average cost per person of the NHS is £4,000 per person per year, people who have higher earnings effectively pay more than that to insure against the risk of becoming too poor to pay that £4,000.

I never use the "kumbaya leftoid" arguments that healthcare is a human right (but human rights stop at the border) or other (usually hypocritical) wishful thinking.

The thatcherites often exploit the confusion between "solidarity" and "redistribution" to argue that even insurance schemes are redistributive, as if people who get a payout on fire insurance because their house has burned down were scrounging off those whose house has not burned down.