Why welfare to work won't work in the UK

President Clinton signs the 1996 Responsibility and work opportunity act which gave federal approval to state 'welfare to work' laws which are the model for British 'welfare reforms'

‘Perhaps the greatest danger of our national life arises from the power of selfish and unscrupulous wealth
which influences public opinion largely through the press’

Joseph Rowntree (1836 – 1925) , businessman and philanthropist, - one of the first people in Britain to do research proving poverty was not caused only by alcoholism or the laziness of those in poverty.

(What follows is a summary – to see the full version with contents links and sources on my website go here.)

Tabloid newspaper owners and the leaders of the main parties in both the US and the UK have promoted myths about the causes of unemployment and poverty and so the solutions to them. The ‘welfare reform’ narrative of the tabloids and the Labour, Conservative, Republican and Democratic parties has been that there are plenty of jobs for everyone but that the supposedly ‘out of control’ growth or expansion of the welfare state has led to generations of people in the same households deciding to live on benefits as this gives them a better and easier life than working would. This is portrayed as having placed an increasing burden on those who do work and as being the main cause of poverty. Just as US welfare to work from the 1990s on returned to a 19^th century view of poverty as due to the moral failings of the poor (especially ‘laziness’ and being ‘unwilling to work’) the same has happened in theUK, with government adviser and Labour MP Frank Field  advising the Conservative-Liberal coalition that poverty is primarily caused by bad parenting rather than low incomes.

Labour MP and adviser to the Conservative-Liberal Coalition government - Frank Field - who believes poverty is primarily the result of bad parenting

This is coupled with political rhetoric about ‘social mobility’, ‘meritocracy’ (whether Labour or Conservative) ,‘equal opportunity for all’ and a ‘classless society’, in which politicians talk as though getting everyone into work will increase all of their incomes and get them out of poverty, as though there are enough jobs with a living income for everyone. The assumption is that as more people come off benefits and into work the welfare bill can be cut, the welfare state can be cut further or gradually phased out as the private sector takes over from it - and everyone will be better off.

Surveys show these claims have influenced British public opinion to become more hostile to those on benefits, with a majority now seeing them as lazy and opposed to increased redistribution of wealth through taxation and welfare.

The trouble is that even politically massaged Government figures, along with research by charities like the Joseph Rowntree Foundation and think tanks like the IPPR, shows that there are between hundreds of thousands and millions more people unemployed than there are job vacancies in the UK through recessions and economic booms over past decades to present.

Employers also told researchers that, far from the unemployed being unwilling to do the kind of jobs they used to do, most applicants were considered over-qualified by the employer

They also show that large numbers of people going into work remain in poverty (under 60% of median income or £119 per week for an adult or £288 for a couple with two children) or in deep poverty (a third or less lower income than that) – and that there are more people in work and in poverty than out of work and in poverty in the UK, with newly created jobs increasingly becoming part-time and/or low paid over the past two decades and over 1 million people who want full-time jobs only being able to get part-time ones.

Despite the tabloid myths this is not due to over-generous benefits, but due to low minimum wages, a lack of enough in-work benefits for those on low incomes. For instance unemployment benefit is only between £51.85 and £65.45 a week depending on age in theUK, just as it was under the previous Labour government.

While many of the measures of poverty used are relative to they are reliable indicators that many of those on these incomes are suffering some forms of absolute poverty – i.e are unable to afford some basic necessities and so suffering frequent hunger, cold and subsequent long term health problems for adults and developmental problems for children. For instance the JRF’s 2000 study found 9.5 million people in Britain could not afford to heat their homes adequately, 4 million couldn’t afford either two meals a day or fruit and vegetables to eat ; and 6.5 million people went without essential clothing such as a warm waterproof jacket or decent shoes (with 2% of children lacking a warm waterproof coat or properly fitting shoes and many unable to afford a healthy diet). One parent interviewed in a later report ate nothing but bread so their children could eat better diets, while another (in 2008) said being in poverty meant “Being hungry, only having enough food to give the children, hoping they would leave some leftovers on the plate, so I wouldn't be so hungry.”)

There are also absolute measures of poverty used, based on the number of people in any year whose income has fallen below 60% of what was the median for a chosen benchmark year. The British government used 60% of the median in financial year 1998/1999 as it’s measure of poverty until 2010, when 60% of the median in 2010 was chosen as the benchmark for the next decade (though the new government may well choose a different definition).

British Prime Minister David Cameron and Chancellor (finance minister) have claimed that under their Labour predecessors welfare spending was “out of control” - but the figures don't back their claims up

Treasury figures also show that welfare spending in the UK has actually fallen as a percentage of GDP (national wealth) between 1997 at 7.76% (during an economic boom with lower unemployment) and just over 7% in 2009 (during a deep recession with higher unemployment) – (credit to Duncan’s Economics blog for pointing this out). Despite the “there is no money” rhetoric the UK increased it’s GDP per capita (wealth per person) by around 67% over the same period on World Bank figures.

This is even more striking as 1997 was an economic boom year with relatively low numbers of unemployed people (and so a lower cost in unemployment benefit) while 2010 was a deep recession with relatively high unemployment levels and benefit costs.

If looking for unfair government spending going to those who neither need nor deserve it there are many better candidates for cut. These include Private Finance Initiatives or ‘Public Private Partnerships’, which the Conservatives began, Labour expanded and the Coalition are planning to expand again, leading to increased taxes for cut services; Export Credit Guarantees to British Aerospace for arms and dual use equipment going to dictatorships and human rights abusers (often including those who later become our enemies such as Saddam Hussein’s forces in the past); and military aid to dictatorships.

US government figures and independent studies show ‘welfare to work’ programmes in the US have led to greatly increased poverty and homelessness.

Cutting benefits and public sector jobs during a period of recession also risks further reducing demand in the economy and a spiral of falling demand and increased job losses in the private sector.

Cartoonist Steve Bell on British welfare minister Ian Duncan Smith MP's welfare to work plans

This may well lead to many of those persuaded to vote to punish those on benefits for supposedly all being workshy fraudsters suffering alongside many of them due to the reality that many are poor or unemployed through no fault of their own – and that even if everyone who isn’t working tried to get work there aren’t enough jobs.

This shows that the model of welfare reform adopted by the main parties in both countries is bound to lead to increasing levels of poverty for the unemployed and many in work alike unless it’s changed to expand the welfare state and public sector employment and government intervention to provide more in-work benefits for those on low incomes, along with increasing minimum wages and more public sector jobs

The Joseph Rowntree Foundation found that relative poverty for pensioners declined throughout New Labour’s period in government from 1997 to 2008/9 and relative and absolute child poverty fell too, but as out-of-work poverty fell, the numbers of people in work but in poverty rose.

The Institute for Fiscal Studies’ 2010 report estimates increases in the numbers of adults and children in poverty of hundreds of thousands each year as a result of the Coalition’s policies

This is not to deny that there are some people defrauding the benefit system or who are unwilling to work. It does show that there’s no evidence to suggest the tabloid rants claiming they are the majority of the unemployed or poor are true ; that ‘laziness’ is most definitely not the only cause of unemployment ; and that welfare spending and benefits are if anything too low and too hard to get in low income jobs. Any welfare reforms that would have a chance of reducing unemployment and poverty would have to provide more in work-benefitsm, or a higher minimum wage, or both, along with more public sector jobs.

(This post is a summary – to see the full version with contents links and sources on my website go here.)