A Welfare Society
Brian Griffiths
The welfare state
A market economy can be a harsh reality for those who work in it. A fall in the world price of a commodity can lead to the closure of a business. A new technology can make jobs redundant. A financial crisis in Asia can lead to rising unemployment in Europe. Economic cycles appear to be a lasting characteristic of market economies. When compounded by problems such as industrial injury, disability and physical and mental illness, a market economy can prove a challenging environment.
It is because of this that ever since the Industrial Revolution there have been moves to protect the vulnerable from the uncertainties of markets and compensate them for its worst effects. In the nineteenth century, voluntary organisations such as friendly societies, trade unions and savings institutions provided services to help families be self-supporting. They were not charities. These were clubs that people joined and to which they paid in contributions, which they could then draw out at a time of need. In the early twentieth century the UK government introduced a compulsory national insurance scheme for all working people, which provided retirement pensions. The government of Clement Attlee (1945–50) extended state provision and laid the foundations for the modern welfare state, which won general approval from the public.
Seventy years on the picture looks very different. The modern welfare state has lost public support and faces a crisis of legitimacy. The 2015 edition of the official government survey ‘British Social Attitudes’ reports that public support for welfare spending has been in long-term decline. Those supporting the statement ‘government should be spending more on welfare benefits for the poor’ fell from 61 per cent in 1989 to 30 per cent in 2014.[1] Within this, pensions and disabled people were a priority, unlike benefits for single parents and unemployed people.
One reason for the loss of public support is that welfare spending fails to reward hard-working people who have contributed to the system and subsidises a minority who have not. A few days after the summer budget of 2015, which aimed to move the UK from a high welfare society to a lower welfare economy, a national newspaper published a letter that expressed the sentiment of many:
Sir, I have worked hard and paid taxes for 45 years, and apart from child allowance, never qualified for tax credit. I have brought up three children, all of whom have been through university. I have paid off my mortgage and have no debts, as I live within my means. My gross pay is £26,000. Why should I pay for people to receive more through social security payments than I earn?
Some years before this, the journalist John Humphrys of BBC Radio 4’s Today programme spent 12 months travelling around the country researching the state of welfare in Britain. He claimed in the resulting late-2011 BBC Two television programme that a culture had grown up in which people had a sense of entitlement that the state owed them a living. His overall conclusion was that:
In my decades of reporting politics I have never before seen the sort of political consensus on the benefits system that we seem to be approaching now and our poll suggests the politicians are reflecting a changing public mood.[2]
The same sentiment was echoed in a controversial Channel Four television series, Benefits Street, which documented the lives of several residents in James Turner Street in Winson Green, Birmingham, in which it was alleged that 90 per cent of residents claimed benefits.
These views have been confirmed by opinion polls.[3] One that was conducted in 2004 for the centre-left think tank IPPR, and which is fairly representative, found that 78 per cent of people surveyed agreed with the proposition ‘the system does too little for people who have contributed’ while 76 per cent agreed with the statement ‘it is too soft on people who could work but don’t’. This was found to be not simply a right-wing view, because 75 per cent of Labour voters who were polled lined up for the first view and 65 per cent for the second.[4]
A second reason welfare has lost support is because of the dependency culture it has created. More than 20 million families in the UK are dependent on some kind of welfare benefit (two-thirds of all families), of which pensioners account for 8.7 million. For 9.6 million families, benefits account for more than half their income. Some people face little incentive to return to work because of the loss of benefits. For an unemployed person with several children, entitled to unemployment benefit, housing benefit, child tax credits and free prescriptions, net take-home pay from employment may not be much greater than income from benefits. Today there are 3.6 million households in the UK in which nobody of working age is in paid employment but dependent entirely on social security. In some housing estates three generations of families have never worked. One million people have been on incapacity benefit for over a decade. Housing benefit has increased from £9 billion in 1990 to roughly £25 billion at present. Christian Guy, formerly the director of the Centre for Social Justice, captured the spirit of William Beveridge and put it crisply: ‘the welfare state should be a life-boat not a cruise ship.’[5]
A third reason social welfare is a problem is cost. Expenditure on social security payments, including pensions, is running at £220 billion per year. Britain has 1 per cent of the world’s population, generates 4 per cent of the world’s income and pays 7 per cent of the world’s welfare spending. In 1980, welfare benefits paid to people of working age amounted to 8 per cent of all public spending. By 2014 that figure had run to 13 per cent. The original tax credit system, which was introduced in 2003, cost £1.1 billion in its first year. Today it costs £31 billion per year.[6]
The welfare bill has grown like topsy and proved a nightmare for politicians to get under control. In his 2015 summer budget speech the Chancellor of the Exchequer quoted Frank Field, a Labour MP and chairman of the House of Commons Work and Pensions Select Committee, as well as one of the great authorities on the subject, as saying that the present system was simply ‘not sustainable’. More surprising perhaps was that soon after, Harriet Harman, the interim leader of the Labour party, told leadership candidates not to oppose welfare cuts because the electorate had twice rejected a Labour manifesto that stated that welfare spending would not be cut.
A fourth problem is that the welfare budget is not perceived as addressing the real causes of poverty. This is partly because of the way poverty is defined and measured. The present official method of measuring poverty is closely connected to the original approach taken by Charles Booth and Joseph Rowntree at the beginning of the twentieth century. They were meticulous in their research and through it they wished to determine the income level that enabled families to achieve a minimum decent standard of living. Those families with incomes below that level were categorised as poor while those above were not. The Child Poverty Act 2010 defined poverty as households with income below 60 per cent of median income. According to this definition, one in five of the UK population today live in poverty.
This approach suffers from three weaknesses. First, it leads to some curious results. During the recession that followed the financial crisis, the number of children living in poverty fell, not because they were better off but because median incomes declined. Similarly a small rise in the state pension will increase average income and with it the number of children living in relative poverty. Second, it is a statistic that measures inequality not poverty. It says nothing about the percentage of children who have failed to meet standards of literacy and numeracy in schools, the percentage of children in workless households, the number of people who suffer from hunger and so on. Third, it fails to shed light on more searching questions regarding the causes of poverty. Why do certain children suffer from a lack of educational achievement? Why do some parents have poor parenting skills? What is the impact of family breakdown on poverty? What can be done to break the cycle of children living in poverty today growing up to be parents living in poverty tomorrow?
A fifth and final reason the present welfare system has lost public support is because of its impersonal nature. Welfare provision has become synonymous with a hugely centralised and complex system of cash payments from central government to individuals. In the friendly societies and trade unions of previous generations there was a personal element involved. Those who collected subscriptions from members and ensured they were paid when need arose had a personal relationship with them. They knew of their circumstances. They lived in their neighbourhoods. They were part of their communities. Welfare payments today have become just another transaction. As a result, the growth of a highly centralised welfare state has been at the expense of those mediating structures that involved personal participation in a local community and typically emphasised an ethos of work, self-support and saving.
The overall result of this is that the welfare state today has lost public support because it is centralised, impersonal, bureaucratic, complex and disjointed.
And who is my neighbour?
In many countries with a Christian tradition, such as Britain, the debate on welfare has deep roots in a Christian understanding of the dignity of the human person, responsibility of caring for the vulnerable and improving the lot of the excluded and poor, and the importance of work. Many friendly societies of the nineteenth century had a religious foundation. The first labour exchange was set up by the Salvation Army in Upper Thames Street in London in 1890. The term ‘welfare state’ was first used by William Temple, Archbishop of Canterbury, in the early 1940s.
The parable of the Good Samaritan (Luke 10.25–37) is one of the most compelling stories Jesus ever told and relates directly to helping people in need. The context was a question addressed to Jesus by a lawyer who was a recognised expert in interesting Jewish laws that Moses had set down in the Torah. ‘Teacher, what must I do to inherit eternal life?’ (v.25). In other words, how should we live now to qualify for life in a future world? Jesus responded with further questions, ‘What is written in the law? What do you read there?’, to which the lawyer answered with two quotations from the Torah, ‘You shall love the Lord your God with all your heart, and with all your soul, and with all your might’ (Deuteronomy 6.5) and ‘your neighbour as yourself’ (Leviticus 19.18). Jesus acknowledged this as the right answer and added ‘do this and you will live’. Quick to look for a loophole and to embarrass Jesus, the lawyer asked a further question, ‘And who is my neighbour?’, something that was a highly disputed issue at the time.
The story relates to a man travelling from Jerusalem to Jericho who was attacked by a gang of robbers who took his clothes, beat him and left him naked and apparently half dead. By accident a priest was travelling down the same road, saw him but consciously walked by on the other side. Similarly a Levite, one of the administrative staff employed at the Temple in Jerusalem, was also travelling along the same road; he saw the victim but again avoided contact with him. Finally a Samaritan, a foreigner, a heretic and a sworn enemy of the Jewish people saw him, had compassion on him, gave him first aid, disinfected and bandaged his wounds, lifted him on to his donkey and led him to an inn. The following day he gave the inn keeper two silver coins with the request ‘Take good care of him. If it costs any more, put it on my bill – I’ll pay you on my way back.’ Jesus then questioned the lawyer as to which of the three did he think was neighbour to the victim. The lawyer replied the one who treated him kindly, to which Jesus responded ‘go and do the same’.
This was a realistic story. The winding road down from Jerusalem to Jericho, roughly 17 miles and through rocky and barren countryside, was known to be dangerous because of frequent attacks. Any parable, however, leaves a great deal to the imagination, and this is no exception. The victim was most probably an Israelite. The priest and Levite might not have been bad people. They might have thought that because he looked as if he was half dead there was little they could do. Or they might have thought they had insufficient knowledge to be able to help him. Or they might have thought the robbers were still nearby and would pounce on them next. Or they might, as professional religious people, have had qualms about defiling themselves ritually because of contact with blood and a dead body. What is not left to the imagination is that they passed by on the other side of the road.
The Samaritan’s response was different. He saw him and went to his aid. His response was more than empathy, simply identifying with him mentally. The import of his response is not adequately conveyed by expressions such as ‘he took pity’, ‘he was moved’, ‘he had compassion’. The Greek verb suggests something much stronger. It was as if he was struck by a bolt of lightning that left him completely shaken. His response was visceral rather than rational. He felt compelled to act. He committed himself to helping the wounded man regardless of the danger involved, and in the way he did it was generous both with his time and his money. The point of the parable is that it turns the lawyer’s question on its head. The Samaritan did not ask ‘Who is my neighbour?’, hoping to be able to divide the world into neighbours and non-neighbours. He found himself asking a more searching question, ‘To whom am I a neighbour?’ For the lawyer the term ‘Good Samaritan’ was an oxymoron. To discover that the wounded man had been helped by a racial enemy, someone from outside of the community, was not just a surprise but a scandal.
We all in one way or another aspire to be a Good Samaritan. By asking the question ‘Who is my neighbour?’ we are seeking the timeless quest for a loophole to divide the world into neighbours and non-neighbours. The lawyer was searching for a clear definition that set a precise boundary. Thomas Walter Manson suggests that the question asked by the lawyer is unanswerable.
For love does not begin by defining its objects: it discovers them. And failure in the observance of the great commandment comes not from lack of precise information about the application of it, but from lack of love. The point of the parable is that if a man has love in his heart it will tell him who his neighbour is: and this is the only possible answer to the lawyer’s question.[7]
Can the parable of the Good Samaritan help us in thinking about welfare policy and the welfare society? Before we explore this we should remember that there was in Israel at the time of Jesus a system of social welfare: every three years one tenth (tithe) of that year’s annual produce was to be given and stored as a source of help for the poor. This was part of a much larger welfare society in which the laws relating to social and economic life were based on Jewish religion, ranging from weights and measures to social provision.
Social welfare provision in the political economy of ancient Israel was comprehensive, mandatory and personal. It was a duty of care charged to each member of the community for the welfare of the poor, the widow, the orphan, the homeless and the stranger. It was complementary to a social programme of welfare provision enabling all to share in the gleaning of the annual harvest, to call on the social fund created from the triennial tithe and to have on the Sabbatical year debts cancelled – though it is doubtful whether this system was ever implemented as such.
The spirit with which welfare was to be provided was generosity.
If there is among you anyone in need … do not be hard-hearted or tight-fisted towards your needy neighbour. You should rather open your hand, willingly lending enough to meet the need, whatever it may be. Be careful that you do not entertain a mean thought, thinking, ‘The seventh year, the year of remission is near’, and therefore view your needy neighbour with hostility and give nothing … Give liberally and be ungrudging when you do so. (Deuteronomy 15.7–10)
What lessons can we draw from our Judaeo-Christian heritage in thinking about welfare? First, we should start by stating the obvious, which is that we as individuals, and we as members of a society, have a moral responsibility to care for those in need. The primary reason for reforming social welfare is not to help HM Treasury to balance the books, tackle the estimated £1 billion benefit fraud or deal with ‘scroungers’ and ‘benefit tourists’. It is to shape a society in which those who are elderly, disabled and vulnerable are cared for and those who can work and are able to save are incentivised to do so. As a society we have responsibilities to those less fortunate than ourselves.
Second, we need to distinguish between a welfare state and a welfare society. A welfare state administers the provision of benefits provided by the state and paid for by taxpayers. By contrast, a welfare society has three components: welfare provided through the state; welfare provided through a range of voluntary and charitable organisations, including religious institutions; and neighbourliness, namely welfare provided by people caring for individuals or families suffering from loneliness, isolation and deprivation in the communities in which we live. Perhaps the most basic of all the elements of a welfare society is the family, in which children are shown love, cared for and taught the values that are important in life, which is why public policy aimed at strengthening family ties is so important.
Over recent decades the culture of our society has become more individualistic and less public spirited. The bonds that bind people together in civil society have loosened. The British Attitudes Survey has documented the reduction in the number of people who wish to be actively involved in their communities – whether as volunteers, school governors, members of a Neighbourhood Watch Scheme or leading Scouts and Guides. The great challenge in strengthening our welfare society today is how to revive the declining sense of mutual responsibility in life and reverse the general loss of ‘neighbourliness’. If the parable of the Good Samaritan has one overriding message it is that people become involved with others when they are moved to have genuine compassion for those in need. This is not something governments can easily effect. It may be prompted by a television news item, a chance meeting, a front-page newspaper photo or the plight of a friend.
There is a third leg important to the Christian understanding of social welfare, and that is the importance of work. The significance of work derives from each person bearing the divine image. The nature of God is to create and work, and in this we as creatures reflect the creator. A job well done is the satisfaction that derives from work, whether paid or unpaid. Work allows each person to express their talents and personality. It is natural for men and women and from it we derive not only satisfaction but a reservoir of self-worth and dignity. Work in itself is rewarding and a service to God. It is because of this that involuntary unemployment is an evil. It is something alien to our nature. We want to work and yet the jobs are not there. The same is true of benefit dependency, in which the state has created incentives that make work unattractive. Not working in this situation is not only a source of long-term poverty, it undermines self-worth and ambition and leads to depression and illness.
Thinking through the principles
People have put forward many different principles as the basis for welfare reform: compassion, justice, reciprocity, contribution, contracts, mutualisation, participation, penalisation and localisation. Which should guide us?
One principle is that of contribution and reciprocity. With the exception of the elderly, disabled and vulnerable, social security should be a safety net in the way proposed by Beveridge in the 1940s, rather than some vast merry-go-round drawing increasing numbers of benefit recipients into its orbit while at the same time requiring them to pay indirectly for their additional benefits through general taxation.
The starting point of Beveridge’s proposals was that in a free society persons who could work had responsibility to earn an income with which to make provision for themselves and their dependants: ‘Management of one’s income is an essential element of a citizen’s freedom.’[8] He claimed that people had come to regard thrift as a ‘duty and pleasure’.[9] John Maynard Keynes had proposed a solution to the mass unemployment of the 1930s and Beveridge believed that a return to full employment was a realistic prospect in the post-war years, which turned out to be correct.
From time to time people would suffer a loss of earnings because of unemployment, injury and sickness, as well as having extra outgoings at times of birth, death and marriage. To deal with this Beveridge proposed a national or social insurance system in which risks were pooled and underwritten by the state. He rejected a system of voluntary private insurance much as we have today for cars, homes and travel. The system was compulsory for all working people. Each paid in flat-rate contributions and when occasion arose each was paid out flat-rate benefits. There was to be no means testing.
This structure rested on key judgements. First, benefits should be paid out in return for contributions, rather than free allowances from the state, which ‘is what the people of Britain desire’.[10] He made it abundantly clear that social security as envisaged in his report was not a plan ‘for giving to everybody something for nothing’.[11]
Next, payments were to be made into a national Fund. If the resources of the Fund proved inadequate, contributions should be increased. The reason for creating a Fund rather than paying for the scheme through general taxation was to make it clear that benefit payments did not come from a bottomless purse.
A future key judgement was that social insurance was intended to be a minimum:
The State in organising [social] security should not stifle incentive, opportunity, responsibility; in establishing a national minimum, it should leave room and encouragement for voluntary action by each individual to provide more than that minimum for himself and his family.[12]
Another principle of welfare reform should be to tackle the root cause of long-term poverty by focusing on the home environment and the early years in order to enhance the life chances of children. For the past one hundred years, by contrast, the focus of removing poverty has been providing more money to less well-off families. This is not unimportant. Soon after becoming Prime Minister in 2010, however, David Cameron commissioned the Labour MP Frank Field to undertake a major rethink of the causes of poverty in the UK, the case for reforming the way poverty is measured and the way a child’s home environment affects their life chances. Frank Field has spent a lifetime working in the field of welfare provision, both inside and outside of parliament and as a minister in the Treasury when Tony Blair became Prime Minister.
In his report he claimed that research suggested that a person’s success in adult life could be predicted by the level of cognitive and non-cognitive skills they possessed on the first day of school.[13] Children who arrived at school in the lower range of ability tended to remain there. More than money income, research emphasised that the factors that mattered for enhancing a person’s life chances were a healthy pregnancy, good maternal mental health, secure bonding with the child, love and responsiveness of parents along with clear boundaries, and opportunities for a child’s cognitive language and emotional development. Good-quality services such as healthcare, children’s centres and childcare also mattered. The key conclusion of this work was that good parenting was critical to improving the life chances of children when they reach adulthood.
The policy recommendation of this approach is to strengthen support for parents through the Foundation Years ‘from conception to age five’, by providing high-quality integrated services across the board, but especially for those from low-income families. As a result, a child from a low-income family but brought up in this environment has every chance of succeeding in life. Perhaps more surprisingly, focusing on the Foundation Years is a better way to achieve a reduction in income inequality.
Finally, it is important that the worlds of welfare (caring, community, neighbourliness) and enterprise (entrepreneurship, aspiration and reward) work together rather than against each other. That is why a growing economy that provides jobs is far better than a stagnant economy as the backdrop to welfare reform. It is also why reducing the government deficit and reining in public borrowing is a necessary step to achieve it.
Notes to Chapter 2
[1] ‘British Social Attitudes 32: Key Findings’, London: NatCen Social Research, 2015, p. 3.
[2] John Humphrys, The Future State of Welfare, 2011, BBC Two.
[3] Ed Cox, ‘Between Priests and Levites: Putting Relationship into the Heart of the Welfare System’, in Nick Spencer (ed.), The Future of Welfare: A Theos Collection, London: Theos, 2014, p. 102.
[4] Cox, ‘Between Priests and Levites’, pp. 102–3.
[5] Christian Guy, ‘Welfare, But on What basis?’, in Spencer, Future of Welfare, pp. 43–51.
[6] Guy, ‘Welfare’.
[7] T. W. Manson, The Sayings of Jesus, Cambridge: Cambridge University Press, 1931, p. 308.
[8] The Beveridge Report, 1942, paragraph 21.
[9] Beveridge, paragraph 21.
[10] Beveridge, paragraph 21.
[11] Beveridge, paragraph 455.
[12] Beveridge, paragraph 9.
[13] Frank Field, The Foundation Years: Preventing Poor Children Becoming Poor Adults – The Report of the Independent Review on Poverty and Life Chances, December 2010.