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Real Welfare Reform

Author: Simon Duffy

The welfare state is both good and necessary, but the welfare state is deeply flawed. Real welfare reform is not about making the welfare state smaller, reducing taxes or even promoting efficiency. Real welfare reform is about designing a welfare state that ensures everyone gets the support they need - and the freedom they need - to live good and positive lives as active citizens.

But the welfare state does not treat us as citizens - but as its subjects. We receive many vital supports and services, but only as gifts from above. Power and control lie with the system. The two most expensive welfare services - education and health - consume about 20% of GDP but are firmly controlled by central government and delivered through their local agents. Our choices are carefully limited - mere tokens of control.

The welfare state is not just paternalistic, it is also very partial - it focuses its benefits unfairly, without regard to real need. One of the most extreme examples is the distinction between health and social care. The NHS is well funded and its expensive medical services are free (although this really means that - given we pay for them with our taxes - we are not expected to pay for them again). Social care services - low cost services that focus on the most needy - are poorly funded. If you have a disabilty and need support you find that your entitlement is weak and that you will be super-taxed (although these taxes are labeled charges - as if we we haven’t paid for it already). In other words those with the highest need actually recieve the least and have diminished rights.

The welfare state is often destructive of things we value. Taxes, benefits, education and social care systems all tend to undermine family structures; families are not respected and perverse incentives often encourage family breakdown. For a third of households - those who are benefit dependent - working and saving becomes irrational in the face of vicious poverty traps. In the same way we have increasingly allowed state-run, homogenised services to take over roles that could be played by citizens and civil society.

The welfare state has become the toy of party politics. Every administration has a new grand plan which focuses on reorganising power and control. Power is centralised, then localised, new structures are created and then demolished. Changing structure gives politicians a neat account of their ‘solution’ for perceived problems - but the on-going instability creates fear, drives centralism and undermines the development of innovation and entitlement.

But it would be both unrealistic and disastrous to wish ourselves backwards to some pre-welfare state utopia that did not exist. I repeat - the welfare state is both good and it is necessary; but it is designed badly. And we can understand why it was designed badly if we remember some of the assumptions of its designers.

The welfare state was designed at a time when class prejudice and meritocracy combined to encourage the politial elite and the upper classes to feel confident that they were better and wiser than the rest of us, and that it would be best to leave important decisions about our well being in their hands. There was also enormous confidence in the idea that state control and state planning work - that government can be trusted to take decisions, manage our money and plan for our future.

There was an assumption that industrial paternalism would be the vehicle for our employment and income security. Large corporations (whether state-run or private) were trusted to provide jobs and pensions. And there was also an assumption that women and families would simply hold everything together - providing the love and discipline necessary for our children to take their place in the state-industrial bureaucracy.

These assumptions are not safe today, even if they were understandable in the 1940s. But it is also important to remember why the welfare state is necessary. Before the creation of the welfare state peoples tore themselves apart. Many lived in fear of losing the basic necessities of life - food, employment, healthcare, housing. Even when times were good the fear of being unable to pay a doctor’s bill or of losing your job crippled the freedom of ordinary people. This lack of basic security fed revolution, totalitarianism and a widespread sense of hopelessness.

In fact it is arguable that contemporary socio-economic structures are even weaker now than the agrarian or industrial structures that preceded them. There is no security to be found in returning to the land (as G K Chesterton once dreamed); there is no security to be found in the firm - which is now both global and insubstantial. The only security we can look to is the security that we can give each other by agreeing to live together in a society which is commmitted to social justice. Security is something we create - if we choose to.

As Ursula Le Guin writes: Honour can exist anywhere, love can exist anywhere, but justice can exist only among people who found their relationships upon it.

Design principles for the new welfare state

The new welfare state needs to be redesigned in order to respect and support citizenship, family and community.

Citizenship is not merely a political concept. The founders of western thought - both secular and religious - were quite aware that there were some very practical conditions for citizenship. When Aristotle says “You can no more make a city out of paupers than out of slaves” he is recognising that poltical engagement requires freedom - both freedom from a master and freedom from necessity. Today we might also note that just having the formal right to vote every few years does not make us citizens, if our lives are spent on the treadmill of necessity.

Beyond the formal rights and duties of citizenship there are at least six practical conditions for citizenship. First, to be a citizen I must be in control of my life - I must make my own decisions. Second, I must set my own direction - I must have goals, roles and purposes that are clearly mine - that give meaning and focus to my life. Third, I must have the means to shape my life - and in the modern world that means I must have enough money to independently pursue my goals (although citizenship does not require that you have enough money to achieve those goals - in fact excessive wealth is a threat to citizenship). Fourth, I must have a place where I belong, where I can be secure and private - a home. Fifth, I must need other people’s help - citizens are interdependent and provide opportunities for others to flourish (autarky also destroys citizenship). Sixth, I must help others - I must contribute to and connect to the wider community.

This is not an idealistic account of citizenship. These six keys to citizenship are rooted in the basic psychology of how we come to value ourselves and the sociology of how we come to respect others as equals. Citizenship gives us the chance to be both free and equal; citizenship brings us together, while letting us each be the unique individual we were meant to be.

It is also vital that the new welfare state stops taking family structures for granted. The family is, and needs to be, the bedrock of human development. We know no better way of bringing good human beings into existence than through the family - and we should want no better way. It is a mistake to see families as some kind of reactionary or patriarchal structure; we should recognise that families can have many forms and that, in reality it is women who are being undermined by our refusal to recognise and support families. In fact, in a reformed welfare state, it would be quite possible to better support and honour women and families by directing income and support to women as a default arrangement.

Our new welfare state also needs to take the idea of civil society seriously. In between the family and the state, citizens need the widest possible spectrum of social, business, faith and community organisations by which to exercise contribution and receive support from others. Citizens want and need to connect - whether to earn, learn, have fun or pray. And the widest range of civil society options should be encouraged. We do need security and entitlement but we can achieve these without falling back on monolithic state-run public services. Instead, we need civil society solutions that open up opportunities for innovation, creativity and membership.

Social justice and entitlement

Justice demands we build a society where everyone gets the support they need to be a full citizen.

The size of the welfare state is not the central issue. On its own the size of the welfare state tells us little about the quality of people’s lives. Moreover the welfare state exists in an important symbiotic relationship both with the formal economy (the private and business economy) and the real and underlying economy of families and community. Money and public services are important, but they are not more important than love and all the other things people do alone or together to achieve better lives.

It is not the size of the welfare state but rather how the welfare state operates that will determine its impact. If the state keeps control over resources in order to provide services as if it were some enormous charity then its social impact can be harmful - both encouraging dependency, powerlessness and internal inertia. However when the welfare state actually works to put power and money directly into the hands of the most needy and enables them to organise their own support then this can strengthen both family and civil society. However this demands we move from the covert world of patronage to an overt economy of entitlement.

Politicians are now wary of promoting entitlements and rights, these are seen as code for undue welfare dependency. But it is dangerous for the state to avoid rights. Rights are something we can all share equally and they are something we can all exercise - they are part of our citizenship. If we move away from rights it is not clear what principles we should use to shape the welfare state. We will fall back on either the heartless paternalism and charity that failed so badly during the nineteenth and early twentieth centuries - or (and this is perhaps worse) we would move to some kind of state-engineered utilitarianism: the powerful will decide what we need - and give it to us whether we like it or not.

Within an appropriate framework of rights we must define robust entitlements and set minimum levels of support and income that are adequate to make our rights meaningful. Poverty is both relative and objective - it does change from place to place and from time to time. Nevertheless, in this time, and in this place we can define a level of entitlement - what is fair today.

In order to do this it will also be necessary to move away from the kind of reverse paternalism (or the politics of envy) that sees any distribution from rich to poor as a good thing. If we are concerned with justice then we need to ensure that there are clear and objective standards for defining our entitlements. If the welfare state becomes merely an instrument for redistribution then this will not help the poor; for it will undermine the very rights that can best protect the poor.

Reverse paternalism also threatens the recipient in another way; for as Simone Weil noted “no kindness can go further than justice without constituting a fault under a false appearance of kindness.” In other words if we give someone more than they need then we corrupt the relationship from one of duty into one of patronage. Giving people what they need is our duty - and this is often a definable good. The imperative is to define what is sufficient - what is enough - what is enough to enable full citizenship.

Practical next steps for real reform

Practical reforms will include the transformation of the tax-benefit system, personalisation in health, education and care and a constitutional settlement.

Taxes and benefits need to be integrated. We do not need two systems to take money from people and two systems to give money back to people - with the benefit system simply adding stigma and complexity to the lives of those who are poorer. We need to define a minimal level of income below which no family will be allowed to fall and to build that into the system; and we must reduce the irrational tax rates levied on the poor.

Wherever possible individuals and families should be in control of the most important decisions in their lives. Personalisation will work in education, employment, and in health and care. This will require radically new systems of entitlement and a local infrastructure of support. Citizens don’t need state-controlled menus - they need to be able to make the best possible use of their entitlements.

We need to create clear and rigid organsiational structures for the delivery of this new system of entitlements. Local democratic structures need to be re-established and the power of Whitehall reduced. Operational control needs to be local but our rights need to be established and confirmed by national legislation. Central government needs to discipline itself to focus on legislation and matters of national policy.

Real welfare reform will not be easy - but that is no reason not to try it.

Published by The Centre for Welfare Reform. 

Real Welfare Reform © Simon Duffy 2011. 

All Rights Reserved. No part of this paper may be reproduced in any form without permission from the publisher except for the quotation of brief passages in reviews.


Introduction to the Centre

Introduction to the Centre

Dr Simon Duffy, Director of the Centre for Welfare Reform describes the purpose and design of the Centre at its Westminster launch in March 2011.

About the Centre for Welfare Reform

About Centre for Welfare Reform

Fellows of the Centre for Welfare Reform discuss social justice, citizenship and the reason for setting up the Centre.

A Fair Income

A Fair Income

Simon Duffy explains how the tax-benefit system can be reformed to promote citizenship and families.

A Fair Start

A Fair Start

Pippa Murray makes the case for an integrated Personalised Pathway to enable disabled children and their families to take control of health, education and care funding.

Local Justice

Local Justice

Clare Hyde argues that the current criminal justice system is failing communities by drawing resources into damaging and inefficient systems.

Positively Local

Positively Local

John Gillespie, with Susanne Hughes, describes how community development and improvement must begin by putting local people in control.

Active Patient

Active Patient

Vidhya Alakeson's Policy Paper sets out the case for extending the principles of self-direction, and in particular the use of individual budgets, to many areas of health care.