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WELFARE REFORM

Britain's social safety net has been "deliberately removed and replaced with a harsh and uncaring ethos" according to  a report commissioned by the UN. "Ideological cuts" to public services since 2010 have led to "tragic consequences".

Britain has the second highest level of inequality in the Western world. Much of the cause of this is a failure to provide a supportive, efficient welfare system. By cutting welfare spending we have created greater inequality, and thwarted social mobility. Inequality, as we are finding out, has huge financial and social costs.

Is our welfare state too large? No, not at all. We spend 21.5% of GDP on welfare. European countries spend on average 27%. Is welfare a drain on resources? No, it is not. Much of welfare spending is an investment in the future. It helps the nation function more efficiently, more fairly and with proper responsibility towards its citizens. Much of the cost is repaid in increased productivity.

​Endemic low pay means that a third of households will depend on universal credit - a third earning too little to survive, many relying on the 2000 food banks that now exist throughout the country.

Austerity has been disastrous. The social and economic costs are huge. The effects of the swingeing austerity imposed over the last nine years will last decades unless urgent action is taken. 1.3 million people have been tipped into destitution because of cuts, the cost of housing, the lack of social housing, benefit changes and delays. 4 million children now live in poverty, 13 million people are in work poverty, and 4 million are trapped in deep poverty. 740 homeless people died last year, many of them on our streets. 24,000 people sleep rough.

 

The welfare safety net? It's full of holes. It has not been neither maintained nor improved. In too many cases it has been reduced or removed altogether.

 

The often repeated message is that we spend too much on welfare. The truth is that we don't spend enough, and what we do spend is not properly targeted to those who need it most, or where it can be of most benefit. What greater example could there be of the failure of British politics? Political parties of all persuasions have for years carelessly failed to update and reform the welfare system. As a result precious human capital has been squandered, the hopes and aspirations of the young have been dashed, and too many families have had to suffer unnecessary hardship and anxiety. 

  

One of the top reform priorities must be to significantly reduce the level of inequality in Britain and to reform and redesign the welfare system to provide proper support to those who need it. Iniquitous taxes such as the bedroom tax need to be abolished, the welfare safety net needs to be reinstated, and additional measures, particularly in relation to social housing, need to be addressed to reduce the high level of insecurity felt by many families.

Welfare spending needs to be raised to be in line with comparable European countries and that must mean a complete overhaul/reform of Universal Credit, which has had the effect of reducing the incomes of low income families and driving too many into destitution and homelessness.

 

For too long companies have been able to get away with not paying people a living wage and passing the problem on to the state. The lack of real wage growth in the economy has put a huge, and totally unnecessary, burden on the state and on welfare services. Debt has been allowed to become a substitute for decent wages. The stress and misery this has caused millions of families throughout the country is unacceptable. 

 

Living wage reform: The living wage must be exactly that: a living wage. This needs to be £10.50 per hour. This would rise annually by the rate of inflation. Zero hours contracts would be replaced by 'limited hours contracts'. These would require a mimimum of 20 hours work to be guaranteed and paid at a rate of 20% in excess of the living wage.

Welfare is in many ways a barometer of the success or failure of a government's ability to run a vibrant, successful economy where benefits are fairly divided. In Britain, successive governments have failed to provide the conditions for a successful economy to flourish. For example, no government has had a proper industrial policy for nearly three decades. Manufacturing has shrunk dramatically. As a percentage of GDP it has fallen 30% since 1970 to a mere 8%. Social mobility hardly exists. Of the 14 million people who are in 'work poverty', many have to rely on food banks. Welfare has had to become an important component in too many people's lives. 

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Britain, the 6th richest economy in the world, has a disgraceful level of poverty. Not only is this a failure of politics, it is hugely expensive in real terms and in terms of wasted human capital.

The coronavirus has highlighted the weakness of our welfare system. It has brought to the fore a discussion about Universal Basic Income. UBI has many benefits. It is simple, and it could be a major factor in the elimination of poverty. 

Automation technology and AI: The effect of automation technology and Artificial Intelligence on the economy and on the lives of working people has to be addressed urgently. Politics is behind the curve. Society's attitude to work, and the reduction in work available to provide income, will become major issues in the coming years. It is increasingly likely that a system of Universal Basic Income may become a necessity.

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