Welfare Reform: Renewing the “Responsibility Society”

by Liam Byrne | 10.05.11 | in: Economics, Uncategorized

“Renewing the Responsibility Society”
Speech to the London Chamber of Commerce and Industry, Tuesday 10 May 2011

 

Summary:

  • The idea of responsibility is a clear theme coming through in feedback to Labour’s policy review listening events; welfare reform is therefore one of the policy areas where Labour needs to win back trust.
  • The Tories have a wrong-headed view of responsibility, with no sense of balance between the responsibility of people to work if they can, and the need of government to help provide jobs and protect the vulnerable.
  • The Lib Dems have a chance to show they are serious about standing up to the Tories, by opposing measures which risk pushing thousands of disabled people into poverty in some crunch votes on the welfare reform bill.

 Full Transcript:

(Check against delivery)

I am very grateful to the London Chamber of Commerce for inviting me here today.

Today, your report, published with Hays, offers an insight into the challenges facing the British economy over the next five years.

If there is one conclusion that stands out, it is the vital need to create the conditions that make it easier not harder to get people losing their jobs back into work.

It’s an instinct that is now shared by millions of people around the country –

Over the last few months, indeed over the last few days, the public has been very clear that they are worried about jobs and the future of jobs above almost everything else.

 Labour’s Policy Review

It is a message we’ve heard loud and clear.

Just before the elections began in earnest, Labour finished the first stage of the biggest listening exercise we have ever undertaken with the British public.

The months of winter and early spring saw every member of the shadow cabinet, and every member of our front-bench team travel the country

Listening, talking, discussing, arguing, debating with the public about their ambitions for the future, and their worries about the here and now.

Thousands of members of the public have come along to events with shadow ministers, and 20,000 submissions have come into to our Policy Review team.

This month and next, we are adding to that picture.

Asking our party members up and down the country what they heard on the doorstep, on the phone, on the school gate during the election campaign.

On 24th June, in Wrexham, I will report to our National Policy Forum what the public has said and we will then begin the business of shaping the final reports Ed Miliband presents to our party conference in September.

When Ed Miliband started this work last September, he said our goal was simple:

To get back in touch with the public.

The public we lost touch with in office.

The public, who I believe, are now saying to us:

  • That they are frustrated by the squeeze on the cost of living;
  • That they are dead worried about the betrayal of the British promise that one generation should do better than the last;
  • But, that they see the renewal of responsibility as the key way through the challenges we now confront.

 The ‘democracy of responsibility’

So today I want to say a little bit about responsibility, what it means for Labour, and crucially what it means for welfare reform.

As a country we have had a tumultuous time these last three years.

A global financial crash. The scandal of Parliamentary expenses. Now a deficit to pay down.

At times of new challenge, people want to stick by some tried and test values; values likes fairness and responsibility.

That’s why I think that throughout our listening events, and our campaign work, we’ve heard so much about

  • The need for a sensible – but determined – way forward on cutting the deficit;
  • A fury about the bank bonus culture that helped land us with today’s deficit;
  • The echo of the anger with parliamentary expenses and a sharper sense of betrayal about the broken political promises on tuition fees;
  • And the ambition for a system of immigration control and welfare reform that does not pay out before people have paid in.

Quite simply there is a sense, that if we stop rewarding people for doing the wrong thing, we could do more to help the people doing the right thing.

People want a lot more help with the squeeze on the cost of living. They want a lot more said and done about jobs, especially for young people.

But their instinct is that we need responsibility in the Treasury, in the City, in boardrooms, in Parliament, on immigration and on welfare.

In my experience, Britain is a country that believes in pulling together when the going gets tough.

We are a nation where people believe in live and let live.

The appetite for a democracy of responsibility, isn’t a concern about our neighbours’ private conduct; it’s about our public duties.

It’s not about private ethics. It’s about public ethics.

It’s about how people act in work, in politics, and in the life of local communities.

It’s about how people act to get a job if they can; to be a good parent; to behave as a good and peaceful neighbour.

As ever the British public has a sixth sense about what is needed now.

Responsibility and strong government

Their instinct is that the responsibility society is not going to be delivered by a government that walks off the pitch.

The lesson we’ve learned is not that we need less government – but different government; as different as the new times are from the past.

For the left, and those of us who believe in the power of state action, this is the key message.

Strong government, yes.

But a different kind of government from the past.

For new Labour that provokes some big questions; about how we move beyond the statecraft of the past to a different kind of political settlement for the future.

Implications for welfare reform

The implication of this analysis is therefore far-ranging.

It will no doubt, have implications for fiscal policy, for politics, for bank reform, for immigration.

But there are few fields of policy where the argument has more bite than in welfare reform.

If we’re to convince the public that we are the party to deliver a democracy of responsibility then we must win trust for our approach, our plans, our ambition for welfare reform.

In a sense this is no more than the insight that writers like Stan Greenberg and Philip Gould make clear at the beginning of new Labour and the new Democrats.

Back in 1990, Stan Greenberg argued the route to power for the left was by reclaiming values that were ‘rooted in the hopes and aspirations or ordinary working people’.

Values that centred on work, reward for work and restraint.

Values that connected to the ideas of opportunity and ambition and responsibility.

I believe we can win on this front once again; not least because the Tories are now at risk at getting the balance wrong between the responsibility of government and the responsibility of the citizen.

In fact the onus is on the individual and the government to work together:

  • To help get people back to work – but to work if you can.
  • To invest in opportunity – but to protect too the most vulnerable.
  • To pay your taxes – but in turn to provide a helping hand with getting on and up in life.

I want to say a quick word about each.

The responsibility to work

The public knows that just as individuals have got a responsibility to work, so too the government has got a responsibility to help.

The public believes that it is irresponsible to put people out of work without any chance of finding a new job, because they know it puts the benefits bill up through the roof.

A fortnight ago we saw GDP figures which showed the economy hasn’t grown at all in the last 6 months.

Right now, private sector employment is not growing fast enough to absorb the public sector redundancies we know are coming down the track this year.

Right now, five people are chasing every job.

Right now, respected organisations like the CIPD are predicting that unemployment will start to rise again later this year.

Yet, right now the government has responded by proposing a Work Programme that the Select Committee says could be as much as one-third smaller than the programmes Labour had in place.

They might think they have a plan for closing the structural deficit. But, the price is higher structural unemployment.

That price is paid by our young people and the long term unemployed.

When Labour left office, youth unemployment was falling.

Now it’s rising.

Yet all the Budget offered for young people was a back to work scheme which cost less than the DWP spends each year on stationery.

So, this morning, I am calling for the government to focus the first months of the Work Programme on helping get our young people back to work.

But just as serious is the picture for the long-term unemployed.

There are now 847,000 people who have been unemployed for a year – an increase of 120,000 in the last 12 months.

More worrying, there are now 367,000 people who have not been in work for over two years.

This failure of the government to grip the problem of unemployment in its crucial first year of office has pushed up the benefits bill by £12.5 billion over the rest of the Parliament – that is £500 for every household in the country.

So as the Work Programme beds in we need to make sure that it doesn’t have its work cut out.

We have heard very little about how the Programme will work in practice and which groups will be targeted to ensure that it is bringing successful outcomes.

My fear is that the Work Programme is not geared up to quickly focus on getting groups with differing needs such as disabled people and the long term unemployed into work.

As your report published today highlights, we have to incentivise businesses to pick up the slack left by the job losses that will appear in the public sector.

Our responsibility to the most vulnerable

Second, my basic position is that we should cut welfare to help cut the deficit; but we should cut welfare by pushing unemployed people into jobs; not pushing the disabled into poverty.

That is what I now fear the government’s welfare reform bill is about to effect.

Just as government has a responsibility to invest in opportunity, so it has a responsibility to protect the vulnerable.

I think ESA should be reformed, but it is wrong to ask people still recovering from cancer to start filling in job applications.

I think DLA should be reformed with a new, independent gateway, but a big bang approach is irresponsible and risks pushing thousands of disabled people into poverty.

And it will waste over half a billion pounds on retesting and retesting, including the disabled, when thousands of disabled people who are blind or have severe mental health problems, are not going to get better no matter how often you re-test them.

The abolition of the DLA mobility payments will overnight, leave disabled people as prisoners in their care home.

And the halving of disability premium for disabled children risks punishing some of the most vulnerable people in our country.

Put this together, and this is an approach to reform which quite simply is financed by cruelty to the disabled.

It is irresponsible, we call on the government to change course before it is too late, and we will continue to seek to change the welfare reform bill to make it better.

These measures are not cruel to be kind. They are just cruel and they should change.

The responsibility to help people get on

The final aspect of our plan for welfare reform, has to be to restore the sense of reward for those who do the right thing; who want to get ahead; who have ambitions for their future.

Labour is not ahead on trust on welfare reform right now.

And we can’t win back trust by simply sitting back and letting the government get it wrong.

I think that means

  • We have to be the party more credible on getting people back to work – but demanding people work if they can.
  • We have to be the party that stands up for the protection of the vulnerable and the war on poverty.
  • And we have to be the party that stands for restoring a sense of a ‘something for something’ deal at the heart of the welfare state.

Too many families today do not believe that they will get on what they put in.

They don’t think there are rewards for taking responsibility and doing the right thing.

The Tories are about to make sure they never do.

  • If you do the right thing and save, you lose any in-work benefits if you’ve £16,000 in the bank.
  • If you want to go back to work but need childcare, you’re about to get your help cut.

The Tory vision, rehearsed over and over again in the House of Commons is that the welfare state is a safety net there only if you’re in the direst of straits.

That is not a welfare state for a democracy of responsibility.

We need a bolder vision. Of a welfare state that genuinely helps those trying to get ahead in life.

That means we have to ask ourselves what are the new risks that families today need to safeguard themselves against.

Where – and when – do people need that extra help not just to pick themselves up when things go wrong, but to make more rapid progress when the wind is behind them.

Those risks are very different to the risks that Beveridge identified.

Take the basic problem of unemployment benefit.

If this recession showed one thing, it showed unemployment can hit anyone.

Add to this the trend for more and more people to become self-employed – not least as firms push down fixed costs, and move demand-risk onto a more self-employed work-force.

Nearly ¾ million more people have become self-employed in the last decade.

When more and more higher earners face the uncertainties of unemployment, is there a way of protecting people’s income in the first period they are out of work, as they do so successfully in Denmark?

Or take the care crunch. Many now have to juggle the obligations of social care, and more men and women now face costs of childcare rising so fast, that with the cuts to childcare, the costs threaten the incentive to go back to work.

The Office for Budget Responsibility has already warned that with families facing reduced childcare support, this could affect the hours worked by parents.

Or take the new life-cycle of savings.

Young people now can expect many more jobs in their lifetime than their parents.

The public are really worried about how hard it has now become for young people to earn enough to pay off their college debts, save for a deposit for their house, and then save up for a pension.

To this picture of new risks, we have to look at the way welfare services are delivered.

How can we do more to encourage mutuals, cooperatives, social enterprises, organisations that are powered by the value of human relationships to help deliver a stronger welfare system in the future?

These new risks and challenges provoke us to ask the question, is the welfare state in the right shape for the future?

This is the territory our policy review will explore.

We pose these questions clear in the knowledge that if we are to invest in new help, in the world of a tight fiscal position, we have to look again at the structure of support we offer in the welfare state and ask ourselves where we have got to make some ‘switch spend’ decisions.

Line by line we have to review the budgets are ask ourselves would it make more sense to offer fewer, simpler, bigger things that people would really value.

From my days at the Treasury, I know there will be only tough choices on the menu.

Conclusion

There are I think a number of tests that we have to pass on welfare reform, to win once again the public’s trust.

But, make the right decision on the future of the welfare state, and I think we can pass those tests and win.

  • How do we reward work, protect the vulnerable and get tough on those who are consistently found shirking their responsibilities?
  • Does the new welfare state actually help people meet the new risks they confront in life?
  • Do the public expect to see a reshaping of the universal benefit system which bends to the differing needs that people face as they go through their lives?
  • How does a party which is after all, called the Labour Party, stand once again as the party of the right and the responsibility to work?

Right now Britain is pessimistic about the future.

People are feeling the squeeze. They’re worried about the next generation.

I believe we can rebuild a nation of opportunity. But if we build alongside it a democracy of responsibility.

Ends

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