Welfare Reform is correct in principle

27 May 2015 Guest Author    Last updated: 6 Jul 2015

There is a difference between theory and practice - despite some problems, Welfare Reform is a social good. Ian James Parsley writes exclusively for Scope.

The biggest problem with the "welfare debate" in Northern Ireland is that we are not having one - at least, not in any reasonable public sphere.

What we have is a clash, based on labels, between those who don't trust the Tories and those who believe everyone on benefits is a scrounger. If we are serious about a working welfare system, we need to move beyond pre-existing political partisanship.

First ask the basic question of what a welfare system is for; next how the challenge of achieving that may have changed over the years; and then how we may achieve the optimum outcome, specifically in Northern Ireland.

This should be aside from the context that, realistically, Northern Ireland's system has to be very close to Great Britain's in order to be affordable via subsidies from the UK exchequer (an arrangement known as "parity", which requires welfare and taxes to be similar across the UK).

The modern system dates back to the five “giant evils” of a 1943 report by Liberal economist William Beveridge - squalor, ignorance, want, idleness and disease - which proposed dramatic changes in social policy to tackle them.

These included (in practice) the introduction of a National Health Service free at point of access, state-sponsored legal aid to ensure access to justice, and a welfare system to act as a safety net.

These were all introduced by the post-War Labour government in Great Britain, and (although not immediately in all cases) subsequently by the Unionist administration here.

Beveridge’s fundamental purpose was to tackle poverty; his welfare system was to be a safety net. The question in the 21st century, therefore, is does the welfare system provide a safety net to help tackle poverty? We need to be clear that the answer to this, conclusively, is "no".

The birth of Welfare Reform

The current UK Work and Pensions Secretary (with responsibility for welfare) is Iain Duncan Smith, whose previous role was as Founder and Chair of the Centre for Social Justice. This think tank, established in 2004, came to not dissimilar conclusions to Beveridge six decades earlier.

It identified five key drivers of poverty - family breakdown, worklessness, educational underachievement, indebtedness and addiction. Other issues, such as poor housing or low income, are associated with poverty but, the Centre argued, they were symptoms rather than causes - and the aim was to tackle the causes.

My own work with the Centre in Northern Ireland found little difference between Belfast and the rest of the UK, particularly from post-industrial cities such as Liverpool or Glasgow. Issues like social segregation and the nature of devolution mean that the interventions required may need to be differently administered, but the fundamental drivers of poverty were the same. (I personally found little evidence, however, for identifying "family breakdown" as a driver of poverty; it seemed to me there was an inherent bias towards arising from the Christian ethos of the Centre's founders in that regard.)

Tackling these drivers is not something welfare can do alone, nor is it the sole reason for the system. However, it is fair to ask whether the system is helping as much as it could. Plainly, it is not. Why is this?

By 2010, the system did almost nothing to tackle worklessness, educational underachievement, indebtedness or addiction at all. Both by design and culture, instead it compensated people for being in poverty, rather than helping them out of poverty. There were two particular deficits in the system which stood out for me - in many cases it actually penalised people for working, and it was far too complex.

Benefits of work

Work is the fundamental route out of poverty. It is commonly stated that the majority of those in poverty are in work, but there are two flaws with this. Firstly, it suggests "poverty" is the same as "low income"; secondly, it misses the point that the vast majority of those in work do not experience poverty (however defined), whereas the vast majority out of work do.

Work is about far more than income - it is about social networks, self-esteem and further opportunities. It is, therefore, to be encouraged - yet, in a huge range of circumstances, the UK's welfare system meant that so many benefits were lost by those entering the workplace that their income dropped overall.

The Massachusetts-based Institute for Healthcare Improvement condemned the UK welfare system for exacerbating mental health problems precisely because it traps people in a cycle of low self-esteem with no way out through work. That is a nonsense and it was clear in 2010 that it was long past time for reform.

Over-complexity also causes difficulty and stress to the people it is supposed to help. The array of credits, top-ups and rates developed over the years led to confusion about entitlement. In my advisory capacity I frequently meet people who enquire about accessing one benefit and turn out to be missing out on another because they found the system bewildering.

The low self-esteem of many reliant on benefits also limits their ability or even desire to spend time working out their entitlements. These different layers of rates and benefits are causing too much confusion and actually cost people support to which they are fully entitled. By 2010 it was clear that this too had to be reformed.

Furthermore, we cannot ignore one other obvious point concerning the whole culture of the welfare system - there is a culture not of supporting people, but of trying to catch them out. The assumption is almost that any applicant is a potential fraudster, so any application for any benefit should be treated with suspicion.

What is supposed to be basically humane and a safety net when people need it becomes a paper trail, adding to the complexities and stress. Actual fraud happens, of course, but rates are actually extraordinarily low, and this is even more the case in Northern Ireland than elsewhere in the UK.

Structure of reform

If the welfare system is designed to provide a safety net to those who need it as part of tackling the key drivers of poverty, it was plainly not working in 2010. The 2012 reforms passed in Great Britain include new "work assessments" and "tapers" designed to ensure those who can access work can do so without financial loss, while those who cannot are properly supported; "Universal Credit" is designed to simplify the system and provide direct support where required; "Personal Independence Payments" aim to provide more support to people in greater need (and, implicitly, less support to those in lesser need).

As with any reform, there are of course winners and losers - but that is the whole point: the reformed system is more targeted on providing interventions which will have real outcomes, particularly to help people return to work.

A system designed to be more personal may also develop a culture of support rather than trying to catch out.

Ah, but Northern Ireland will surely lose out? It is hard to see how that is the case. For example, Northern Ireland has the highest rate of economic inactivity in the UK, and the reformed system would help reduce this gap; Northern Ireland has the highest rates of disability, and the reformed system will provide more targeted assistance for those in severest need; Northern Ireland has the lowest rates of fraud, and hopefully the reformed system will recognise that and be more helpful in ensuring those entitled to support receive it.

In practice

Has it all gone perfectly? Of course not. Partly this is the nature of reform - things will always go wrong, not least when IT systems are involved. Part of this, no doubt, is the nature of the Conservatives - alongside legitimate reforms they are indeed seeking to introduce "cuts", for example by restricting annual rises in benefits, in a way which in fact goes against the whole basis and spirit of the programme.

Nevertheless, we need to distinguish between the principles of the reforms, the practice of the reforms, and proposals which are not reforms at all but straightforward cuts. Northern Ireland, therefore, should introduce welfare reform. Its needs are not significantly distinct from elsewhere in the UK, and indeed it stands specifically to gain in some areas.

However there are three areas where Northern Ireland needs to do particular work for the reforms to be truly beneficial.

Firstly, the reforms assume a functioning state-sponsored childcare system as in Great Britain; this does not currently exist in Northern Ireland. Secondly, they assume the availability of work; there remains too great a reliance on the public sector and non-export business such as construction (although recent levels of foreign direct investment provide grounds for hope).

Thirdly, the reforms as now being carried through include a Spare Room Subsidy (the so-called "Bedroom Tax"), which has nothing to do with the original research and would have a particularly negative impact in Northern Ireland given the reality of social segregation; this means that Northern Ireland needs initially to provide mitigation against this, and that it then needs to move decisively to address that social segregation.

However all of this, without exception, can be done by a devolved Assembly with very limited budgetary consequences (certainly far more limited than breaching parity).

The principles of welfare reform are sound. However, our devolved Assembly has the capacity to shape reform to suit us, even within the confines of parity. I fear the fact we have wasted five years not having a proper debate on the topic is our fault, no one else's - but, perhaps, better late than never!

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