Priorities and principles: James Purnell responds on welfare reform

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reform, welfare

Author(s):  James Purnell
Published date:  05 Aug 2011
Source:  IPPR

The publication of IPPR’s proposal for National Salary Insurance – to provide higher benefits to people losing their job, but repaid when they’re back in work – has sparked a good debate about the left’s attitude to welfare reform. A number of responses to our paper have been thoughtful and productive – particularly from Kate Green and Dan Paskins. In response, I want to separate two elements of the argument we are making.

In doing so, I don't want to start from what ‘the public’ might think or want. I happen to think that the agenda we are outlining has the potential to help the left make a positive, popular case for welfare. And that, as a believer in democracy, it is not a heinous crime to think about what voters might think and want. But to keep the argument clear, I want to make the case on principle alone.

First, the left cannot avoid making some big strategic choices about where its priorities lie in the welfare state. This question needs to be faced whatever we think of the government's current fiscal path. Britain has a structural deficit – in other words, we are spending more than we would be raising in taxes, even once the economy returns to growth.  So, a Labour government would have to raise taxes and cut spending, even if it decided to close the deficit more slowly.

That means there's unlikely to be extra money for big extensions to the welfare state any time soon. Meeting the extra pressures we already know about, like social care and pensions for an ageing population, will be hard enough.

That leaves us with two broad options.

Defending exactly the same settlement as Labour left in 2010, less the Coalition’s cuts, is one credible option. But that plus lots of new things as well just isn’t. Indeed, that is exactly the position Labour ended up in at the last election – unable to offer major new policies in the manifesto because it hadn't freed up any resources to fund them. IPPR is arguing for a different option. Rather than assume the welfare settlement is perfect or untouchable, we would like to see some big extensions to it – free universal childcare, a higher basic pension, properly paid parental leave, a job guarantee against long-term unemployment and refundable salary insurance. These extensions would transform the welfare state, but they could only be put in place if we scaled back other valuable but less important areas of spending.

Some people have reported my argument as saying that “we should get rid of free bus passes or winter fuel allowances”, which is not what I'm saying . What I am saying is that we should work out what our priorities are. Free bus passes might be considered a top priority along with universal childcare and a job guarantee, and that might mean winter fuel allowances and perhaps longer parental leave or the Dilnot proposals on long-term care allowances were considered lower priorities. But I'm not proposing that particular allocation – I'm just illustrating the point.

In short, it would be better to order our welfare spending according to our values and priorities rather than simply because something is already part of the welfare state. The alternative is to end up in an essentially conservative position of just defending the status quo. Or the unrealistic position of thinking there are no limits on public spending.

The second big argument is that we need to strengthen the values of contribution and reciprocity in the welfare state. Not, as some have argued, to pander to right-wing attitudes, but to implement left-wing ones. It is liberals who argue for individual rights and independence. It is Labour that stands for collective obligations and interdependence. So the welfare state isn’t an entitlement emanating from a contract, but a mutual commitment to do the right thing by each other – to protect each other.

That’s why expecting people to look for work in return for support or having proper gateways to benefits to make sure people get what they are due is not a deviation from left-wing principles but their embodiment. And of course – as Ed Miliband recently argued – that responsibility has to be shown right across society, including from those who benefit from living in our country without paying tax here. It doesn’t matter if one expression of irresponsibility costs the taxpayer more than the other; it’s the principle that counts.

So, our proposal for National Salary Insurance is an attempt to revive the contributory principle, which has been gradually marginalised over the last few decades. It would provide higher, non-means tested benefits at the point when people need it most – in return for people having paid into the system. Kate Green is right to say that we need to also find ways to recognise the contribution that people make through care – and ensure security for the minority of people who are semi-permanently unable to work. The pensions system already recognises caring contributions – with parents and carers getting National Insurance credits, just as workers do – and that could apply to our NSI proposal.

Strengthening the contributory principle in this way does not mean abandoning universalism – and in this area in particular it would lead to less reliance on means testing. It just means being clear about where universalism is really important. I think universal services are particularly attractive as they embody real relationships between people rather than just cash transactions. Some – like the NHS – embody a broad spirit of reciprocity and mutuality, and give that institutional form. So, I think childcare should be a universal service, rather than a cash transfer, because tax credits and vouchers are not as effective or durable as a free service that everyone uses.

For the last political generation, the left has been playing a defensive game on welfare – seeking to hold back a taxpayer rebellion and to redistribute by stealth on the side. That has left a shaky legacy. In response, the left can simply choose to defend the settlement in place when Labour lost power, believing there are no hard choices or priorities to be made. And it can advocate a liberal, individual rights-based approach to welfare.

Personally, I don’t think the first is credible and the second does not chime with the Labour tradition. Instead, we should use this period of opposition to ask fundamental and difficult questions about the priorities we would make and the principles we hold. IPPR’s paper and my film on Newsnight has started that conversation – and I look forward to that debate continuing.

See other responses to IPPR’s welfare reform proposals at: