On the front foot: Designing a welfare cap that reforms social security

Our plan for a reformed social security system that controls overall welfare spending while preserving key entitlements

Article

Exploring the historical trends behind - and current public attitudes towards - social security spending in the UK, this report argues that a welfare cap could provide an opportunity to advance centre-left objectives for reforming welfare and making the best use of public expenditure.

The concept of a 'welfare cap' will be fiercely contested territory between now and the next election. In response, the argument presented in this report is that the centre-left should agree with the need to control social security spending, but contest the cause of rising expenditure and set out a distinctive strategy for reforming spending. In particular, this should maximise social investment over what might be termed 'compensatory welfare'.

To make this case, the report first presents a detailed overview of trends in social security spending throughout the postwar period, showing how much the system has changed since the Beveridge era. It then presents original polling from YouGov on public attitudes towards social security and tax credit spending, which shows significant misconceptions about where social security spending actually goes, but also strong support for a number of strategic shifts in spending which could improve the system and save money in the long run.

Finally, the report sets out the design of a welfare cap that could promote three core strategic objectives:

  1. Bringing down cyclical welfare spending as quickly as possible, while keeping mechanisms in place to support demand during economic downturns.
  2. Advancing reforms that reduce the costs of market failures, and switch resources to social investments that target the working-age population.
  3. Defending the value and integrity of the state pension, while addressing the fiscal challenges of rising longevity.

Click here for a PDF of the full results of the survey on public attitudes towards social security and tax-credit spending conducted by YouGov for IPPR.

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