Where next for the Labour Party on Welfare?

In recent weeks, the Labour Party leader Ed Miliband has been subject to repeat attacks from senior party colleagues including John Prescott, David Blunkett, Andy Burnham and Maurice Glasman, (see here). Criticisms have been mainly due to a perceived lack of “rock hard defence” (against the government) and a failure to “shout loud enough” on important policy issues. Unsurprisingly, welfare has been top of the list of policy areas where Miliband is accused of lacking clarity and substance (see here). Below I sketch out how a new progressive welfare policy might look, considering some key elements that I believe the party have not been ‘shouting loudly’ enough about.

First, the strongest dividing line between a Miliband and Blairite welfare policy must lie in its approach to the economy. New Labour welfare policy stood in the shadow of a neoliberal supply-side approach towards unemployment. As is noted elsewhere, policymakers adamantly denied that regional variations in unemployment were a result of demand-side deficiencies, despite strong evidence to the contrary (cf. Beatty and Fothergill, 2002 and 2005; Theodore, 2007). Miliband’s Labour Party ought to demonstrate its commitment to new job-creation projects in areas of high unemployment. They must think creatively of ways to develop an inclusive, green economy which brings much needed work opportunities to areas of high unemployment. As argued before, the ‘right to work’ must be advocated as a central tenet of a coherent welfare policy.

Second, the Labour Party ought to invest more heavily in training programmes for the unemployed – so-called ‘active labour market policies’ (ALMPS). The difference in spending between the UK and other OECD countries is well illustrated by Daniel Sage (see here). He notes that the UK spends just 0.4 per cent of GDP on ALMPS. Perhaps unsurprisingly, this is well behind the Scandinavian countries e.g. Sweden at 1.1 per cent and Denmark at 2 per cent. A greater shock however is the difference between us and our more Liberal brothers, the Germans and French, who spend 0.9 and 1.2 per cent, respectively. No welfare contract between the state and the unemployed can be genuine if it does not include real resources to help people obtain sustained work.

The two points above thus cover the state’s obligations on the ‘supply’ and ‘demand’ side of unemployment. Decent and realistically attainable work must be in place and people must be equipped with the necessary tools to be able to get it. Looking more specifically at the welfare system, Labour must outline plans for simplifications. Irrational cost-saving mechanisms such as the immediate withdrawal of payments upon somebody obtaining work are counter-productive, causing people to fall back on crisis loans which are far more costly in the longer term. The Labour Party must welcome the principle of simplification behind the Coalition’s Universal Credit and propose its own changes which take this further.

Once promises have been made on these fronts then the Labour Party can state its position on the most politically sensitive issue – conditionality – the expectations upon welfare recipients in return for state support. This is an uncomfortable area for Labour leaders and it is one in which they know that they are consistently behind the Conservatives in opinion polls. It is thus something on which they must offer greater clarity.

The scale of ‘benefit fraud’ is notoriously difficult to measure. Left-wing commentators’ often use recent estimates from the Department for Work and Pensions which state that only 0.6 to 0.8 per cent of total expenditure is lost to fraud (DWP, 2009). My personal opinion is that this is probably wrong for the following reasons:

1)      It’s inevitably difficult to measure something that people are likely to lie about

2)      From working with benefit claimants in London, it seemed likely that a higher amount than that did cheat the system for all sorts of reasons, (e.g. they were moving from JSA to work and were waiting for their first pay cheque to come through so that they could be sure they could meet that month’s rent)

In spite of this, the fact is that two-thirds of working-age benefit claimants are now in work (see here) and many of the other one-third are too sick to work. Thus, there must be a sense of perspective on the issue of benefit fraud. Labour Party leaders must avoid, at all costs, the tabloid frenzy of ‘scroungerphobia’. Nonetheless, if the state genuinely does meet its obligations – unlike the current and previous administrations – then a fair degree of conditionality can and arguably, should be a part of the welfare system.