Andrew Lilico: How we should approach welfare reform

Welfare reform is back under discussion.  During the 1980s and early 1990s this was a hot political topic, probably because of high unemployment, and even through the mid 1990s many of us wrote pamphlets in which jargon such as “Wisconsin-style systems”, “workfare”, “compulsory private insurance”, “opting-out” and so on were the lingua franca.  This debate largely perished with the collapse of Frank Field’s “thinking the unthinkable” project, and since then (with the exception of a growing — rather confused — discussion of pensions reform, of which I shall write more another time) Gordon Brown’s bizarrely complicated system of means-tested benefits and tax credits has ruled uncontested-though-roundly-criticized.

More recently, however, the report of Iain Duncan Smith’s Social Justice Policy Group and David Cameron’s speech at the 2007 Party Conference has re-ignited the discussion.  I want here to offer a few principles that I believe should guide our engagement with this issue.

First, I believe that we should paint an accurate but restrained picture of the problem, giving it sufficient emphasis to demonstrate our genuine concern, but avoiding creating the impression of a world in crisis or that matters were much rosier in the past.  If we want a “sunny uplands Reganite” Conservatism, we must appear optimistic about the world — “you can get it if you really want it”.  Implying that things are much worse than they actually are makes one appear dour and unpleasant, whilst implying that the world was much better in the past makes one appear like one of those Conservatives that looked back to a mythical golden age before those “nasty feminists and homosexuals” ruined everything in the 1960s.  I believe that our position should be a “much done, but much left to do” analysis of the world, and we should characterize Labour as having spent ten years failing to move things on.

Next we should characterise the problem in the first instance as one of misery for those suffering deprivation and distress, rather than as one of a source of threat to the comfortable. That is to say, the problem (or problems — for they are many) should be seen as principally a social problem, rather than a crime-and-punishment problem or a taxation burden problem, but without failing to note, as secondary features the crime-and-punishment and taxation elements.  Far too often in the recent past when Conservatives have discussed welfare reform, we have seemed as if the main issue was that we were selfish rich people who resented having to pay taxes to help the poor.  The other error would be to seem paranoid, as if our desire to reform the system were driven by a fear that gangs of the “feckless poor” were roaming the streets about to break into our houses and steal our goods.  Although it is, of course, foolish and inefficient to pay more for things than is useful, and though of course it is true that social problems contributed to (or at least not helped sufficiently by) the welfare system may in a small number of cases lead to criminal behaviour, nonetheless our vision of welfare-reform must not be fear- or finance-driven, but compassion-driven, seeking to reform the welfare system so that the poor are helped more by it.

Third, the solutions offered should strive, in the first instance, to involve the state removing obstacles it itself creates to private/community action (through markets or charities or families or churches or other private/community institutions), secondarily by the state creating the conditions in which those institutions can flourish without further assistance, thirdly by the state facilitating or encouraging the formation of private/community groups, fourthly by the state creating its own versions of private/community action (e.g. social insurance), and only lastly via direct imposed-state-provision solutions (e.g. taxes and benefits). All five elements will be necessary (and that should be acknowledged explicitly), but the hierarchy of desirability should be recognised.  Far too often discussions of welfare reform consider only extreme alternatives — “tax and provide benefits” or “learn to help yourself”.  There are many other ways people can be helped apart from providing benefits and urging them to heal themselves.  Conservatives have always known this — we just haven’t said it explicitly enough.

Fourth, within the solutions offered, we should strive, insofar as is feasible and practicable, to favour solutions that permit of the expression of self-sacrificing love and pity and other moral elements — not shying away from these to colder, less "cringing" utilitarian notions, such as “promoting efficiency”, “helping labour markets to function properly”, “increasing productivity”, and so on. This will mean more personal solutions, and ones that involve more judgement and more cases of individual controversy and the possibility that matters might have been handled differently. That should be seen as a strength, not a weakness.  Welfare reform is an area in which the truth is that people are often helped more when (a) they are given more assistance when they themselves have done more to deserve it; and (b) they are given more assistance by people that want to help them, as opposed to bureaucrats simply doing their jobs.  Faith-based assistance, morally-infused mentoring schemes, and the language of right and wrong, duty and responsibility, and so on are very often more productive than less morally brave approaches that fear to been seen to condemn and seek to “help without patronizing”.

Fifth, we should entirely eschew any notion that our goals are egalitarian.  I have written before about why I consider egalitarian goals not merely misguided but actually wicked. We do not want our welfare system to promote equality.  Quite the reverse. We want a system in which those that are loved more tend to do better than their individual qualities would merit alone. For love must issue in effect if it is to be true love at all.  It is a considerable challenge to avoid the temptation in this area to claim that we are promoting equality — for the idea that “more equality is better” seems to many people as un-contentious as motherhood and apple pie.  So we must be robust.  The Socialist can keep his goal of equality, and we shall have our goal as love.

Finally, our overall solutions should be framed so as to maximize ordered liberty as their underlying guiding principle.  I have written before that the proper approach for the Conservative Party at this time is to seek to appeal to Paternalistic sentiments and voters, whilst being true to our own Whiggish nature.  We must speak the language that Paternalists need to hear, but we must never pretend to be Paternalists ourselves.  Our solutions must be recognisably Whiggish, promoting the use of markets, guaranteeing order, and enhancing liberty.  Indeed as Whigs we are the Champions of the Underdog, but we are also the Champions of the Individual, and his freedom to combine with others into families and other elements of civil society, and to use these to express his love and freedom in action and, as far as is feasible and compatible with order, to help others because that is his own will, not because the State compels him.

Comments

[Tony Makara]

'Welfare to Work' is an area where politicians from all parties have been less than honest with the public. The fact is that with over five million jobless and only just over half a million jobs available at any given time it is physically impossible for everyone to work. So first and foremost politicians should stop promising full employment.

The only way to achieve full employment under current economic conditions is to create a public works programme. However politicians are afraid to undertake such a radical venture.

Politicians should set more realistic goals. All talk of trying to shoehorn every disabled person into work should be abandoned and instead the focus should be set on moving JSA claimants into the vacancies that are available. Even then aims have to be realistic with 1.6 million JSA claimants and only 600,000 or so vacancies available. So again the approach should be streamlined and the focus set on finding work for the youth and young families. That should be the priority.

Labour's egalitarian dreams of finding work for severely disabled people and the old have wasted resources and at the same time youth unemployment has risen by 20%. So the Conservative party must end the one-size-fits-all culture of jobcentreplus and have a more streamlined and targeted employment strategy.

[William Norton]

Not sure about Whigs as the champion of the underdog. Which Whigs do you mean (Shaftesbury? Walpole? Fox? Grey? Devonshire? - the only one of that lot who could even tenuously claim to be a self-made man was Walpole, and he made himself by embezzling public funds). But perhaps we don't want a digressive discussion on Whiggery.

I wouldn't disagree with the principles Andrew sets out - but they strike me as being a set of spokes without amounting to a complete wheel. Welfare reform needs a Big Idea. Grey's mob offered Benthamite modernisation to stave off the Malthusian horrors of the undeserving poor; Attlee offered socialist modernisation to prevent the horrors of another Great Depression. What's our Big Idea?

[Tony Makara]

We can't get people into work if the work isn't there. Whats more the work won't ever be there unless we re-build a manufacturing base. The service-sector cannot employ people in sufficient numbers for a population of our size. A population that looks to expand rapidly.

A stop-gap measure would be a public works programme. It seems crazy to me to pay people JSA, housing benefit and a council tax allowance and have them rotting on the dole when for a little extra money we could make them waged and have the manpower at our disposal to undertake public works. Why fully contract out when there is a workforce ready to be utilized?

Politicians really ought to think twice about promoting harebrained schemes to get the disabled and lone mothers into work. Such thinking is big-hearted and empty-headed.

[Opinicus]

The solution is a Citizen's Wage

And please lay off the Whigs or I will be goaded to have another go.

[Lucy]

The approach being described is broadly utilitarianism. Acting for the greatest happiness includes taking into account the satisfaction of emotional and personal needs, not just the practical or financial.

[Andrew Lilico]

David Cameron's Big Idea seems to me to be the use of the "little platoons" on a scale not seen since the 19th century. He believes that we should use the voluntary sector as the delivery agency of welfare. Personally I would agree that this is a good way forward insofar as we are talking about benefits and other forms or assistance that are targeted (through means-testing or otherwise) at the poorest - intended as charity.

On the other hand, if we are talking about unemployment or sickness insurance for the relatively affluent, then I believe that the current system treats us as if we were charity recipients when it would be better if we were regarded as insurance beneficiaries - complete with the ability of other insurance beneficiaries to purchase higher levels of insurance than the minimum we are required to have.

So, for example, the state requires me to have third party car insurance, but it does not prevent me from purchasing a comprehensive policy that embeds my third party insurance (I do not need to have *one* third party insurance policy to meet the legal requirement and then have to purchase a second policy if I want comprehensive insurance). In the same way, I believe that I ought to be able to buy (from the State in the first instance - we can always consider privatising the delivery of the system later if it works) additional unemployment insurance - e.g. that covers me for a much higher proportion of my pre-unemployment salary, and/or that is combined with a serious job search function such as might be undertaken by a recruitment agency (so, if I am a City Banker the unemployment insurance agency would search down jobs in Banking for me).

Such a separation of the charitable form of welfare (which, I agree, is best delivered by voluntary agencies) from the insurance form of social security would be of considerable benefit, in my view.

[Terry]

I agree with your broad approach. Some of the most successful work on re-habilitating ex-prisoners and helping drug addicts to kick the habit has been done by voluntary groups. Encouraging such voluntary and self-help groups in these and other areas is obviously well worthwhile. One concern, however, is how this would be funded and more importantly how the funding would be monitored. I can see a future Conservative government funding one of these groups (some of which naturally concentrate on their main purpose rather than administration) only to have the funds misappropriated. This could cast a shadow over the whole enterprise. I can imagine the political capital which our opponents would make and how it could be used to discredit the whole idea.
How would you deal with this? We do not want to stifle initiative but at the same time public money needs to be accounted for.

[Yet Another Anon]

Even then aims have to be realistic with 1.6 million JSA claimants and only 600,000 or so vacancies available.
That's the ILO figure not the claimant count, latest level of JSA claimants was about 852,000 - of course many who are unemployed and actively seeking work are not eligible for JSA because their contributiony eligibility has expired and they have too much in the way of income or are not eligible under other criteria, or don't claim, or are classified as sick or incapacitated.

I don't think it is desirable for the government to attempt to have job creation programmes, the government needs to focus on running the public infrastructure, defending the country from internal and external enemies and boosting the economy in a stable way while also holding down public spending and reducing the National Debt. Unemployment will find it's own level - I favour switching to lower level but Universal benefits with low interest loans from the Student Loans Company relaunched and broadened to cover all variable rate costs including Housing, Medical and Education costs including Housing Benefit and Council Tax Relief - repayable at at least a certain proportion of earnings over a certain level.

NI Contributions need more to focus on those paying NI Contributions - eg money for Personal Healthcare from NI Contributors should only go on those who qualify under contributory criteria. Systems need to be simplified with the numbers of separate benefits being reduced and people who have spent all their money and so are destitute as a result being told to get lost if they ask for more or suffer as a result of their carelessness - Social Services should only be there for the elderly, children, the severely disabled and the mentally handicapped.

The labour market needs to be deregulated with no limits on working hours, the abolition of all concept of redundancy or requirements to pay notice beyond what has been agreed contractually, and the abolition of all minimum wage legislation and all restrictions on trading hours.

So far as immigration goes, in a country where in theory the private sector operates in a free market then allowing for national security considerations otherwise employers should be able to employ whoever they want from wherever they want and the workforce is in competition with each other whether in this country or anywhere else in the world.

Industrial action in public sector and other vital organisations needs to be banned completely in order to maintain what are vital strategic services.

It isn't about compassion or cruelty, it is about having a system that is best for maintaining stable economic growth while also maintaining law & order, and in fact having a strong police, security services and military; and having the availability of a range of punishments including capital and corporal and the ability to intern anyone believed to be a terrorist or otherwise of danger or nuisance to society is important to a well functioning and stable society.

[Andrew Lilico]

Jonathan@01:27,

I think that perhaps before you carry out your threat to "have another go" you should consider Crewe & Searing's 1988 American Political Science Review paper - here: http://links.jstor.org/sici?sici=0003-0554(198806)82%3A2%3C361%3AICITBC%3E2.0.CO%3B2-W

[Andrew Lilico]

Terry@03:51,

Misuse of funds is not something that happens only among voluntary groups or in the private sector. There has always been considerable fraud associated with the public benefits system. It is very difficult to eliminate such fraud, and doubtless some would continue amongst voluntary groups. I see no reason why this should discredit the whole idea, any more than misuse of lottery grants discredits the idea of using lottery funding for sports and culture or the misuse of local grants discredits the making of local grants. Each scandal is itself, and should be dealt with as such.

[Andrew Lilico]

Tony@10:12,

As we've discussed before, I simply don't agree with your version of the "lump of labour fallacy". The amount of work available is not some fixed some that only requires a certain number of people to perform, with it being inevitable that the residual are unemployed. The falsity of this superficially-attractive idea is amongst the first things one learns in economics.

Thus, we don't need to invent work for the unemployed by having some artificial public works programme. I'm sorry to be harsh, but your continued repetition of the lump of labour fallacy doesn't match the quality of your other contributions (which are often interesting and worth pondering) and I really think you should check out a few web-sites and think about why no-one with even a cursory training in economics is going to agree with you.

[William Norton]

Tony Makara: which part of manufacturing would you rebuild first: spinning jennies; canal barge construction; or steam engines?

[oxymoron]

I was recently pondering the issue of why we have so many people on benefits, often in pockets of high unemployment, yet immigrants seem to have little trouble finding employment.

It seems to me that labour mobility is a major factor. When immigrants decide to come to Britain they have a choice where to live and they naturally choose to live where the work is, especially if their employment has been pre-arranged with an agency.

Natives however are not so mobile. They are often settled in certain areas with their children in the local schools etc. where the local large employers are long since gone.

I know the classic response to this is "Get On Your Bike" but this isn't the Great Depression anymore and anyway Cameron wants to emphasise keeping families together rather than having them split up.

So perhaps we should be looking at ways to make families more mobile.

[Tony Makara]

William Norton, you may scoff at the idea of a rebuilding a manufacturing industry but I advise you to watch China's development, follow it very carefully, they are well on their way to becoming the world's economic superpower, and its been done through manufacturing.

Andrew Lilico, I think its a pity that so many subscribe to the 'court' version of economics and are dazzled by those who hold economic council in the world of academia. The fact is the service sector cannot provide enough jobs but export-led manufacturing can. If people don't want manufacturing back then they will have to accept mass unemployment as a permanent feature of life and stop complaining about their taxes being used to pay to keep the jobless.

Again I ask you to look at China as an example of what manufacturing can achieve. The service sector has a role in the economic life of a nation, but an auxiliary role, it can exist as the main motor in the economy. Currently without a manufacturing base to provide for our domestic market and are becoming highly dependent on imports. If our currency were ever to fall significantly in value it would drive the prices of those imports up.

David Cameron often tells us that we shouldn't accept that a given situation is inevitable, and I agree with him fully. I don't think we should accept mass unemployment as an inevitable feature of life. We must work to eradicate it or be left with an ever expanding and permanent social underclass.

[Opinicus]

@Andrew
Not being an academic I dont have access privileges to that site. Could you send it to me [email protected]

@Tony
I quite agree. We will not flourish unless we rebuild manufacturing. It isn't impossible. Germany have retained a huge internationally profitable manufacturing sector. The myth that we can survive as a first rate economy without manufacturing is just one of the worst lies of economic orthodoxy.

[William Norton]

Tony Makara: yes, I have noticed the rise of China, and I've noticed also that it started on the back of undercutting traditional industries through lower labour costs and overseas trade, with some contribution from a rather large domestic market. I'd like to see how you're going to persuade the British metal-basher to accept Chinese wage levels to price himself back into those markets. On other threads you've described yourself as a believer in a rose-tinted 'national self-sufficiency' downplaying the need to trade with other countries. So, when you've succeeded in your industrial policy and the UK is able to churn out millions of widgets each year: who's going to buy them?

Here's a thought - instead of fighting a losing battle of beggar-myself with the Chinese, why don't we concentrate on higher-value premium items like, um, services? We can actually do them rather well. There might be some specialist niche areas in manufacturing (I expect on the design side, with the metal bashing outsourced to Asia) but they aren't going to be 'manufacturing' in the sense you mean and they won't be large headcount operations. Adaptability used to be a British virtue: we got out of subsisitence agriculture and into smokestack manufacturing, and now its time to move on to something else.

(PS: in 50 yrs time, who knows, perhaps the Africans will start undercutting the Chinese in these areas and they might have to start moving over to services themselves?)

[Yet Another Anon]

Abolishing payment of National Insurance credits for people signing on or on certain other benefits would both save the Treasury some money in the short term especially, but also simplify people's choices, at the moment whether the NI stamp is fully paid is a consideration that puts people off taking part time and low paid work. In most cases when it comes to their reaching their later years most people will probably get the same amounts of benefit anyway (counting State Pension and Pension Credit as benefit) from the state, so why add an extra complication.

[Tony Makara]

William Norton, the way to deal with China is to set limits on the amount of trade that can enter our country. I know that goes against the free-market ethic but I believe that a completely open free-market can leave nations exposed to an economic powerhouse like China.

Unfortunately many Conservatives blindly follow the concept of free-trade to the point where it has become dogma and they are afraid to even talk about protectionism. Ideally I'd like to see China confined to an Asian sphere of influence. I am very worried by the way China is trying to colonize Africa and China continually talk openly about ending western economic pre-eminence. The Chinese call their store for foreign currency reserves their future economic-nuclear option. So the way I see it China must be driven from the west and Africa and pushed back into their own sphere of influence.

I agree that there is a role for the service sector, but that role is an auxiliary one. Please thing about the logistics here. The service sector cannot employ enough people for a nation of our size and living in a service dominated economy makes us dependent on imports. The problem is we as a nation have developed an import dependency culture.

I know many Conservatives fear manufacturing because of the potential for militant organized labour. However there are ways around that and a future manufacturing base must be privately owned, that is a must. We cannot ever go back to the failed state-owned hard industries of the past. Private means initiative and drive, that's what we need to move forward. I have great faith in the British entrepreneur and given the right economic conditions I know he could make a great success out of manufacturing.

[William Norton]

Tony:I have great faith in the British entrepreneur and given the right economic conditions I know he could make a great success out of manufacturing.

Fine, providing your British entrepreneur:
(a) doesn't want to trade with the outside world (you've ripped up the WTO, which is a bit awkward when we've spent the last 10 yrs arguing China ought to play by the rules);
(b) doesn't rely on intellectual property rights (ditto);
(c) doesn't need imported raw materials at any stage (ditto);
(d) doesn't have a problem with UK wage rates;
(e) doesn't want to do something other than make widgets.

Ironically the British entrepreneur is making a great success out of manufacturing as the sector is still pretty good at exporting high-value-added items - so the policies you advocate to prop-up manufacturing would actually cripple the sector you're trying to save. The point is that the old-fashioned mass employment model of metal-bashing is in a long-term secular decline and the biggest barrier to further concentrating on what we're good at is that the state education system appears to be incapable of turning out enough highly-skilled adults.

Here's a thought: do you suppose the reason that the Chinese have acquired all that foreign currency power is because they're selling something people in other countries want to buy at a price they're prepared to pay? So if you can't beat them on headline price, you've got to be able to beat them on value.

I wouldn't describe myself as a great fan of free trade it's just that, like democracy, when we've tried all the alternatives they've been worse.

PS: in a vague nod to the official subject of this thread - highly-skilled workforces able to compete in a global market don't need to sponge off a welfare system; schools designed to churn out production-line drones end up churning out dole fodder.

[Yet Another Anon]

So the way I see it China must be driven from the west and Africa and pushed back into their own sphere of influence.
Such attempts would result in a Trade War - China and India if they decide to could be very effective at pushing the UK and indeed the EU back.

Such ideas are somewhat contrary to International Development, many who support the principle of International Development including people such as Arthur Scargill then bizarrely come out with economic policies that actually make it more difficult for poorer parts of the world to pull themselves out of sucvh problems.

In fact such negative responses to newly advancing nations are liable to stifle the growth of the Global Economy, this might lead to the EU and US keeping a bigger share, but at the expense of being out of a smaller pot.

If countries such as Bangladesh, Pakistan, China and Iran are more fully developed economically they will also be more stable politically both in terms of government attitudes to geopolitics but also things such as Islamic radicalism, Al Qaeda flourish in poor countries that struggle to access the world's trade networks and apart from anything China is investing a lot of money in Africa and there will be major economic benefits to those countries.

[Tony Makara]

Yet Another Anon, I'm afraid I don't share your geoeconomic view. I see other nations not as partners but rather as competitors. That is what business is all about after all.

The job of the British government of the day is to help British business to corner and dominate markets, if that is at the expense of other nations then so be it. China and India would have plenty of markets to exploit even if they were pushed back into an asian sphere of influence. You are right to say China is investing money in Africa but it is not without conditions. In return the Chinese have made claim for and expect minerals and manpower.

William Norton, the Marxist myth that protectionism causes wars has left western politicians to accept completely open trade as a faith-like dogma, the west is fast becoming dependent on imports and is sleepwalking into economic subservience.

Marxists believe that economic conditions create a man's political mindset but I believe the reverse is the case. Currently we have politicians who are too passive and don't fight hard enough to promote British economic stength. We need harder minds, harder attitudes and we need to stand and fight our corner as an economic power.