Welfare Titans: How Lloyd George and Gordon Brown Compare, and other essays on welfare reform, Civitas, by Frank Field

London, 2002, 77 pp, pb, 1 903 386 20 9, £4. Order this book

Frank Field was Director of the Child Poverty Action Group and of the Low Pay Unit before becoming MP for Birkenhead in 1979. From 1997 to 1998 he was Minister for Welfare Reform, and before, during and after that brief spell in government he has tried and tried again to get social security reform further up the public agenda. His message has always been that means-testing is bad for people; and if you want to know why means-testing is bad for people, then read this book.

The chapter which will most interest readers of this Newsletter is chapter 4, entitled ‘Lloyd George and Gordon Brown: How the Welfare Titans Compare’. The chapter is well summarised in the introductory essay, and it is worth quoting this summary at length:

“The fundamental difference between these major figures as Chancellors of the Exchequer derives from what they see as the goal of welfare reform. Gordon Brown has an essentially one-dimensional view where the object of his tax credit strategy is to increase the income of the poor. This is no mean objective.

“Its limitations, however, become quickly apparent as soon as Lloyd George’s dual objectives in welfare reform are considered. Lloyd George shared Gordon Brown’s objective of channelling more money to the poor. But of equal importance to Lloyd George was the objective of combining increases of income for the poor with extending their freedom.

“Gordon Brown’s strategy achieves the opposite. Indeed, in a cruel paradox, the more money that goes to the poor by way of means-testing, the greater is the restriction on their freedom. Tax credits make it impossible for a growing army of individuals to improve their family’s income and well-being by working harder or longer or gaining additional qualifications” (pp.4f).

The chapter itself is a mine of historical and contemporary information and of relevant comment and is a powerful argument for work-incentives. Gordon Brown’s tax credits will provide such an incentive in the first year of the scheme – but, as Field correctly notes, “in welfare it is the long-term impact of policies which is of key importance” (p.54), and, with Brown’s system, “once a person is into the tax credit system, few will be able by their own efforts to escape” (p.57). Ironically, a new welfare dependency has been created by the government which said that it intended to end such dependency, and Brown has created a ceiling and not the kind of floor on which people can build, which Lloyd George created with his contributory pensions and Trade Union administered unemployment benefits.

Whilst chapter 4 is somewhat negative in tone, because it is an argument against means-testing rather than an argument for a solution, chapter 2 is more positive. It is equally against means-testing, and particularly against the pensioners’ minimum income guarantee (and now its replacement by a tax credit), but it also makes a recommendation: a stakeholder pension to which people have to contribute. Elsewhere, Field recommends that the value of tax credits should be frozen, tax rates reduced, and a higher state pension introduced, as a means of reducing people’s dependency on means-tested benefits, and he concludes: “That welfare reform has to be built so that it works with the grain of human nature – of directing self-interest so that it promotes work, savings and honesty – is a lesson which [he] thought had been learnt before Labour’s 1997 election win. That lesson will have to be learnt again, but this time in the wake of a collapsing tax credit system” (p.7). The argument clearly leads in the direction of universal benefits (for there can be no firmer ‘floor’ than automatic, nonwithdrawable benefits such as Child Benefit), but these don’t get a mention. This is a pity. If Field doesn’t like this particular option for reducing the influence of means-testing then somewhere in a book like this he should at least have told us why he doesn’t like it.
There is some fascinating historical material in this short book, on education and health care as well as on income maintenance strategies, and there is some equally fascinating political theory, particularly relating to the freedom of the individual citizen. The Institute for the Study of Civil Society is to be commended for publishing this collection of lectures and papers, and Frank Field is to be congratulated for writing what’s in it. It’s only a pity that he didn’t remain a bit longer in government, and particularly that he wasn’t there long enough to prevent the extension of means-testing which tax credits represent.