Fair benefits

In a recent article in Renewal, Rachel Reeves, the Shadow Secretary of State for Work and Pensions, and Martin McIvor, an advisor to Rachel Reeves, reflect on the legacy of Clement Attlee and of the 1945 Labour Government, and suggest that the principles underlying Attlee’s and his government’s policies are still relevant today, including ‘the need to ensure our social security system works with the grain of the values and ethos of British people, in particular their belief in fairness, solidarity and the dignity of work’. [note]Rachel Reeves and Martin McIvor, ‘Clement Attlee and the foundations of the British welfare state’, Renewal, vol.22, nos.3-4, 2014, p.57[/note] The way in which our current Tax Credits system ensures that many workers receive only 15p more disposable income for every extra £1 they earn (and for some it’s only 5p) does little to dignify work. The situation will be little better under Universal Credit ( – those paying Income Tax at the same time as their Universal Credit is being withdrawn will retain only about a quarter of any additional earnings). The way in which low-paid or short-hours employment imposes on families complex and demeaning means-tested regulations exacerbates the effect. Employment and dignity are not concepts that sit easily together for low-paid employees in receipt of Tax Credits. And the fact that the higher paid are not subjected to such undignified deductions and regulations, whereas the low-paid are, is not fair and it doesn’t generate solidarity. We hear it said that a 50% Income Tax rate would be too high; but we don’t hear the higher paid saying the same thing about the marginal deduction rate suffered by people with low pay on Tax Credits.

If the Labour Party finds itself in government after the General Election then we look forward to the new Secretary of State for Work and Pensions establishing a fairer benefits system than we have now, and one that promotes both solidarity and the dignity of work. We would recommend a benefits system based on a Citizen’s Income, which would be entirely fair (because the same for everyone), which would generate the kind of solidarity that we have never yet seen in our tax and benefits system, and which would enhance the dignity of work, both by valuing caring and voluntary work and by making it easier for workers to refuse lousy jobs. A welfare state based on a Citizen’s Income would be a worthy successor to Attlee’s welfare state, and to the fair and solidaristic NHS and Family Benefits that were at its heart.