Stumbling Backwards into the Future of Welfare

The history of social policy is more of a winding country lane, with poorly-signposted crossroads, than a majestic motorway. Iain Duncan Smith’s proposed radical welfare reforms, announced on May 27, were very much in this tradition. But they conceal the germs of an important innovation.

After all, the social insurance principle was a stratagem by the anti-democratic German Chancellor, Otto Von Bismarck, to stymie the liberal opposition; and Lloyd George’s embryonic welfare state schemes of 1910 were opposed by trade unions and friendly societies. Duncan Smith’s proposals are a mixture between increased conditionality and cuts, and the first step towards a truly progressive integration of the tax-benefits system.

In an interview in the New Statesman on 29 October last year, the controversial political philosopher, Slavoj Žižek, referred to the idea of universal basic incomes (unconditional sums for all citizens) as the only new idea from the Left, but one which was doomed as ‘the last desperate attempt to make capitalism work for socialist ends’. Now it seems that he was looking in the wrong direction; the economic crisis has led the Conservatives towards this idea as the technical fix for systems failures in means-tested benefits, the poverty and unemployment traps.

Duncan Smith’s plan, outlined in a report by his Centre for Social Justice in September last year, is to merge the present complex conditions of elegibility for these benefits into just two elements, and to ensure that they are withdrawn consecutively rather than simultaneously. Together with allowing claimants to keep a far larger proportion of their earnings for work of less than 16 hours per week, this would create a smooth withdrawal rate of 55 per cent as earnings rise, and greatly improve incentives to take ‘entry jobs’ in fragmented labour markets.

At first sight, this has nothing to do with the grand principle of ending means-testing which has informed the basic income approach, and in the Duncan Smith version it is combined with increased, not diminished, work enforcement. Worse still, it is based on household, not individual entitlement. Yet the decision to administer all benefits for poor people of working age as parts of the tax system would be a necessary first step to any basic income scheme, and one that no previous government has been willing to take.

Advocates of basic income have tended to approach the issues as ones of political freedom and equality – as allowing all citizens to enter labour markets and household arrangements on the same (independent) basis. For this reason the idea has recently appealed to Old Marxists like André Gorz, to analytical socialists like Philippe Van Parijs, and to feminists like Carole Pateman, as well as to liberals like Brian Barry. The only parliamentary manifesto which contained its endorsement was that of the Greens’ Caroline Lucas.

All of these expected progress to basic income to proceed along the highway of ‘decommodification’, via an enlightened awareness of the demands of justice in co-operation for the common good, and for the future of the planet. Instead, the motives for this crucial reform are far more closely related to the analyses by the High Tory, Hermione Parker.

She focused on the self-defeating features of the interactions between the onset of taxation and the withdrawal of benefits, which were only partly mitigated by tax credits. Duncan Smith’s measures would fit squarely in her tradition, even if they violate the principles of the purists.

But it seems to me to be only partly because of the manifest perversities of the current system that the time for this idea has come. The vision of the Big Society, which was the only new idea for the future on offer at the election, depends on mass participation in a wide range of local, associational, mutual and co-operative activities.

As they stood, the benefit rules would have kept all claimants out of any part in these developments, which would in turn have scuppered any prospects for them to be included in the drive to mend ‘Broken Britain’. Duncan Smith’s scheme would mean that they could join in, as part-time paid workers or as volunteers.

This may go some way to mitigating the disappointment of basic income advocates that tax-benefit integration should arrive by this ignominious route. They can also console themselves with the thought that this foundation can be used to develop more liberal, unconditional superstructures, and that at least it proves that the idea was not as ‘utopian’ as Žižek (and many others) have supposed.


Bill Jordan is Professor of Social Policy at Plymouth University. He is the author of What’s Wrong with Social Policy and How to Fix It, published by Polity Press in March this year.