James Bartholomew is the author of The Welfare State We’re In.
The welfare system proposed by Lord Beveridge was a good one.
But gradually his system was corrupted by politicians who, unlike him, knew nothing of welfare. They offered more and more money in benefits with fewer conditions and did not think about the long term consequences.
And so it was that – unintentionally – we lurched from a sensible system to a welfare tragedy. We came to have permanent mass unemployment. In 16 years, we had more than a doubling of people claiming incapacity benefit. We have had a surge in children brought up by relatively poor, lone parents. And a social housing disaster. Meanwhile saving by anyone relatively poor was turned into a mug’s game. And following on from this came fraud and damage to our culture.
The public has seen that the system has gone wrong.
The task now is to get back to a more sensible policy. This is something that many countries –Denmark and the Netherlands among others – have been working on in the past 20 years. Britain is rather late into the game.
There is more than one way to make things better but my vision for a reformed welfare state starts ideally with returning the emphasis to one of the main planks of the Beveridge system – unemployment insurance. One good thing about unemployment insurance is that nobody is entitled to have it until they have worked for a good period of time. Work comes first. Even more important, the benefit is not means-tested, so those who fear becoming unemployed, have less reason to avoid saving.
Then, once unemployment insurance benefit runs out, means-tested benefit should kick in at a significantly lower level. The recipient should be obliged to sell assets such as cars and homes in high-value areas. If they are in rented accommodation, they could be required to move to a lower rent flat. This is how it works in Sweden.
Most important of all, as a condition of receiving benefits – both unemployment benefit and means-tested benefit – each unemployed person should be required actively to see work and accept help with overcoming typical barriers to work such as functional illiteracy. If he or she can find no work within a given period, publicly subsidised work should be found. Work is the best welfare.
The personal allowance should be raised to £12,000 so no low-income person is discouraged by tax from working. Child benefit would be replaced by child personal tax allowances, so people, again, would have every reason to work. The minimum wage should be abolished.
Lone parents should not be given council flats. They should be expected to live with their parents or else work to pay for rented accommodation. If they cannot manage this, hostels of a very modest sort should be provided, as in Italy.
It should be possible to opt out of government-run unemployment, health and sickness insurance and choose instead schemes run by mutual societies, trade unions or commercial companies.
Radical reform of Britain’s state schools is also a vital part of making people more employable. Reformed schools are needed to teach all children to read, not just four out of five.
This is just a part of what I would suggest to create a welfare state that is sustainable and a country that is decent and self-sufficient.