Defend the welfare state

Labour’s latest attacks on unemployment and disability benefits

Defend the welfare state

NEW LABOUR’S Welfare Reform Bill recently received its first reading in parliament. This bill will hit sick and disabled people and lone parents particularly hard but will also make life on benefits even harsher for the hundreds of thousands of workers currently losing their jobs.
JIM HORTON, a welfare rights adviser in north London, explains.

AS THE recession brings the last fifteen years of economic growth shuddering to a close, New Labour shows again that it is a party for the rich, against the poor.

State handouts for the bankers, whose corporate greed is already having a devastating impact on working-class communities across Britain, will be partly paid for by welfare cuts for people who were mainly passed by during the economic boom.

Government plans involve a major shake-up of the benefits system which, even according to the Social Security Advisory Committee, represents “a major departure from the principles of Beveridge that have underpinned UK social protection for almost 60 years”.

The Welfare Reform Bill has about 15 different measures covering social security, the provision of services for disabled people, and child maintenance. Its most controversial parts, though, relate to forcing lone parents and the disabled into the jobs market under the threat of losing their ‘out of work’ benefits.

The bill brings in workfare for the long-term unemployed and aims to pay the private sector to drive people off benefits whilst shooting massive holes through the already threadbare welfare safety net.

Work and Pensions secretary James Purnell claims that the government is “increasing the real help available to everyone claiming benefits during the economic downturn”.

Purnell and New Labour have the broad support of both the Tories and Liberal Democrats. Unsurprisingly, the Confederation of British Industry also came out in favour. The TUC limited itself to expressing ‘concerns’.

Purnell dresses his attacks on welfare in the language of helping the poor and the ‘right to work’. These euphemisms will fool no one. Where is the right to work for the thousands of workers now losing their jobs as the economy takes a dive?


The welfare attacks were first mooted when the economy was still expanding. The government aimed to move a million people off benefits and into work. Yet, as The Guardian commented: “The immediate prospect, however, is of as many as a million people moving out of work and on to benefits”.

Notwithstanding the shrinking jobs market, almost everyone currently on Income Support or Incapacity Benefit will be forced to look for a job or prepare for work, regardless of any personal difficulties they face.

The government claims there will be ‘tailored support’ and training for individual claimants. However, the recession will bring rapidly increasing unemployment and declining government revenues, making it less likely that sufficient resources will be provided by the government to pay for these carrots, although there will be sticks aplenty.

The government emphasises punishment not encouragement. Failure to comply with stricter Jobcentre directions will result in savage cuts in the amount of benefit received and ultimately the withdrawal of the benefit, making the poor even poorer.

The media misleadingly paint a picture of work-shy claimants being allowed to languish on the dole with no pressure to find work. In fact, unemployed people already face sanctions, such as cuts to or loss of benefits, for failing to look for work. Purnell’s measures will tighten benefit conditionality and toughen the sanctions.

More crucially, thousands of lone parents and the disabled currently receiving benefits without conditions will now be subject to the same sanctions if they fail to look for work or participate in work-related activity.

The government has a stated aim of reducing child poverty to 1.7 million by 2010, yet forcing people into work is no guarantee that this target will be achieved. Child poverty has recently increased, with 2.9 million children now living in poverty.

Among parents who are in work, poverty remains high, particularly for the most disadvantaged low-waged groups.

The government propagandises against ‘welfare dependency’, in particular targeting so-called scroungers and ‘benefit cheats’. But loss from benefit fraud is actually a fraction of the amount of unclaimed benefits, with the government doing little to promote benefit take-up. And notwithstanding benefit fraud falling by half, the government still seeks to demonise all benefit claimants.

Even the small number committing fraud is overstated. Most suspected fraud actually stems from the complexities and unfairness of the benefits system. The bill’s provisions will allow for those suspected of benefit fraud to be subjected to a lie detector test, the reliability of which is not proved.

While these measures are aimed at the poorest in society, tax ‘loopholes’ have allowed the rich to avoid tax totalling a staggering £25 billion a year.

Proposals criticised

Welfare rights organisations, such as the Child Poverty Action Group (CPAG) and the Disability Alliance, have criticised the government’s welfare proposals. CPAG is campaigning for the government to aim a fiscal stimulus at supporting poor families, citing research which shows that the poor are more likely to spend any extra money given to them.

Few would disagree with this usually non-partisan charity’s scathing comment that “harsh sanctions are surely more appropriate for the architects of the recession, not its victims”.

Welfare rights organisations and many unions question the wisdom of introducing welfare ‘reform’ at a time of deepening recession.

Yet it does not look like the government will delay its proposals because of the economic crisis, although it cannot be ruled out that it will hold back on some of the more draconian measures. In any event many of the bill’s provisions are not due to be implemented until 2010 when the government hopes Britain will be coming out of the recession.

Although the proposals will result in horrendous benefit cuts for many individuals, total spending on welfare is likely to increase for a period of time as thousands join the queues at Jobcentres. But New Labour and their capitalist paymasters have a long-term agenda of reducing overall welfare spending, with welfare benefits seen as an easy target.

From the government’s perspective there is unlikely to be a ‘good time’ to push ahead with these attacks. Indeed even with the end of the recession the economy is likely to remain stagnant with years of low or little growth.

The billions doled out to the banks and the farcical cut in VAT will have to be repaid to reduce the public sector deficit. So the attempt to squeeze public spending is likely to intensify, as is the propaganda on getting people back to work.

Charities such as CPAG and the Disability Alliance do important work on behalf of claimants, but they lack the muscle to stop the government in its tracks. This task must surely fall to the trade unions whose current and potential members will feel the brunt of welfare benefit changes.

The PCS union has already come out strongly against the welfare proposals not least because its members in Jobcentres are struggling to cope with the increased numbers claiming benefits.

But the entire trade union movement needs to act; to defend workers’ jobs, terms and conditions, and also to defend the welfare state.

Jobs must be saved, but when they are lost workers cannot be allowed to face years in penury. And those who are sick, disabled or with care responsibilities should not face the Hobson’s choice of cuts in benefit, workfare, or insecure, low-paid jobs.

A campaign to defend jobs, involving industrial action, should be linked to defending the welfare state and making sure that the unemployed and those unable to work have a living income, along with the necessary training, support and encouragement to return to work where and when this is appropriate.

Grouped for maximum, medium and minimal coercion

THE WELFARE Reform Bill divides all working-age benefit claimants into three groups: a ‘work-ready’ group; a ‘progression to work’ group; and a ‘no conditionality’ group. This is arguably a New Labour take on the Victorian distinction between ‘deserving’ and ‘undeserving’ poor. The workhouse’s return surely cannot be far away!

The ‘work-ready’ group consists of unemployed people claiming Job Seekers Allowance (JSA), whose numbers are being swelled by the slashing of jobs as the recession takes grip.

The number of JSA claimants will also be boosted by single parents with a youngest child aged seven or over who are forced off Income Support and by sick and disabled people being refused Employment and Support Allowance (ESA) under a more stringent work capability assessment.

People in the ‘work-ready’ group will face harsh sanctions such as benefit cuts if they do not show they are actively seeking work or if they fail to comply with directions to find work.

On top of that, the current 20,000 JSA claimants who have been unemployed and signing on for over two years will be forced onto a ‘work for your benefit’ scheme. Even if the recession lasts just 12-18 months this is likely to dramatically increase the number of long-term unemployed people forced onto this workfare.

It is not exaggerating to call this US-style workfare ‘cheap labour’. Given that JSA is at present just £60.50 a week (meaning claimants live below the poverty line), then on the basis of a 35-hour week the hourly pay rate would be just £1.73. That is £4 an hour less than the current minimum wage for workers aged 22 and older.

The Child Poverty Action Group correctly argues that if the government can find temporary work for an unemployed person, then they should pay them a proper wage.

In difficult economic times it will be easier for workers most recently made unemployed to find work than it will be for the longer-term unemployed. It will particularly be the most vulnerable, some with learning disabilities and literacy problems, those whom employers tend to discriminate against regarding job opportunities, who will be forced onto workfare schemes.

Unscrupulous employers will take on workfare workers when they want to avoid paying the minimum wage. The effect would be to drive down the wages of all workers and throw more workers and their families into poverty.

The second group, labelled ‘progression to work’, will include about 400,000 single parents whose youngest child is aged one to six and more than two million people currently claiming Incapacity Benefit.

People in this group will be forced to prepare for work. They will have to carry out ‘work-related activities’ such as compulsory work-focused interviews, training or unpaid work placements. Failure to follow directions will result in cuts in benefits.

The third ‘no conditionality’ group consists of the severely disabled, estimated at 300,000, some carers, and lone parents with children under the age of one. Only this small minority of current benefit claimants will continue to receive unconditional benefits.

Incapacity benefit

BY 2015, the government aims to reduce by one million the 2.7 million people who are presently claiming Incapacity Benefit (IB). These are people whom the medical profession and, up to now, the Department of Work and Pensions (DWP) deem too ill or disabled to work.

Incapacity Benefit has already been replaced by Employment and Support Allowance for new claimants from October 2008. All current Incapacity Benefit claimants will be pushed onto ESA between 2010 and 2013. The government is also examining the case for a single ‘out of work’ benefit.

The government predicts 260,000 currently on Incapacity Benefit will be forced to look for work. These claimants face a cut in their already inadequate Incapacity Benefit, currently between £63.75 and £84.50 a week, onto Job Seekers Allowance at just £60.50 a week.

‘Income Support’ abolished

INCOME SUPPORT recipients tend to be either single parents or the sick or disabled who have not paid sufficient national insurance contributions to claim Incapacity Benefit. Income Support will be abolished. There will be just two ‘out of work’ benefits, Job Seekers allowance (JSA) and Employment and Support Allowance (ESA).

Purnell’s attacks on single parents go much further than even the much reviled Thatcherite Peter Lilley did in the 1980s. From 2010 single parents with a youngest child aged seven or over will be forced off Income Support onto JSA. Until 24 November 2008 lone parents could remain on Income Support until their youngest child was 16. That age is now 12 and from October 2009 the new rules will apply to lone parents with a youngest child aged ten or over.

Research shows that many lone parents would prefer to work but low pay, unsuitable hours and lack of affordable childcare act as barriers. Affordable childcare provision remains woefully inadequate despite 15 years of economic growth. No increase in supply is planned until 2015, with up to 600,000 places then to be paid for from cuts in benefits. But even this extra capacity target is likely to prove too optimistic.

The media highlights the fact that Purnell is a child of a lone parent. But given his comfortable upbringing – his education included attending the fee-paying Royal Grammar school in Guildford and Balliol college Oxford – he is not well placed to empathise with lone parents who struggle on benefits and find themselves trapped in poverty.

For example, single parents currently on Income Support can attend full-time higher education courses, potentially an important route out of low-paid jobs and into better paid professional work. This is not allowed under rules for claiming JSA.

Housing help eroded

ALTHOUGH NOT part of the Welfare Reform Bill, the government will further restrict payments of Local Housing Allowance, which is a set amount of housing benefit based on the size of a property considered suitable for a claimant and their family.

Since it was introduced for private sector tenants last April, it has brought cuts in housing benefit for many low-paid workers and unemployed who previously received full housing benefit to cover their rent.

New Labour trumpets the reduction in the waiting period from 39 weeks to 13 weeks for people on JSA to get help with mortgage interest payments. Aside from the rules being more complicated than presented, the government’s claim that this will prevent the unemployed becoming homeless ignores the less publicised fact that new claimants will lose help with housing costs after two years on JSA.

Welfare provision

THE RECESSION has made the failures of a profit-driven market economy increasingly obvious. But the government is still pressing ahead with plans to allow private sector organisations to be paid public money, more than £1 billion over five years, to get people ‘back to work’.

As an incentive, profit-seeking companies can keep the savings from benefit sanctions and forcing claimants off benefits. Pilots start in 2011 in Lambeth, Glasgow, West Midlands, Greater Manchester and Norfolk.

This measure will mean the private sector profiting from the unemployed and most vulnerable sections of society, despite there being no evidence internationally that outsourcing to the private sector produces better results.

Many companies bidding for contracts will seek to cherry-pick the easy cases, leaving those who need the most support, such as those with disabilities and lone parents who have not worked for many years, to exist on benefits under the threat of workfare.

The greedy companies bidding for the contracts are now demanding that instead of up-front service fees of 20% (with the remaining 80% paid when people are placed in work), they should be paid 50% up-front because of the contracting jobs market and a projected 300% increase in the number of people forced onto the workfare schemes.

Threatening to scupper the government’s plans, they essentially want to ensure they get their grubby hands on public money regardless of whether people are found work.

Although recently forced to retreat from letting private companies charge interest on crisis loans, New Labour is also giving the private sector a role in delivering a ‘reformed’ social fund scheme. The social fund provides crisis loans and grants to the poor to buy essential items.