Widening the poverty trap door

August 7, 1998

Last week 150 academics supported a letter opposing the government's welfare reforms. In the latest in the series on social exclusion, Ruth Lister explains what is wrong with pushing people off benefits and into work

Last week more than 150 social policy academics supported an open letter to Alistair Darling, the new secretary of state for social security, criticising the government's approach to welfare reform. The proposed reforms are designed to encourage people to come off benefits and find work.

The academics were commenting on the department's green paper A New Contract for Welfare, which was drawn up by former minister for welfare, Frank Field, who resigned last week following the Cabinet reshuffle. Consultation on Field's paper ended last Friday.

Ruth Lister, professor of social policy at Loughborough University and a former director of the Child Poverty Action Group, said the critical letter emerged from a workshop at the Social Policy Association's annual conference.

"As we discussed the green paper it became clear that there was a strong consensus of disappointment with it", she said. Supporters of the open letter include Eithne McLaughlin, of Queen's University, Belfast, Jonathan Bradshaw of York, Fiona Williams at Leeds, John Clarke at the Open University and John Veit-Wilson at Newcastle.

In the letter, academics, who describe themselves as eager to "prevent poverty and promote social justice for all", warn that:

* the principle guiding the government's proposed reforms - "work for those who can; security for those who cannot" is one-sided. The reforms put the onus on the unemployed to accept work and training but where is the "duty on government and employers to provide such opportunities?"

* the green paper ignores and undervalues the unpaid work women do caring for children and the elderly

* if a recession slashes the number of job opportunities available, there is no strategy in the green paper to safeguard those unable to work

* there is no strategy for social security as a whole

* there is no discussion of raising benefit levels in line with need

* the paper ignores the difficulties faced by ethnic minorities in finding jobs and a way out of poverty

Tony Blair has declared that new Labour is "the party of middle Britain, but if we don't raise the standard of living of the poorest people in Britain we will have failed as a government".

So what about the government's recent green paper on reforming the welfare state? Will it raise the standard of living of the poor? Or will it rather stand as an early marker to Labour's reluctance to persuade middle Britain that if poverty is to be prevented in this country the taxes of the middle classes may have to be raised?

New Labour may have rehabilitated the "p" word "poverty" in contrast to its official expurgation under the Conservatives, but it prefers to talk the language of "social exclusion". Some maintain that this phrase is simply a euphemism for poverty. Arguably, though, social exclusion does capture something different. It is a more multi-dimensional concept than poverty, embracing several ways in which people may be denied full participation in society.

The danger with the term is that it may be used to obscure the poverty, ie the lack of material resources, that frequently underlies social exclusion. Moreover, there is a tendency for the government to define social exclusion very narrowly as simply exclusion from paid work. The result is an anti-exclusion strategy summed up in the mantra: "we are reforming welfare around the work ethic".

Few would deny that paid work represents the best route out of poverty and social exclusion, in the context of a reasonable minimum wage (though whether the proposed rate of Pounds 3.60 an hour is reasonable is another matter). The government also has policies "to make work pay" through improving in-work benefits for the low paid. But this is not a route that is open to everyone.

The problem is twofold. First, "the work ethic" is defined purely in terms of paid work. The value of other forms of work - domestic caring work, still largely undertaken by women, for instance - is denied. When the abolition of lone parents' benefits was justified with reference to the New Deal's aim of helping the unemployed off benefit and into work this was interpreted by many lone parents as a denial of the importance of the unpaid work they do caring for their children.

Second, government ministers have scorned those who argue for an improvement in social security benefits (although the budget did include a welcome improvement in a number of benefits for children). The green paper caricatures our position as based on a belief that "poverty is relieved exclusively by cash hand-outs" and that it is "alleviated by more money rather than more opportunity". No serious analyst of or campaigner against poverty would take such a position. Indeed, many of those arguing the case for improved benefits have long emphasised that poverty has to be tackled through the primary distribution of resources in the labour market as well as its secondary redistribution through the tax and benefits systems.

The point is that both are necessary. It is not a question of either/or. Welcome as the various New Deal schemes are, they are not on their own going to solve the problems of poverty and social exclusion. There are some, such as pensioners and those physically incapable of paid work, who will not be touched by the schemes, a point that the government has now conceded. But there are also others who might choose not to participate in the voluntary New Deals (for instance, lone parents and disabled people).

And we cannot be sure that the work opportunities, which are crucial to the New Deal's long-term success, will be there for all who want them. There are still areas of high unemployment where New Deal participants will be competing with each other for too few jobs. And the medium-term outlook for jobs is not exactly rosy.

Moreover, there is a danger that inadequate benefit levels could weaken the government's own strategy to bring the poor back into society. As a group of 54 professors of social policy and sociology wrote to the Financial Times last year: "Research suggests that the effectiveness of education reforms could be undermined by unacceptably high levels of child poverty and that impoverished benefits claimants are not the best recruits for 'welfare-to-work' programmes". A study into literacy and numeracy concluded that tackling child poverty was arguably the most powerful long term educational policy. Malnourished children are unlikely to be able to benefit fully from the government's extra planned spending on education. They will, quite simply, be too hungry to concentrate in class.

On the welfare-to-work front, research suggests that the lower someone's out-of-work income, the harder it is for them to risk taking a job in an increasingly insecure labour market. A Policy Studies Institute study of lone mothers identified a possible "hardship trap". It found that greater poverty levels were strongly associated with a lower likelihood of moving into employment. The researchers suggested that this reflects the costs associated with finding a job: clothing, communications, transport and child care.

Research has also demonstrated the inadequacy of benefit levels, especially for families with children. David Piachaud, professor of social policy at the London School of Economics, has warned that poverty could rise again if benefits continue to be indexed to prices and not to earnings. Yet, there has been no official public review of benefit adequacy since the rates were set by Beveridge over 50 years ago.

While the acceptance of Conservative public spending levels for the first two years in office gives little scope for improving benefit levels in the short term, the time could profitably be used to establish a minimum income standard, as called for by the Commission on Social Justice, established to advise Labour by the late John Smith. This would act as a benchmark against which benefits could be assessed and, in the words of the European Commission, should be at a level "considered sufficient to cover essential needs with regard to respect for human dignity".

The issue of benefits adequacy represents a "black hole" at the heart of the welfare reform green paper despite the second half of its promise of "work for those who can; security for those who cannot". For all its talk of "20:20 vision", the contours of the future social security system remain blurred. On the one hand, the green paper reaffirms the government's commitment to universal benefits designed to meet the costs of children and disability and much of the rhetoric, including in prime minister Tony Blair's foreword, is about a welfare state for us all.

On the other hand, the minimising of means-testing is not included as an objective. A central principle is that people will be expected to make provision for themselves where they can and it is envisaged that private providers will deliver a "substantial share" of pensions and social security provision. This raises the possibility of a two-tier system of private provision for those who can afford it and state provision for those who cannot.

A key issue here is the future of the national insurance system. All the green paper offers us is a big question mark. There is no mention of the case made by the Commission on Social Justice for a modernised, more inclusive social insurance system, better attuned to contemporary employment patterns and, in particular, to the needs and circumstances of women.

Tony Blair's commitment to raising the standard of living of the poorest points to the need for a poverty reduction target (not included in the green paper's 32 "measures of success"). Meeting such a target, in one of the most unequal industrialised societies, will require an element of redistribution through the tax and benefits systems as well as greater equality of opportunities through education and employment. It is a responsibility of government to persuade middle Britain of the case for such measures.

Ruth Lister is professor of social policy, Loughborough University.

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