Benefits cushion for change

January 23, 1998

THE House of Lords is considering the detail of the Teaching and Higher Education Bill to reorganise student loans and give ministers power to make universities charge students fees at a set level. Dennis Farrington (left) sets out the implications for university autonomy.

But there is another aspect to this legislation. Prime Minister Tony Blair is on the stump arguing for reform of the welfare state in which he includes education and health. First, he says, the need for reform must be established, next the underlying principles must be set out and then, and only then, will it be time for detail.

So why have we detailed legislation now on students' costs and benefits? These are surely part of the welfare state. What principle underpins removing grants from the poorest students and giving state loans to cover fees to the richest? Mr Blair should not be so surprised when people are sceptical about his broader intentions.

It is widely accepted that the welfare state, including health and education, needs reform. But such a reform is a huge undertaking. Large numbers of people may have to be persuaded to act more in line with their better nature and less with their short-term selfish interest if the reform is to be successful. It cannot be done without serious, open and very public debate.

The issues are old and intractable. The Elizabethan Poor Law grappled with distinguishing between undeserving poor who should work and deserving poor who could not. Deciding who will not and who cannot work will be no easier now than it was then.

The Speenhamland system at the turn of the last century was devised to secure a minimum living wage but fell into disrepute when income support from the rates allowed employers to reduce wages further. George Bain's work on the minimum wage must be an integral part of Labour's welfare reform.

Those who think the richer old could do without their state pensions forget that the Beveridge settlement in effect nationalised the myriad mutual self-help and insurance schemes which had grown up during this century but which protected people only patchily from what Frank Field, minister of state for social security, has described as "the contingencies that pockmark our lives". It will be difficult politically to remove pensions from people who have paid their stamps on the assumption they were saving for their old age - even if that was a deceit.

Those who inveigh against swollen bills for housing, disability and sickness benefits might like to consider what the impact of two recessions in the 1980s and 1990s, and large-scale readjustments to the economic base, would have been without some relatively generous means of persuading people not to impede change. In the last century people rioted and were killed. Are we to face the next recession without such cushioning?

Mr Field has been thinking about these things for years. Mr Blair has not. Mr Field's green paper opening up the debate has been delayed repeatedly. Mr Blair has now taken charge and is making policy on the hoof: no affluence test, state pensions to be protected - at least while the present manifesto has currency, "people to provide more for themselves but the system to be organised by the government".

Once upon a time governments, faced with the need for major reforms which threatened vested interests, set up royal commissions. These were able to draw in the views of all sectors of society. They could mobilise the research expertise of universities. By the very process of gathering evidence they could help forge consensus - and take the blame for unpopular recommendations. Of course they could also be slow and provide nervous governments with an excuse for delay. But this is not a nervous government - perhaps not nervous enough. It could insist on speed. It may even be right that it already has appropriate answers. But it is foolish to assume that it has only to tell us what is what and it will be accepted. Better to pause now, before it gets into worse trouble, and involve a wider range of people in discussion. And since the Teaching and Higher Education Bill is such a mess, shelving the higher education bit of it could be a good start.

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