This month's speech on social security and the reform of the welfare state was a big moment for the Labour leader, Ed Miliband. He has made some important arguments, on which at least a sizeable part of the battle for the hearts, minds and votes of the electorate will turn. To reduce these to a question of universalism versus means-testing, as commentators from both left and right have done, is entirely to miss the point of the speech, however.
Miliband’s political purpose is twofold: first, to shore up Labour’s position on the welfare state in the face of sustained popular hostility to key elements of benefit expenditure; and second, to get ahead of a telegraphed trap that George Osborne will lay in his forthcoming spending review of a new expenditure cap on overall working-age social security. His substantive concern is to meet these political challenges by setting out a recognisably social democratic and therefore majoritarian agenda for controlling social security spending, rather than embracing a residualised, shrunken safety net for a Shameless-style, so-called underclass.
Conflating a majoritarian approach to the welfare state with the existing structure of universal cash transfers is a mistake. The British welfare state has for the most part of its history contained elements of universalism, means-testing and contributory entitlement. The balance between them has shifted over time, as indeed has their institutional expression.
In the immediate post-war period, housing needs were met by building council houses. In contrast, today the government spends 95p in every £1 on housing on housing benefit. The winter fuel payment – held up by many this week as a vital resource for social solidarity – was only created in the late 1990s. It is a marginal addition to pensioner incomes, important for the poorest, but nothing like as vital to the renewal of social security for older people as the basic state pension, which has been restored to its central role in the welfare state in recent years. Conversely, the most important embodiment of collective risk-sharing and mutual responsibility in Britain is not a cash transfer at all, but a much loved institution: the national health service.
For the foreseeable future, then, the welfare state and the broader architecture of collective public provision will contain elements of universalism, means-testing and contribution. The majoritarian character of Labour’s agenda today is affirmed by its recognition that social security should not be reduced solely to its means-tested elements, nor focused on particularly disadvantaged claimants groups, rather than the broad mass of the population. This remains the key dividing line between Labour’s approach and that of work and pensions secretary Iain Duncan Smith (at least for working-age benefits, since both parties support the principle of a single-tier basic state pension).
Labour’s majoritarianism takes on a new shape in Miliband’s speech, however. Three key areas stand out. First, there is the attempt to resuscitate the contributory principle, via changes to the rules for jobseeker’s allowance payments. Second, there is an argument that wages, the rewards to work and the employment rate must all rise as a core component of any welfare strategy, to take the strain off tax credits. (Although it should be noted that almost all OECD countries operate tax credit or in-work benefit systems, and there will always be an important role for these transfers, even if real wages and household employment can rise.) Third, there is a marked shift towards productive investment in institutions and services, rather than compensatory transfers: from housing benefit back to bricks and mortar, and from child benefits and tax credits to childcare services.
Services and institutions support higher employment rates, help to constrain cost rises in social security, and provide norm-setting places in which people can live their lives in common. For all of these reasons, they are likely to put down deeper roots in public sentiment and discourses, and to better withstand attempts to cut back collective provision, even if an important role for cash transfers is retained in key areas.
Of course, there will be arguments about the detail of these proposals, how to define the new social security cap, and how it can be delivered. But these should not distract us from the importance of the new territory that the Labour leader has opened up: this was not a defensive or tactical speech, but one that creates political space for new ideas and energy on the centre-left. Labour’s task now is embrace the arguments it has made this month, not resile from them in the coming weeks, and move forward on other key fronts, in particular on education, childcare and other key public services where it still lacks strategic direction and strong policy definition. The political lesson of the last year is that it has to sustain momentum from its set-piece moments, rather than allowing drift to undermine the advances it makes. This was a speech in which Labour finally and firmly pivoted its politics towards the next general election – the key question is whether it can stay the course.
Crossposted with thanks to IPPR.