Posts Tagged 'welfare state'

Taxation, inequality and post-industrial society

Ruane4Jul17

Sally Ruane

In this blog post, Sally Ruane, co-author of Paying for the Welfare State in the 21st Century, explains why we need to challenge the political culture surrounding taxation to effectively tackle inequality.

 

“The dramatic electoral developments in the US, France and most recently the UK, point to a state of flux in which there is a high degree of uncertainty regarding future direction and outcomes.

These political symptoms emerge following the transition of advanced Western countries from industrial to post-industrial societies, a transition managed in such a way that economic inequality has deepened and financial deregulation has brought about a destabilisation of the whole system.

The rise of in-work poverty

In the UK, from 1980 to 2003, median income began to lag behind economic growth, rising at the rate of only 70% of national economic growth; and in the five years leading up to the financial crash, household income stagnated despite economic growth during the period. More recently, the Institute for Fiscal Studies found that in the seven years after the crash, average gross employment income had yet to recover its pre-recession levels. Into this mix we must add that, unlike the postwar period when poverty was associated with a problematic or disrupted relationship to the labour market, most people living in poverty today are living in households where at least one person is working. What is more, average pensioner household income is now higher than average income in working age households. Meanwhile, at the top end of the scale, the best off 1% of households has raced away, holding 7.9% of all income in 2014/15 against 5.7% 1990.

“Average pensioner household income is now higher than average income in working age households.”

Tax and the allocation of resources

The allocation of resources in society is an outcome not just of ‘market incomes’ but also of the totality of fiscal policy. This entails government spending on benefits and in-kind services, on the one hand, and the tax system on the other. The social policy gaze has tended to focus on the former rather than the latter but to understand questions of inequality we have to examine taxation. The tax system encompasses more than the entities taxed, the taxes levied, and the rates and thresholds at which those taxes are levied. It entails also attitudes to the payment of tax, the capacity to and vigour with which the tax collection authority pursues those who owe tax and the infrastructure through which income and wealth are handled, disclosed (or not) and made subject (or not) to tax liability.

‘Flexible’ working and rising inequality

The way in which the tax system works not only is influenced by the nature of the wider socio-cultural and economic system but at the same time influences that wider system.

The acceptance of a model of globalisation in which the financial system was deregulated and many relatively well paid working class jobs were transferred to other, low wage economies, reinforced by a strong pound which suited the interests of the financial sector, gave rise to exhortations that labour must be flexible to attract capital investment. ‘Flexibility’ meant that the wages and terms and conditions of workers were systematically worsened to the advantage of capital. New Labour’s revival of Speenhamland type policies in which the low wages of those in work were supplemented by tax credits afforded a degree of redistribution but at the expense of establishing the acceptability of paying low wages, reinforcing the problem of in work poverty. In other words in addressing workplace exploitation, the tax system has simultaneously exacerbated it.

“… in addressing workplace exploitation, the tax system has simultaneously exacerbated it.”

The cost of tax avoidance

The increasing effectiveness with which corporate and financial interests have been able to lobby ministers has given rise to criticism of Her Majesty’s Revenue and Customs for lacking zeal in its pursuit of complex and sophisticated forms of tax avoidance and evasion, reinforcing the resources which corporations can bring to bear in further lobbying of ministers. The debilitation of the organised working class through acceptance of the dominant globalisation model has weakened the countervailing forces which might have checked concessions to big business and big finance. The success with which large corporations and affluent individuals are able to avoid and evade paying taxes materially affects the resources governments claim are available for funding social security and public services. The resulting austerity erodes the social wage and further weakens the base for social democratic policies.

“Challenging the political culture surrounding taxation is essential if inequality is to be effectively tackled.”

These are just some of the inter-linking examples of the way in which the tax system is both shaped by wider cultural and social factors as well as recursively shaping that wider society.

We argue in Paying for the Welfare State in the 21st Century that reforming the tax system goes beyond altering rates and bands and that challenging the political culture surrounding taxation is essential if inequality is to be effectively tackled and some of the destructive consequences of the shift to post-industrial society are to be reversed.

 

Paying for the welfare state in the 21st century [FC]Paying for the welfare state in the 21st Century by David Byrne and Sally Ruane is available with 20% discount on the Policy Press website.  Order here for just £10.39.

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The views and opinions expressed on this blog site are solely those of the original blog post authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

Attitudes to welfare: a departure from the past or more of the same?

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John Hudson

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Ruth Patrick

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Emma Wincup

 

 

 

 

 

 

The latest issue of the Journal of Poverty and Social Justice is a special themed issue exploring ‘welfare’ attitudes and experiences. Here, the issue editors – John Hudson, Ruth Patrick and Emma Wincup –  look at hints that attitudes to welfare may be changing.

 

Discussions about ‘welfare’ in the UK over the past five years have been set against a dominant backdrop of ongoing welfare reform. The key players in government – David Cameron, George Osborne and Iain Duncan Smith – have focused on ending what they describe as a culture of ‘welfare dependency’.

This political landscape shaped public and media debates, with the negative characterisation of ‘welfare’ and the lives of those who rely on it only further embedded by the exponential growth in ‘Poverty Porn’. However, in the 12 months since we began assembling the research we report here,  the UK’s political landscape has been dramatically altered by Brexit: Cameron, Osborne and Duncan Smith are all figures of the past.

The ramifications for social policy are unclear, but today, as we publish our Journal of Poverty and Social Justice special issue on attitudes to ‘welfare’ and lived experiences of those reliant on the most stigmatised form of state support, there are hints of a new rhetoric, politics and approach on ‘welfare’ in the UK. Continue reading ‘Attitudes to welfare: a departure from the past or more of the same?’

Ann Oakley: Connecting private lives and public work

Author and academic Ann Oakley discusses gender, patriarchy, methodology, and the politics of memory and identity at the Bristol Festival of ideas event held at Foyles bookshop in November.

Ann talks frankly and openly about the experience of being the daughter of Richard Titmuss, policy analyst and defender of the welfare state, and how growing up in what she refers to as ‘the blue plaque house’ in London shaped her own personal, political and academic development.

In conversation with  Sarah LeFanu, Ann shares stories about discovering and developing her feminism amid the act of dusting her father’s bookshelves as well as her delight in burrowing into deep and darksome archives where she uncovered papers that had not previously been seen to find ‘the shadowy spaces behind and between the official texts.’ Her enthusiasm for the way the private and public interact in the making of people is heartfelt and contagious. Listen to Ann speak below:

Much of the discussion is based around material recently published by Ann in her latest book Father and Daughter, in which she mixes biography, autobiography, intellectual history, archives, and personal interviews to provide a compelling narrative that analysis defies the usual social science publications to offer a truly distinctive account. Copies are available at the Policy Press website at a 20% discount.

Myth busting: How the Treasury really spends your money

In light of the Treasury’s example ‘annual tax summaries’ and the implications in terms of welfare spending, academic and Policy Press author John Hills has shared some infographics with us to help us understand the difference between what we’re told and what the numbers actually show.

According to Hills’ research, when the social security budget was described to members of the British public – covering state pensions, child benefits, tax credits for those in work, benefits for unemployed and disabled people – half of people said they thought that 40% or more of spending went on the unemployed. The actual figure is closer to 4%. Continue reading ‘Myth busting: How the Treasury really spends your money’

The welfare state’s surprising winners

Leading social policy expert, academic and Policy Press author John Hills’ new book Good Times, Bad Times: The welfare myth of them and us,  publishes today. In his blog, first published on the LSE British Politics and Policy blog explains how the idea of a welfare-dependent underclass is wrong.

John Hills (small)Twenty-five years ago Granada television and my colleague in LSE’s social policy department, Julian Le Grand, came up with a novel way of presenting the effects of social policy.

Instead of graphs, tables and talk, they used a TV game show between two families – the Ackroyds, from Salford in Greater Manchester, and the Osbornes, from Alderley Edge in Cheshire – to illustrate who got what out of the welfare state of the time. Which of these stereo-typical working-class and middle-class families were the true ‘Spongers’ of the show’s title, most ‘dependent on government’ in current formulations, if one could look over their whole lives?

As it happens, the longer-living, university-educated, opera-loving middle-class Osbornes turned out to be the winners, getting more than the working-class Ackroyds. A follow-up programme which I helped with, Beat the Taxman, two years later looked at which family had done best as a share of income out of the tax reforms of the Thatcher years. Perhaps less surprisingly, the Osbornes won that one too.

Invented

What was special about these families was that, in the words of the game show host Nicholas Parsons, “we’ve invented them”. A quarter of a century later I’ve gone back to those families and their (newly invented) children and grandchildren to explore key issues in the current debate about ‘welfare’ and the welfare state.

In my new book, Good Times, Bad Times: The welfare myth of them and us, I present the results of research over the last decade or more in LSE’s Centre for Analysis of Social Exclusion (CASE) and elsewhere using large datasets, the results of our own surveys, government statistics, and the results of computer simulations.

But the continuing lives of the Osbornes and the Ackroyds may bring home some of its key points. There are Gary and Denise Ackroyd, whose incomes vary widely from month to month as his hours as a van driver change and her work in a school only brings in pay only in term-time – contrasting with the stable and predictable incomes of people like young civil servant Charlotte Osborne (and of many academics).

Over the 2000s, the circumstances of the Osborne parents, Stephen and Henrietta changed a lot, particularly after Stephen’s heart attacks and decision to down-shift his accountancy work, but they still remained in the top 2 per cent of the income distribution. By contrast, the changes in the size of their family and the effects of Jim Ackroyd losing his job in 2006 meant that he and his wife Tracy bounced around the income distribution – close to being in the poorest tenth in two years, but just above the middle by the time they were empty nesters in 2010.

“But we don’t need made-up examples to know that arid picture of unchanging lives is wrong”

The book also looks at the life chances of the newest grandchildren, George Ackroyd and Edward Osborne, born at the same time in July last year. If we knew nothing about them apart from where they were born, we would already expect Edward to live nearly four years longer. And although some of the educational gaps have closed in the last decade, the chances are that Edward will be doing better at school from the very start, leave with better qualifications, go to a better university, earn much more and build up a far higher level of wealth. There’s nothing predetermined about that, and George Ackroyd might buck the trend – it’s just that he starts with the odds against him.

And looking at the recent past, the poorest of the families, lone mother Michelle Ackroyd, working 16 hours a week on a low wage, turns out to have lost 6 per cent of her income from tax credit and benefit cuts and austerity tax rises since May 2010. By contrast the most affluent of the families – Stephen Osborne with £97,000 per year earnings and his wife with £9,000 from her part-time teaching, plus significant investment income – have lost slightly less in weekly cash than Michelle, and only 0.7 per cent of their income.

Twenty-five years on, more than ever, the debate around ‘welfare’ contrasts a stagnant group of people benefiting from it all, while the rest pay in and get nothing back – skivers against strivers; dishonest scroungers against honest taxpayers; families where three generations have never worked against hard-working families; people with their curtains still drawn mid-morning against alarm-clock Britain; ‘Benefits Street’ against the rest of the country; undeserving and deserving; them against us. We are always in work, pay our taxes and get nothing from the state. They are a welfare-dependent underclass, pay nothing to the taxman, and get everything from the state.

But we don’t need made-up examples to know that arid picture of unchanging lives is wrong. We know from our own experiences, those of our families – and from TV soap operas and nearly every novel – that people’s lives and circumstances change, and what we get out and put in changes over our lives.

It remains true that people starting advantaged remain much more likely than others to end up advantaged, and those who start poorer are more likely to end up poorer. But there is considerable variation and uncertainty around such average differences in life trajectories. This does not just include the long-term changes over the life cycle that we all go through, but also other variations and changes, from at one end the rapid variations many people experience in circumstances and need for support from week to week to, at the other end, the factors that affect the life chances of our children and our grandchildren.

As a result of all this variation in circumstances over our lives, most of us get back something at least close to what we pay in over our lives towards the welfare state. When we pay in more than we get out, we are helping our parents, our children, ourselves at another time – and ourselves as we might have been, if life had not turned out quite so well for us. In that sense, we are all – or nearly all – in it together.

Good times bad times [FC]Good Times, Bad Times: The welfare myth of them and us is published by Policy Press.  For further information, follow this link: Good times, bad times

John Hills is Professor of Social Policy and Director of the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics.

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

The coming apocalypse in UK social policy

Academic and Policy Press author Tony Fitzpatrick has been musing on the state of UK social policy and the effectiveness of welfare reforms since 1945.


tonyfitzpatrick[1]Many expect that in the next few years we will experience an Armageddon in UK social policy, with the effective privatisation of the NHS, the proliferation of profit-making schools, the increased outsourcing and marketisation of public services more generally, and increased levels of poverty and inequality as a result of government austerity.

But these pessimists and naysayers are overlooking something important about the near future. Here’s why.

How often have you heard something like the following? ‘The problem with the welfare state is that it pays people to do nothing. All of those entitlements and unconditional rights encourage them to become dependent. Benefit levels are too high. The result is an erosion of the work ethic, a culture of poverty, lack of family values, increased crime and general loutishness. What we should do is crack down, force the shirkers and the scroungers to do their bit. Let’s end the passive, something-for-nothing system.’

This refrain has been heard repeatedly since 1979. In fact, it began the day after the Elizabethan Poor Law was enacted in 1601, but leave that point to one side. 1979 was the year a government was elected which was dedicated to ending benefit and welfare dependency. Ever since then successive governments have more or less sung the same song.

Milk-and-honey

Of course, quite soon a difficulty builds up. If the welfare state’s unconditional, milk-and-honey culture has produced endless social problems, how to account for the effects of economic and social reforms since 1979? As the welfare state becomes more and more conditional, and as markets and consumerism play a greater and greater role, then it becomes harder to maintain that social problems are due to a post-WW2 system that encourages people to take, take, take.

It’s at this point that politicians turn into vampires. Just as vampires don’t see their own reflection in a mirror, so politicians are often adept at ignoring their own role in creating existing social and economic conditions.

Take the strategy of most Secretaries of State in the last government. Every few months some new shake-up was announced in which unemployed claimants/scroungers/beggars/single mums/teenagers/asylum-seekers/deadbeat-dads would no longer be allowed to sit at home all day having children and watching Countdown. This would be announced on BBC news as ‘the greatest reform to the welfare state since Beveridge’, etc etc. Time would pass. Then a few months later, basically the same initiative would be re-announced as if nothing had happened beforehand.

“By 1979 a grateful nation had awoken to its moral decline, vowed to pull its socks up and give a good kicking to those indigents who insisted on not getting the message”

This is one reason social policy debates often resemble some malicious echo chamber in which the same ideas bounce around for decades by being refurbished as radical and innovative. Overall, governments have swept the negative effects of their own policies and interventions to one side in the search for headlines and votes.

The narrative of the last 3 decades has been this, then. The years after 1945 after filled with social policies that distributed all sorts of goodies and presents to people and asked nothing in return.

This was the era of ‘passive welfare’. Only a few brave, lone voices in the wilderness warned us where it was all going: laziness, dependency, economic catastrophe, and so on.

‘Active welfare’

By 1979 a grateful nation had awoken to its moral decline, vowed to pull its socks up and give a good kicking to those indigents who insisted on not getting the message. After 34 years the party was over; time for responsible adults to clean the house. This is now the era of ‘active welfare’.

Is this idyll the society in which we now live? Can you think of anyone who imagines this is the case? Why isn’t middle England content, for instance? Let’s think of the possibilities.

One is that we were simply too optimistic about the task to be done. Turns out that the 1945-79 period was one of such decline that it may take generations, of instilling discipline and respect for authority in the rabble, to rectify.

Another possibility is that too many politicians of all parties have been living in a fantasy of their own making and have been trying to conjure that fantasy into reality by ignoring their own previous and ongoing role in creating a highly unequal, anxious, scapegoat-seeking and often punitive country.

For instance, New Labour’s defence of its record was simple.

In unfavourable circumstances – global hypercapitalism, corporate governance, post-national sovereignty, knowledge economies, and a culture of political apathy – it did all a modern social democratic party can do. Poverty was reduced. And following 4 years of Coalition government, its record doesn’t seem that bad now, does it?

Yet its modest progress on poverty stalled around 2003; ‘the excluded’ were Othered in a way that has increased middle England paranoia about destitute spaces, feral youth, social-moral meltdown and anti-social whatever; and it did little to reduce the levels of inequality it inherited in 1997.

So, according to the prevailing narrative, in the 34 years from 1945-79 we had a hedonistic, unconditional welfare state which failed. Well, by 2013 we had had 34 years since 1979. Will this lead to a sober, objective appraisal of where those 3 decades have left us and why? Will we conclude that if 34 years was long enough for one type of system to fail, it is also long enough for another to fail too?

Will we turn ourselves away from a political and economic system that tolerates massive inequalities, the intrusion of free markets into practically everything, an assumption that private is always best because the public sector is inefficient, underemployment and overwork (including some of the longest working hours in Europe), high levels of child poverty, insecurities, personal acquisitiveness and selfish individualism, and all the regulations designed to control personal behaviour?

Climate Change & Poverty [FC]Tony Fitzpatrick’s latest book Climate change and poverty: A new agenda for developed nations is available at the discounted price of £19.99 (RRP £24.99) from Policy Press website here.

Also available by the same author:

Applied ethics and social problems: Moral questions of birth, society and death

Voyage to Utopias: A fictional guide through social philosophy

Understanding the environment and social policy

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

Celebrating the British Welfare State?

The UK has recently looked back over the last sixty years in the context of the Queen’s Diamond Jubilee celebrations. At The Policy Press we have been thinking about what the last sixty years have really meant for Britain, and would love to know your thoughts – by leaving a comment on this blog, emailing tpp-marketing@bristol.ac.uk or on Twitter @policypress.

Here, author Paul Spicker (How Social Security Works, Social Policy) takes a look at what has happened to the British Welfare State over this time:

The British Welfare State was intended to be an ideal. Asa Briggs identified three key elements by which it would act:

“First by guaranteeing individuals and families a minimum income irrespective of the market value of their work, or their property. Second by narrowing the extent of insecurity by enabling individuals and families to meet certain “social contingencies” (for example sickness, old age and unemployment) which lead otherwise to individual or family crisis, and third, by ensuring that all citizens without distinction of status or class are offered the best standards available in relation to a certain agreed range of social services.”  (Briggs A., ‘The welfare state in historical perspective’, European Journal of Sociology, 1961, 2, pp.221-258)

Although he refers three times to “individuals” and “families”, the Welfare State was conceived in collectivist terms. It depended on the idea that some things are done better through collective action, that government needed to serve the public, that it should try to ensure basic universal standards, and that it should do things as best it could.

The assault on the Welfare State by the New Right, and the shift in politics that has taken place since, challenged the conceptual foundation of the Welfare State, not just its practice. The market economy is now taken as the norm. The Treasury’s Green Book advises:

“Before any possible action by government is contemplated, it is important to identify a clear need which it is in the national interest for government to address. Accordingly, a statement of the rationale for intervention should be developed. This underlying rationale is usually founded either in market failure or where there are clear government distributional objectives that need to be met. Market failure refers to where the market has not and cannot of itself be expected to deliver an efficient outcome; the intervention that is contemplated will seek to redress this. Distributional objectives are self-explanatory and are based on equity considerations.”  (HM Treasury, n.d., Green Book, at http://www.hm-treasury.gov.uk/d/green_book_complete.pdf)

It appears, then, that it is not good enough for government to justify their actions because they would benefit people, because they protect people’s rights, because the government has a moral commitment – or even because it has been elected to address an issue. We have lost sight of the fundamental principle that government is there to do things for people.

Paul Spicker.

Paul Spicker’s book How Social Security Works is available for only £15 until the end of June only. Order your copy here.


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