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Cameron means business on welfare: the Tories are the radicals again

David Cameron is about to take up the issue that Margaret Thatcher didn’t dare touch and that defeated Tony Blair at the height of his powers: welfare reform. Fraser Nelson explains how the Conservative leader intends to bring the American welfare revolution to this country, challenge Labour on its home turf and make poverty history in Britain.

31 October 2007

5:06 PM

31 October 2007

5:06 PM

There is something about impending doom which focuses the mind. That is why the Tory conference in Blackpool was perhaps the most effective brainstorming session in the party’s history — albeit inadvertently. David Cameron arrived facing an election. He left the northern seaside resort having scared Gordon Brown away from going to the polls — and, in the process, launched a policy strategy more radical than he had ever dreamt he would be pursuing. The proposal to raise the inheritance-tax threshold to £1 million grabbed all the headlines and seems to have struck a chord in the Labour marginals that worried the PM very much. Much less attention was paid, however, to a much more radical proposal: namely, to bring the ‘Wisconsin welfare revolution’ to Britain.

He first slipped this out in a television interview in Blackpool, and then repeated it for good measure in his conference hall speech. The invocation of Wisconsin — a state in America’s upper Midwest — would have passed over the head of most people in the Winter Gardens, let alone in the country. The word triggers few images, if any: snowploughs, badgers and perhaps bicycle lanes. But to policy wonks, it is the home of the most aggressive and successful welfare reform programme the world has ever seen — which became the template for Bill Clinton’s federal reform. And this was what Mr Cameron seemed, quite explicitly, to sign up to.

Even now, members of the shadow Cabinet are not entirely sure if he misspoke. Didn’t Tony Blair try all this in 1999, and wasn’t he forced to drop the strategy after disabled people chained themselves to the No. 10 railings in protest? Isn’t welfare reform so toxic an issue that even Baroness Thatcher didn’t dare to touch it? And why, precisely, would the famously risk-averse David Cameron, who does not dare touch the health service, decide to go straight for the root canal of the British welfare state?

Yet the debate on welfare has changed fundamentally since Mr Blair threw his hands up in despair. Now, there is much wider discontent with the benefits system and the jobless total. It emerged this week that, since 1997, most new jobs have been taken (or created) by immigrants. When New Labour started, there were 5.7 million on out-of-work benefits. Now, the figure is 5.4 million — hardly any change. ‘British jobs for British people,’ Mr Brown’s most fatuous slogan, is, as it happens, the precise opposite of what Labour has done.

So Mr Cameron has come to believe that the connected issues of poverty, welfare dependency and idleness, far from being hostile territory for Conservatives, is terrain where they can take on and defeat Mr Brown. Welfare reform, he believes, encapsulates both the weaknesses of Mr Brown’s ideas and the strengths of his own. It is an area of policy where, he believes, the hitherto vague Cameroon themes of ‘general well­being’ and ‘social responsibility’ can be made vivid, dynamic and relevant to people’s day-to-day lives. And it is an area of policy where he can offer a genuine and palpable alternative to Labour’s failure.

The first task will be to highlight Labour’s dismal record. Mr Cameron is slowly grasping that he who chooses the terms of debate tends to win. After 18 months of using Mr Brown’s language (saying ‘investment’ rather than ‘spending’) he is setting his own terms. And when welfare policy is measured according to the level of joblessness — as opposed to ‘equality’ — the picture becomes devastating.

Include all the hidden unemployed (lone parents and those on incapacity benefit) and it soars to five million: a figure which dwarfs the three million figure that stuck to Baroness Thatcher like napalm. The proportion of those on out-of-work benefits, 15 per cent of the population, is even higher in the cities. In Birmingham, one in five is on benefits. In Glasgow, Liverpool and Manchester the figure rises to one in four. In a booming economy, such statistics are absurd, as well as unforgivable.

Why should this be so? After all, there are so many jobs that 1,540 immigrants settle here every day to fill them. But in this case, as so often, we come against the great clunking fist of unintended consequences. If the right benefit combinations pay more than work, millions will rationally choose welfare — and are therefore ushered by perverse incentives into a life of poverty. And nowhere in Europe do more children live in such households. A generation trap is in operation.

Navigating the welfare system is, for millions, a way of life. The New Deal (which the Tories would abolish) has done nothing to youth unemployment, greater now than when Labour came to power. Nowhere in Europe are there longer-lasting benefits for lone parents. And nowhere in Europe are there more teenage pregnancies (five times as many as Holland). When Mr Cameron talks about family breakup, it is his code for lone parenthood — which even the American centre-left came to see as a major cause of poverty.

The detail of Cameron’s plan is not yet settled but the ethos is clear: it will involve ‘tough love’ and denying welfare to people who turn down a suitable job. Iain Duncan Smith, one of the unexpected stars of the Blackpool conference, is being brought back to help, and many of the ideas for welfare reform are being drawn from his seminal Breakdown Britain report. It is clear that the approach will be revolutionary, breaking with the European concept of entitlement. Rather than tackling poverty per se, the focus will be on tackling the behaviour which leads to poverty — namely worklessness, educational failure and family breakdown.

Mr Cameron is much taken by the work of William Galston, a political theorist behind the Clinton-era welfare reforms. Galston identified three steps to escaping poverty: finish school, marry before having children and avoid teenage pregnancy. Among those who did all three, only 8 per cent were poor. Of those who did none, 79 per cent were poor. This, for Mr Cameron, was a rare example of his ‘social responsibility’ slogan come alive: here was strong evidence that what counts is people’s own life choices and behaviour, rather than clumsy government intervention which so often compounds the problem.

Mr Brown’s approach to poverty is purely financial, and is seen through a strikingly narrow prism of average income, determined by rigid thresholds set out on spreadsheets. Mr Cameron’s approach will be more ‘holistic’, and is based on restoring the dignity of work. Less about GDP, as he likes to say, and more about GWB — ‘general wellbeing’. And rather than state control (running the welfare system from Whitehall), he would have separate private agencies competing to run the welfare systems, paid by results according to how many they get back to work.

And just as Mr Cameron’s school reform policy comes from Sweden, the most socialistic country in the free world, his welfare reform hails from Wisconsin, historically one of the most left-wing states in the Union. This is no accident. It was the American Left which grasped that traditional welfare was actually locking people into poverty, and decided to fight it not by raising incomes through benefits but by cutting welfare rolls.

It was a Republican governor, Tommy Thompson, who started the first Wisconsin welfare reform on his election in 1987. The founding principle was that everyone who could work should do so. People were assessed for
the type of work they could do, even if menial park-sweeping tasks, and placed in subsidised jobs. If they did not turn up for work, their welfare was docked. The concept of welfare as an entitlement, as something-for-nothing, was ended for good.

Thompson cut benefit rates, but used the saved money to introduce new benefit schemes. Those taking work placements had their childcare and commuting costs subsidised. New demands kept being introduced. Parents, for example, would lose benefit if their child played truant — a scheme designed to stop the welfare habit being passed down the generations. There is ample scope for such demands in Britain, where one in five children lives in a household with no earned income.

The effects of Wisconsin’s tough love were extraordinary. Wisconsin’s welfare rolls had fallen by 82 per cent by 2001, by which time the state had become used by the Clinton presidency as a template for America and the country as a whole had reduced its welfare recipients from 14 million to less than five million. The type of fall which ministers say is impossible for Britain had been enacted in a few years. When welfare stopped offering something for nothing, it lost its appeal. People chose work instead. Poverty rates among black children fell to the lowest since records began. Like Britain, America had declared work to be the best form of welfare. But unlike Britain, they legislated for it.

But how much of this could be imported to Britain? It is the culture, more than the size, that’s the issue. The Wisconsin project worked because it answered a clear public demand. In the past half-century, Britain’s tolerance for huge welfare spending has been greater, the stigma of accepting benefits much smaller and overall public perception of the problem generally dimmer. The Brown government’s ‘let them eat tax credits’ approach is only now beginning to come undone. Welfare reform has worked best around the world where the old system was perceived to be in crisis. Britain, alas, has lacked this sense of urgency.

Yet much has changed since Mr Blair backed down in 1999. The problem of welfare ghettos is growing more acute, and more obviously so, spawning gang warfare and endemic criminality. Jonathan Matondo, the 16-year-old boy shot dead last month by another teenager in Sheffield, was killed in one of the most welfare-dependent areas in Britain. Violent crime goes hand in hand with male joblessness (itself at an all-time peak). The Conservatives could plausibly argue that such ghettos are not just a waste of human potential. They are Petri dishes where social malaise festers.

Mass immigration now makes it impossible to argue that there are not enough jobs in Britain. Ministers say the ‘skills agenda’ is the solution, but the bulk of the immigrants arriving are unskilled and still finding work. The Labour and Tory party’s respective preparations for the election that never was uncovered mounting public anger over welfare, especially in council estates where working families resent the fact that their welfare-dependent neighbours seem better off and appear to be able to afford longer holidays. A sense of deep unfairness is starting to take root. Britain is a tolerant, decent country, but there is a growing impatience with those who seem to exploit the rules rather than observe their spirit.

Politically, too, the sands are shifting. Labour has accepted that it will miss its target of halving child poverty by 2010. Sure Start nurseries for the poor are proving an expensive flop. The idea that the solution to poverty is to give more resources to the needy has been tested to destruction. Yet this remains Mr Brown’s immutable creed (and that of the anti-poverty pressure groups who test his performance in public). It seems we can already write the epitaph of this government: that Labour fought poverty — and poverty won.

But poverty lost in Wisconsin. And in promising to re-enact the battle here, using the same plan of attack, Mr Cameron is undertaking his boldest mission yet. The electoral pressure-cooker of Blackpool may have forced him to make the leap, but now that he is on the other side he seems comfortable. It is a better place from which to take on Mr Brown: hugely ambitious, yet in tune with the times. And there are few better ways to unnerve the PM than to claim, as Mr Cameron now does, that only the Con­servatives have the strength, energy and ideas to make poverty history in Britain.

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