There are three thankless posts in a modern Labour government. There’s the Chancellor, who has to announce the tightening of belts and the hiking of taxes; the Home Secretary, who must busy themselves cracking down, banging up and throwing away the key; and the Work and Pensions Secretary, who is charged with Scroogeing every last penny out of the benefits system.
These are the ministers Labour’s grassroots and its graduate liberal voters love to hate, but they likely do more to keep Labour in power than their more popular colleagues. Labour liberals have an outsized influence in policy debates, overrepresented as they are in the BBC, the NGOs and academia, but the gap between them and the median Labour voter is significant, not least on welfare.
For the welfare state to have a future, it must be sustainable
Liz Kendall is this government’s number one hate figure. She has to reform a welfare system that is leviathan in size and cost. The government is spending £319 billion on benefits this year, equivalent to roughly 11 per cent of GDP, with retirees receiving £166 billion, or 55 per cent of it. But Kendall’s reforms concentrate on working-age benefits, specifically those related to health and disability. These totalled just shy of £49 billion last year and are projected to hit £76 billion by the end of the decade. The Office for Budget Responsibility projects that eight per cent of working-age adults will be in receipt of an incapacity-related benefit by 2029, an unprecedented high. Much of this is driven by a £20 billion increase in health-related welfare spending since the Covid-19 pandemic.
Kendall needs to strike a balance between bringing this spend under control and minimising the impact on seriously ill and disabled people. Her plans for personal independence payments (PIP) walk this fine line, tightening eligibility in a way that will exclude significant numbers of current claimants but also scrapping reassessments for those with severe, long-term conditions. It’s a similar story with the incapacity element of universal credit. Freezing payments at £97 per week until 2029/30 will mean a real-term reduction in income for many, but Kendall wants to build in an additional premium for the most impaired, meaning their money will be protected. There will also be a guarantee that anyone willing to take a chance at a job won’t put their payments at risk by doing so.
This balancing act will not impress the left, which is determined to oppose any reform. Some liberals will remain concerned that vulnerable people – the sort of people Labour is supposed to stick up for – will bear the brunt of these measures. Those who fall in the latter camp should maintain an open mind and wait to see what further concessions the government is willing to make. Whatever the rights and wrongs of the green paper, it is plainly an attempt to keep the social security system afloat, not to sink it.
Kendall’s argument is that people capable of working should be economically active, and that the disabled and chronically ill should not be dumped on welfare and denied the opportunity to earn a living for themselves. There is something to this, and there are certainly well-intentioned but regressive attitudes about what disabled people are capable of. But it’s not hard to imagine the kinds of cases that will fall foul of this approach. Some people simply can’t work and all the Blairite patter in the world – opportunity! choice! reform! – isn’t going to change that.
Where Kendall is on firmer ground is the growth in mental health as a primary condition for receipt of benefits. It’s a fraught conversation, and I should probably declare an interest as someone diagnosed with severe depression and panic disorder. Unlike physical conditions, mental ill-health is diagnosed primarily on subjective evidence from the patient, rendering it vulnerable to fraudsters and malingerers. However, anyone raising this point is generally accused of substituting their judgement (or prejudice) for that of doctors. Regardless, it is a conversation that needs to be had, if only to estimate the scale of the problem and preclude an over-correction that causes distress and unfairness to genuine sufferers.
The plans laid before parliament are serious and merit serious consideration. I’m one of those handwringing liberals who thinks the only reform the benefits system needs is more money, but for the welfare state to have a future, it must be sustainable. Public finances will never be sustainable until the government is prepared to be candid with the country about the gap between the size of state we want and the amount of tax we’re willing to pay. Such candour is unlikely to be heard any time soon. In the absence of changes to taxation, the only way the benefits system can be paid for is by cutting costs and restricting eligibility. Good intentions and liberal indignation do not alter a balance sheet. No one will thank Liz Kendall for telling us financial truths we don’t want to hear.
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