Welfare “debate” still shrouded by myth and fantasy

My response to an article on Slugger O’Toole describing welfare reform as the “horror show”.

I think the article itself was excellent, in the sense that it gave an entirely fair commentary of many of the opinions held on welfare reform (albeit limited to a particular, often unrepresentative sector). However, most of these are based on scaremongering, if not pure fantasy. It is worth noting that this applies to all sides of the “debate”.

A few of the myths, therefore…

The ‘mitigating measures’ agreed for NI had not previously been laid out

In fact, they had often been discussed in the Assembly – both in Committee and plenary (particularly during questions).

The previous Minister Nelson McCausland had clearly stated a preference for covering the cost of not implementing “Bedroom Tax”, and estimating this cost at £17 million. Some thought had also been given to implementing “Split Payments” (i.e. fortnightly Universal Credit payments) at £24 million, although the issue there was that they do not actually put more money in people’s pockets (so there was more wariness). There was also an acceptance that childcare is different in Northern Ireland and thus different arrangements would not necessarily be penalised.

This was all on the record – to those with a keen interest in the subject, it really shouldn’t have been news! It is a matter of concern that some professing deep interest or even expertise in the subject had not been following the debate on it in the Assembly.

Households will lose £6,000 in a ‘welfare disaster’

The article left it unclear, however, why people would lose £6,000. I have checked with those present who confirm that this was not established. We do have to ask why absolutely no one in attendance sought to establish the precise facts around this figure, and merely took it as read. It is indicative that stances on welfare reform had already become entrenched, and there is no willingness to explore it in meaningful detail.

There is a serious issue in all policy areas with debates around welfare which focus on random figures being raised without explanation. Speaking of which…

Welfare Reform will take £750 million out of the NI economy

Most of this was actually already accounted for under Labour’s reforms; we don’t actually know how much welfare will cost under the new arrangements (by definition it is designed to meet a defined need, it is not a budgeted expenditure); and actually that figure did not account for large aspects of the reform likely to work out positively (not least because they make access to benefits more straightforward and limit bureaucracy). Even NICVA now accepts the figure is nowhere near that, and that it cannot be precise about what it is.

What is more, the “research” upon which the figure is based looked solely at the public money spent on welfare and not, for example, at the positive outcomes of people entering or returning to the workplace – outcomes which go well beyond income (now enhanced by the rise in personal allowance meaning you can work part-time on just short of the NI average wage and pay no income tax at all) and include improved social networks, improved self-esteem and thus improved health, improved educational opportunities, perhaps even further job creation.

Therein lies the problem. Anyone with a predetermined political viewpoint can shape statistics to suit their own case. Frankly, academics can be more likely than anyone to do this. Worse still, they sought to turn the debate into one purely about financial allocations rather than about people’s qualify of life and the serious scourge of entire communities trapped in poverty. That is scandalous.

Welfare Reform has the reverse effect from that intended

It would be foolish to dismiss this possibility. However, it does not look likely.

The suggestion is that welfare reform in Warrington led to increased indebtedness, abuse and food bank use.

Yet in fact, levels of indebtedness have grown faster in Northern Ireland than anywhere else in the UK since 2010 (see Julian O’Neill’s recent BBC report for more). Charities have had to set up food banks even in supposedly “prosperous” South Belfast. The evidence is indeed that indebtedness, abuse and food bank use are increasing – but they are increasing right across the UK and, if anything, more so in Northern Ireland where welfare reform has not been implemented (and, in fact, nor have significant public sector spending reductions).

The UK was in fact 16% poorer in 2013/14 than it expected to be in 2007/8. This dip is about twice the rate of average industrialised countries – in fact beaten only by Ireland, which has a particular effect in Northern Ireland given the importance of cross-border trade.

In other words, the negative effects which are being put down to welfare reform (and indeed “austerity”) are actually down to the general negative effects of the Great Recession. This was something which was in the end broadly accepted at the NICVA conference, but not given enough exposure. The fact that the Great Recession proved so calamitous for people at the bottom end is if anything yet more evidence that the previous welfare system wasn’t working – and, in Northern Ireland, still isn’t.

The 1% rise in working-age benefits is particularly harmful

Actually the 1% rise in working-age benefits is particularly harmful – but that is not part of Welfare Reform, but rather a later populist financial decision taken by the Chancellor.

The Chancellor’s justification was that people on benefits should not see their income rise faster than people in work. This is a false parallel, as any real supporter of Welfare Reform would point out. Welfare Reform is about helping people into work precisely because once you are in work your options and flexibility for earning income increase.

Put another way, I am self-employed and if my income decreases (which it most certainly did during the Great Recession) I can use my past professional experience and flexibility to take on more, or different, or varied work to cover at least some of that decrease. Someone on benefits (even if not entirely dependent on them, in fact) is restricted in their potential to do this – particularly pre-reform where in many cases, outrageously, taking work can actually mean financial loss rather than gain to the individual. Thus the parallel between fixed benefits income and flexible work income is false. Proponents of Welfare Reform fully accept this – which is why they (with me among them) spoke out against the 1% cap.

Why introduce something that’s not working?

Welfare Reform is a generational thing. Just like Beveridge in the first place, it is about establishing a system to stand the test of time for at least a generation. Since most of it has not been put in place in Great Britain, and none in Northern Ireland, we simply cannot yet say whether or not it’s working.

What we can say, definitively, is that the old system inherited by the Coalition in 2010 absolutely does not work. It simply does not do what the system is supposed to do – provide a buffer for those who fall on hard times. It does do what it is not supposed to do – trap people and even entire communities in poverty.

NICVA had no right organising a conference

NICVA has every right to organise a conference, but I cannot help but think it organised the wrong conference – and not just because the gathering had no proponents of Welfare Reform present, to the extent that no one was even prepared to question the detail of claims made from the floor.

One of the core problems with what passed for “debate” on tackling poverty (which is ultimately what this is about) is that it focuses on tackling the short-term symptoms rather than the long-term causes.

It is easy to quote a few people likely to face significant difficulty – after all, by quoting the idea of an old woman living on her own in a big house she inherited, rich people were able to mount a campaign which means people in mansions pay a third of the rates comparatively that the rest of us pay (due to the rates cap) – something which appeared reasonable when presented with a short-term symptom, but is actually a long-term political, social and financial outrage!

Many voluntary organisations do exist to help such people, particularly during transitions, but they need to understand that is a case for short-term action and intervention on specific issues, not broad long-term policy making. For recommendations to deal with longer-term causes of poverty, including the role in it of the welfare system, we really need evidence-based think tanks who take a broader view. We are sadly short of these, which is why so much policy “debate” proves unsatisfactory and ends up a competition of interests rather than ideas.

In other words, conferences like this are ultimately all about managing poverty (and those who experience it) rather than tackling and overcoming it. The latter is a long-term objective – and, by necessity, Welfare Reform is a long-term solution.

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2 thoughts on “Welfare “debate” still shrouded by myth and fantasy

  1. Clenched Fist says:

    Welfare reform doesn’t really save any money. We should go after tax dodgers instead.

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