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- [00:00]
James Frittee
Welcome to lseiq, a podcast from the London School of Economics and Political Science, where we ask leading social scientists and other experts to answer an intelligent question about economics, politics or Society. In 1942, at the height of the Second World War, the British government published the Social Insurance and Allied Services Report. Its aim was to establish new forms of Social Security and welfare for a post war uk. Its writer, William Beveridge, proposed solutions to the prevailing social evils of the want, ignorance, disease, idleness and squalor. The report advocated that the government established provisions to combat these evils, including a free education system, a National Health Service and a comprehensive state pension. Here's Beveridge underlining the importance of these recommendations.
- [00:51]
William Beveridge
The national minimum is a peculiarly British idea. It means that no one is to fall below a certain standard. It leaves everyone free to spend his income above that standard as he will. It preserves the maximum of individual freedom and responsibility that is consistent with the abolition of want.
- [01:26]
James Frittee
In the 21st century, the welfare state's purpose and effectiveness has been contested. With over 50% of the country's budget spent on it and an ever changing political, technological and cultural landscape, its purpose, size and utility have dominated public discourse. In this episode of lseiq, James Ratee asks, what's the future of the welfare state?
- [01:48]
Malcolm Torrey
Our welfare state is dysfunctional.
- [01:50]
James Frittee
Plans to raise the state pension age.
- [01:52]
Malcolm Torrey
To 70 have been proposed. How do you fancy working until you're 70 before you can get to state pension age?
- [01:56]
James Ratee
Opportunist criminals have taken over hundreds of council houses.
- [01:59]
Malcolm Torrey
Hospitals have been under huge pressure this winter. Social care already is in crisis. Take back control of £350 million a week and spend on our priorities here.
- [02:10]
John Hills
In this country, including on the National Health Service.
- [02:12]
James Ratee
I think that the benefit system is unfair.
- [02:15]
Lucinda Platt
It's grossly unfair.
- [02:16]
Unidentified Public Commentator
You should be forced to to give something back to our society and do some community service or something to make you get out of your pit. You don't deserve what you get, mate. You're taking the mickey out of everybody who's watching this. Who grafts, who cares, who loves, who scrimps, who saves and people who are looking for jobs. And you're smirking at us all of the time.
- [02:36]
James Ratee
Discussions about the welfare state tend to elicit passionate beliefs, whether it's the underfunding of the NHS or the amount we spend on benefits. Opinions abound about where money is spent and who it's spent on. In the midst of these emotive arguments, I wondered whether we may have lost sight of what exactly we mean when we talk about the welfare state. Professor John Hills of LSE's Department of Social Policy has written the book Good Times, Bad Times, the Welfare Myth of Them and Us. I asked him to define the welfare state and whether as a country, we hold false conceptions about its role in society.
- [03:09]
John Hills
It encompasses the range of what we do collectively through paying taxes and through the state providing services and money across the range of pensions, support for people who are unemployed or for other reasons, can't work, health care, which in Britain is done through the National Health Service, state education and other kinds of public services. So in many ways, going back to Beveridge's vision 75 years ago and his report, it's the things that we do collectively to combat those five giants of disease, squalor, idleness, want, ignorance. It's different from some modern conceptions of really the US idea of welfare, meaning only handouts to people of working age with deep public suspicion as to whether those people really need them, whether they're pulling their weight. So the word welfare has moved from being an encompassing term, an inclusive term, to often being used in a pejorative sense as something stigmatized and undesirable.
- [04:25]
James Ratee
Why do people think of it in those terms?
- [04:27]
John Hills
I think you have to understand two different kinds of politics. In a way, the great triumph of Beveridge in 1942 and then the post war Labour government in Britain from 1945 was to put together all of the different risks that we face as individuals going through our lives and as families. The need to support people when they're going through education, but also to need to support them when they're out of work because of old age or illness, or the extra needs we have when we have children, or support for us when we're sick. All those different risks which affect everybody were put together in one place. These are different ways in which we as a society can organize ourselves efficiently. Because often it's much more efficient to do this through the state, to cope with those where you might not yourself face the risk of unemployment, but you will, one hopes, live long enough to go into retirement. But not knowing how long that retirement is going to take, that's a risk. We cover that through a pension system organized through, through the state. So that initial conception of the welfare state as a whole, which I think still describes exactly what we do, was an inclusive one. So that brought along people who might in some quarters be seen as somehow undeserving, but might by others seen as unlucky, along with all of the life risks that everybody else Faces. If you ask the public what income level would constitute destitution, the answer you get back from the general public is about £70 a week. In other words, the rate we set for Single People for Job Seekers Allowance is barely enough to meet what I think most people would say was not, you know, below the poverty level, what people would describe as a poverty level, but the absolute, barest minimum. Of course, if people have children, if there's more than one adult, then the amounts involved might be higher.
- [06:39]
James Ratee
Professor Lucinda Platt from LSE's Department of Social Policy and author of Understanding Inequalities agrees that the welfare state was designed to benefit the country as a whole.
- [06:49]
Lucinda Platt
So it's evolved very much in the nation state model of competitiveness to ensure that states have educated and skilled populations who can make sure that their countries remain economically profitable and increase gdp.
- [07:03]
James Ratee
And yet, despite the nobility of these aims, there's a lot of skepticism, especially with regard to who benefits. Lucinda believes one of the key factors that underlies these concerns is one of fairness. You've written a bit about the kind of conception of fairness.
- [07:18]
Lucinda Platt
Yes.
- [07:19]
James Ratee
If the welfare state isn't necessarily designed to kind of address issues of inequality, do you think it has a role in terms of fairness?
- [07:25]
Lucinda Platt
Yes. Fairness is one of those interesting things that everybody thinks is a good thing, but can mean very different things to different people. And I think fairness is very implicated in the welfare state and where it puts money. So, for example, around attitudes to unemployment, there are often very heated debates around whether unemployment spending should be reduced further and whether there should be strong incentives and strong sanctions from those who think that it's only fair that everybody should work, everybody should be in a sense made to work. Whereas other people would see fairness as being that these are people who are excluded structurally from the labour market or through no fault of their own, are not able to get a job, or even if they don't have, there's issues about the extent to which they're able to acquire the necessary skills for participating in the labour market, that there's still a responsibility of the wider society to provide for them, and that it's inappropriate, it's unfair to penalise people for things that they beyond their control. Is it fair that people in work should maybe sometimes not get the same level of reward as people out of work has been behind a lot of the way someone should be penalised because they have a large family. And then the other debates and then other positions would say, well, is it fair that someone with a larger family should get more because They've chosen to have a larger family. And so issues of choice, issues of what's voluntary and what's involuntary are often at the heart of these discussions. And we can see this also in relation to disability which again the debates around disability have evolved quite a lot in relation to the role of the welfare state. So again going back to beverage, disability was seen as by definition involuntary and therefore something where people should be protected, people should be supported by the state. But we've seen increasingly punitive attitudes to disability. Disability seen as people's somehow people choosing not to participate when they're long term sick.
- [09:21]
James Ratee
Why do you think that change has occurred?
- [09:23]
Lucinda Platt
It is quite disturbing I think but I think some of it's come from the way that the discussion around Social Security, around the welfare state has highlighted concerns around fraud, concerns which not much fraud happens but it's talked about a lot more than it warrants in terms of its incidence. And again around this notion of that people are choosing not to work. There are much higher rates of disability in areas of high unemployment is sometimes used to suggest that it's false that disability is false. Rather than thinking about the more complicated reasons why there are high rates of disability in areas of high unemployment such as sort of industries that have gone and created the high unemployment may also be industries that are associated with with illness and disability such as mining areas and additionally the ways in which unemployment itself can lead to mental health problems. And I think it's gone alongside generally more punitive attitudes to people who are claiming means tested benefits which we've seen an increase in public attitude service in the people who think that. I think there's a problem around people who receive means he benefits because they're out of work.
- [10:41]
James Ratee
Even if there is less cheating going on than we might expect there is still the concern that we simply cannot afford to spend so much money. Since 2008 austerity policies have sought to reduce the national debt by cutting public spending. Has the cost of helping those who are poorest simply got too much. John Hills contends that if anyone is costing too much it is the rich and not the poor.
- [11:02]
John Hills
If you look at what's happened to who gets what share of income in Britain and you look back to the early 80s, late 1970s and then move it forward to say what share goes to the bottom 20th, the next fifth and so on up to the top fifth and so on, you can see that the share of those at the bottom was never high. But it fell. And it fell in particular in the period from between 1979 and the early 1990s. Since then it's been that share of those at the bottom has been roughly stable. The share of our national income going to the top has increased. If you think of dividing our collective production like a pie, the slice being taken at the top increased. But I think the argument is that the perception has maybe been successfully portrayed that the reason for the crisis in the first place, which I would dispute, but the reason for the crisis in the first place was that the Labour government was too generous in what it did on Social Security and tax credits up to 2010, and that that was the reason why incomes were now being squeezed in the middle. But you can equally look at it from the other side, say, well, actually it's the share of the top that's gone up and that's what's meant. There's been a smaller share for absolutely everybody else. So roughly two thirds, maybe even three quarters of what the welfare state as a whole does is about those, that life cycle, about those life cycle needs that, if you like, when we're working, that's the point where we're paying the most taxes, we're out of pocket, if you like, compared with what we're getting back. But we're hoping that our children will pay into the system and will support our healthcare and our pensions. The smaller part of what the welfare state does is the redistribution at a point in time towards people who are poorer at the moment, who are getting one kind of Social Security benefit or another, people who are have just low incomes because they've got low wages. That though, is the minority of what the system is doing. In fact, only of all the money we spend on the welfare state, only 1 pound in 15 goes to cash payments to working age people who are not in work. Most of the money is going to the things that I think would be generally recognized as things from which everybody benefits. And even that if you think, oh well, that £1 15, that's going to this dependent underclass, actually there's a lot of turnover. People's circumstances change and it might not be you who've lost your job today, but it might be you tomorrow. Or more particularly, it might be your children or it might be other relatives. So these are risks that we share. And yes, there are some people who are at greater risk than others, but I hope we all run the risk of living a long time and needing the pensions. And I think it's incredibly helpful for all of us to have a system there that supports our healthcare needs efficiently rather than having very expensive private insurance and which provides a level of education for our young people from which the whole population will benefit in the future.
- [14:40]
James Ratee
So while the welfare state supports us all, how effective is it in doing so? In what ways could it be improved? I asked Lucinda whether we should think more about targeting resources towards groups of people most in need.
- [14:53]
Lucinda Platt
That's a very interesting question. I mean, I think there's a sort of a broader question within how welfare states work as to whether they should be targeted or whether they should be universal. And this is often seen as in terms of whether they kind of screen people first. For example, means tested benefits are targeted and child benefit used to be universal. So anybody with a child, so it's on the strength of having a child. And I think some of these same arguments could be had about whether there needs to be attention to particular groups or particular populations within society. And I think. I don't think there are any clear answers, but I think it's one that's quite important to consider. So I have done a lot of work around ethnicity and of course across minority ethnic groups in general, there tend to be higher rates of poverty and higher rates of child poverty in particular compared to the majority, which raises questions about whether there should be sort of targeted approaches or whether the way to raise the living standards of minority families is just to raise the living standards of families in general. And I think there's some traction in both approaches. Looking at the data, it was clear that the measures to address child poverty in general disproportionately benefited families from the poorest groups, in the sense that poverty rates went down much more among those groups who had exceptionally high rates of poverty. And we're thinking rate, talking about rates of poverty of around 60% or so among Bangladeshis, for example, that they have gone so very high rates that they went down more when those universal measures were induced. But there also has been some evidence that targeted approaches to supporting people into work can be effective. That, for example, the way job centres work isn't necessarily sensitive to people's circumstances or sensitive to the ways in which family members might or might not be able to engage in the labour market. And so sometimes targeted approaches can be effective there. And I suppose the other thing about universal approaches is that if they're kind of generous and if they're positive, then they might be beneficial for those more disadvantaged groups.
- [17:10]
James Ratee
While John Hills and Lucinda Platt defend the welfare state, both agree that certain means tested benefits are thought of as burdensome on the state, easily exploitable, and for these reasons, stigmatising between 1980 and 2014, Dr. Malcolm Torrey served in full time posts in the Church of England's ministry and is now a Visiting Senior Fellow in the Department of Social Policy at lse. Malcolm advocates a radical solution to these issues, one that may shape the future of the welfare state. He began by talking about how his experiences of working in a benefits office before joining the ministry informed his thinking.
- [17:45]
Malcolm Torrey
I was sandwiched like other people on the, on the public counter between the claimants and the staff behind me who were calculating people's benefits. These were all means tested benefits at the supplementary benefit office and I could understand the anger of the claimants because it was a really terrible system we were imposing on them. We insisted on vast reams of evidence from them but we delved into the intimate details of their financial lives, their employment lives and their sexual lives. That was the worst bit of the job because you had to work out who was in a couple and who wasn't and it was degrading for them and for us. And the number of errors that were made, huge. Most people didn't realise how many errors were made and I wasn't the only one to be thinking how can this be different? The benefit we really loved was child benefit because it just carried on and it was the claimant's favourite benefit and it was our favourite benefit because it was completely predictable. Child benefit and National Health Service are important foundations for our welfare state. Beveridge certainly regarded them in that light. They were the foundation on which to build everything else. And if that's the kind of foundation which is going to work then there's a lot to be said for implementing a citizen's income. It's of the same character.
- [19:19]
James Ratee
Malcolm is now director of the Citizens Basic Income Trust and author of the Feasibility of Citizens Income. He argues that by giving a fixed monthly income to everyone regardless of need, several of the problems with the welfare state would be addressed by both making the system more efficient and removing the stigma associated with means testing.
- [19:40]
Malcolm Torrey
It is simply extremely efficient to give it to everybody. And the argument for giving it to everybody is first of all it creates social cohesion. We're in desperate need of that because it will be one of the things that will bind us together. Secondly, it's efficient to do it because the administrative costs are extremely low if you give it to everybody, whereas the administrative costs of means sister benefits are far too high.
- [20:06]
James Ratee
Let's turn to the issue of feasibility. So I can see two main issues. One is the kind of economic feasibility of it. The Second is persuading the general public, politicians, everyone that you would need to in order to kind of enact this. Let's look at the economic issue first. Is it viable?
- [20:24]
Malcolm Torrey
It's perfectly feasible. The research that we publish, it's done using Euromod micro simulation tool that's managed by the University of Essex by the Institute for Social and Economic Research there. And it's the gold standard in micro simulation. And it shows the real world effects of making changes to our tax and benefit system. And by using it, we can show that it's perfectly feasible to pay a Citizen's income of pound 61 per week to working age adults by making adjustments to income tax and benefits. And you can make it revenue neutral, that is no additional funding would be required from elsewhere in the government's budget. It's perfectly feasible to do would also solve a huge problem which an awful lot of the people the other side of the counter from me in Brixton were suffering from. That is, if they started to earn an income and they were still on supplementary benefit, then their benefits were rapidly reduced as their earnings rose, which was no incentive, whereas a basic income, it would not. It would simply keep on coming at exactly the same rate. It would therefore be an employment incentive. That's one of the major arguments for it. So, yeah, you can see why I got to it from the history that I've just told you that that I couldn't see a better solution to all of the problems that we'd noticed than just giving everyone the same amount of money, whatever their circumstances. The important thing to achieve is that no income households should suffer losses. And what we can show is that with an illustrative scheme of £61 a week for working age adults and lower amounts for young adults and small top ups for child benefit and people who are retired, it's perfectly feasible to do it without imposing a significant number of significant losses on low income households. Political feasibility is a much more complicated question and has as much to do with the views of the population as a whole as it does to do with political ideologies. If members of Parliament and ministers can see that public opinion is moving in a certain way, then largely regardless of the ideology, that's probably where they'll be moving. We've seen some interesting examples of that over the last few years where government has gone ahead of public opinion, but always in the direction in which public opinion is moving. Some obvious examples are smoking in public places and equalities legislation and same sex marriage. What's really interested some of us is the way in which, first of all, the idea of a citizen's income is now much better known, and secondly, the way in which the idea has attracted much more approval than in the past. And it looks as if approval rates are now nearing 50%. That's a really interesting figure.
- [23:39]
James Ratee
To reach a universal basic income would be a bold change to the welfare state. Many of its proponents argue that its implementation is necessary if we are heading towards a future where more and more of us are made redundant by robots, what other social, political and cultural changes are we facing? How has the welfare state coped thus far in dealing with these changes? And what challenges might it face in the future? John Hills on the one hand, you.
- [24:04]
John Hills
Have the pressures from aging, and to meet those, one would expect a growing share of the economy would need to go in that direction. At the same time as there may be these pressures that lead to a profound change in the structure of the labour market that's at the moment extremely hard to predict. One street at one extreme, people are arguing, well, we're all going to be replaced by robots, including you and me, and there will be bots that will be having these conversations carrying the danger that there are an equally remarkably small number of people who own the robots, who then get all the income, leaving the rest of us with little to do and nothing to live on unless we can persuade the owners of the robots to pay the taxes that would then make some kind of transfer to the rest of us. So that's one end of it. The other end of the argument is to say, well, actually we've coped with technological change before and we're not. It's not yet clear how different the coming technological revolution will be from the things that we've weathered in the past that have been extremely painful for the people who found themselves displaced by industrialization, or the people who found themselves displaced by. By the IT revolution and de. Industrialization in places. And I would expect it. Whatever happens, it will be painful for some people. But whether the end result is that we either end up with some kind of dystopia where really most of us are literally technologically redundant, or alternatively and more cheerfully, a kind of utopian vision where we don't have to do all the boring work and we can do all. We can all go and write our novel or make our film, or have lovely long holidays or be creative in all kinds of ways that the robots can't do, we hope that's at the other end. I suspect the truth will be, as in the more recent past somewhere between the two of those extremes. But either way it presents a challenge because either way it suggests that there will be more people who at the very least have to change what they're doing in their careers and therefore may have periods when they need support as we're making that kind of transition. If you think back over the last since 1979, it's quite clear that welfare state has survived some aging we've already had, and it survived the ideological assault that came in the Thatcher era in the 1980s. And I think it survived because it's a very efficient way of providing for the needs that everybody faces.
- [27:03]
James Ratee
So what would Beveridge make of today's welfare state?
- [27:06]
Lucinda Platt
LUCINDA platt, the success of the National Health Service, both in terms of its coverage and its effectiveness, and also how much people are invested in it, committed to the National Health Service, I think might be perhaps a positive surprise. And that is something that's continued. We've talked a bit about how people's attitudes have changed, but the attitudes to the health service have tended to maintain that positive attitudes that accompanied his introduction. But he might realize that he hadn't predicted some of the major social changes that were going to take place. So he was very much working with a model where he assumed that married women would not be in the workforce. And also that what that implies for family incomes, for ideas of what a family income is and should be, and also for inequality, given that better off men and women tend to be married to each other and therefore actually the entry of women to the labour force in large numbers has, if anything, increased inequality across the population, even if not between the sexes. And the other surprise, I think would be around the extent to which migration into the UK is kind of now such a substantial reality and also is kind of vital to so many areas of the welfare state. So that through people working in health and social care, through the fact that the aging society means that migration is in a sense, in many senses, vital for being able to continue to pay pensions and to introduce tax revenue. And also some of the debates and discussions about that and how that's shaped in some ways has shaped people's attitudes to the welfare state as well. The contentions around who has, who has entitlement, who doesn't, that in a very bounded notion of a country of a welfare state, it's very easy to think on a citizenship model, okay, all citizens have entitlement. Hard then probably for Beveridge to think ahead to a time when there would be high levels of migration. A lot of people may be citizens, but they may not have been born in the country, or they may not be citizens and may not be born in the country. And what that implies for how we talk about rights and how people feel about entitlements, and how about how attitudes to the welfare state develop and change.
- [29:23]
James Ratee
Perhaps the best way to consider the welfare state's future is to look back at its past and why it has come to play such a significant role in society. Here's John Hill's one final time looking at why Beveridge's report has remained so influential.
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John Hills
When they took the observation that the wartime bombs were falling on all of us and in a way generalised that, that maybe it's better to have systems where we all put in a beat to protect ourselves from those risks. That's exactly what health service does. That's exactly what state education does. That's what a pension system, which pays out regardless of how long you live, does, where your pension, where its value keeps up with the incomes of the rest of society. If we can shift back to seeing one person might need the health care, another person might live for a long time and therefore need the insurance against living a long time, or another person might might need the dementia and we see all of those things together as part of a unified system rather than as each individual bit where we're asking the question, what did I get out of that little bit? I'm not in favor of it because I don't benefit today from that part of it, rather than seeing the whole thing. But that requires quite a lot of explanation. It requires quite a lot of realization that the system is a long way away from the tabloid myth that there's a group of people who are unchanging, who are actually costing the rest of us a very large amount of money. The truth is that it's all of us who are responsible for the bulk of the costs. And therefore the implication is all of us should be paying into that to protect not just ourselves, but also our children, our grandchildren.
- [31:19]
James Ratee
Regardless of any shortcomings it may have, the welfare state has endured because it plays a pivotal role in our lives. Whether it's educating our children, supporting our parents in retirement, or looking after us when we're ill. It serves to insulate and protect everyone. Its future depends on us recognising that it is something we all contribute to and benefit from. What do you think? Tell us using the hashtag lseiq.
- [31:43]
James Frittee
This episode of LSEIQ was brought to you by James Frittee, Tom Williams and Shea Forbes. Taylor. It was based in part on the following Good Times, Bad Times, the Welfare Myth of Them and Us by John Hills, Understanding Inequalities by Lucinda Platt and the Feasibility of Citizens Income by Malcolm Torrey. If you want to know more about this topic, the LSE will be holding a festival to shine a light on the five giants identified in the Beveridge Report recall for the 21st century and for the global context. Beverage 2.0 will take place between the 19th and 24th of February 2018. More information can be found at lse.ac.uk events lsefestival for more episodes of this podcast and to subscribe on iTunes and SoundCloud, please visit bit.ly LseIQ or search for nseiq you in your favorite podcast app. Join us next time when we ask why is democracy declining.