Independence at the heart of welfare state - speech by Rt Hon James Purnell MP to the Social Market Foundation

20 February 2008

Rt Hon James Purnell MP
Secretary of State for Work and Pensions

'Independence at the heart of welfare state' - speech to the Social Market Foundation

Wednesday, 20th February 2008

[Check against delivery]

As I sat through meetings with my officials in my first week in post I was reminded of a remark made by Alan Greenspan when he was still Chairman of the Federal Reserve: “If I have made myself clear then you must have misunderstood me”.

It’s very simple to be complicated about the welfare state. It is very easy to lose your audience in the alphabet soup of benefit names and a wake-me-when-you’ve-finished list of eligibility rules, taper rates and disregard procedures.

Today I want to try to be purposefully simpler than that. I want to talk about the principles behind the details. I want to do what, as politicians we do too rarely, and talk about what the welfare state should be designed to achieve. 

For me, it’s simple: the welfare state is there to improve life chances. The aim is that people should be the authors of their own lives.

Life chances

Two weeks ago, the Prime Minister set out the animating purpose of this government. It is to find, encourage and nurture the talent of everyone. This is, of course, an economic issue.  In an era when the premium to skills keeps rising, our economy more than ever before depends on our people.

But it is more than that. The defining purpose of our politics, our cardinal value, is to remove everything that attenuates life chances, everything that stymies opportunity. Even if there were no economic consequences to wasted talent, which there are, it offends the most widely-held moral intuition in this country: it’s not fair. 

InBritain today it’s too much a matter of fortune if you get a chance. And it’s too much a matter of chance if you make a fortune.

The welfare state, from its origins, encodes the idea that we use the common wealth for the good of all. There was more to it than just the smoothing of income over the life course. There was more to it than ensuring basic needs were met. There was more to it than avoiding destitution. It was, above all else in fact, a claim for democratic nobility, for equal consideration.

Think of that telling word nobility which describes both a desirable trait and the social elite who are said to display it. Think of the narrative of Tom Jones, the foundling boy, whose notable ability is explained when he turns out to be of high birth after all. It wasn’t thought credible that someone born in ordinary circumstances could have such talent.

Progressive politics turns on the very opposite idea. All people can flourish. It is a matter of basic justice. Social nobility extends to everyone.

There are three relevant principles which will guide me as we move towards this genuine meritocracy: control, capability and contribution. Just in case you think I’ve chosen those for the fact of the alliteration I could say that they correspond to equality, liberty and fraternity – my not very revolutionary trinity for welfare. 

I want people to be in control of their own lives. But I recognise, as our political opponents don’t, that sometimes we need to build people’s capability before that is possible. And I recognise too that welfare is a collective good – we have duties to one another that we need to discharge in the contribution we make.

Control

The guiding idea of welfare should be independence and control. Freedom from dependence of any sort is the objective.

For the majority, independence means work.

Twenty years ago, it would have been impossible for our economy to absorb over a million new workers from overseas.  And they wouldn’t have wanted to come here  anyway.

Yet, we’ve absorbed those new workers, and unemployment has continued to fall.  Today, there are jobs if people want them.  That’s the traditional definition of full employment, and we have achieved it.

The claimant count is at its lowest for 32 years.  The employment level is a record at nearly 29.4m.  There are one million fewer people on out of work benefits than there were in 1997. Work is proving to be the best welfare for more people than ever before.

But not everyone can work. That doesn’t mean we give up on the idea of control.  I want to look at the principle of individual budgets to see how we can give more control over their lives to those we don’t expect to work.  I don’t think it’s an accident that a pressure group advocating the greater use of personal budgets is called “In Control”. I think this is a very effective way of extending choice and control over care and support.  And it’s transforming people’s lives and opportunities.

I also want us to ask whether we are doing enough to help disabled people into work. As we get more people in to work, we will release resources.  Where do we need to improve the support we give to disabled people, so as to give them control over their lives, whatever their circumstances?

Over the next few weeks, I want to sit down with disabled people, organisations representing them, people who have pioneered individual budgets, and address these questions before putting forward policy proposals.  

But there is a lot to be done before people are fully in control. This brings me to the second of my three principles: capability. People don’t all start with the same chance to live independent lives.

In my constituency I see lives blighted from the start. Children who don’t get half what their peers get, and therefore won’t get the same opportunities.

Poverty shrinks capability. It impairs life chances. Poverty makes life riskier than it needs to be, less pleasant than it needs to be, less fulfilling than it could be.

I want to be categorical our about child poverty goal: it will not be quietly abandoned. Achieving our goals will not be easy. But I am determined that we will continue to tackle child poverty, and to see how savings from my department can contribute.  If we can reduce spending on the costs of worklessness, to invest in the future of our children, we will hit two targets with one policy.

Now I’m talking about capability I’m wearing the influence of Amartya Sen on my sleeve. The real treasure of Sen’s work is the way that he gives us a richer idea of equality. He teaches us that equality has many dimensions, of which income is just one. One thing he shows is that work is intrinsically important. It is a good thing to have a job, over and above the income it brings in.

Over the last ten years, we have become much more ambitious about who we believe can work. Ten years ago, helping people on incapacity benefit into work might have been thought dangerous for their health.Today, the evidence shows that helping and supporting people into work is often the best way to improve their health. Ten years ago, people were wary about requiring single parents to look for work. Today, we know that it would improve their life chances and lift 70,000 of their children out of poverty. 

That’s why, this October, we are replacingIncapacity Benefit with the Employment and Support Allowance.The new Allowance will remove the perverse financial incentives of Incapacity Benefit and refocus the capability assessment on what the claimant can do rather than what they cannot.

And it’s also why we will be expecting single parents to look for work when their youngest child is 7, rather than 16, bringing us more into line with other industrialized countries.

The Employment and Support Allowance will apply to new claimants first. We’ve already announced we will extend the new medical test to current Incapacity Benefit claimants under 25, and give them the tailored help of the Pathways to Work programme to support their return to work.  But I want to make clear that over time and as resources permit our ambition is to transfer everyone on Incapacity Benefit to the Employment and Support Allowance.

These new expectations will mean we strike for a higher summit in our labour market: an aspiration of 80% employment – the highest of any major industrialized country. That means 1 million people off Incapacity Benefit, 300,000 more single parents and 1 million more older people working.  

This is all based on the fact that we want to focus on what people can do, not on what they can’t. In my last job, I met a remarkable young man, Mark Foster, who was one of the leading actors in Oily Cart, a world class theatre company specialising in work by people with disabilities. He had significant learning disabilities, but that hadn’t lowered his expectations – he was working and contributing just like everyone else in the company, indeed he was one of its stars.

This is my third principle: contribution. Welfare is a mutual bond. It is not a gift but a relationship.

The contract is simple. The citizen is expected to contribute. In return, the state will guarantee protection.

That principle of contribution applies to everyone. If you come to the UK from outside the EU we will expect you to contribute to our economy before you are entitled to the full range of benefits. That is why we are announcing a period of probationary citizenship where individuals will have to work, to learn English and to stay out of jail.

In addition the Home Secretary and I have decided to set up a cross-Whitehall unit to take a more detailed look at the impact of EEA migration on the welfare system and to come up with proposals which will strengthen the "something for something" culture. The Unit will be set up with immediate effect and will report back to Ministers in the summer.

People need to earn welfare rights over a period of time not inherit them on day one. Otherwise, the mutual bond starts to fray: those who are working feel that they are contributing to the welfare of people who are not contributing to the welfare state. If we want to retain an ambitious idea of welfare in the future we have to demonstrate that getting something out is linked to putting something in.

This doesn’t always mean money. There are other ways to contribute. For example, we already have significant conditions attached to benefits. I want us now to consider whether we should go further.

When I was speaking to Jobcentre Plus staff recently, they felt that the sanctions regime could be improved.  They wanted to have a system of graduated sanctions and they wanted greater freedom to use the sanctions that currently exist.

Jobcentre Plus is widely recognised as a world leader in getting people in to work and in the use of conditionality. I’ve asked its Chief Executive, Lesley Strathie, to lead a review to look at these questions. It will include the sanctions applied to customers playing the system and how we might best use advisors’ discretion in tailoring services to meet the needs of citizens.

We want a system where inactive benefits are the exception rather than the rule.

I am announcing today that everyone who is long term unemployed, claiming JSA and participating in flexible New Deal will be expected to take active steps to return to work, which will include undertaking work related activity in return for their dole.  We are streamlining the various New Deals into a single, flexible New Deal. This will be delivered by private and voluntary sector organisations and we won’t try to dictate to them how to do their jobs. We will reward them on what they achieve, precisely so we can free them to work out how to achieve those results.

But we will make clear that we expect all jobseekers who join the Flexible New Deal to do at least four weeks of full time work or work-related activity unless they find work within 12 months. This will be a minimum: we will be looking for bidders who extend this principle to those claimants who will benefit. 

This is a crucial point – a personalised regime for each individual. The evidence on so-called “work for the dole” programmes suggests that they work when they are adapted to the needs of the individual. They need to combine work with job search, skills and training.  Community service programmes  which  dump everyone in menial work   do the opposite of what we want. They actually make welfare dependency worse, because they push claimants further from the labour market. Instead we need personalised programmes, which treat different claimants differently, not blanket ones that lump everyone together.

These policies will help those who need support. But there is a small group who refuse to take up the opportunities available. For them, beyond the Flexible New Deal, we will be looking at how we can develop a strict sanctions regime including either cuts in benefits or an option of permanent work for their benefits. I want to explore advisers having the flexibility to require individuals to do this programme – where they are frequent benefit claimants, for example, or where they haven’t found work within 12 months of support on the Flexible New Deal.

I think with these proposals we respect both sides of the welfare contract. Those who cannot find work would feel a sense of contribution. Those who don’t want to work would have to.

I promised I would make this a simple speech. I’m in danger of breaching my own rule. But my main point has been a simple one: whenever in future I set out what we will do you can refer to these three principles – control, capability and contribution – to understand why. This is how I think we should understand the modern welfare state.