Welfare reform - a political battle that affects millions of people

7th Jun 2013

Welfare reform will be at the heart of political battles in the run up to the 2015 general election, but whose interpretation is right?

Welfare will be at the heart of political battles in the run up to the 2015 general election, says Katie Schmuecker. But whose interpretation is right?

After Ed Miliband’s speech, we have two competing interpretations of welfare reform to consider.

The Government’s welfare reforms have tended to focus on the individual, and what will motivate or push people into work. It has introduced caps on how much families can claim, toughened up the sanctions regime, and, through Universal Credit, is trying to ensure it always pays to work more hours.

By contrast, the ideas set out by Ed Miliband focus more on the wider structural factors that have driven up the size of the welfare budget. It places welfare in the much bigger picture of our housing shortage and the kinds of jobs on offer in the UK today, arguing that only by tackling these long-standing challenges can we begin to bring down the welfare budget.

Certainly we will never have a welfare system that offers adequate protection to those that cannot work, and a hand up to those that are moving into work, if we do not acknowledge a number of big challenges facing us.

These include that in some parts of the country the problem is a lack of jobs rather than a lack of effort on the part of jobseekers. And this is not simply recession related – some of these places never recovered from the last recession.

We also have to acknowledge that we have an endemic problem with low-paid and low-skilled work in the UK, which traps some people in a low-pay no-pay cycle. As a result the UK has a real and growing problem of in-work poverty, which now outstrips workless poverty – 6.1m people experiencing poverty live in a household where at least one person works.

Meanwhile the UK’s failure to build enough homes pushes up housing costs, with a knock-on effect for the benefits bill. But this isn’t the only factor pushing up the cost of living. The rising cost of childcare, public transport, energy and fuel have all made it harder for families to make ends meet.

We haven’t even mentioned the growing proportion of the welfare bill taken up by pensions as our society ages and people live longer.

Considering the scale of these challenges there is more work to be done to achieve a sufficient policy response. Nonetheless, it feels like something of a dividing line has been drawn.

In reality, some combination of individual and structural factors explains why our welfare bill is so large. And where the balance is struck between these two competing interpretations of the problem will matter for millions of low-paid households.