Are you working hard enough?

Thursday 23 July 2015

Before the election every party was the friend of hard-working families but what they actually meant by 'hard-working' was tricky to work out. Fortunately, the Conservatives budget have now given everyone a clearer idea of what the Tories mean by 'hard-working'. Leaving aside the headline grabbing loss of student maintenance grants and the wonderfully misnamed National Living Wage (NLW), it is even more discouraging to look at the likely impact of the budget on low income workers.

These are not the welfare scroungers that the media and politicians wheel out when they want to trash the welfare system. Instead I mean the men and women in low paid jobs who make ends meet as much as they can through the array of welfare benefits such as tax and universal credits and housing benefits. The headline figure of 13 million families, as stated by the Institute of Fiscal Studies (IFS), feeling the squeeze of the budget throws attention away from the tightness of the squeeze for different families. Further analysis by the Institute of Fiscal Studies (IFS) of this impact makes depressing reading for low income families particularly finding that the poorest 40% of income earners will be over £1000 worst off when all the budget changes kick in, representing a loss of income of between 5-11%.

How should LibDems react to these changes? The Tories claim they are incentivising work for such people, painting all low-income earners with the same brush of not working hard enough. After all, the Liberal architect of the welfare system, William Beveridge in his own 1942 report said that 'social security should not stifle incentive, opportunity, responsibility' (p.7).

Beveridge also made it clear his social security system was an insurance plan that gave the means upon which individuals could build. He viewed the welfare system as providing individuals with a route to escape their temporary conditions by building on the opportunities provided by a free and fair society. As Lib Dems this view of welfare as a means of enabling individuals to develop their full potential to their and society's benefit is a lens through which we can view the welfare reforms of the budget.

The budget does not provide low-income earners with opportunities to build upon their potential, instead it creates fears that their situations will get worse. They are locked into a cycle of more low-paid work to maintain their income; sprinting rather than running to stand still. As a family they will need to work longer hours, often hunting for part-time work in a labour market crowded with others trying to do the same and where employers are likely to be shedding part-time hours as the NLW adds to their costs. Grandparents will be increasingly called upon to cover for childcare that parents can not afford or to cover for free childcare places that just don't exist. The opportunities to build upon potential is ground down by the grim necessities of Want. Yet all the time the Tories would have low-income families believe they are not working hard enough.

The welfare system needs reform but as well as the fear of Want, the hope of social progress for individuals needs to be part of that system. Limiting social progress could become generational as more children become locked into a cycle of in-work poverty with their parents and their hopes of social progress are extinguished as well as noted by Patrick Butler in the Guardian on 16th July. Conservative policy casts the low paid as part of the 'undeserving poor' and punishes them for that. Lib Dems need to see the welfare system as wider than just changing benefits, we need to balance creating sufficient incentives to work with the development of policies that produce real opportunities for improving the life of the low paid and that advance a fair society so social progress is possible.