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Changing the debate on welfare reform

A special double edition of Local Economy on welfare reform and labour market activation is scheduled for publication in early August. As editor of Local Economy, I’m compelled to use every opportunity to plug the journal as hard as I can, but I’m plugging especially hard in this instance because I think it’s important to try to re-set the terms of the somewhat uninspiring debate that is currently accompanying welfare reform in this country. I hope that, in part, this can be done by comparing the UK’s welfare arrangements and reform trajectory with those in other countries, and indeed, the edition offers something of a smorgasbord of alternative versions of social protection and labour market interventions. About half of the 250 pages or so in this edition accommodate papers from the UK, but we also have articles about the USA, Denmark, Finland, the Netherlands, Germany, Sweden, New Zealand, Japan, and China.

If anyone doubts the importance or timeliness of all this, I can refer them back to Dominic Harrison’s blog on this site. To Dominic’s blog I can add a few other observations about Britain’s welfare state in comparative perspective, at least as far as its system of social security is concerned. For example, Beveridge’s design of universal, flat rate contributions in exchange for flat-rate benefits, although noble in conception, has meant that social security payments have always been somewhat mean in this country, certainly in comparison with much of continental Europe.

This has made it easier for the middle classes to peel away from collective, universal provision, but it also punctures the myth, apparently cherished by much of the media, that benefits claimants in this country are luxuriating in some sort of paradise for the workshy. Further to myth puncturing, we can note that some European countries with the most generous benefits are also among those with the highest employment rates, and also do pretty well in per capita GDP – so it’s not abundantly clear that generous welfare either creates work disincentives or has ruinous consequences for the economy. Unsurprisingly, generous welfare regimes also do better in tackling poverty than more welfare-niggardly countries such as the UK and the USA.

The bad news is that what could be described as a ‘neo-liberal drift’ appears to have led to some degree of welfare state retrenchment nearly everywhere, although in some cases reforms have tackled welfare dysfunctions and hence are hard to object to on their own terms. In Denmark there existed something known as the ‘benefits carousel’ whereby time spent on a job-creation scheme served as re-qualification for (very generous) unemployment insurance. In the Netherlands, disability insurance had become a covert form of income replacement for the long-term unemployed, perhaps similar in effect to the process that drove the steep increase in invalidity/incapacity claims in this country from about the late 1970s. But it is not clear how much further retrenchment, as opposed to re-alignment, can go in some countries.

In an article comparing changes in Denmark, Finland, and Sweden, by Johannes Kananen (University of Helsinki), the Swedish model is shown to possess some degree of resilience. Another article on Denmark shows a decline in trade union influence in welfare reform, but unions are still present on regional and city labour market councils that oversee the delivery of work-welfare initiatives. In an article on the administration of social assistance by the Dutch municipalities, we learn that the interests of social welfare recipients are represented on a statutory national client council which is replicated at local levels. The Dutch approach reflects an attitude that seems a galaxy away from the dominant public discourse in this country that apparently refuses to acknowledge the attachment of basic social rights to claimants, let alone allow for client representation and consultation in decisions that affect them. From both the Danish and Dutch cases, we can infer a rather more distributed form of governance in welfare reform than is currently available in this country.

The immediate prompt to putting this edition together is the current round of reform in the 2012 Welfare Reform Act. Thus we have two articles on the universal credit, and whether it will deliver on its claim for greater simplicity and better work incentives (it won’t). The work programme is dealt with in two articles, one of which explains in perhaps greater detail than is available elsewhere the programme’s funding mechanisms, the other reflecting on the programme’s impact in areas of high worklessness and the position of community providers situated between the ‘primes’ and local people.

Further to the dismantling of the welfare state, Alan Murie shows how current housing reforms are dealing the death blow to social housing as a source of security for vulnerable people, whilst  more housing marketisation is driving yet deeper social and spatial inequalities in Britain’s towns and cities. Other papers from the UK look back on the City Strategy initiative and Pathways to Work. David McCollum (University of St. Andrew’s) provides a street-level view of the chaotic competition between back-to-work providers in their attempts to secure sustainable employment for their clients.

If there is any good news, it’s that there might be an alternative paradigm tentatively emerging from the current wreckage. Frequent visitors to this site might recognise the term social investment, which in its simplest incarnation counters the dominant view that welfare expenditure is merely a form of consumption that hinders the development of the productive economy. More sophisticated elaborations are blowing in from Scandinavia, which is perhaps one reason for optimism that the Nordic model at least can withstand the neo-liberal assault.

Returning to my original purpose of shamelessly plugging the journal Local Economy, I’d like to draw attention to the other special editions in the pipeline which separately will focus on low-carbon mobility, gender, localism and sub-national economic development (again) and African urbanisation. Local Economy is published in 8 editions a year, if you take the advantage of the offer available through CLES membership, each edition would cost you only £2.25 (unbeatable value for money).

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