Rethinking the welfare state

by Hugh Cortazzi

A Japanese father, mother and grownup son were recently reported in the British press to have starved to death rather than face the shame of applying for public relief. Self-reliance and the work ethic are important for economic prosperity and social cohesion, but it should not be shameful to seek outside help when work cannot be found. Society has a duty to provide adequate help to the destitute. But those in need have a duty to seek work and must not be allowed to become dependent on welfare benefits.

The present British welfare system stems from the determination that the poverty and hunger that resulted from the Great Depression of the 1930s must not be allowed to recur. The British government in some of the most dire times of World War II appointed Sir William Beveridge to study the issues and make recommendations. His report was accepted in principle by both the Conservative and Labour members of the war-time coalition. His report formed the basis on which Britain’s postwar welfare system and the National Health Service were based.

The “welfare state” has ensured that no one in Britain need starve or have to live rough on the streets. It has brought real benefits to many and helped to ensure a fairer and more equal society. But perhaps inevitably its administration has required a large bureaucracy and the system has become hugely complicated if only to try to ensure that it is not misused. It has also led to a dependency culture among some of the beneficiaries of the welfare state. Similar problems have arisen in other developed countries with advanced welfare systems. Some governments have coped with the problems better than others, but no government has found a perfect solution. Perhaps the ideal is unattainable.

Beveridge is blamed in some quarters for having been instrumental in creating a dependency culture, but he always made it clear that the welfare benefits should be earned and would have deplored the way in which the system stemming from his report has to some extent been perverted.

There is a general consensus in Britain that the welfare system must be reformed, but inevitably those who might lose benefits as a result of reform have been fighting for their particular interests. The coalition government minister in charge of welfare reform Ian Duncan Smith is a conservative who has studied the problems sympathetically and his proposals have received wide support.

One aim of the reforms is to simplify the system and reduce the number of benefits, which can be claimed. The plethora of different welfare benefits in Britain, often administered by separate organizations, is being reduced and unified. The complications of the system deterred some claimants while allowing a few clever people to exploit the complexities for their own advantage.

Another aim has been to ensure that claimants who have been awarded incapacity benefits really are incapable of working. This means that the extent of their incapacity must be independently assessed. There have inevitably been some complaints that the system of independent assessments is unfair especially to those who are mentally handicapped or suffering from psychological problems, but claimants can appeal if they feel that they have been unfairly declared fit to work.

Objectors have made the most fuss about the overall cap on benefits. This is intended to ensure that no family receiving welfare benefits will be better off than the average wage-earning family.

A major element in the British welfare system has been housing benefit awarded to families for whom public housing is not available. In London and some other high cost areas housing families in rented accommodations has become particularly costly because of high demand and limited supply. Some of those likely to be affected by the cap have complained loudly that they will have to move out of central districts, but although some charities support the complainants the cap has popular support and the government has accepted that transitional help should be given to those who could face particular problems as a result of the cap.

Unemployment benefits called “job-seekers allowance” are only payable for a limited period. This makes it especially important that more jobs are created particularly in areas where unemployment is high and for younger workers many of whom have never had jobs. The lack of any meaningful work is seriously damaging to the morale of young people.

A government scheme that gives work experience, albeit short term, to young people seeking work has been introduced. It has unfortunately attracted criticism. Some on the left have claimed that as the young workers were not being paid while they were gaining experience, this amounted to “slave labor.” This is nonsense as they still received their job-seekers’ allowance and were paid their expenses.

Another complaint was that if those gaining work experience left their jobs without due cause they would lose their benefits. The government conceded that the scheme must be entirely voluntary and that benefits would not be cut for anyone who left while gaining work experience.

Some employers have complained that young unemployed Britons will not accept the minimum wages paid for manual work such as fruit and vegetable picking and do not work as hard as workers from Eastern Europe. Generalizations based on anecdotal evidence are best avoided and this accusation should be treated skeptically, but even if exaggerated and unfair, the complaint confirms that the complicated British welfare system may have created among some a dependency culture, which is inimical to work. The government’s reforms should help to rectify this.

Britain under the last Labour governments had become too reliant on service industries especially finance. Efforts are now being made to rebalance the economy and encourage more investment in manufacturing. Britain provides a warm welcome to Japanese investment, and as firms such as Nissan, Toyota and Honda have found, British workers given adequate training can be just as productive as workers in other countries.

Hugh Cortazzi served as British ambassador to Japan from 1980-1984.