Monday 1 April 2013

Welfare - the ship is turning ... slowly

Today some of the most radical changes to the welfare system in Britain come into force. They are the culmination of long and arduous efforts by Ian Duncan Smith, the Welfare and Pension Seretary, who tirelessly worked for more than 8 years to find a way to reform the system. While in opposition, IDS worked with politicians from all sides of the political spectrum to identify the problems of the welfare system and create broad support for his reforms. Being appointed Welfare Secretary in 2010, he set about to reform one of the most convoluted and complex benefits systems in the developed world. The challenge was enormous. The previous Labour Chancellor Gordon Brown had introduced tax credits to working families which meant that billions of pounds of public money were spent on propping up the income of families who were actually in work but not receiving sufficient income to sustain their lives. It effectively trapped people in low paid, part time work while the taxpayer topped up the wages of those hardworking families. For those out of work, there was little meaningful support, and, in some areas, generations of families live on welfare benefits.

Perhaps the most effective Welfare Secretary of post-war Britain?

The biggest challenge for IDS however was how to sell this reform to the public. Previous reforms in other countries, though successful, like in Germany under Chancellor Schroeder (a Social Democrat) proved to be deeply unpopular. IDS early on distanced himself from value-laden language and honed in rhetorically on the problem of 'making work pay', i.e. to create a differential between benefits payments and work related wages. In effect, his reforms were tackling the incentive structure for work.

In an interview this morning with John Humphreys from the BBC, he robustly defended the benefits changes (the full interview HERE). Humphreys intoned about the immoral effect of benefits changes but IDS pointed out that the effects of benefits changes will be to improve the situation of those out of work in the long term. He thereby found a way to reject the 'moral outrage' of those on the left and in the Church establishment, while using their language to defend the reforms. This two-pronged approach, appealing to the sensible majority by emphasising the incentive structure of the reforms, and pointing to the ethical underpinning of the changes, makes his reforms uniquely likely to succeed. Over the years, despite a merciless onslaught from some of the left, he never used disparaging language about those people at the bottom of society but spoke clearly of the need to give them the right support. He might just turn out to be one of the most effective welfare secretaries of post-war Britain.

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