The welfare state – continuing the revolution

5 February 2015

It was the architect of the modern welfare state, William Beveridge, who boldly stated that: “a revolutionary moment in the world’s history is a time for revolutions, not for patching”. Nevertheless, since its inception, Britain’s welfare state has been subject to all manner of patch-up jobs.

After decades of tinkering, the result was as a complex and chaotic system, which failed to promote work and penalised responsible choices – leaving millions to languish in worklessness and dependency for too long.

When the Conservative-led Coalition entered office in 2010, far-reaching change was long overdue. It wasn’t that others didn’t agree with the need for reform. Rather, welfare reform on such a scale had been thought too difficult. When it came to a complete overhaul of the benefits system, many said it couldn’t be done, and hardly in such tough economic times.

Yet faced with an economy which had suffered the worst recession in living memory, this task was only more pressing. After all, our economy could never be where it should, holding its own in the global marketplace, unless all in our society were able and willing to play a productive part.

From day one, welfare reform had to be at the heart of our long-term economic plan. But it was crucial to realise that this was about far more than the public finances alone. For whilst how much we spend matters, even more important is how we spend it and what impact our spending has.

In its true sense, welfare reform is about transforming the life chances and outcomes of those on benefits – bringing down the cost of social failure in the process. In other words, restoring fiscal stability by restoring lives.

To this end, the Government has pursued an ambitious programme of change. Throughout this Parliament – be it through our reforms to housing benefit, sickness benefits, unemployment benefits and more – our aim has been this: the renewal of a dynamic welfare system, no longer static but about movement from dependence to independence.

In doing so, we have ensured an economic recovery in which no one has been left behind. We now have record employment, up 1.75 million since 2010; but also more women in work than ever before, as well as more lone parents, young people, and older workers too. There now are 270,000 fewer families in social housing where no one works, whilst long-term unemployment is at its lowest for 5 years and the rate of workless households is at its lowest since records began.

This is positive life change, which drives down demand for welfare and in turn reduces spending. Thus, the overall welfare bill has been falling as a proportion of GDP since 2012, and last year fell in real terms for the first time in 16 years. Not simply top-slicing, but through dynamic change that re-incentivises work and rewards the right choices. Nothing illustrates this better than Universal Credit, now going nationwide and on track to help people move out of unemployment more quickly – helping the economy but reducing poverty as well.

Over this Parliament, the Government’s welfare reforms have proved that meaningful change can be delivered. So too the establishment of a nascent social investment market, which proves that it is possible to change the whole approach of Government spending – no longer pouring money into income transfers, but investing in proven programmes that change lives.

Looking ahead, it is where we’ve come from that will shape where we are going next. Our vision remains one of a fair and sustainable welfare state, building on our progress so far. Ensuring a safety net for all those who need it, or who cannot help themselves. But equally important, a welfare system that encourages people to do the right thing, doing all they can to secure their own futures.

Rt Hon Iain Duncan Smith MP

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