Britain - Welfare "new deal": dirty deal for all workers

Mar/Apr 2006

The government's welfare reform green paper, "A new deal for welfare: Empowering people to work", was finally launched on 24 January, by new Work and Pensions secretary, John Hutton.

It met with none of the expected opposition from Labour's own ranks, unlike Blair's first attack against the most vulnerable section of the unemployed, those on incapacity benefit, back in 1999. At that time, Blair had faced his first real backbench revolt, with 65 MPs rebelling.

Yet the main aim of this reform remains, first and foremost, a radical reduction in the number of incapacity benefit (IB) claimants, which currently stands at around 2.7m. However, the Department of Work and Pensions has learnt from previous errors and has done a good deal of repackaging.

So today, Hutton speaks of everybody's "right to work" before going on to make his more ominous references to end the "dependency culture" and force incapacitated people to take a job under threat of loss of benefit payments. Moreover, since 2003, the DWP has been running pilot "Pathway to work" schemes targeting IB claimants, which it has presented as a terrific success. This seems to have been enough to silence backbench Labour MPs - at least on this issue and for the time being - and has even resulted in positive support from a number of the usual critics of government social policy.

Anyway, since this is a "green " paper, it is meant to undergo a period of "consultation", before being turned into a bill for legislation. But this consultation period is short. It is scheduled to end on 21 April and the government hopes to begin implementing the reform as soon as this July. One can assume therefore, that Hutton is relatively confident that the proposals will be agreed.

The launching spin for this green paper was the grandiose aim to achieve an 80% employment rate for people of working age. Not that any precise time scale has been attached to this "aspiration", other than to talk about the need for 3m more workers to be in employment by 2025 if such a target is to be reached.

But who is going to be "empowered" to work, in order to get to "80% employment"?

To quote the green paper: "To achieve our aim, we will: reduce by 1m the number on incapacity benefits; help 300,000 lone parents into work and increase by 1m the number of older workers."

Yet according to the ONS, the total number of job vacancies is currently running at around 616,800. Which are not even enough to provide jobs for the current 902,400 "job seekers", let alone for the total 2.3m disabled, lone parents and older workers which the government is supposed to "help into work".

The policy proposed is all the more absurd, when surveys show that only 40% of employers would consider employing someone with a mental illness (the mentally ill make up at least one third of those claiming IB) and 90% say that employing blind or partially sighted people would be "difficult or impossible".

But then, of course, the real reason for this new exercise in "reform" has nothing to do with "helping" those who are targeted, but everything to do with pushing them off benefits, whether IB, income support or Single Parent Allowance. For Blair's ministers, the arithmetic is simple. Incapacity benefit alone costs an annual £7bn, which, to get it into proportion, is about one quarter of the annual defence budget and about the amount spent on the war in Iraq by January 2005. Of course IB has to be topped up by other more specific disability allowances and income support, so the bill for the Treasury is closer to £12.5bn in benefit payments. And it is this bill that the government intends to cut.

Pathway to a McJob?

How will this welfare reform be implemented? In green paper-speak, the "underpinning" of the strategy will be to "simplify" the actual form of benefits. So from 2008, a new "Employment and Support Allowance" would replace incapacity benefit, special disability allowances and income support for those suffering from a chronic illness or other disabilities. But this would be managed through an improved "gateway" so that the Personal Capability Assessment would now assess "capability for work", rather than entitlement for benefits (as if this was not already the case!). The intention is for this assessment to be completed within 12 weeks. The DWP has already contracted out assessments for incapacity benefit to a private firm called Atos Origin under a £500m, 7-year deal. This company employs 250 doctors full-time and then employs other doctors (many of them GPs) part-time.

Once claimants pass the gateway, they would be expected to undertake compulsory work interviews, agree a compulsory action plan and participate in a work-related activity from day one. If they do not agree to this, or fail to comply in some other way, their new benefit would be cut, in a series of slices until it gets down to the level of Job Seekers Allowance.

The exception would be those claimants who have obviously severe and permanent disabilities which prevent them from working. They would receive the allowance unconditionally, and at a higher rate than is currently paid. Which is, of course, a cynical admission of the poverty level of this benefit today.

To complement this coercive regime the number of workers moving onto the new allowance would apparently be reduced by preventing them from falling ill or sustaining damaged lungs, backs or limbs, or getting injured at work in the first place. So another plank of this noble strategy will be aimed at "improving workplace health" (!). Indeed, "healthy workplaces would be created"... - although we are not told which coercive means would be used to force British bosses to comply with this!

What is more, there would be "better absence management.. to help employees who do become ill to stay in work or ...return to work at the earliest opportunity".

To this end, GPs and Primary Care Teams would be expected to "help people back to work" and financial rewards for doing so would be incorporated into their employment contracts! So if not by coercion, by bribery, doctors would be expected to help the government and the bosses to police sick workers!

And just in case this is not enough, employment advisors will be located in GP surgeries. In fact they are already being placed in some surgeries under a pilot scheme, with the job of "recording sickness certification as part of good medical practice". Which means simply that they are there to spy on GPs in order to make sure they do not give sick workers too much time off work. This will be intended to "audit" Statutory Sick Pay, which in turn will be "reformed" "to ensure it helps people to stay in work"! In fact the proposal is that much of "bureaucracy" and need for record keeping by the employers will be cut. The first 3 days of sickness, which at present is paid at normal rate and not the lower SSP rate, will now qualify for SSP instead, for instance! Indeed, nothing is to be left untouched by this government in its crusade to hound the sick and of course, therefore cut the cost of sick leave to employers.

"Pathways to Work", the great success story, is to be rolled out to the two thirds of the country where it has not yet been imposed and made compulsory. This scheme provides personal advisors to each incapacitated claimant to assess their ability to work. They are then directed into work-related activities and a "condition-related programme" for rehabilitation. The latter could be a short course of psychotherapy/counselling for a person with a mental illness or supervised gym training for someone with back problems, for instance. If claimants do not comply, they too, face a cut in their benefits. But this penalty is enforced solely at the discretion of the so-called personal advisor. And these personal advisors (at present mostly civil servants from the DWP) are considered fully competent to make such judgements after just 26 days of "training"!

What is more, it is intended that this scheme, which obviously requires a substantial input of "advisors" and other personnel, not to mention cognitive behaviour therapists, physiotherapists and gym coaches, etc., will, as far as possible, be operated by the private and voluntary sector, as has already been the case in some of the pilot areas. It seems there will also be further scope for private medical companies to provide the "medical examination centres" for claimants attending reviews of their "progress" on the pathway to work...

It is difficult to find concrete evidence of the Pathway's success, however, despite the government's claims. The Observer columnist, Polly Toynbee, who turns out to be a fan of this scheme, cites the extra £40 a week for 12 months, which claimants who take a job get as the "key to Pathway's phenomenal success". The fact that they can also return to IB if their job doesn't work out (after 12 months, when the £40 dries up?) is meant to be another sign of its great progressiveness. However, with pilots only having been evaluated between mid 2003 and 2005, how can anyone leap to conclusions? Yet we are told that the 8% of participants in Pathway who come off IB in the first six months of the scheme is "the best result any OECD country has achieved with sickness employment". All very well, especially if one has no way of knowing what is being compared with what, nor from the point of view of whose interests!

The few anecdotes supplied by the BBC are revealing, however. Three employers are cited as having taken on ex-IB claimants. The first is a recruiter for Marriott hotel chain, who finds these people "excellent candidates" for the jobs they have on offer, presumably because it is hard to find anyone else to do low paid catering assistant or cleaning work in hotels these days. Then there is ISS, the Danish cleaning (or "facilities") company which employs station and train cleaners, at the minimum wage. The third example is a call centre for nPower in the North East on an industrial estate which finds it hard to recruit. Enough said?

These examples at least help one to understand why that extra £40 quid per week is so "key" to the success of the scheme - as a subsidy to the extremely low-paying bosses!

Going by these examples, too, it is possible to predict only short-lived success of Pathway - like around 12 months!

Targeting lone parents again, the over 50s and others

The next target of the green paper proposals is lone parents. For them, the government claims to have already "achieved" a 56.6% employment rate. Since 1997, apparently the number on income support has fallen by 230,000. So how will the rest be "incentivised" off income support?

Local authorities are to be expected, under a new statute, to improve child care facilities further (even if their grants are being cut as we write). According to the DWP, employers apparently already offer jobs which allow workers to demand the "flexible working rights" which the government claims to have introduced (!). So, accordingly, this means that lone parents really have no excuse to be out of work.

There is to be a new pilot scheme for those whose youngest child is 11 years old (but there is currently consultation taking place on an even younger age). They will not be allowed to excuse themselves on the grounds that they were caring for their children who, at 11 years (or younger), would be considered old enough by the DWP, to manage without their sole parent. They would be paid a "Work Related Premium" as an incentive to take a job. Failing that, they would have to attend "work focused interviews" more often, in order to continue receiving their level of income support, that is, be subjected to more intense pressure than before.

The green paper also states that by 2024, an estimated 50% of the population will be over the age of 50. But, "despite living longer than ever before, they are spending a smaller proportion of their lives in work... Unemployment for people over 50 is low, but inactivity is high, and many people leave work early due to ill health". So what to do about it? Unemployed workers over 50 years would be "generously" provided with the level of "support" currently given to 30-40 year olds. In other words, they would be compulsorily required to attend New Deal interviews!

But who made these older workers redundant in the first place? Who forced them into taking early retirement because they were no longer quick or agile enough, or because they were totally worn out or made ill and crippled by their work? How many manual workers after 20-30 years in a job are not plagued by lower back problems, joint problems and repetitive strain injuries, not to speak of the heart and circulation problems which result from long hours and shift work? Yet the DWP intends to force these workers to go back to work, nevertheless, and what is more, on a fraction of their former wages! It is nothing short of obscene.

The green paper also targets Housing Benefit, since, of course, it cannot bear to leave any social benefit untouched.

Currently this benefit costs the government £13bn annually. Again, what amounts to cutting this benefit, is disguised behind a proposal to "simplify" an over complex system. But this is an issue which has been discussed for a long time, by this and previous governments. As less and less socially-provided housing in the form of council homes was available to the poor and low-paid, the Tories aimed at subsidising private landlords so that they could charge higher rents - and to guarantee landlords' incomes by paying them claimants' housing benefit directly.

But with private rents soaring even higher, this benefit is now considered too costly for the Treasury. So 18 local authorities have been undertaking a pilot study for some time already, where rents are paid by claimants themselves. The benefit they receive for this is based on a market estimate for the area. If their rent is higher, they have to make up the additional cost themselves. This benefit has been renamed "Local Housing Allowance". The green paper proposes to roll this out for all new claimants. Housing benefit is no longer appropriate in the view of the government as it is a "passive" benefit and another negative incentive keeping people out of work! So recipients will in future be required to "take responsibility" - that is skimp on food to pay the rent ... or be evicted.

A record of social deprivation

The proposals in the green paper are, of course, merely a continuation of the "reforms" carried out in the 1980s and during the 1990s, by both Tory and Labour governments, allegedly to "pull the poor out of poverty" or "push the jobless into work".

It is worth looking at the balance sheet of these reforms at this point in time, and particularly one of its measures, that is, child poverty. Because the social reality of Britain today stands in stark contrast to all of the government's boasting about its social achievements.

In fact, when the figures for the number of children living in poverty in Britain were published on 9 March 2006, it was no surprise that the government had missed its target. Since 1999, when the government pledged to reduce the 4.1 million children living below the poverty line by half, by 2010 - and eliminate child poverty by 2020 - this number has fallen by only 700,000. So that child poverty remains more than 50% higher in Britain than in Continental Europe as a whole.

As child poverty is usually linked to low pay and under-employment in households, this on-going poverty only exposes the real achievements of Labour's "help back into work" policy. But it is also closely connected to the derisory level of benefits paid to the poor. Which makes it even more outrageous that Hutton should propose to cut benefits "slice by slice" as he puts it, when claimants do not comply to the more coercive rules he wishes to impose on them to force them "into work". Is it not also obvious that those who fail to comply are usually the most socially marginalised and compromised through all kinds of chronic conditions?

The current levels of benefits give lie to their description by government ministers as a "negative incentive" - that is an incentive not to get (better-paid) work!

Of course, the Job Seekers Allowance, by definition, is as low as possible so that those who are eligible for this benefit, i.e. those who have just lost their jobs, will "actively seek work" and moreover, feel obliged to take any of the jobs they are "offered". This is payable for only 6 months and is around £56/per week.

The current incapacity benefit, which requires a medical certificate and is usually validated only by scoring enough points in a "Personal Capability Assessment" conducted by the DWP, is paid either short term at a rate of £57.65/w or £68.20/w, or long term at £76.45/w (with additions of £8-£16 according to age).

In addition, certain benefit claimants (who have savings under £8,000 or like most, no savings at all) qualify for smaller or greater income support payments from the DWP, which are meant to provide a basic minimum income to live on. These consist of a personal allowance, premiums for special circumstances and housing cost top-ups. But these are "means tested" as is housing benefit and council tax benefit, which are paid by the local authority.

It must be said that at the level of benefit paid to most of those who are eligible (say, £56 JSA + £40 personal allowance from income support) giving £96 per week - even if their rent is also paid - this is a miserable income! Indeed anyone living on less than £100/w is officially "living in poverty". For instance, if you go into low-paid work, that is a minimum wage job at 16 hours/w, you will earn £80/w, but £52 of JSA will be deducted (you get to keep just £5 of the JSA) and for every £1 you earn, your housing benefit is cut by 60p and council tax benefit by 80p!

In fact a household with 2 children and an income of under £260/w is also officially considered to be "in poverty". On today's minimum wage a worker doing a 40 hour week will receive only £194! He or she would be reliant on tax credits from the government in order to survive - that generous subsidy provided by taxpayers to bosses who refuse to pay their workers a living wage.

This is, at best, the future promised for the 2.3m to whom the government intends to "give a hand up" rather than a "hand out", as it asserts, under its welfare reform.

Seeing through the lies

Ultimately, Labour's main justification for these latest attacks on the working class is that it will thereby achieve its target of 80% employment. But who can believe in such a boastful aim? Or to put it another way, what enormous cost would it entail for the working class, when today, despite the drastic reduction in workers' standards of living, the actual level of real employment is very far from what Blair and Brown claim?

According to the Office of National Statistics (ONS), Britain's employment rate currently stands at 74.5% of those of working age. But, assuming this is true, what kind of jobs are they employed in?

The official definition of "employment" which is used by the ONS to calculate their "74%" figure, ludicrously includes anyone who has worked for a minimum of just one hour in the previous week! It also includes unpaid workers and all workers who are in training as being "employed" even though most of this category are on government schemes and receive social benefits.

Besides, there is also the problem of double or triple counting of workers who have more than one job, which would also artificially inflate the figure for the number of "employed".

This is because the number in employment is calculated by using two measures: the number of jobs, which is worked out from data supplied by employers, and the number of people in jobs, from the Labour Force Survey, which interviews a sample of individuals. The ONS claims that these two totals are essentially the same, provided the number of second, third, fourth, etc., job each worker does is also counted. So, while making some attempt to prevent double and triple counting, it reckons that today, only 1.07m workers - or 3% of employed workers have additional jobs. But this is probably nowhere near the true figure. Indeed, a recent survey by the Liverpool and Victoria Friendly Society found that one in four workers - 25% of the employed - had an additional job. It also reported that in every case this was a matter of survival and/or to pay off debts. And that half of the workers concerned did 10 or more hours per week in extra jobs.

In fact, Labour claims that its "record" employment level represents 2.3m additional jobs "created" under its regime. In 1997, when it came to power, official employment was already above 70%, and considered a bit of a record. At that time it was estimated that 250,000 of these employed workers were temporary agency workers - that is, working mostly in what has come to be known as "McJobs".

In 2003 the DTI estimated that the number of agency temps had grown to 600,000. And one must take into the account that over 230,000 workers from the 10 new EU accession countries registered to work in Britain, mainly via employment agencies, between May 2004 and June 2005. So McJobs have probably grown to somewhere between 800,000 and one million, and this does not include casual jobs in workplaces where workers are taken on directly, by the bosses themselves.

Since 1997 too, while this increased casualisation of work was taking place, 830,000 full-time manufacturing jobs have been "lost". This means that over the past 8/9 years, Labour's real "achievement" in the British economy has been the replacement of full-time relatively secure and well-paid jobs with an equivalent number of poverty jobs. That is Brown's "flexible labour market": one in which workers can be hired and fired at will.

This being said, even on the basis of government's figures, officially 25.5% of those of working age are actually unemployed.

However, only a tiny proportion of these unemployed is included in the official "unemployment rate" - currently 5.1% - which is relatively low compared to other rich countries, and is used to flaunt the "success" of Brown's handling of the economy.

This rate however, only includes those jobless people who have been actively seeking work in the previous 4 weeks and who are willing to start work in the next two weeks. The claimant count is even lower (2.9%) since it includes only those entitled to Jobseekers Allowance (JSA) and NI credits to maintain their eligibility for a pension.

If you are not actively seeking work, even if you want a job, you are regarded as "economically inactive" and excluded from the unemployment count. And this figure amounts to 20.4% of those of working age, nearly 8m. It includes 1.8m students over 16 years, 2.3m people "looking after family and home", 2.2m long term sick and 1.7m who are neither on benefits nor "looking for a job". This 1.7m also includes those who have "lost" their eligibility to benefits due to the increasingly coercive rules. Not to mention those who lose their jobs but do not wish to apply for any benefit because of the constant harassment and scrutiny: the take-up rate for Job Seekers Allowance is said to vary between 50-70% of those eligible - which speaks for itself.

In fact the "economically inactive" of working age hit an all-time high in December 2005. According to a government research paper published this year, "A major factor driving such high inactivity levels is the number of people claiming incapacity benefit (IB), which has increased significantly over the past 20 years in contrast to the numbers claiming workless benefits[JSA]".

No doubt it is this kind of "research" which drives the welfare reforms. Yet the real figures for the past 8/9 years, under this government, show that IB claimants have hardly increased at all. Between May 1997 and February 2005, their total number increased by only 16,500, from 2, 370,500 to 2,387,000. But the number of people of working age on IB (1.4m) actually fell by 100,000!

Anyway, it can hardly be argued that it is the rise in IB claimants which has driven the recent rise in economic inactivity. This is a very convenient lie. Nevertheless, it is this kind of highly dubious rationale which is actually being used as a justification for the latest proposed reforms to the welfare system.

Turn it into a dead letter

All this welfare reform paraphernalia, dressed up in political correctness, which is meant to sound so well-meaning, should fool no-one. Not only does it target the disabled, the weakest section of the working class, which is already bad enough. But, as the plans for policing sick workers and "reforming" Statutory Sick Pay show, it is actually aimed at all workers.

And how could it be otherwise, coming from a government which, even when it talks about the welfare of the unemployed, is busy cutting jobs in the very department which is designated to administer their benefits and try to find jobs for them?

Yes, Hutton's green paper does not talk about the 30,000 redundancies in the DWP nor the 15, 000 Benefits Agency workers who have already been packed off to join the jobless!

But of course, this is precisely what lays the ground for the "private and voluntary sectors" to move in and bid for the work and thus, just as in the NHS, allows profit sharks to prey on the sick and vulnerable! And the green paper certainly does make this abundantly clear! "Private and voluntary organisations also play a key role in delivering many programmes - notably New deal for Disabled People. The government is committed to removing the barriers that these organisations face in order to establish a level playing field which enables them to provide a broader range of services than they do currently". Sure, and if the 30,000 civil servants were there, providing the service which they have been trained for, with their skills and years of experience, this would tip the playing field far too much against the sharks, whose only expertise is in the field of exploitation, coercion and making money in the easiest way possible. And what easier way is there than feeding out of the public purse?

There is only one way of responding to this welfare reform plan and that is to oppose it.