Social Policy: Philosophies of Welfare

Key areas regularly examined in the areas of welfare and poverty and social policy include:

The aims of welfare provision; principally in areas such as the family; poverty and health and involving concepts such as equality, rights and social justice.

Analysis of the Welfare State from different perspectives.

The debate concerning the proper purpose, and the extent of state involvement in the provision of welfare has - since the creation of the British Welfare State - been dominated, certainly at the level of actual policy, by two main perspectives:

  • The Social Democratic approach.
  • The New Right (market liberal) approach.

Social democracy

The Social Democratic approach dominated political and public opinion for the thirty years after 1945. It is a philosophy based on the economic theory of J. Keynes and the social thought of W. Beveridge.

Houses of Parliament

Keynes argued that governments could and should intervene in the economy, and that it could manage demand for goods and employment levels by its own taxation and spending policies.

Beveridge believed it was the duty of individuals to combine as a society with the strong supporting the weak. This liberal consensus involved an acceptance of the mixed economy and of the welfare state. The term 'Butskellism' was coined to describe this approach of moderate reformism. Leading writers in this tradition are: R. Titmuss, P. Townsend; D. Donnison, and B. Abel-Smith.

What many followers of this tradition share, is a belief that the free market produces a number of undesirable features. These are:

  1. Based on accumulation not social purpose, a free market economy inevitably leads to avoidable ills and misery for some.
  2. Market forces are undemocratic being controlled by a few very powerful individuals.
  3. A free market gives unjust rewards. Rewards and penalties are not governed by moral principle.
  4. The market is not self-regulating. Unless regulated it ends in economic crisis, unemployment, inflation and over production.
  5. Because of the above, poverty and inequality increase in a free market economy.

From the social democratic viewpoint, the Welfare State is an obvious response to the drawbacks of the free market. For social democrats, it is necessary for governments to intervene in the market, compensating victims, redistributing income, providing opportunity for the underprivileged and restraining the greedy and powerful.

The outcome, social democrats argue, is greater social justice, and the rewarding of talent and effort rather than of power and privilege. It helps society to become more efficient in avoiding the wastage of the talents of its citizens. Social conflict is avoided because society becomes more integrated and all can support a manifestly fair system.

The aim of Social Democracy is to promote a society where social priorities are set in a considered and rational way, with a co-ordinated plan to achieve them. In such a society, social inequalities are reduced to acceptable levels and social ills are countered by state run organisations.

Within this tradition the key issue concerns the nature of welfare provision.

Should welfare be provided universally or selectively?

Universalism provides services as a matter of right to all citizens. Selectivity involves establishing the criteria that gives access to welfare and a process for means testing applicants. A parallel distinction is that between institutional and residual concepts of welfare.

A residual system provides that state social welfare institutions come into play only when all other avenues of assistance have been exhausted. An institutional system, on the other hand, sees the state welfare service as a normal first line function of a modern industrialised and civilised society.

Arguments in support of universal benefits are:

  1. Universal benefits eliminate the need for means-tests which could be humiliating, bureaucratic, and off putting, which may discourage people from claiming benefit to which they are entitled. For social democrats the low take up of means tested benefits is an important failing of the current social security system. In 1980, no means tested benefit had more than an 80% take up. (Parliamentary answer, 1981).
  2. Universal benefits are funded from taxes and National Insurance contributions paid in the past by the people themselves. One should thus be able to draw money from the fund regardless of one's current financial circumstances. This point was strongly made in the Beveridge Report.
  3. Universal benefits are more practical. They are cheaper to administer, and these savings can be used for higher benefit levels.
  4. Means-tests perpetuate poverty by creating a poverty trap. Universal benefits are paid regardless of income and so prevent the poverty trap from operating.
  5. Means-tests can be used as a form of social control through the way the rules of eligibility are framed.
  6. Universal benefits are integrative, selective ones are divisive.

Beveridge recommended a system of national security that was universal and compulsory. It is argued that the universal system provides services on the basis of right an equality, and therefore fosters a shared community; clearly a social vision. It was also considered that a more socially secure society would be a more orderly one. The major argument against such a system is cost and this is a major reason for the drift away from universalism in the British Welfare State.

Crises in Social Democracy:

The reason for the crises in welfare is the decline of the economy. The crisis in the economy tested and broke the post-war social democratic consensus and the compromise between capitalism and socialism.

The free market failed to supply an expanding surplus with which to fund the welfare state. The problem became insoluble because to take pressure off the market meant reducing taxation and cutting welfare. Expanding, or even maintaining welfare levels, meant increasing taxation.

Criticisms of Social Democracy:

It tends to concentrate on the symptoms of social problems rather than on the causes. Poverty, to be tackled at the level of its causes has to be related to the system that produces it; to income, to career patterns, etc.

Career options

The approach is fundamentally conservative. Attention focuses on particular examples of poverty rather than on the system that generates it. There is a stress on gradual reform, but not the realisation that capitalism is a system that only works in the presence of inequality because it is based on the principles of economic self interest and the incentive to have more than others by being successful

The New Right

The New Right is the dominant philosophy in the Western world at present.

It is a development of the old right, notably the political economy of Adam Smith. When the conservative party came to power in the UK in 1979, they set about cutting social expenditure. They did this because they believed that to do so would regenerate private profitability, but also because they believed that reducing public reliance on state provision was a matter of principle.

The New right wanted to liberate Britain from the tax burden of social democratic welfare principles. M. Friedman argued that the state should not be used to bring about any social objectives, no matter how laudably such objectives might be.

The New Right argued that:

  1. The capitalist system is capable of providing wealth and happiness for all.
  2. The market system ensures that prices and wages find their 'correct' level so that there is full employment and a match between supply and demand.
  3. Governments are mistaken if they interfere in the market through taxation, welfare measures and artificial restraints on business activity.
  4. Government interference leads to wages that are too high, unemployment and lack of initiative.

These beliefs committed the Conservative governments of the 1980s and 90s to:

  1. Reducing the size and expenditure of the state sector.
  2. Reducing the levels of taxation.
  3. Leaving the labour markets to regulate themselves.
  4. Weakening unions and restrictive practices.
  5. Promoting the market via privatisation.
  6. Increasing individual and family self-help to remove dependence on the state.

However, these measures were not cheap, and also had consequences in terms of state control. The costs of forcing the market to be free are:

  1. A strong state.
  2. Increased centralised intervention.
  3. More authoritarian and repressive measures (Held, 1984; Gamble, 1986).

In the UK, as in the USA, public expenditure has continued to grow despite government efforts to curb it. However, although levels of social expenditure have continued to rise, they have not been sufficient to meet the needs of the changing population structure, and increased social needs and deprivations.

In Britain we have a combination of four sectors providing social services and health care:

  • Statutory organisations - set up by parliamentary legislation.
  • Voluntary - often charities.
  • Commercial - profit-making businesses.
  • Informal - relatives, neighbours, friends.

Commercial

This situation has been described by the Wolfenden Report as 'Welfare Pluralism'. The Conservative governments since 1979 have attempted to alter the mix of this pluralism, reducing the role of the state and increasing the other three.

The reason for this is a belief that:

  • State organisations are captured by professionals who use them in their own interests; increased salaries rather than improved services for clients, more bureaucracy less efficiency.
  • State services are impressive and bureaucratic. Private schemes and charitable agencies give more choice and efficiency than state schemes.
  • State organisations are too large and unresponsive to client needs.
  • Generally state intervention should be reduced.
  • Compulsory insurance, state programmes etc belong to pre-war and early post-war years, they are out of date in modern society.
  • The strategy of equality has gone too far.
  • The costs of the welfare state are too great - demand is unlimited and there are constantly rising expectations.
  • Government action has unintended consequences - for example, the importance of the family declines, people become unwilling to take low wage labour.
  • The government has become overloaded - the system is too complex and outcomes are no longer predictable.
  • Government spending on welfare creates inflation, which causes further problems.
  • Governments act according to the vote motive, they offer welfare bribes. This means welfare services are set up irresponsibly, without thought to cost or consequences.

The New Right does not propose that the Welfare State should be abolished, but that it should be in line with what is termed a 'residual model'. For example, those who need state help form a small group at the bottom of society. Benefits should be targeted at them (and only them - the deserving poor), and should be minimal.

Universal provision of benefits is nonsensical; it gives to those who don't need it and wastes resources. Child benefit, for example, costs nearly £5 billion a year (1988), going to 6.8 million households with 12 million children regardless of income.

Child benefit

The residual model relies on the ability of the caring agencies to identify those in need. This is done primarily through the use of means testing. Benefits can thus be targeted to those who need them. Means-tested benefits are cheap, efficient and effective. And being cheap, taxes can be reduced and the incentive to work is increased as a result. Means-testing also limits the demand for goods and services. For example, charging for eye tests and dental check ups (free prior to 1989) will cut unnecessary demand for these services.

The 1986 Social Security Act reflects the Government's New Right thinking. It returned to the views that motivated the passing of the 1834 Poor Law Amendment Act, that the principle cause of poverty is the ignorance and idleness of the poor themselves. Poverty is seen as a moral problem rather than an economic problem.

The New Right tend to adopt an absolute definition of poverty and see it as the fault of poor people themselves. The 1986 Social Security Act (operative in 1988) has been called the most important social welfare measure since the post-war legislation, which followed the Beveridge Report.

The Act introduced:

Income support to replace Supplementary benefit. The result was that the level of benefit was reduced for many, and cut completely for some. Discretionary payments for hardship were abolished.

The social Fund, partly to help those in hardship not covered by income support, but almost all payments were loans not grants.

Family credit replaced Family Income Supplement. In some ways it was more generous but it could not be claimed by many of those eligible for it - family heads in work but on low income.

Reduced state pensions for those retiring early, by limiting the link between the earnings now and pension then. It became easier to take out private pensions.

Pensions

In addition, the 1988 Social Security act withdrew benefit from most people under 18. The assumption was that all such people should be in work or on youth training schemes. It was estimated that at least 14,000 people between the ages of 16-17 were without jobs or income during Christmas 1988.

Other Conservative social security measures of recent years include:

  • A failure to increase child benefit in line with inflation.
  • An increase in prescription charges and charges introduced for dental and eye checks.
  • After 1982, LEAs not obliged to provide school meals (except for benefit claimants) or nursery education.
  • The council house-building programme was stopped or cut in a number of ways.
  • Resources for DHSS to identify fraudulent claims greatly increased.
  • Income tax was reduced dramatically between 1979 and 1988, most of it going to benefit higher rate taxpayers.
  • Domestic rates were replaced by the poll tax.

The effect of these changes was to leave 80% of the poorest claimants worse off than they were before April 1988, and to intensify the poverty trap.

The General election of 1979 is now seen as a watershed in the development of the post-war welfare state. Two immediate changes occurred:

The government brought a determined economic regime and a reaffirmation of the principles of self-help and value for money. This was bolstered by an uncompromising social morality.

At present, the Welfare State mirrors the social, economic and ideological values of the modern Conservative party, and some would add, New Labour as well.

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