Opinion

What is the welfare state?

There should be no more cuts to benefits in the wake of the pandemic, says our columnist Karl Handscomb
Karl Handscomb: 'The pandemic – which has led to around six million adults claiming Universal Credit – has shown us just how important our social safety net is. But it has also highlighted some damaging holes'
Karl Handscomb: 'The pandemic – which has led to around six million adults claiming Universal Credit – has shown us just how important our social safety net is. But it has also highlighted some damaging holes'

Welfare. It’s a word that has become increasingly provocative – for those who argue welfare cuts have created unnecessary hardship, and those who think welfare is an unaffordable burden for the taxpayer. But what do we really mean by welfare, and why do we have it?

First up is a principle of providing extra support to those with particular disadvantages – for example, the Personal Independence Payment is available to anyone (regardless of income) with a significant disability.

Second is the concept of insurance. Be that against unemployment, becoming too sick to work, or just old age. The benefits paid under this heading are not a complete form of insurance, however, as they are mostly a fixed amount. A typical earner would find relying on just contributory benefits a bit of a shock to their bank balance.

Third, preventing poverty and redistributing income. This is now mostly achieved through Universal Credit (and Pension Credit for pensioners), and is based on needs and means. In theory, it should provide enough for a family to pay for the essentials if they are out of work, but cuts mean more and more families are often left short. There is a debate to be had about the generosity of these benefits, but the normal rate of support for a single adult is just £75 per week – far below any reasonable minimum income.

The final reason for welfare is to help unemployed people get back into work. Having a requirement to look for work while claiming benefits not only helps get people back into work faster, it also makes it much less likely that claimants will avoid work. Having this social contract for unemployed claimants means we should worry less about support being overly generous.

The pandemic – which has led to around six million adults claiming Universal Credit – has shown us just how important our social safety net is. But it has also highlighted some damaging holes.

Even with new policies, such as the Job Retention Scheme, millions more people have had to rely on benefits – and the support has not been enough to prevent thousands more accruing debts or struggling to buy essentials, as recent Resolution Foundation research has shown.

With the worst of the pandemic behind us, a national conversation is needed about what is important to us in post-pandemic Britain. This should include reviewing our welfare objectives and ensuring they are fit for purpose. One crucial lesson we should learn is that the basic generosity of benefits – be it unemployment support or statutory sick pay – really matters, and can’t be allowed to whither any more.