Resolution Foundation

We all pay the price for narrow thinking on social protection

Whatever else ‘building back better’ was supposed to mean it is now clear it involves returning to exactly the system…

Whatever else ‘building back better’ was supposed to mean it is now clear it involves returning to exactly the system of social protection that existed before Covid struck.

When the furlough scheme and the crisis-related increase to Universal Credit disappear next month, assuming that still happens, the UK’s welfare state will slump back to its pre-pandemic normal. The telling facts about the social condition of the country that the Covid-era has highlighted — the pivotal role played by poorly treated key workers, threadbare sick pay, benefit levels for the unemployed stuck at the level they were when Mrs Thatcher left power — have not moved the government to think afresh.

It is important to understand the calculus that explains this. Treasury concerns about post-crisis fiscal pressures certainly weigh heavily, as does a boosterish view of what an improving labour market alone can achieve. But entrenched scepticism when it comes to measures that would boost the economic security of working-age population also stems from something deeper. It is rooted in a narrow — and flawed — worldview about who gains from higher standards of social protection.

The benefits of a stronger safety net will, according to this perspective, be overwhelmingly concentrated among a relatively small minority of persistently disadvantaged households, typically disconnected from the world of work, with little wider upside for the rest of society. This is a well-worn line of argument in British political history and there was more than a whiff of it surrounding the Prime Minister’s defence of the impending cut to Universal Credit on the basis that he favoured wages rising due to people’s ‘efforts’ rather than ‘welfare’.

It’s an argument that implodes on first contact with the reality that the clear majority of those on Universal Credit are either already in employment or claiming benefit precisely because the government has determined that their circumstances dictate that they should not be working.

But it fails, too, at a deeper level. Attempting to separate out those reliant on ‘benefits’ from the rest of society mis-understands the social dynamics of contemporary Britain. Over recent decades roughly one in five households have typically relied on some sort of working-age means-tested support at any moment in time (and half of all children live in families who receive universal credit or tax credits). But if we step back and consider a longer time horizon we see that over half of all households rely on means-tested benefits at some point. This is hardly surprising when we consider, contrary to endless punditry suggesting the opposite, that the UK is characterised by unusually high levels of mobility across much of the income spectrum (excluding the rich who are ever more successful at protecting their relative position). We very clearly aren’t all in the same boat (contra to the arresting new Banksy image) but many more of us than currently realise will end up needing help to stay afloat at some stage. Making today’s poor even poorer — as per the planned cut to Universal Credit — not only hurts them, it also sets back the majority of others who will eventually be cushioned by the safety net too.

A narrow lens on the purpose of social protection also underpins intransigence on statutory sick pay. The Treasury may believe that sticking with the current broken system — which excludes the nation’s two million lowest earners and offers among the lowest levels of support in the advanced world — represents a win for muscular spending control. Given that the majority of workers can fall back on some sort of occupational sick pay scheme the politics of eroding state support may not feel all that choppy. But this mindset fails to weigh the wider costs of living in a country where the economically insecure are forced to work when ill. We’ve paid a heavy price for this: care homes providing sick pay to their workers experienced significantly lower levels of Covid infection among residents than those that didn’t. Decent social protection not only supports the ill, it guards the well too.

A similar logic applies to the treatment of care workers. Many might hope to live in a society where securing the dignity of today’s million plus workforce — most of whom get paid less than the real Living Wage — would itself be a prompt to action. All the more so given the jeopardy they’ve faced: care workers are roughly three times more likely to have died of Covid-19 than the rest of us. But given these arguments have conspicuously failed to clinch the case for improved conditions then taking account of the broader knock-on effect on the quality of care for the nation’s elderly and vulnerable surely should. There is, afterall, no route to an improved system of social care that doesn’t involve a better deal for the workforce.

These different examples should remind us that decent social protection not only helps those who’ve currently fallen into hard times, crucial though that it is; it also provides a solid foundation for everyone else too.

Chip away at the cement of society for long enough and sooner or later something will give. When it does, it’s not just those relying on the immediate support system who get hurt. Everyone else living in the same building — whether they realise it or not — is vulnerable too.