How not to reform welfare

Blair messed it up. Liz Kendall can't afford to.

Liz Kendall has delayed the launch of her welfare reform plan - a wise move, given that she was already losing control of the narrative. Leaks had got out to the effect that she’d cut benefits for at least a million people, framing the whole exercise as Tory-style sado-austerity. It’s vital that she gets the messaging right, and her party’s own history offers examples of how the wrong messaging can kill welfare reform quite quickly.

Tony Blair was emboldened by Bill Clinton’s welfare reform (and stunning results in Wisconsin) and asked Frank Field to “think the unthinkable” on welfare. He imagined he’d use his huge Commons majority to force change through. But when the disabled started chaining themselves to the gates of No10, dousing themselves in fake blood, the agenda was abandoned - with tragic consequences. Harriet Harman was moved, Field was fired. New Labour ended up growing the workforce mainly by immigration rather than welfare reform and promoting social cohesion.

Blair had gone in unarmed. He didn’t have a strong enough narrative and ended up losing the argument to activists. He hadn’t realised that welfare reforms come in many varieties, varying in political risk and efficacy. The trick is to triage, to start with the politically least-risky then work up a clear scale of ambition.

Taking away payments from the genuinely disabled is the worst place to start. It brings maximum political pain. HM Treasury likes a raid of PIP (benefits paid to help the disabled with living costs) as this translates into quick savings that the OBR will ‘score’. But the tools at the DWP’s disposal are crude. Any reform, no matter how well-intentioned, will hit people it should not. Someone living with a genuinely crippling condition could be pushed below the breadline.

An astonishing 24pc of UK adults now identify as disabled, up from 17pc in ten years, a rise in no small part explained by the financial incentives. PIP was never intended for a country where one in four claim to be disabled, but the Tories lost control. There are many people who do not deserve the huge support they claim in PIP. But it’s also claimed by the most vulnerable people in society, whose conditions don’t always fit neat DWP categorisations. Pull the rug from under them and the risk of suicide cannot be ruled out. A few of these cases can be well publicised and cause uproar: you get into I, Daniel Blake territory quite quickly.

Reducing the inflow is the easiest place to start, carrying low political risk. It can be done invisibly. About 2,000 a day are signed on long-term sick, which I find the single most appalling statistic in this whole mess. Restoration of basic procedure (in-person interviews, requirement of medical evidence, recording the interviews to ensure quality of decision-making) should cut this by at least half. Everyone agrees that the current ‘Work Capability Assessment’ system doesn’t work. But WCA will take months, perhaps years, to replace: it needs reform today. It can be done my ministerial email. In another SubStack I propose six quick fixes that can be enacted immediately, without need for announcement let alone parliamentary approval.

Restarting reassessments also brings low political risk and can bring huge results. People are not signed off sick forever: they are deemed unable to work for (say) an 18-month period. But various mayhem under the Tories saw reassessments abandoned, and the few that are carried out now are formalities (a 95pc renew rate). The result is below: a truly shocking graph. It amounts to the abandonment of those on sickness benefit. NB, they are not sent any kind of other support.

Restarting reassessments will revive the off-flow, cutting the caseload . The OBR will not ‘score’ this because they will take a ‘I’ll believe it when I see it’ approach to such reforms. Rightly so: the mixed results of previous measures means it’s fiscally irresponsible to build any assumption of success into the public finances. As a result, Liz Kendall will be told by HM Treasury that tweaking WCA won’t cut the mustard because the OBR won’t score it - and she needs to give them billions of savings pronto! This is the classic HMT vs DWP tension, over which Iain Duncan Smith eventually resigned.

Kendall needs to stand firm: if she lets Treasury penny-pinching define her mission, she’ll be cooked. She needs to tell HMT that the OBR don’t run the government and that she’s confident that such reforms will soon deliver results. If she orders dataflow improvements so WCA assessment results are published in real time (as Covid data was) the OBR will come around. And when they do, the revisions will show savings counted in the billions.

Redeploy communications staff as in-person WCA assessors Before lockdown, the standard assessment was in-person. Now, it’s a phone call - which cuts costs but has led to a huge increase in caseload. A tick-box phone interview system is easily gamed, especially under coaching by ‘sickfluencers.’

The DWP says they could not find the people to do the in-work assessments, but there are alternatives. Keir Starmer has been struck by how many people in communications are kicking around Whitehall: 7,000 at the last count. 7,000! What do they all do? As any journalist will tell you, the efficacy of a comms department is in inverse proportion to its size. Just as staff were moved from DCMS to trade after Brexit, so comms staff can be retrained to go through the tick-box exercise of the WCA. In-person interviews will need another 600 to 1,000 staff. The simple act of having an in-person human will deter chancers.

Don’t do it in darkness: publish data on the benefits claimants by total amount claimed. This will show the excesses - especially on the notorious “motability” system - and strengthen the case for change. Right now, activists will oppose everything by cherry-picked examples. Greater transparency is needed. I’m struck by how, even now, commentators argue that sickness benefit is quite low - not realising that 70pc of sickness benefit is paid in conjunction with PIP and housing benefit. Often more. The Centre for Social Justice shows some scenarios below: this should be done by the DWP. Otherwise they will be successfully defined by their critics as robbing the poorest.

No ‘frauds and scroungers’ language - no matter how much focus groups like it. One of the biggest traps in front of ministers is polling that shows how much punters loathe benefits frauds and approve of hard-man language. So some know-nothing spad will say: minister, sound tough! The Guardian will hate it, but those red-wall voters will love it! The most infamous example of this was Peter Lilley in the 1992 Tory conference. The video, below, is worth watching: it has aged well as an example of disgusting ministerial populism.

David Cameron and George Osborne were tempted down this road. Cameron would attack people he thought were “swinging the lead”, George Osborne spoke of a shift worker “leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits.” The DWP studiously avoided such demonising language, but Osborne couldn’t help himself. Any minister who uses such language toxifies the mission, making ministers out as bullies who have little conception of the trap that their own dysfunctional system has laid for people who deserve better.

Welfare reform is a story about good people caught in a bad system. Words of anger and exasperation should be reserved for this system, those who built it - and those who let it fester. Liz Kendall and Ali McGovern should keep the moral high ground: once you cede this, welfare reform gets much harder. (Worryingly, both seem to be silent - thereby allowing their critics to define their mission.)

Don’t forget to talk about the workforce upside. If welfare reform is seen only as a demolition job, it raises questions: why is a Labour government doing this? Is this the progressive mission: to destroy safety nets? Every step of the way, welfare reform needs to be explained in terms of the destination - and the progressive nature of the mission. The scandal of unused skills, the purpose of social cohesion. I was surprised to see no one has explored this angle so I asked the CEBR to run the numbers. If the million people who joined sickness benefit in the last five years were instead in the economy, it found this would mean £30 billion more in tax revenue by the end of parliament - and about £10 billion less in welfare. This £40 billion-a-year dividend would give Starmer all he needs for defence. These figures are ‘scenarios’ - actually achieving 1m more jobs would be a near miracle. But Starmer needs 2m to get to his target 80pc employment rate, so he’d better start praying for these miracles. Labour was, once, driven by dreams of “full employment”. It can be again.

Keir Starmer and Liz Kendall need to make the purpose of welfare clear from the offset: savings lives, repairing social damage, going back for those written off by the Tories. Tackling what was once called the ‘giant evil’ of worklessness.

If they give in to kneejerk Treasury money-grabbing or revive the Alan B’Stard language of the Lilley/Osborne era they will toxify the agenda and lose. But if they explain this in terms of what they hope to build - and how well it chimes with the 1945 Attlee manifesto dream of “full employment” they will create a potentially transformative agenda that could unite left and right. Here’s hoping.

PS Thanks for reading my Substack, but is not worth subscribing too as it’s the in-the-weeds stuff - notes, graphs, data that 12 people in the country will find interesting. This substack is more a notebook . But if you are interested in welfare reform, here’s my Channel Four film:-