Caps, cuts and freezes to benefits since 2010 are driving rising poverty. Labour’s priority on returning to power must be the urgent repair of the gaping holes left in the social security safety net by harsh years of Tory austerity.
But as the world of work changes rapidly around us, we cannot rely on traditional models of social security alone to protect us from rising poverty in the future. Two phenomena already – or may soon – create increased hardship for those who face the greatest labour market disadvantage, including the low paid, the poorly skilled, and those who can’t work sufficient hours to provide for themselves and their families. The first of these is the rise in insecure work, characterised by the growth of the gig economy, atypical and shift working patterns, and involuntary ‘self’-employment. The second is the uncertain impact of automation.
But while the future effects of automation may be uncertain, the adverse impact of the ‘flexible’ labour market on the lowest paid, least well-qualified workers is already felt by the most vulnerable. Labour’s policies for a comprehensive set of workers’ rights and stronger protections for trade unions will help to address that. But social security also has an important role to play – and the abject failure of universal credit is prompting a search for new solutions.
One approach which could sustain public support for working-age benefits, offer a measure of choice, flexibility and autonomy to claimants, and meet both the immediate and future challenges of the labour market, would be to develop new tailor-made models of support that adapt to the changing shape of the workplace, and to life events that affect people’s ability to participate in it. That, however, requires us to imagine a broader definition of ‘social security’.
If we anticipate continuing changes and disruption in the workplace, access to student finance, must be core to our concept of social security. This includes funding for part-time courses, so that people can reskill over the course of their working lives. Labour could incorporate an entitlement to financial support while retraining to acquire new skills, as part of our National Education Service. Such support could take the form of a personal learning account that can be used over a whole career, perhaps with additional funding for courses where there are labour shortages.
As working patterns become more fluid, access to additional, flexible childcare should be available for working parents, supplementing a universal offer for all children. Extending and improving paid paternity leave could also offer families more flexibility, while helping to address continuing gender inequality. For those with caring responsibilities for adults, meanwhile, the woefully low and limited carers’ allowance should be increased and extended to a wider group of people.
As our working lives look set to extend well into our late 60s and beyond, some approaching retirement may wish to reduce their hours in paid employment gradually over time, or to retire early to pursue other interests, or undertake family responsibilities. Some private pension schemes offer reduced annual payments for every year a pension is taken early. It would be possible to design something similar for the state pension, offering a choice of partial or full earlier retirement.
It might also be possible to offer an individual the chance to earmark a proportion of their national insurance contributions at certain times in their working life to build up additional ‘assets’ for planned events or life changes (including retirement, but also changing jobs, studying, or becoming a parent), with their contributions wholly or partially matched by government. While there are dangers from such models that unplanned events could leave people unprovided for in time of need, carefully designed policy solutions could offer a degree of choice and autonomy, while giving a role for the now residualised, but still highly popular, concept of ‘contribution’ in the social security system.
Noone suggests that social security can or should do all the ‘heavy lifting’ in a rapidly changing working environment, and no policy should weaken the pooling and sharing that is intrinsic to providing security for all, but a flexible, less secure labour market requires a flexible, personalised social security system that’s fit for the future. Failure to design such a system will mean the most vulnerable continue to suffer from increased labour market flexibility, while those with most stand to gain most from it. Addressing that modern inequality presents a new, important and urgent challenge for social security policy. Labour must demonstrate that we have the confidence, the ambition, the ideas, and the values to address it.
Read more about the Fabian Society’s Poverty and social security project here.