Social Security Policy

New Labour promised to halve child poverty by 2010 and to eradicate it by 2020, (Walker, 1999). Social security is not merely about poverty relief, as the relief of poverty requires more than just social security reform, it is important to address the position of social security policy at present to see whether Labour can live up to this rather ambitious target it has set.

The term ‘Social Security’ is used to refer to the range of policies which aim to transfer cash resources between individuals and families. It is concerned with policies which govern the redistribution of resources within society.

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After coming to power in 1997 the Labour government reviewed the key principles of social security policy. They developed the ‘Welfare to Work’ strategy, as they want people of working age to look for employment within the labour market and avoid dependence on the state.

The maintenance of a high and stable level of employment was one of the fundamental assumptions of the Beveridge report, and an objective to which all governments were positively committed after 1944 (Lowe, 1993).

Hills (1997) argues that since Beveridge, the objectives of social security have never been set out in a way allowing measurement of whether benefit levels are adequate to meet their aims.

The original aim of the National Insurance system as introduced following the recommendations of the Beveridge report in 1948 was to set up a system of subsistence level flat-rate social insurance benefits which were intended to cover all the main causes of inability to earn, such as old age, sickness, unemployment, widowhood and orphanhood. It also included virtually the whole body of the populations, whether employed, self- employed or non- employed, as far as possible in the same terms (Sleeman, 1979).

Changes in the welfare system have been needed for a variety of reasons, society has changed, and policies need to change to keep in tune with this, these changes include changing families, working women, an ageing society and rising expectations (Giddens, 1998; Hills, 1997).

In the UK, the earliest form of social security was the Poor Law which was based around discretionary payments related to individuals’ assessment of need, and this continued to play a part in the delivery of many means- tested benefits until the last two decades of the twentieth century (Alcock, 2003). The Elizabethan Poor Law (1598) distinguished between the deserving and undeserving, this is something which is still reflected in Social Security policy; Hewitt and Powell (2002) point out how the use of contracts can be taken back to the deserving and undeserving poor, only now the terms being used are responsible and irresponsible; and this is reflected in the ‘Security for those who cannot’ (DSS 1998)- which means no security for those who can but do not. Another similarity between the poor law and the modern welfare state is that Parishes excluded the traveling poor from its boundaries; this is still evident today with the treatment of travelers and the single homeless. This argument is supported by Hills and Gardiner (1997).

Within Social Security, Employment policy occupies a crucial position in the post- war reconstruction, and without which the welfare state could not exist. Full employment would both finance the development of the welfare state, and government welfare policy would help to maintain economic growth.

Barr (1993) has outlined three social aims of state intervention in income distribution; the relief of poverty in order to protect a minimum income standard was the first. The second is the protection of accustomed living standards to ensure that none has to face an unexpected and unacceptably large drop in their standard of living and the third is, smoothing out income over the life cycle. However, as pointed out by Glennerster and Hills these three interact, the balance between them and the responsibility of the state can differ over time and between countries.

The aims of Social Security policy are not merely to be measured in income terms. Social and political participation may be seen as important civic virtues by a broad spectrum of political opinion. Social Security maintains a standard of living that supports inclusiveness (Townsend 1979), the consequences of failure in this respect is ‘social exclusion’.

The miseries of unemployment in a work- ethic society are well- documented by Sinfield, (1981). To these are added the harassment and insecurity of dependence on means tested welfare (Bradshaw and Deacon,1983) and the despair of living at a standard of living which steadily falls behind that of the working class in work. (Taylor- Gooby, 1985). Glennerster (1999) has criticized the critics, arguing that paid work brings dignity and respect.

Social welfare imposes controls on society, social security regulations distinguish those who do and do not deserve support. As pointed out by Taylor- Gooby (1985) regulations which ensure that a household head is usually responsible for the living standards of family members defined as dependents encourage a certain household pattern.

Social Security is traditionally divided into a contributory and a non- contributory sector, the former covers benefits such as sickness benefits, unemployment benefits, retirement pension, widows’ benefit- those regarded as the important benefits. In the latter most benefits are allocated to those who can prove that they do through a mean test.

Eligibility for social security has two elements, the first being the formal rules and regulations governing provision of benefits and secondly the perceptions of eligibility held by claimants and potential claimants. The contributory principle, whereby National Insurance benefits are linked to earnings established under rules of eligibility which disproportionately excludes those in intermittent or low paid work, those with a higher risk of unemployment as well as recent migrants. The establishment of such policy on the basis of a White, Male norm thereby formally excluded many of those in minority ethnic group from social citizenship rights to such benefits (Amin and Oppenheim, 1992).

Post war welfare reforms and immigration legislation have continued to institutionalize racially exclusionary rules which determine eligibility to welfare benefits these include residence tests, rules on ‘recourse to public funds’ and sponsorship conditions. This is well documented in the case of asylum seekers in Britain.

Compared with some of the other developed industrial countries, Britain has been relatively successful in establishing a general and comprehensive welfare floor. (Sleeman, 1979)

As argued by Hills (1997) benefits for those without work may ameliorate their immediate position but they do not solve the problem. A prime aim of social security policy should be for claimants, where possible to find independent sources of income. While the overall level of employment depends on wider economic factors, the social security structure may discourage employment under some circumstances.

Under the Conservatives, due to rising unemployment and the recession in the early 1990’s changes were made to social security policy with regards to the unemployed. Not only did the costs of paying unemployed people’s mortgages reduced, but Income support (IS) payments for mortgages were withdrawn for the first nine months of unemployment. In 1996 Jobseekers Allowance (JSA) was created when contributory unemployment benefit and means- tested Income support were merged. With JSA for the first six months of unemployment there would be a contributory basis and after that it would be means- tested. It was decided that those under the age of 25 would receive a lower rate of benefit and that contract would be introduced between claimants and the benefits agency to formalise job searches and training criteria, as well as establishing availability for work.

With regards to means tested benefits, we have all heard politicians expressing their concerns about benefit ‘dependency’. According to Glennerster and Hills (1998) unemployment benefit has been the largest single source of growth in means- tested populations, followed by lone parenthood.

A major theme of policy has been to sustain a gap between income and benefits and in work to ensure incentives to work in the face of increasing levels of unemployment, decreasing relative levels of wages for the unskilled, and increased part- time and temporary working, Benefit policy has been changed to both decrease relative value of benefits for the unemployed and to increase use of means testing. This leads to two problems for ensuring incentives to work: one is to ensure that benefit rates are not close to or greater than in- work income and to ensure that those who are working on the margins of benefit entitlement are able to improve their incomes through work. The side- effect of means testing is that benefit is reduced as income rises alongside the incidence of tax and social security contributions on increased earnings. As benefits have fallen relative to incomes over time, the incentives to work, therefore, in general have been improved (Glennerster and Hills, 1998).

The main theme of social security policy is ‘work for those who can; security for those who cannot’. Which consist of a rights and responsibilities discourse. Those who cannot work have a right to security. However, for those who can work, the right to benefit is more conditional. The basic philosophy is that work is the best route out of poverty. ‘Making work pay’ includes a national minimum wage, tax reform such as Working families tax credits and nursery credits, which increase the return from low paid work and reduce the poverty trap. The government aims to achieve full employment, instead of paying people in poverty more benefit, New labour will redistribute opportunities and take a preventative approach, giving people the skills to escape poverty.

Within Social Security policy is employment centred social policy which is based around the ‘New Deal’ programmes; which target different groups. For example for young unemployed people there are four choices; education; a subsidized private sector job; a voluntary sector job or an environmental task force; the opportunity for sitting at home on benefits is not an option, as benefits will be reduced. For lone parents there are no penalties for not taking up employment, although they do have to attend work- focused interviews, in order to make them aware of the opportunities available to them.

With regards to pensioners; pensions are uprated by prices rather than earning, the poorest pensioners do have a means- tested minimum pension guarantee that ties in with the increase in earnings. This represents a move from Universalism to selectivity. This also means that gradually pensioners will carry on falling behind workers (Powell and Hewitt, 2002). This in itself demonstrates the lack of respect for the elderly, and the fuels the argument that once someone passes working age, they are no longer deemed an integral part of society, and are pushed out of mainstream society. This essay aims to look at the provisions in place for younger people, of working age, for whom the government are trying to move into the labour market.

What New Labour is trying to aim for is an active, preventative and intelligent rather than passive welfare state that encourages people to realize their potential rather than being chained to passive dependency (Powell and Hewitt, 2002).

The bulk of National Insurance expenditure is on pensions, whereas for sickness and unemployment contributory benefits do still apply. JSA covers unemployment, for the first six months there is non- means tested support for hose who meet the NI contribution conditions and is linked to an agreement by claimants to take steps to secure a return to the labor market. Jobseekers allowance is no longer an Insurance benefit for the unemployed, after six months claimants remain on the benefit, and are subject to the same job search criteria, but their benefit moves onto a means- tested basis, which means any other resources (income from a partner) will reduce one’s overall entitlement. In practical terms, means- tested JSA is Income support, given another title, as Income support has for some time been payable to unemployed claimants not covered by National Insurance benefits. It is still available for those out of work, who are not required to seek work under JSA rules, such as lone parents and people with disabilities and Carers.

‘Income support is a minimum income scheme for British citizens’ (Alcock, 2003), payable only to those who are out of full- time employment (16 hours a week) and is reduced if there are any earning or any capital above �3000 in total. Housing costs are not covered, but claimants who pay rent can apply to their local council for housing benefit and council tax benefit, in some cases interest payments on mortgage debts are covered. For children of parents who are in receipt of Income Support or means- tested JSA free school meals are available.

A major feature of social security protection was once sickness, but in the 1980’s , under the Tories support for short term sickness (up to six months) was shifted to employment, employers were expected to pay workers a minimum level, whilst they were off sick. After six months, claimants with chronic illness or disability move to Incapacity benefit (NI protection) if they meet the contribution conditions with a medical test, which requires they are incapable of ‘all work’. For those who do not satisfy the contribution condition, they are paid Income Support which is means- tested, as long as they can satisfy the conditions for Incapacity Benefit.

For those in low wage employment means- tested support is also available through tax credits, payable through employers, administered by the Inland Revenue. Alcock (2003) argues that there has been a significant shift in the operation of means – tested benefits under the Labour government since 1997. Family Credit was replaced by Working Families Tax Credit, made available to a wider range of low- income families. Not only does this act as a supplement to the wages of low income workers with dependent children, it also aims to make low paid work seem more attractive, to encourage labour market participation as part of the governments commitment to promote employment.

The most important of the Universal benefits is child benefit which is paid to all parent or guardians to help them with the cost or rearing children. Critics would argue that, like all Universal services, Child benefit is a waste of public resources by paying benefit to wealthy parents, who do not need this money like poorer parents do. The benefit of Universal benefits is that there is no stigma attached to being in receipt of it.

Jones and Novak (1999) argue that the whole benefits system operates to control and discipline citizens rather than support and protect them.

There are a number of different theories and ideologies of welfare, the main traditional theories are the Classical Liberal theory; Marxist theories and Fabian theories.

Classical liberal theories are based around ideas that see freedom as absence of coercion rather than protection from misfortune and hardship. Within classical liberal thinking there are two contrasting views on the state. Traditional or negative liberal defend the individual liberty while challenging what they perceive as the arbitrary misuse of power. Negative liberals say the role of the state should be minimal. On the other hand there are positive liberals who say that the state can adopt a more constructive role in dealing with social problems. Both positive and negative liberal thinking have been influential on the modern British Conservative party. It is important to make the distinction that not all classical liberals are opposed to the welfare state.

Classical liberal theory points out that unwarranted state intervention will only amplify social and economic problems since the market system will be less efficient and economic growth will slow. It is also believed that individual freedom is of paramount importance and any attempt by the state to provide fiscal help to the poor compromises that individual freedom, this is said to be done in two ways; the first is by asking those who earn wages to pay extra taxes to support the poor and secondly, by creating the conditions under which poor individuals and the state will have a relationship of dependency.

Classical liberals regard the causes of poverty to be personal, rather than structural; poverty is traced to personal feelings rather than to failings of the political or economic systems. They go on to say that individual rights must be preserved at all times, and go as far to say that people have the ‘right’ to be poor.

Barnett (1986) stated that the welfare state was necessary for a short time, following the problems created by the Second World War; that those who supported it did not take a long term view of the countries economic needs. The welfare state is no longer beneficial. A recurring objection to the welfare state is the belief that services provide benefit to those who do not need it; such as child benefit, which is a universal benefit and it paid to everyone, regardless of earning, some would see this as a waste.

Sidney and Beatrice Webb were influential figures in Fabianism, they believed that collective welfare through the state was not only essential, but an inevitable development within British capitalist society. An early example of the influence of Fabian thinking was with regards to the Poor Laws, whereby in 1905 the Royal Commission was set up to review the old Victorian support system. The significance of this was the governments’ recognition that it had to implement major changes to the welfare state. Fabianism is a variant of British Socialism.

The ‘New Left’ is a term used to describe a broad range of differing approaches to social structure and social policy from a Marxist perspective. In general many agreed that the achievement of the welfare state in Britain was neither as desirable nor as successful as had been assumed. Marxists argued that the welfare state had not been successful in solving the social problems or the poor and of the broader working class, in practice the welfare state supported capitalism, as opposed to challenging it (Ginsburg, 1979)

The New Left has been criticized for its theoretical assumptions of the assumed desirability of state welfare services, arguing that for many of the working class social security was seen as being oppressive and stigmatizing.

Hayek (1944) argues that despite the overwhelming influence of Fabianism within social policy, right wing critics of state welfare had always argued against the interference of state provision with the workings of a capitalist market economy. This neo-liberal thinking was referred to by Fabians and the new left as the ‘New Right; as it was interested in returning to the classic liberal values of a laissez- faire state, which advocated for self- protecting families and communities.

The main argument of the new right was that state intervention to provide welfare services, and the gradual expansion of these which Fabianism sought, merely drove up the cost of public expenditure to a point at which it began to interfere with the effective operation of a market economy (Bacon and Eltis, 1976). They claimed that this was a point that had already been reached in the 1970’s , where the high levels of taxation needed for welfare services managed to reduce profits, crippled investment and driven capital overseas (Alcock, 2003).

Like the New Left, the New Right also challenged the desirability of state welfare in practice, arguing that free welfare services only encouraged dependency and provided no incentive for individuals and families to protect themselves through savings and insurance (Boyson, 1971).

Hayek (1982) argued that state intervention involved unwanted interference with the freedom of individuals to organize their own lives.

Neo- liberal thinking is opposed to extensive state intervention to provide public services; effectively they are opposed to the ‘welfare state’. They argue that it is undesirable on ideological, political and economic grounds; that is undesirable in theory and impossible in practice.

Their ideological objections to it revolve around their concern about dependency culture; by providing welfare through the state, individuals are discouraged from providing these for themselves and their families, which could in turn trap them into relying on others for support. Murray (2002) makes the point that in social security if everyone is going to be provided with a basic standard of living, this makes it an attractive option for individuals to choose this, rather than seeking paid employment. Which applies to means- tested benefits, whereby entitlement is related to an individuals’ income level, this means any increase in income means a loss in benefit.

Economically speaking, the welfare state is undesirable because it interferes with the free working of the market, leading to failures in markets developing properly.

Although neo- liberals argue that the welfare state is not practical, most recent neo- liberal theorists agree that a safety net should be in place, as it may still be needed. Neo- liberalism, therefore still remains within the mixed economy of welfare, which is found in all modern welfare capitalist countries (Alcock, 2003).

Marxist theories are based around the idea of Marx (1970) whose claim was that capitalism is an inherently oppressive economic structure in which the working class are exploited by the capitalist class through the labour market. It is argued by Marxists that Socialism or Communism is the logical and desirable alternative to the failures of both capitalist markets and the welfare state. However, they do not provide any explanation as to how this is to be achieved, except that it needs to be done revolutionarily, rather than gradually and involves the overthrowing of the existing democratic governments. This ideology has never attracted much attention in Britain, making its political potential limited here.

Marxists believe that the welfare state uses taxes paid by everyone to provide services and to foster the illusion that the state is altruistic and redistributiove, whereas in actual fact the stae is preserving and reinforcing certain norms and structural relationships.

Ginsburg (1979) argued that institutions of welfare operated within British society to control and suppress people as well as to provide for them; arguing that the social security system in practice stigmatized claimants and forced them into low waged employment. This criticism of the British welfare state comes from a Marxist perspective.

The strength of the Marxist critique of the welfare within Capitalism is its ability to demonstrate the contradictory nature of social policy as providing social control and social protection at the same time.

In 1998, New labour developed a ‘third way’, Blair argued that both the right wing pro- market approaches and the old left’s support from state monopolistic services should be rejected in favour of a new (third way) which would be located between the state and the market.

The new labour government was not interested in whether services were best provided by the state (the old, Fabian, left) or by the market (the right) instead it was looking to find the most effective way to meet social needs; which was a practical judgement based on empirical evidence of effectiveness.

Hills (1997) has pointed out that some benefits, such as child benefit, state pension and unemployment benefit for some, go to people unaffected by means- testing, and argues that further means- testing would allow spending to be better targeted. Some have argued that elimination of universal benefits would free up sizeable sums of money, which could then be spent on those that need it the most, which would mean for New Labour that they could go a little further to achieve its targeted with regards to child poverty. Eliminating Universal benefits would mean a substantial reduction in the overall cost of welfare spending, meaning the government could put more money into other areas such as the National Health Service.

Social Security is the largest element of public expenditure, greater than both health and education, and accounts for 11 per cent of gross domestic product (Alcock, 2003).

Social Security is an important aspect of our society, through state intervention individuals are provided with a basic standard of living, and kept out of absolute poverty. An interesting Marxist theory of the purpose of the welfare state states that the state maintains a ‘reserve army of labour’ , through which a certain portion of society are kept out of work , but may be asked to join the labour force when needed. By providing these people with benefits (the unemployed, disabled and lone parents) the welfare state is serving capitalism by maintaining these groups who can be called upon at short notice.

Marxists would argue that welfare constitutes social control and ‘polices’ the state. They claim that the unemployed and other members of the reserve army of labour are treated harshly, to remind others of the consequences of not working.

Lowe(1999) points out that the history of postwar social security was riddled with contradictions. The promise of the Beveridge report was to realize the new ideal of social security, through a simplified system of state relief without resort to the unpopular means- test, aroused immense popular enthusiasm and lay at the heart of the new values and perspectives upon which the new welfare state was initially built. Yet within ten years the social security system was no longer popular. The means test did not wither away and the system started to become so complex that it became self defeating.

Social Security has both positive and negative connotations, in practice it can be seen as a benefit and by others a cost (Alcock, 2003).

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