2 Ways Work & Welfare Are Changing Forever

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I attended a fascinating roundtable last week, on wellbeing and productivity. (Thanks again to Reform for the invite.) First of all, it reminded me of a few facts of life:

1. Most of the intractable public policy issues we face could be solved by getting all of the expertise that exists in the same room and not letting them out until they have the answer. It’s always a privilege to be in a room with really smart people.

2. Until we actually do that, things move almost glacially slowly. Some of the stuff that we were talking about (for example, the AME-DEL switch) that would be genuinely transformational, we have now been talking about for over a decade.

3. We are living through a period of profound change. Firstly, in the economy, as the labour market continues to evolve into one that is very different from that even our parents knew. Secondly, in the public realm, as the current administration continues to radically redefine the role of the state and our relationship with it.

It’s this last point I want to pick up here.

Lord Freud gave a wide-ranging and thought-provoking speech, but I’ve been coming back to his remarks on the forthcoming Work & Pensions White Paper, over and over again. At the centre of everything he talked about was Universal Credit. Freud made it clear that the impact of this reform is seen to be significant – not just at an economic, but at a deeper, cultural level. Some of this stuff is profound.

Breaking down distinctions

One of the aims of Universal Credit, Freud told us, is to break down distinctions. For example:

1. Universal Credit will break down the distinction between employment and unemployment.

Getting rid of the distinction between Jobseekers’ Allowance and Working Tax Credits is a major shift. In work conditionality takes the state (in the form of Jobcentre Plus) ‘into a part of the economy its not previously been.’ The interest of the state, Freud told us, ‘is to reduce cost’. That being the case, it has a vested interest, not only in moving people into work and keeping them there, but in working with employers to increase productivity and skills to generate higher wages in order to move people up the taper.

2. Universal Credit will break down the distinction between able and unable.

There will be no marker that says ‘I am out of work because of a health condition’. There will, equally, be no higher rate of benefit paid because of that. People who need additional financial which is specific to their health condition or disability, will receive it through, say, Personal Independence Payments, but if you’re out of work due to a mild, moderate health or mental health problem, you’re going to be categorised no differently to the chap who was made redundant.

These two statements, it seems to me, fundamentally change the relationship between the employer and the state, the individual and the state and the individual and their employer.

Public, private?

Freud also talked about the borders between the state and the private sector. He posed the question, where is the boundary between the tax and welfare system and the private insurance industry? Looking at the balance of incentives in the system, he asked, why do employers insure against sickness absence and why don’t individuals?

(It’s a reminder, for me, that behavioural economics often forgets that behaviour isn’t always economically rational.)

But the lingering thought is whether or not the White Paper will see us moving towards a mixed market economy in the welfare and work space. Is there a drive from government to create a space for private insurance products to enable individuals to contribute and provide their own protection in the event of unemployment – whether for health reasons or otherwise? Is there a desire in the private insurance industry to supply that? What would be the implications?

Where are we going?

Wherever we are going, it’s clear that the current administration remain intent on far-reaching reform. They are set upon, in their minds, a redrawing of the relationship between the citizen and the state and a reimagining of the way in which public services are funded and delivered.

Debating the rights and wrongs of this direction is for another time. But there is no getting away from the fact that however much we think the world has changed in public service delivery in the past five years, there’s much, much more to come. It’s an adapt or die environment out there still.

I’d love to hear from you in the comments below, on Twitter or on LinkedIn.

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