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Disadvantage, Squared

By Chris Pierson 

In this last posting on the state of British welfare, I consider the cumulative consequences of disadvantage and what, if anything, is likely to be done about it.

No-one’s post-code or age is their destiny.  There are always (as John Hills points out) some who make it from rags to riches; (though there is rather less traffic moving in the opposite direction).     But, in the long run, the law of averages grinds pretty small.   Those who start out near the bottom of the profile are likely to end up there.  And the same goes for those at the top.   And this means that the attempt to recast welfare politics as having transitioned from class struggle to intergenerational struggle is an over-simplification.  Not all baby-boomers are wealthy retirees or near-retirees sitting in their gently-appreciating owner-occupied homes planning a string of foreign holidays funded by their generous and index-linked pensions.   Nor are all of the late-born poor (or destined to remain that way).  (Some illustrative figures here).    In a context where previously accumulated wealth and inheritance may be ever more important, having wealthy parents, even for those who are now capital-poor, may have a decisive effect on their lifetime wealth and opportunities.    And the accumulation of disadvantage is not a linear but an exponential process.   Those who are presently resource-poor and have chosen the ‘wrong’ parents face the prospects of disadvantage, squared.

What is to be done?

The challenge we face is formidable, since whatever we do will be in the face of a demographic logic which is working against us.  But we would make a good start by recognising that the challenge we confront is not primarily one of screwing down (further) the budget devoted to welfare, narrowly conceived (often as if this were principally directed to the support of the working aged able-bodied poor).   It is a problem of our broader political economy of welfare: of growing inequality in incomes and wealth, of social mobility that has more or less ground to a halt.  It may be that what we really need, as Thomas Piketty suggests, is a global tax on capital.  More modestly, as John Hills  argues, we might need seriously to re-balance the complex apparatus of taxation, benefits and allowances in ways which do less to privilege those with already-accumulated wealth (in relation to pensions, capital gains in savings and housing, inheritance etc.)  Somehow, we have to craft a way of re-distributing the costs and benefits of living in a society and economy like ours.  This would be very difficult if, collectively, we had the political will to do this.   But, it is pretty plain that we don’t.

There are real differences in what the parties offer in the run-up to the 2015 General Election.    The Conservatives have already committed to a further unidentified £12 bn. of cuts in welfare spending if returned to government.  Their manifesto also includes measures to restrict Jobseekers Allowance and Housing Benefit for 18-21 year-olds.    Labour would abolish the ‘bedroom tax’, as well as removing winter fuel payments for the wealthiest pensioners.  It would protect the value of tax credits for working families, raise the minimum wage and reduce tuition fees for higher education.   It would impose some tax increases on the rich, (abolishing ‘non-dom’ status and re-introducing a 50p upper rate income tax).  But it would retain the (largely cosmetic) benefits cap and freeze child benefit for two years. The Liberal Democrats emphasise their commitment to maintain spending on education and to increase the tax-free allowance – while cutting the welfare budget by a further £3 bn. and pegging increases in benefits (other than the old-age pension and some disability payments) to 1%.   In the context of a close-run fight, the air is thick with doubtfully-costed commitments to increase healthcare spending, to build more and more new homes and to cut inheritance tax.   Only the Greens, with their manifesto for a ‘peaceful revolution’ and proposals for a citizens’ basic income, could be said to have recognised the nature and scale of the problem.  But their proposals for re-instating the welfare state look to have the chances usually associated with the proverbial snowball in hell.

This is an unpromising place from which to set out.  One of the few bright points is, that if Piketty (2014) is to be believed, it really is the one per cent, or perhaps even a fraction of the one per cent who are super-privileged by current arrangements.  Potentially, an alliance of the great majority around a reform agenda may be imaginable.   But only at the end of a long and very hard road.  For now, we should look forward to an extended period of growing inequality and mounting poverty.

Chris Pierson is Professor of Politics at the University of Nottingham, author of  Beyond the Welfare State and lead editor of Political Studies.

Image credit: Wikipedia Commons


Published inBritish PoliticsGeneral Election 2015Politics

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