We can afford welfare and housing

4th May 2012

Andrew Fisher, LRC joint secretary and LEAP co-ordinator, puts the case for social security. On 19 May, Andrew will be speaking alongside Kevin Maguire, Teresa Pearce MP and Andy Winter at the LRC’s Brighton Festival fringe event ‘We can afford welfare and housing’.

It was Nietzsche who said that man has killed God and Christianity, “but belief in the sickness which it taught and propagated continues to exist”. He meant the belief in sin remained, but now with no belief in the cure.

Listening to Iain Duncan Smith talk about welfare reveals the same scenario: “A system developed to help the most vulnerable and support people in times of need is trapping people in a cycle of dependency.” Of course it is, because it has to be accompanied by a policy of full employment.

As well as creating the welfare state, the 1945 Attlee government also had a policy of full employment. That policy of full employment was part of the welfare system they created. The contract was that the government would provide a stable economy that eradicated mass unemployment. It worked: between the 1940s and 1978 unemployment in the UK never rose above a million.

In 1979, unemployment had risen to just over one million - a national shame which led to the Tories famous election poster ‘Labour isn’t working’. Within a few years of that election, unemployment reached 3 million, and the commitment to full employment was buried.

Today the Tories are attacking welfare with unprecedented viciousness. Around £30bn in welfare cuts have been announced since the Tory-led government came to power.

When he announced the first tranche of welfare cuts in the 2010 Budget, the Chancellor said:

“Total welfare spending has increased from £132 billion ten years ago to £192 billion today. It’s one reason why there is no money left.”

“There is no money left” – the same phrase that Labour’s shadow minister Liam Byrne used in his infamous note. The problem with it is it’s not true.

The best evidence to prove that is that over the same period as Osborne’s £30bn cuts to welfare, he will have cut business taxes by £30bn. So Osborne is redistributing wealth from the poorest in society to the shareholders of large companies.

But there is a large deficit and welfare spending has increased by 45% in the last decade. More importantly there’s the misery of mass unemployment to tackle too.

So how could a Labour government tackle the welfare bill in a socially just way?

  • Firstly invest to create jobs to reduce the £4.8bn cost of unemployment benefit – committing to full employment again
  • Secondly - and this would create jobs - build council housing to cut the massive £20bn cost of housing benefit, which mostly goes into the pockets of wealthy landlords.
  • Finally, make the minimum wage a living wage to reduce the £8bn tax credit bill – which means the government is subsidising low paying employers

Labour must promote a systematic approach again: full employment, decent wages in work, the guarantee of a secure home, and a generous welfare state that offers security to those unable to work.

Get tickets for We can afford Welfare and Housing at the Brighton Festival fringe on Saturday 19 May
See the LEAP economics blog for more on the economy

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