Who benefits from benefits?

This was the question posed at the most recent ‘Myths and Realities’ debate hosted this week in London by the British Library and the Academy of Social Sciences. The aim of these public debates is to challenge common myths and assumptions, and to show the role social science plays in explaining what is happening and why.

There is probably no area of public policy more beset by myths and easy, unchallenged assumptions than the issue of ‘benefits’ – also known as ‘social security’ (which is often agreed to be a good thing) or, increasingly, ‘welfare’ (which is much more pejorative). But ignorance is widespread about how the benefits system in the UK actually works, not least because it is so complex – and becoming more so as society itself becomes more complex and multi-layered.

“We all benefit from benefits.” That was the view of Professor Jane Millar from the University of Bath, who set the context for the debate. People benefit as individuals, by paying money into the system and receiving assistance when they need it. And society benefits as a whole, as the system helps the economy function more smoothly (supplementing low wages, for example, or providing sick-pay when people are too ill to work). Benefits therefore represent our values as a society, symbolising who we see ourselves as and who we want to be. If top-up tax credits are considered alongside benefits, the system – far from supporting ‘dependency’ – actively enables people to participate in work.

Jane Millar described the social security system as “the interface between the labour market and the family”. When William Beveridge first produced his blueprint in the 1940s for what became known the welfare state in the UK, he focused on the idea of risks – risks that can affect anyone and affect their ability to earn an income and support their family. His solution was social insurance – everyone pays in when they can, and receives assistance when they need it. But the contemporary family faces a greater number of potential income risks than the typical family in Beveridge’s day. Jobs and families are generally less stable and secure, and there are many more potential income gaps into which people can fall.

The current social security system is therefore highly complex and costly, as it is attempting to meet a very wide range of needs and fulfil a number of different purposes. But while the system may reflect society’s needs and problems, it can’t in itself solve them – even though it frequently has to respond to needs created by government policies that are ostensibly unrelated to benefits. Some examples: lone parents are likely to need more income support if there is limited enforcement of child maintenance structures; tax credits will cost more if the minimum wage is low; housing benefit will cost more if rents are uncontrolled.

The question of competing priorities was addressed by Professor Stephen McKay from the University of Birmingham. He observed that the challenge for any benefit system is to reward the ‘deserving’, while avoiding stigmatising them and avoiding being seen to reward the ‘undeserving’. The UK’s benefit system is often assumed to be redistributive – but detailed analysis shows that there is much more ‘redistribution’ across a single individual’s life-course than redistribution from rich to poor. Stephen McKay described this as the ‘piggy-bank’ approach – giving money back to the people who put it in, not redistributing it to others. This approach accounts for approximately two-thirds of social security expenditure.

The two main principles of social security are national insurance (the contributory principle) and means-testing (the targeting-by-income principle). Most countries separate the two approaches: the UK is unusual in operating both within a single over-arching benefit system. From a political perspective, national insurance says ‘we’re all in it together’, while means-testing says ‘them and us’.

Alison Garnham, chief executive of the Child Poverty Action Group, explored the reality of life on benefits. She emphasised the correlation between low incomes and social exclusion – life on a low income results in gaps in health, education and overall wellbeing. As well as “stealing away children’s life-chances’, this also costs the state £25bn per year in additional public spending. Research indicates that children’s progress is affected more by poverty than by parenting practices.

Public attitudes to benefits are a major obstacle to increasing the amount that is given to people on low incomes. British Social Attitudes Surveys show that fewer people now believe that the Government should redistribute more and spend more on benefits than in previous years. Public approval of governments that ‘get tough’ on welfare makes it hard for governments to spend more on people who really need it.

All three speakers at the debate agreed that politicians need to be better at leading the way in challenging myths about the benefit system and the assumptions people make about it. The lack of public support for the benefit system stands in notable contrast to the vocal support that politicians from all parties show for the NHS. Spending on health is nearly always portrayed (and perceived) in a positive light – unlike spending on social security.

The final point made was the observation that claimants of non-contributory benefits have been ‘psychologised’. People’s poverty is increasingly attributed to their individual behaviour rather than to social conditions, and benefit recipients are constructed as being ‘different’ to the rest of us.