Much of Osborne’s 8th July budget had been heavily trailed, meaning that the further reductions to working age benefits were to be expected, although the removal of benefit entitlement for 3rd or subsequent children from 2017 (for new claims or births) was a surprisingly radical step. The rabbit out of the hat was the introduction of the misnamed ‘Living Wage’. This post takes a look at a few of the ideas supporting the reforms that I think are most important for understanding the (intended and unintended) direction of this government.
The big announcement was the living wage: The ‘Living Wage’ further cements a worldview where the labour market should provide sufficiently for individuals, with the state only playing a role in exceptional circumstances, in particular in cases where ‘vulnerable’ individuals can’t look after themselves. This worldview ignores the varying needs of different households, and undermines socially useful activities such as caring, domestic and community work. The new ‘living wage’ simply won’t make up for the significant loses families will experience from tax credit cuts (pg.3), but even imagining a world where minimum wages were set at a very generous level (a hypothetical world where there was no adverse effect on unemployment levels), would these high wages paired with a low level of social security provision be desirable?
It needs to be made clear that the welfare reforms outlined in the budget are linked to a specific normative view of society, and one which seems to challenge what one would have thought were core conservative ideals. The chancellor made clear that “The best route out of poverty is work”. This almost exclusive focus on the role of the labour market for maintaining income, and narrow definition of what constitutes ‘work’ is problematic. The work of caring for others, and work done in the home is devalued or ignored. Osborne announced that parents with children as young as 3 are now expected to look for work if they want to receive Universal Credit – adults should be workers, and other roles such as parenthood are secondary to this. This continued increasing conditionality on social security, combined with reductions to payment amounts promotes a society of atomised adult workers who must sustain themselves. Ideas of collectivity, pooling of resources, sharing of risk or responsibilities, are increasingly absent.
But there’s a circle to be squared here. How do these reforms, and focus on paid work, fit with conservative values of protecting and valuing family life? I see two options. Either it’s that the vision of a small state takes primacy and must be pursued at all costs. Or, there is a more pernicious belief at work: That those that receive social security payments do so because of personal failings and shortcomings (they are lazy, uncommitted to work, etc.), not because of the weaknesses in a low wage, low security labour market (forces that are outside of their control). Their family lives are not ones worth protecting, and cuts or conditionality are needed to force them to provide for themselves.
The Living Wage and language use
Of course there’s an extra twist to this story, Osborne’s Living Wage rabbit was announced as the counterbalance to social security cuts. Pay, it is claimed, really can be the route out of poverty, trumping the argument made above that you can’t remove benefit payments when there are only insecure, poorly paying jobs available.
On its own terms it is difficult to see how this policy succeeds: the ‘Living Wage’ of £7.20 proposed by Osborne is below the £7.85 currently set by the Living Wage Foundation, and well below its £9.15 figure for London. This gap goes unjustified. The Living Wage Foundation calculates its figures according to need, by accounting for rises in living costs and factoring in the cost of what the public believes is needed for a minimum acceptable standard of living. There appears to be no move to change the remit of the Low Pay Commission (which will be responsible for setting the new Living Wage) so that it calculates the amount based on need and not what it understands the market can take. All that has happened is a rebadging of the minimum wage for the over 25s. Furthermore it has been shown already that the group benefiting from the Living Wage does not map cleanly onto those losing out from tax credit cuts.
But there’s a more fundamental point here – that both the ‘real’ and ‘new’ living wage are inadequate in truly meeting need. The ‘real’ Living Wage looks at different types of households with different needs, and then comes up with a figure based on the average wage needed by these different household types. That is to say, households with particularly costly needs, for example because they have a large family, or disability in the family, or expensive housing costs, will not be able to afford a minimum acceptable standard of living if paid the Living Wage. The ‘new’ living wage doesn’t appear to even try to account for these sorts of factors. Wages cannot act as a guarantee out of poverty.
So why on earth call it a Living Wage if it doesn’t follow the approach of the original Living Wage, and is unlikely to guarantee its recipients enough to live on? By appropriating the terminology of the Living Wage Foundation, the government can begin to dominate, and control, the debate around what a decent level of pay is. It might be a bit of a stretch, but Living Wage also prompts thoughts of ‘living to work’ and not ‘working to live’: A ‘Living Wage’ sums up the idea that increasingly one’s identity is intertwined with, or contingent upon, one’s status as an economically active individual.
Finally to the plans to restrict new social security claims from April 2017 to the first two children (which will also apply to existing claims where there is a new birth after April 2017). This was the most powerful message that the family lives of low income households should not be protected, but instead regulated. The premise for this policy is that ‘most families’ make a careful decision about how many children to have based on the resources available to them, the suggestion being that money available to social security recipients causes them to have more children.
There was a very similar policy introduced in some American states called the ‘family cap’ in the late 1990s, which restricted further welfare assistance to families after the birth of another child. The evidence is mixed, but tends to show that there is no effect, or a weak effect, on reducing birth rates. It seems likely (and intuitive) that women don’t make decisions to have children based on purely monetary calculations. As a welfare director in Georgia, USA put it, when talking about the family cap – “[a]nyone who thinks that a woman goes through nine months of pregnancy, the pain of childbirth and 18 years of rearing a child for $45 more a month . . . has got to be a man.”
It is unlikely that restricting social security payments will result in the widespread deterrence of low income families having more than two children. These children will be rendered invisible to the social security system (save the payment of Child Benefit that has been preserved for now), and the work involved in raising them quite literally devalued.