Back to work?

With the latest figures showing a rise in unemployment – but a fall in the number claiming unemployment benefit – it seems like there is an opportunity to momentarily shift discussion away from the Clegg bounce and leadership debates and towards welfare policy. So far the parties have largely focused on making sure voters know that they will be tough on welfare, but with unemployment at 2.5 million, this is insufficient.

Lots of similarities between Labour and Conservative welfare policies are evident from the manifestos, but also some important differences, in approach as well as policy.

There are similarities in the sound-bites: Labour aims for a ‘swift return to employment’ and the Conservatives want to ‘get Britain working again’. And in the headlines: both main parties are keen to offer more targeted and personalised support, focus attention on job creation and prevent a scarred generation of young people. There are similarities in flagship programmes, namely Labour’s Flexible New Deal and the Conservatives’ single Work Programme. And both parties talk of toughening up the system with proposals on sanctions and benefit cheats.

But there are also significant differences. Labour’s manifesto commitments include an extension to the Young Person’s Guarantee, a better off in work guarantee, a living wage in Whitehall, and rises in the National Minimum Wage. And the narrative of a ‘big society’ that underpins Tory proposals to tackle welfare dependency highlights different roles for the state, welfare to work organisations and individuals.

What of the Liberal Democrats? Well, their manifesto commitments on welfare are noticeably thin. There is a focus on supply-side measures such as job creation and especially green jobs, but proposals to tackle unemployment are mostly absent.

It is clear that many challenges remain around welfare reform. Amongst the most significant is personalising welfare. Emerging findings from ippr’s innovative Now it’s Personal research are highlighting the need for interventions that don’t just isolate employment support and that recognise a wider set of needs such as childcare and transport. Also needed are advisers who have good knowledge of the local environment and in particular good relationships with local employers and training providers. In addition a focus on supporting sustainable job outcomes with more support for people once they are in work to manage the transition as well as a volatile and flexible labour market.

A tougher welfare policy may seem like the right tactic to appeal to voters, but with 2.5 million people currently unemployed and with public sector cuts still to come, this will not be enough. More radical change is needed for the welfare system to be genuinely responsive, personalised and effective.

Dalia Ben-Galim

Labour and income inequality

The gap between rich and poor in the UK has widened since 1997, according to the results of a recent study by the Institute for Fiscal Studies. It found that income inequality in 2007-08 was higher than when Labour came to power and ‘higher than in any year since at least the 1950s’.

On the face of it, this is unwelcome reading for Labour supporters. What is the point of 13 years of Labour Government if it cannot prevent widening income inequalities?

Dig deeper into the IFS’s analysis, however, and it becomes clear that the gap between rich and poor has widened despite the Government’s efforts, not because of them. In the 1980s, when government policies seemed designed to benefit the rich, income inequality increased by an enormous amount. The increase in income inequality under Labour has been far smaller because changes to the tax and benefit system since 1997 have favoured poorer households at the expense of richer ones.

But what is missing from this analysis is an understanding of the causes of the increases in inequality that have occurred before the effects of government policy are taken into account. Throughout the last three decades, it seems, underlying inequality has been increasing. In the 1980s, this was exacerbated by government policy; over the last 13 years it has been mitigated by it. But under Conservative and Labour governments alike, it has remained a powerful trend.

There are a host of explanations for this trend, including globalisation, technological change and the dominance of the financial sector in the UK economy and we need to develop a full understanding of them because – as Richard Wilkinson and Kate Pickett have demonstrated so conclusively in their book The Spirit Level – greater inequality leaves everyone worse off.

So, while it is right to challenge the main political parties during the election campaign on how their tax and benefit policies might affect income inequality, it is perhaps more important to ask them what they intend to do about the growing disparity in pre-tax incomes. If they are, to quote Lord Mandelson, ‘intensely relaxed about people getting filthy rich’, they shouldn’t be.

Tony Dolphin