The outgoing Bank of England governor Mervyn King has presided over a huge economic crisis. His parting gift is the claim “a recovery is in sight” that the UK might achieve economic growth of even 1% this year. Despite this, the GDP will still be less than the 2007 figure.

Don’t be in a hurry to pop any champagne corks, because the assumed economic recovery is not what it seems and is unlikely to be sustained. It has been achieved through quantitative easing, printing money as old-fashioned economists used to call it, to the tune of £375 billion. That is equivalent to about £16,000 per household.

This money has been added to national debt – the only thing that citizens seem to own these days – but has not been used to restructure the UK economy or start new industries. Instead, it has been mainly given to the banks and they have used it to bolster their balance sheets and pay high executive salaries.

The plight of ordinary people has been getting worse. UK unemployment is rising and the official count now stands at 2.52 million. Nearly a million young people aged 16-24 are unemployed, taking the rate to a depressing 21.2%. The number of young people on zero hour contracts has doubled from 35,000 in 2008 to 76,000 in 2012. Zero contract hours are jobs which provide no guarantee of regular work or pay and have become the preferred mode of employment for some 23% of UK employers. Many miss out on rights such as sick pay, pension and paid holidays. Many firms and even charities and public sector organisations are adopting zero hour contracts.

Large sections of the UK population are wracked with insecurity. Since the 1980s, the governments have sought to weaken and destroy trade unions. In 1979, some 13.2 million UK workers, or 55.4% of the workforce was in a trade union, but by 2011 this declined to just over 6 million workers or 23% of the work force, compared to 69.2% in Finland, 68.4% in Sweden, 66.6% in Denmark and 54.4% in Norway.

In the absence of countervailing power structures, workers' pay has been ruthlessly assaulted. In 1976, wages and salaries paid to employees, expressed as percentage of GDP, stood at 65.1% of GDP. Now it stands at barely 53%. The plight of ordinary people is made even worse because the above statistics include the rewards lapped up by executives. The rates of corporate profitability are at historically high.

Wealth has been sucked upwards with the aid of state policies. Corporation tax rate has been reduced from 52% in 1982 to 21% for 2014. The top marginal rate of income tax has declined from 83%, in 1979, to 45%. Despite the recession, the rich are getting richer. In 2012, the richest 1000 people, representing just 0.003% of the adult population, increased their wealth by £35 billion to £450 billion, enabling them to fund political parties and shape public choices.

It is misery for ordinary people who have borrowed £1.423 trillion, equivalent to the GDP, to maintain a decent living standard. Thousands of people have become victims of the payday loans industry which does not shy away from charging interest at the rate of 4000%. Some 13.5 million people, including 1.8 million pensioners and 2.5 million children were estimated to be living below the poverty line and with a deep austerity programme these numbers will increase.

The number of people relying on emergency food handouts, simply to survive, has trebled to 350,000. People are facing massive hikes in the price of electricity, gas, water, transport and other essentials and simply do not have the financial capacity to take any further hits. One survey has suggested that an increase in monthly bills of just £99 will prove to be disastrous for a large number of families.

The above sketch of the social landscape is a million miles away from the rosy picture painted by the Bank of England. Equitable distribution of income and wealth is a key requirement for any sustained economic recovery, but it is not on the agenda of any major political party. Some may be happy to gather the crumbs of economic recovery; but most of us will simply be asking, “what recovery?”

Our current land economy serves us badly. The landed are getting loaded through no hard work of their own, while too few ordinary people can afford a decent home. With no tax on empty land in the UK, it can be more lucrative to acquire and hold onto swathes of empty land, watch its value rise as others invest in the area, and then sell it, than it is to develop it for people to live or work on. A Land Value Tax, targeted at unproductive wealth, could tackle this land-banking, spur the development of much-needed new homes, and help kickstart our ailing economy. In Land Revenue, a new paper published today by CLASS, adds to a growing chorus of voices from across the political spectrum advocating an age-old idea lent renewed currency by today’s straitened and unequal times.

Two thirds of the UK’s 60m acres of land are owned by just 0.36% of the population. An annual Land Value Tax levied on all land except that under occupied primary residences worth less than £2m would affect these wealthy landowners rather than ordinary homeowners and promote capital investment rather than idle speculation.

It would address a long-term driver of our chronic housing crisis – lack of land supply – by encouraging efficient use of land within the constraints of the democratic planning process. The message it would give is that those who own land should use it. And, given land is a visible, fixed, immovable asset that cannot be hidden or offshored, a Land Value Tax would be impossible for the rich and powerful to avoid.

It would more equitably align risk and reward. When the community as a whole, or the state on its behalf, takes a risk and invests in an area, for instance by developing its infrastructure, land values will rise and in turn should be taxed, returning a proportion of the gain to the public purse. Infrastructure investment could, in this way, become self-financing. A well-rehearsed example is London Underground’s Jubilee Line Extension which cost the taxpayer £3.5bn but resulted in a £10-13bn increase in land values along the route.

For it to work, compulsory registration of all land holdings would need to be introduced and enforced. Asset-rich but income-poor (generally older) people living in very expensive homes could defer payment until sale or transfer of the property. Calculations of the annualised market rental value of unimproved land should be based upon that land’s optimum permitted use. This would recognise the validity of different uses of land, so farmers, for example, would not go unduly punished for using their land for agriculture.

A new Land Value Tax should probably replace Business Rates and Stamp Duty. Council Tax would remain, although it is also in need of serious reform. Land Value Tax on very expensive primary residences would then supplement the Council Tax on them, which at that end of the market accounts for a tiny proportion of a property’s value.

Land taxes of various sorts exist in Australia and the USA, Denmark and Estonia, Taiwan, Hong Kong and Singapore, South Korea, Japan and some Caribbean states. Any attempt to introduce a Land Value Tax in the UK should draw on learning from these places.

Introducing a Land Value Tax here will take political courage, but it could help to deliver the house-building revolution, and the economic revival, our country desperately needs. It will mean facing down vested interests, not least the big land-banking ‘developers’ who deliberately drip-feed properties onto the market, making large profits on small volumes of output, even though they have the land and the country badly needs more homes. It will take a manifesto commitment, a real mandate, and no doubt a battle in parliament. But, at least in some sense, this land is ours, and our tax system should reflect that fact.

As part of the ongoing Social State project, Howard Reed reflects on the macroeconomic significance of involuntary idleness. He argues that it is a waste of economic resources but one rooted in complex underlying causes. Drawing on a recent paper, he outlines ideas for how reform could be enacted and these difficulties overcome.

Idleness has been an unfortunate fact of life for far too many for far too long in the UK. My paper with Richard Murphy for the CLASS “Social State” series looks at the macroeconomic and microeconomic policies which currently prevent the UK from reducing idleness and achieving full employment. At a macroeconomic level, involuntary idleness represents a massive waste of economic resources, and the current government policies of austerity which have prolonged the high unemployment resulting from the 2008 crash (and which are additionally leading to a growing wave of disguised under-employment) make no economic sense. In the current state of the economy, spending on investment by the government pays for itself, at the very least, in the short term, while in the longer term it can generate the revenues needed to deliver deficit reduction. This is nothing more than a restatement of Keynes’s argument from eighty years ago, which is that if the issue of unemployment is addressed then the budget looks after itself.

The paper also addresses the fact that at a microeconomic level the barriers to work are very real. When many on low levels of income face marginal deduction rates (MDRs – a measure which combines the impact of tax and National Insurance payments and benefit withdrawals) of over 70 percent (and in some cases over 90 percent) over relatively wide ranges of their possible earnings then the disincentive to work is, understandably, high. The government claims that the new Universal Credit system will reduce MDRs to a maximum 73 percent, but this calculation ignores the new localised system of Council Tax Benefit, which will operate as an additional taper on low incomes, pushing MDRs over 80 percent in many cases.

We face a conundrum. Overwhelmingly people want to work, and it is clear that it makes sound economic sense for the government to invest to get people back into work. However, there are sound and wholly economically rational reasons deep-rooted in the current tax and benefits system why for some people work quite literally cannot pay, even before their additional costs arising from being out of their homes (such as travel costs and paying for childcare) are taken into account. If idleness is to be tackled then there is an irrefutable case for broader reform of the tax, National Insurance and benefits system, than this government, or any since the current structure was created, has been willing to undertake.

We are not, of course, the first to suggest the merger of the tax and National Insurance systems. What we do in addition to this, however, is to integrate tax reform with a suggestion for radical reform of the benefits system. Our proposal embraces the idea of a “citizen’s income” – a universal non-taxable payment to all families, without exception, of a weekly sum meant to ensure they have enough income to participate fully in society. The payment level we suggest for the Citizens Income is the Minimum Income Standard level calculated by researchers at Loughborough University. On current definitions of poverty this payment would, at a stroke, eliminate want from the UK economy.

The design of the payment we propose is important: it is simple and universal. Thus it avoids many of the problems of the current means-tested benefits system – in particular, stigmatisation of benefit claimants, and high MDRs. However, the payment would be expensive. We estimate a total cost of approximately £470 billion per year. To put this in context, the current total benefits budget is around £175 billion per year, including the old age pension that this payment would also replace. To raise the extra funds to pay the Citizens Income we suggest reform of the direct tax system, with a new Universal Income Tax which would replace the current Income Tax and National Insurance Contributons systems.

This new tax would have a different logic to some parts of the existing tax system. For example, because there would be a universal payment to all families every week, the need for a significant personal tax allowance would largely be eliminated; almost all earned and unearned income could, as a result, be taxed.

The tax structure should be progressive, starting at a rate of perhaps 25 percent, with a standard rate of 45 percent (similar to the current combined rates of income tax plus employee and employer NICs) and with higher rates up to (say) 70 percent on incomes in excess of £150,000 per year. Means-tested Housing Benefit would be retained but would be designed so that overall MDRs for low income families are no more than 60 percent.

While many of the details of the new tax-benefit system which we propose remain to be ironed out in further work, the broad outline is clear; the proposals would tackle one of the main impediments to work by ensuring that work really does pay. That has to be appropriate. But equally, our proposal also tackles want. And in the process tax abuse is tackled by simplifying the tax system while the outcome is a tax system that accords with the natural justice and economic logic of progressive taxation. Half measures will not work when tackling the current crisis. In 1942, Beveridge said the war provided a revolutionary moment and as he noted “A revolutionary moment in the world’s history is a time for revolutions, not for patching”. We agree: the global recession is now providing another revolutionary moment in which new thinking is required. That is what we have sought to offer in this paper.

To find out more, read Howard Reed and Richard Murphy's paper and for more information on our Social State project click here.

We are facing government policies of such inhumanity that if they are allowed to be carried through, we will look back in years to come with deep horror and shame. From the attacks on disability benefits to the bedroom tax, these measures return us to the kind of society where poverty was blamed on the poor and gross inequality was accepted as an economic inevitability.

Britain once had a welfare system to be proud of (for all its shortcomings) and it did not come easily. Our welfare state was born from centuries of struggle, culminating in a postwar deal to appease the millions who, through the war, had come to realise their own worth and capacities.

The children of this generation of heroes pushed in the 1960s and 70s for the full realisation of these post-war aspirations; for democracy in the workplace, the family, the universities and indeed every sphere of life.

But at the same time, an increasing section of the ruling class, championed by Margaret Thatcher, broke with the post-war compromise.

Thatcher and her coterie were determined to destroy the welfare state. At that time they did not quite succeed, but they began the process and they forged the ideological weapons. New Labour refined them to further weaken the defences of the social security state. Now the Conservatives, aided by the abject Liberal Democrats, have turned the crisis of the financial markets into a crisis of public spending. They have used this as an excuse to systematically shatter what remains of the welfare state – in other words to finish the destruction begun by Margaret Thatcher.

So how, not even 70 years on from 1945, are they getting away with it? Why are they so rarely challenged when they say that taxing the richest is impossible, but cutting the living standards of the poorest is just being realistic?

This is the importance of the ‘myth’. Milton in his great defence of free speech and a free press urged the importance of debate and argument declaring that 'argument is knowledge in the making'. By contrast, deference to power, or at least to office and the trappings of power, leads to the making of myths.

The crushing of protest in the parties that founded the welfare state, the marginalising of anyone who argues, has over the past thirty years or so created a stagnant political culture in which myths can thrive like algae, poisoning the surrounding environment.

Those in power can spew out, almost unchallenged, a constant polluting flow of misinformation about the deficit being caused by runaway welfare spending – the most brazen lie that the public becomes inured to through repetition. This allows the government to plead economic necessity for rolling back the welfare state, a project that in reality it has been just waiting to complete.

It is often said that you can judge a society on how it treats its weakest member, and in that respect the current government have blood on their hands.

What kind of society is it that allows a million young people to struggle on the dole, squandering their potential and their creativity, instead of spending the money on putting them into meaningful work – and then blames them for the increase in the benefits budget?

What kind of society is it where bankers take home telephone-number bonuses and live in 20-bedroom mansions while people living in poverty with spare bedrooms are told they need to pay more or move to smaller homes?

What kind of society is it where disabled people are called in for crude, tick-box tests to prove that they’re ‘really’ disabled, then found fit for work only to die a few months later?

We urgently need to overturn this by forcefully challenging the myths that poison any attempts at progressive change today.

We have already seen, with Occupy and UK Uncut, some of the ways that this can be done – how the stagnant water can be stirred up and the algae removed. The importance of these new kinds of political initiative is that not only were they shouting clearly 'No' but also through their practice they have been creating democratic alternatives to this ruthless assault – platforms outside our closed political system.

Exposing the Myths of Welfare is produced in the spirit of Milton's call to promote argument and debate to arrive at truth. It reasserts the principle of social security as a universal right. It exposes the tall tales used to disguise the ideological dogma of government attempts to replace our welfare state with US-style residual ‘relief’  for the poor.

Please use it to remove the poison and create a political environment in which alternatives can be nourished and a renewed welfare state created of which we can once again be proud.

For more information on the welfare mythbuster and to download a copy click here.

At 2.36 on the afternoon of Tuesday 27 March, 2012 the Health and Social Care Bill 2011, repealing the legal foundations of the NHS in England, was given royal assent and became law.

Campaigning groups, NHS staff and professional organisations had fought for nearly 2 years against what must count as one of the most regressive pieces of UK legislation of the last 60 years.

That the bill became law in the end is testimony not to our robust democratic processes but to the autocratic power of government. The coalition came to office in May 2010 on a manifesto promising no further top-down reform of the NHS, and then promptly did the opposite.

The bill passed into law without an electoral mandate because no major political party or parliamentary institution in England was willing or able to defend the NHS. It was a constitutional outrage. Its passing marked the end of a National Health Service in England that for more than sixty years served as one of the most successful models in the world, widely praised and copied.

The UK NHS was created by national consensus in order to ensure that every citizen was guaranteed health care. Underpinning these arrangements was the secretary of state’s core duty to provide or secure a comprehensive health service, a duty repealed by the first clause of the Health and Social Care Act.

Repeal was the fulcrum of the free market agenda because the duty compelled the minister to allocate resources according to need instead of leaving allocation to market forces and unaccountable organisations.

In the absence of a ministerial responsibility, it now becomes possible to blur the boundaries between free health care and chargeable health and social care. Many NHS services are being transferred to local authorities, which can charge for care.

The Act also abolishes rules that make certain health services mandatory. Under this system, players in the health care market can choose the services they wish to provide and the patients for whom they provide.

The principle is not, as the coalition repeatedly claimed, increased patient choice but increased choice of patient.

The NHS has been an international model because it provided what no other country in the world has achieved at the same cost: universal health care in the form of equal access to comprehensive care irrespective of personal income.

For most of its existence the NHS was based on the principle that the poor, the chronically sick and the frail elderly would receive the best available care only if the rich received the same service. Since the 1970s and throughout the 1990s, we have witnessed a dismantling of publicly-funded and provided long-term care including nursing care for the elderly and the huge inequalities that have accompanied it.

As the 2012 Act is being implemented, corporations will have more say in determining our entitlement to free health services. In future, no single organisation will be responsible for ensuring the health care of all residents within an area and it will no longer be clear who should be held accountable when things go wrong.

Our relationship with our doctor will change when for-profit companies run more services. According to the Financial Times, Virgin already earns around £200 million a year by running more than 100 NHS services nationwide, including GP surgeries.

As patients we will no longer necessarily come first: how can we feel confident that our doctor is putting us first when he or she is a for-profit company employee?

It is clear that the government is manufacturing a crisis, reducing the level of services and their quality, and shaking public confidence in the NHS. But claims that we can no longer afford the NHS are untrue. The NHS is not over budget. Last year the NHS budget was under spent and £2 billion was returned to the Treasury.

This year it’s a similar story. Headline stories about hospital and other health service deficits only mean that resources are unfairly distributed not that the NHS is unaffordable overall.

The answer of course is political not financial. A new Act is needed to reinstate the NHS. These changes are the culmination of a transition from public to private responsibility as market dogma has penetrated, only to abolish, an institution that has defined us in our own eyes and internationally.

By removing the mandate on government to provide a health service, the Health and Social Care Act 2012 is the crowning achievement of the architects of this long recessional from universality. Our response must be political too.

Well, that wasn’t terribly edifying, was it? I suppose we knew not to expect an exercise in humility from George Osborne. But a less defiant tone, with wages stagnating, with benefits cuts looming and growth nowhere to be seen, might have been a better option for him.

That was the budget speech of a chancellor who is trapped – by his own rhetoric and weak political situation. Osborne is intelligent enough to read all the economic analysis that has been telling him, for over two years, that his approach is unlikely to work and indeed is not working. The government is choosing not to heed this advice. I don’t know about you, but if Joe Stiglitz, Paul Krugman, Larry Summers, Martin Wolf and Sam Brittan all told me I was getting policy wrong, I think I’d stop and have a think about it. The confidence of the young history graduate at No.11 is remarkable!

No, Osborne refuses to change course because he is too heavily invested, politically, in his programme of cuts. The new “help to buy” scheme symbolises how badly adrift he is. Borrowing is awful, Osborne and Cameron keep telling us. Labour’s alternative approach is characterised as meaning “more borrowing”, which is portrayed by the Conservatives as being self-evidently absurd.

And yet what are billions of pounds of proposed new mortgages, other than borrowing? Is every mortgage holder in this country an idiot? Should they try and live a debt-free life and never borrow any money to do anything at all? What about university tuition fees – are students idiots, too? This crude denigration of the concept of borrowing reminds me of the Tory insistence in the 1980s that public spending, all of it, should be kept down, whether it was for current needs or capital investment.

The distinction that can be drawn, between “good borrowing” and “bad borrowing”, is one that might be helpful for Labour between now and the election. When HMG could borrow today for 10 years at extremely low rates and invest that money productively, it is bizarre to reject the idea of doing so.

As Nick Pearce of the IPPR has argued, it could be pretty sterile and uninspiring for Labour to replay its 1997 policy of sticking precisely to Tory spending plans at the next election. At a Resolution Foundation briefing the morning after the budget, Peter Kellner of YouGov explained that voters were stuck, between disillusionment at the government’s incompetence and lack of confidence in the Labour opposition. Fear and pessimism are winning out over hope and optimism, he said. That mix will not necessarily lead to increased support for Labour. A more positive (and realistic) programme might have greater appeal. But that will mean escaping from the fatalism of this year’s budget which says There Is No Alternative to the full range of cuts being planned and executed.

The government’s current economic policy has more to do with psychology, PR, face-saving and infantile politicking, than with economics. I fear we are only just over half-way through this lost Bullingdon Club weekend of a government. A lot more damage will be done and time will be lost before a change can come.

The budget that was cheered by Tory backbenchers on Wednesday afternoon will look pretty sick this spring as the economy continues to struggle and further cuts to benefits are made. Ed Miliband was right to say that “Britain deserves better than this”. He now has to show us what his better alternative would be.

The Treasury plans to cut £2.5bn of current spending from several government departments – and transfer the money to another pot, for investment in infrastructure (probably housing).

This investment will be welcome to the construction industry. Total construction work in the UK between November and January 2013, was 10% down on the same period a year before, according to the ONS. Taken on an annual basis this loss to one industry in one year, is roughly equal to the £2.5bn the chancellor intends to invest in ‘infrastructure’ over the next two years. 

“What was really noticeable around the cabinet table” according to loyal Ed Davey “was people supporting the overall approach not only of the chancellor but the Chief Secretary to the Treasury Danny Alexander."

Davey and the cabinet appear to believe that these meagre savings, which do not represent additional spending, when applied to ‘infrastructure investment’ will help restore Britain’s economy to health.

To believe this they have to be oblivious to the scale of Britain’s economic failure – and to the steepness of the gradient to be climbed to get back to where we were before.

It’s as if the cabinet has been blinded by the blast that was the 2007-9 financial failure – and can’t see past the extreme intensity of the light flash that is our prolonged and painful recession.

£2.5bn sounds like a lot of money to you and me. And indeed it will be a lot of money for those construction companies lucky enough to win the contracts.

But in terms of the economy as a whole £2.5bn is meagre.

It represents about 1/7th of 1% of the nation’s economic cake – the Gross Domestic Product of about £1,500,000,000 p.a.

Since the financial crisis a great big hole has been blown out of the ‘cake’ that is the economy – a £500,000,000 ‘crater’ of economic failure and inactivity.

We arrive at that number by adding up the loss (or fall) of GDP each year since 2007. That loss amounts to about 15% of annual GDP (£1,500bn). We then add the amount of economic activity that, on the basis of past experience, could reasonably, but cautiously be expected to be added each year – a modest 1% p.a. Aggregated, this comes to a further 15% that could have been gained between 2008 and 2012.

Adding the actual loss to that which we could reasonably expect to have gained, amounts to a loss of 30% of potential UK GDP.

In other words the ‘crater’ of lost opportunities, investment, and employment; the bankruptcies, declines in incomes and profits - amount to a hole equivalent to £500bn – 30% of the nation’s GDP.  And that is a conservative estimate.

Picture a cake with almost a third devoured. Now imagine a crumb the size of 1/7th of 1% of the cake, placed on the plate to fix the hole.

That is the scale of the British Coalition government’s ambition.

In tomorrow’s budget, the Chancellor is set to plough on with a fourth year of his economic experiment – a mix of super-charged austerity and hope for the best. The outcome is all too predictable - the economy will continue to falter, living standards will carry on sliding and investment will stay at near-historic lows.

One effect of this strategy can be seen in recent World Bank growth figures. The UK economy is more than 2% smaller than in 2008 - fractionally better than Spain and just behind Italy, but a much weaker performance than in the US, Denmark, France and Germany. 

* Gross national income ( GNI ) per capita based on purchasing power parity (PPP). PPP GNI is converted to international dollars using purchasing power parity rates.

The UK’s tepid economy is largely down to a prolonged contraction of demand since 2008. The economy’s vital blood supply has been drained by sustained cuts in public spending, shrinking real wages, a collapse in private investment and a failure of exports to respond to the falling value of sterling.

One of the key reasons for sluggish demand is the way the output of the economy has been divided in recent decades. Since the early 1980s, economic policy has encouraged the share of the cake going to profits to rise, and to wages to fall. As a result, while the UK has become an increasingly low paid economy, its corporate sector is sitting on record, but largely unspent, piles of cash. Mark Carney, the Bank of England Governor-designate, has called this ‘dead money`.

The present economic paralysis is in part down to austerity, but can also be pinned on this entrenched economic imbalance - low wages and consumer demand on the one hand, and a mountain of unspent corporate cash on the other. The government has been willing companies to use this money to boost investment, but such calls have fallen on deaf ears. Instead, the cash pile has continued to mount and much-needed investment has failed to materialize.

Corporations say they can see no prospect of a return on investment. But dead money is also a product of Britain’s deeply flawed economic model. The rising profit share of the last thirty years, according to market theorists, should have unleashed an investment boom. In fact it has been associated with an investment slump. Instead, during the feast years, the profit bonanza was poured into a range of largely unproductive economic activities, from financial engineering of companies to private equity acquisitions. Such activity enriched the corporate and financial architects of the deals and reduced the corporate tax base but did little to boost productivity.

The likelihood is that when these cash piles are finally used, they will merely trigger the  next  boom in speculative financial deal-making and corporate restructuring, the kind of activity that helped push us over the cliff in 2008. Indeed, there are already signs – take the £15 bn takeover of Virgin Media by the US media giant, Liberty Global in February – that the next wave of such lucrative financial deal-making may come even before recovery is properly underway.

None of these issues is being properly addressed by the government. The budget is likely to ignore mounting calls to stimulate demand. Even more alarming, one of the fundamental faultlines of the British model of finance capitalism - its failure to steer resources into the real, productive base of the economy - is not even on the government’s agenda. Here’s why the prospect of sustained recovery is proving so elusive.

This blog is part of a series connected to the Social State project from the Centre for Labour and Social Studies (Class). The project looks at what Beveridge’s analysis of society can teach us about the Giant Evils of today and uses this to explore how we can chart an alternative course for a welfare state – or Social State – fit for a new settlement in 2015. This blog refers to Kate Bell’s paper – Abolishing Want in a Social State – which addresses the Giant Evil of ‘want’ and proposes new policy priorities for tackling poverty.

Beveridge believed that want – or poverty as we would today understand it – would be one of the easiest of the five giants to slay on the road to reconstruction, compared to the task of eliminating disease, squalor, ignorance and idleness. Seventy years on we’re a long way from achieving that goal. Figures for 2010/11 show that 27 per cent of children, 21 per cent of working age adults, and 14 per cent of pensioners were poor and the number is set to rise in years to come.

This failure can be seen as one of politics as much as policy. Beveridge argued that “freedom from want cannot be forced on a democracy or given to a democracy. It must be won by them”. Looking both at the history of UK policy and internationally it’s clear that countries that set out to reduce poverty, and are prepared to increase spending in order to do so, find that poverty does indeed reduce. Child and pensioner poverty both fell by over a million in the last decade in the UK and in general, countries with more generous welfare states have lower poverty levels. In the words of UNICEF, you get the (child) poverty level you pay for.

This doesn’t mean however that the only strategy to tackle poverty is one of redistribution. The need to commit additional resources to tackling poverty, and the ability to do so, depends to a large extent on levels of employment across a population. The increases in poverty in the UK 1980s were driven not only by reductions in the level of social security but in a polarisation between ‘work rich’ and ‘work poor’ families, and levels of maternal employment play an important role in explaining differences in child poverty rates across countries.

It’s easy to be pessimistic about the British public’s willingness to win an end to poverty at the moment. Repeated attitude surveys show scepticism about additional spending on social security and declining support for redistribution. But it’s possible to argue that this results in part from a debate about poverty and benefit claimants that has become increasingly toxic, serving to separate off the poor from the rest. Attempts to neutralise this debate by getting tough on welfare have largely proved counterproductive. What might an alternative strategy look like?

One positive message from this report is that the policy and communications implications of research on poverty in the UK point largely in the same direction. We know that in policy terms, the largest groups of people living in poverty are people in work and couples with children. Tackling poverty for these groups means universal policies that reduce the costs of children (including additional childcare and child benefit), and policies that seek to tackle in-work poverty by both increasing employment and potentially by reducing housing costs. We also know that in terms of communicating the need for these policies we need to not separate out ‘the poor’ from the rest, but to show that these are interventions that help the majority rather than a marginalised group. Universal and employment based solutions therefore meet both these criteria.

Two challenges face this agenda in the context of economic austerity. Firstly, universal policies have greater immediate costs than targeted additional spending. But international evidence suggests that in the long term they are more effective at tackling poverty. We don’t have to believe that we can move instantly to a comprehensive universal welfare state to think that this should still be the direction of travel. Secondly, by far the biggest driver of poverty levels in the next several years is likely to be the widespread cuts imposed to social security. Should antipoverty campaigners simply focus on campaigning against these cuts? Again, this seems like a poor long-term strategy. Although the need to demonstrate the impact of these cuts on people’s lives is vital, this task needs to be kept separate from that of forging a positive agenda for improving the incomes and lives of the significant numbers of people still hit by poverty in the UK. Neither of these are easy choices, but the evidence suggests that if we want to ensure that we get the policies we need to finally get rid of want, they may be necessary.

Poverty takes away people’s autonomy, subjects them to shame, and damages their futures. But the key message of this report is that it can be tackled – provided the political commitment is there. Winning that commitment is now an essential task.

Kate Bell discussed her paper along with a range of other speakers at the Achieving the Social State event on 13 March at the London School of Economics. Find out more here.

Article first appeared on the LSE British politics and policy blog on 6 March 2013.

This blog is part of a series connected to the Social State project from the Centre for Labour and Social Studies (Class). The project looks at what Beveridge’s analysis of society can teach us about the Giant Evils of today and uses this to explore how we can chart an alternative course for a welfare state – or Social State – fit for a new settlement in 2015. This blog refers to Duncan Bowie’s paper which addresses the Giant Evil of ‘squalor’ and proposes new policy priorities for housing in 2015 Britain.

Housing is back on the political agenda at long last. Politicians of all parties are finally realising that there is a housing crisis. This is most notable in London and the South of England, which is suffering from an acute shortage of housing, combined with new demand arising from an internationalised housing market. But problems of inadequate housing, undersupply and lack of affordability apply in other parts of the country as well and we need to avoid developing policies which are too London-centric.

The main reason for the current media attention is that the middle classes are now being squeezed with young professionals realising that it will be a long time before they can access the housing market. It is however only more recently that the media and politicians have realised that the housing position of lower income households is also being worsened. This reflects an unusual combination of under supply, rising rents and changes in welfare policy. Recent policy changes reflect an increasing hardening of policies and attitudes by the Coalition Government, but we need to recognise that some of these initiatives actually develop from policies and attitudes commonly held by politicians, policy makers and think tankers under the New Labour Governments.

The 2008 recession should have generated a major rethink of housing policy by socialists and progressives. An opportunity was missed. It is even more important now for the Left to devise a strategy which focuses on meeting the housing needs of lower income households as well as the aspirations of the squeezed middle, and to demonstrate that both from an ideological and practical perspective, the left has a distinct position from the Coalition and a position worthy of drawing electoral support.

The post-war consensus in which the liberal Beveridge played a key role, recognised the need for public intervention to ensure that lower income households had access to a minimum quality of life – the concept of the safety net. It was a responsibility of central government to ensure that all households had access to decent housing. This consensus held through the Churchill, Eden, Macmillan, Home, Wilson, Heath and Callaghan Governments. The political consensus of the last thirty years, deriving largely from Margaret Thatcher but shared by Tony Blair and to a large extent by Gordon Brown, was that households should be home owners, that expenditure by the public sector on housing should be radically cut and that the stock of public sector housing be reduced and that the main role of government in housing should be to assist more households into owner occupation. While the 2008 recession demonstrated the failure of the private market, we should also recognise that the boom period did not provide an adequate supply of homes in quantitative or qualitative terms, while leading to increased exclusion of lower income households, and more recently, at least in some parts of the country, of middle income households as well.

Elements of the left have been slow to lose the belief that increased home ownership should be a central objective for housing policy. Reports from ‘progressive’ think tanks, recognising that property ownership is now the basis of wealth appreciation and therefore of access to what are often referred to as ‘life chances’ see the solution enabling access to home ownership to a new cohort of marginal homeowners, rather than challenging the fundamental inequalities that the housing market generates. We need to recognise that assisting a few thousand more households into home ownership is an ineffective use of public money but also reinforces the role of housing as an investment good rather than as an essential consumer good – i.e. somewhere for a household to live, as well as promoting the ideology that only a home owner can assume the responsibilities of citizenship. We can argue that a household has a human right to decent shelter – but not necessarily to have an inalienable right make a personal capital gain from occupying that shelter, and certainly not at the expense of other taxpayers  or with the effect of disadvantaging other households.

We are seeing the return of housing squalor – with severe overcrowding for many, an unregulated private rented sector, and in extreme cases, the relatively new phenomena of ‘beds in sheds’. We are now seeing the impact of cuts in housing benefits, and caps on welfare benefits overall, based on the premise that lower income households should not be able to live in better off areas. The objective of achieving mixed communities has been forgotten, as the press feed on cases of large families costing the taxpayer thousands of pounds to live in hotels or other private accommodation. We tend to forget that this cost is only incurred because local authorities after thirty years of council house sales, no longer have any larger homes in their ownership to let. We have a government that has stopped all funding for secure affordable local authority and housing association homes, while seeking to replicate in the increasingly residualised social housing sector the insecurities of the private rented sector, further destabilising the lives of lower income households and their children and forcing them away from their community networks. To reverse this approach and the suffering it causes is not however cheap. We need to ensure more homes are built but stimulation of the private market is not the solution.

The important issue is not how many new homes we build but rather the type of homes, where we build then and how lower and middle income households can afford to live in them. So many homes in developments on prime sites are sold for international investment rather than for occupation, while across the country new and second hand market homes and even many shared ownership homes, are beyond the means of middle income households. The use of the term’ affordable housing’ to describe any home which is marginally sub-market is an abuse of the English language, used successfully and intentionally by the Coalition government to mislead the electorate. We need family sized homes which can be occupied by lower income households including lower paid workers without dependence on benefits on sites which are close to their work. To support such housing through ‘bricks and mortar’ subsidy is an essential investment in our future and much more cost effective than subsidising private landlords through housing benefit. We need to use resources to provide genuinely affordable housing which is good quality and secure, rather than using funds to help households to pay the going rate for insecure poorer quality housing. We also need to bring back local authority leadership both in planning and developing new homes. Social housing performs an essential public service function. The legacy of underinvestment is not a justification for scape-goating social housing or its occupants for failures of governance or communities. Social housing has been a way out of squalor in the past – a new programme of investment in social housing is the best way out of today’s squalor.

Event

Duncan Bowie discussed his paper along with a range of other speakers at the Achieving the Social State event on Wednesday 13 March 2013 at the London School of Economics. Find out more and register here.