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Social security: the landscape
Jane Millar and Roy Sainsbury
The provision of social security â cash transfers to individuals and families â is one of the most important functions of government in modern economies. In the UK about half of the population, over 30 million people, receive financial support through the benefit and tax credit system at any time (Hood and Oakley, 2014). Many more will do so during their lives, as children, as old people, or because they are sick, have a disability, are unemployed, low paid, caring for others or facing one of the many other circumstances that social security helps to cover (Hills, 2017). Social security is the largest single area of government expenditure in the UK, at almost ÂŁ220 billion in 2015/16, accounting for about 28 per cent of total expenditure and 11.5 per cent of GDP (DWP, 2016a, UK summary). This is a system that is deeply embedded in our society, central to the pursuit of both social and economic goals.
But the extent, range and complexity of social security â the various aims and purposes, the different groups included, the contribution conditions, the means tests, the levels of support and the outcomes â creates a system that is often misunderstood, sometimes maligned and frequently challenged. Understanding social security is therefore a topic that concerns us all, and the aim of this book is to critically examine social security policy and provision in the UK, covering issues of aims and purpose, design and implementation, outcomes and impact.
This is the third edition of Understanding social security. Previous editions appeared in 2003 and 2009 during the Labour governments of Tony Blair and Gordon Brown respectively, when changes to social security could be seen to have a coherent rationale â to reduce poverty, especially child poverty, and to promote paid employment. This was encapsulated in what was a familiar phrase at the time: âwork for those who can, security for those who canâtâ. In that context, Chapter 1 of the 2003 edition started by stating that âReform of the social security and tax systems is at the heart of the Labour governmentâs aspirations to combat social exclusion, to eradicate child poverty, to increase employment rates among all people of working age, and to modernise the welfare stateâ (p 1). This agenda was still current while we were writing the 2009 edition, which was before the full extent of the 2008 banking and financial crisis, and the economic recession that followed. The policy agenda was thoroughly shaken as a result, when the coalition government of 2010-15 made the reduction of the budget deficit (the gap between government spending and income) their overarching objective. This led to a programme of âausterityâ, in which the social security system was a key target for restrictions to eligibility and cuts in the level of support. Thus, as we prepare the third edition, the policy environment and the key policy goals are very different from 10 years ago. This book is not an assessment of austerity policy and welfare reform (see Bochel and Powell, 2016; Lupton et al, 2016; Cooper and Whyte, 2017; Royston, 2017), but this changed environment and agenda is certainly reflected in the contents.
We return to this discussion later in this chapter, but first, we reflect more generally on social security policy goals and instruments. We pose a number of fundamental questions about the UK system, and then consider the modern context of social security since 2010, a period that could be characterised as one of austerity and âwelfare reformâ.
What are the aims of social security?
This question might seem an obvious and simple one to ask in a book called Understanding social security, but trying to answer it reveals it as more complex. The question itself seems to carry an assumption, for example, that there is a set of aims that are in some way self-evident, waiting to be revealed. On reflection, this assumption turns out to be entirely unjustified. The âaimsâ of social security are highly contentious and contestable. One personâs (or political partyâs) aims will be different to the next personâs (or partyâs). And aims can change over time. Sainsbury sums this up as follows: â⊠the aims of social security (are) constantly contested, defined and redefined, invented and reinvented, taken up and abandonedâ (Sainsbury, 1999, p 35). We can only really answer the question with reference to whose aims we are talking about.
But even this doesnât necessarily make answering the question any easier. Walker (2005) makes some useful analytical distinctions in his discussion of social security aims and objectives. First he distinguishes between social security systems (the whole set of measures) and social security schemes (specific benefits or sets of benefits). He further distinguishes between the aims (the purposes ascribed to the system as a whole) and objectives (attached to specific benefits or programmes). Thus the purposes for the overall system âestablish the paradigm within which policy development takes place and that, in turn, provides the raison dâĂȘtre for benefit and tax credit schemes and shapes their objectivesâ (2005, p 24).
The purposes for the overall system reflect different underlying ideologies â different views about the role of the state, about the responsibilities of citizens and about the causes of poverty. These vary across countries as well as over time. Esping-Andersen (1990), in his influential work on the âthree worlds of welfare capitalismâ, focuses on the âde-commodifyingâ role of welfare states, referring to the extent to which people can maintain a livelihood outside the market. His âthree worldsâ contrasts the liberal welfare state (small state, private markets, means-tested) with the conservative (preservation of family and class, insurance-based) and social democratic (solidarity, egalitarian, universal). And in their discussion in Chapter 9 here, Kevin Farnsworth and ZoĂ« Irving emphasise both the economic and the social functions: the social security system helps countries weather economic downturns, and reduces the risk of social unrest.
The objectives for specific benefits and programmes include the desired outcomes (for example, lower rates of child poverty, more people in work, and so on) and also the way in which these outcomes are to be reached. Thus, for example, goals such as accuracy, efficiency and reducing fraud are often included as specific elements in the design of benefits. This is well encapsulated in the phrase that was used to underpin the working of the Benefits Agency (the forerunner of Jobcentre Plus): âthe right amount of benefit to the right person, at the right time, every timeâ (Harris, 2013, p 133). Simplification is often put forward as an important goal in its own right, although the pursuit of a range of aims and objectives makes this difficult to achieve in practice. As one example, Box 1.1 shows the vision, principles, aims and objectives for social security recently set out by the Scottish government (see page 8).
Therefore a number of different purposes and goals can be identified for social security policy. Harris (2013, p 4) notes that, âThe key areas of state welfare provision all rest on very simple ideas, or at least are intended to meet straightforward objectives, as for example conceptualised in Beveridgeâs notion of slaying the âfive giant evilsâ of Want, Disease, Ignorance, Squalor and Idleness.â He goes on to quote the definition put forward by the International Labour Organization (ILO) (Ghai, 2002), which gives three main aims, âreducing destitution, providing for social contingencies, and promoting greater income and consumption equalityâ. Or, in other words, social security is about reducing poverty, covering risks and creating a more equal society.
What benefits do we have, and how do they differ?
Just as there are many possible aims, there are also many forms of social security provision. In some countries, in-kind provision is an important element, for example, food stamps in the US, but, as in previous editions of the book, we focus on cash benefits (see Chapter 8). These can be grouped into three main types, differentiated by the method of funding and the main conditions for receipt:
âą Universal, or categorical, benefits are funded by general taxation; they take no account of income and are paid to those who fit the designated category (Child Benefit for all children was the main UK example, until 2013, when higher earners were excluded).
âą Social insurance, or contributory, benefits are in part funded by contributions from workers, employers and the government (see Chapter 9, this volume), and cover interruptions or loss of earnings for specified reasons (retirement, unemployment, sickness and, for women, widowhood).
âą Social assistance, or means-tested, benefits are funded by general taxation and are paid to people with low incomes, taking account of their particular circumstances and family situation. These include benefits for people with no other sources of income as well as various other benefits intended to meet particular needs (for example, housing costs) or circumstances (for example, low wages, large families).
To this list we must add tax credits. The Working Tax Credit and Child Tax Credit are administered by HM Revenue & Customs (HMRC) and not by the Department for Work and Pensions (DWP) (see further discussion below). But these tax credits follow the same logic as means-tested benefits â funded from general taxation and paid to people with a low income, taking account of their circumstances. So these tax credits can be discussed alongside benefits such as Income Support, Pension Credit, Housing Benefit and Universal Credit.
Looking beyond the state provision of cash benefits, the tax system is also a vehicle for income support, through provisions such as tax allowances and tax exemptions. These increase income by reducing tax deductions. Occupational benefits are paid by employers, for example, occupational pension schemes, but regulated (and sometimes subsidised) by government. They also include some schemes that employers are obliged to provide, such as statutory sick pay and statutory maternity pay. The private market also plays a role, particularly in respect of pensions, with membership of private pensions schemes encouraged by state subsidies and regulated by government. And charities or voluntary bodies may also provide support, in cash or in kind. The growth of foodbanks in recent years (Garthwaite, 2016) is one example of this.
Finally, it should also be noted that the family plays a major role in income transfers, and that defining family obligations â who should be required to support whom â is an important aspect of social security policy. The assumption that married women would be financially dependent on their husbands was, for example, central to the postwar National Insurance benefit system. Married women were largely excluded from these benefits on the grounds that they could rely on their husbands for financial support. Married men received allowances for their wives as dependants. This established a particular structure that had wide-reaching and long-term implications for gender divisions (see Chapter 6, this volume).
How much do we spend on social security?
As noted above, public expenditure on benefits and tax credits is a significant element in total government expenditure. DWP benefits expenditure in 2015/16 was about ÂŁ173 billion, including ÂŁ2 billion on children, ÂŁ54 billion on working-age people and ÂŁ117 billion on pensioners (DWP, 2016a, Benefit summary). HMRC expenditure in the same year was about ÂŁ11 billion on Child Benefit and about ÂŁ28 billion on tax credits (DWP, 2016a, non-DWP welfare).
Hood and Oakley (2014) provide a detailed âsurvey of the GB benefit systemâ, including benefits and tax credits, and dividing expenditure by type of recipient. Figure 1.1 shows that spending on older people makes up the largest single element (45 per cent), with spending on three other groups (families with children, people with low incomes, sick and disabled people) each at about 17 or 18 per cent. Spending on unemployed people accounts for just 2 per cent of total expenditure (there is also a category of bereaved people, less than 1 per cent, not shown in the figure).
Figure 1.1: Social security expenditure, Great Britain, 2013-14
In terms of spending...
