Professor Adrian Sinfield, Emeritus Professor of Social Policy at the University of Edinburgh, talks about the welfare state. Stephen Boyd, Assistant Secretary of the Scottish Trade Unions Congress, talks about how the Scottish economy works. The Whose Economy? seminars, organised by Oxfam Scotland and the University of the West of Scotland, brought together experts to look at recent changes in the Scottish economy and their impact on Scotland's most vulnerable communities. Held over winter and spring 2010-11 in Edinburgh, Inverness, Glasgow and Stirling, the series posed the question of what economy is being created in Scotland and, specifically, for whom? To find out more and view other Whose Economy? papers, presentations and videos visit: http://www.oxfamblogs.org/ukpovertypost/whose-economy-seminar-series-winter-2010-spring-2011/

1. Whose welfare state now?
Adrian Sinfield
School of Social & Political Science
University of Edinburgh
adrian.sinfield@ed.ac.uk

2. ‘Whose welfare state?’ 1958
„The middle classes feel that too much is
being given to too many at too high a
standard, and they are being forced to
foot the whole bill.‟
Brian Abel-Smith,
in Norman Mackenzie ed., Conviction,
MacGibbon and Kee, 1958, p 55

3. By no means a new complaint
„We the people‟ and „they the poor‟
The „givers‟ vs the „takers‟
„We the taxpayers‟ vs „those languishing/resting on
benefits‟
Virtually all of us give and receive - how fairly?
And how and when?
Need to focus on processes, not individuals, first -
the institutional structures determine countries‟
overall level of poverty, not personal failings
however bad.
Avoid the harm of „blaming the victim‟

4. Who contributes and how
as well as who benefits and how
All UK Taxes % Gross Income, 2008-2009
Income Council Indirect All Taxes%
tax & NI tax % tax %
contri %
All 17.3 2.9 13.3 33.5
Top fifth 22.2 1.9 9.7 33.9
Bottom 5.0 6.2 25.1 36.2
fifth

5. How do we compare?
Out of 24 EU countries, poverty risk in 2007
for those aged 18-64 in the UK
for unemployed only 1 worse
for all not employed only 1 worse
for those in work only 7 worse
for all 18-64 only 6 worse
(Eurostat 2010 report, Table 1)
But still we are told to increase the incentives to
work, flying in the face of the evidence

6. Job loss into poverty
„Loss of employment is the single most
significant cause of entry to poverty‟
(Smith & Middleton, JRF, 2007)
Especially when JSA benefit only £65.45 -
under 25£51.85 - 11% average
earnings - back to May 1979 relative to
earnings needs an increase of over
80% to £117.
But unemployment-poverty link by no
means inevitable - cf Denmark in 1980s

8. Neglect of demand-side
Long-term as % labour force, not of
unemployed - David Webster, 2005
Pattern over 55 years reveals greater
importance of demand in accounting for
levels of long-term unemployment
rather than the individual behaviour of
those out of work
Confirmed by comparative, small-area &
evaluation analyses (but need more)

9. While ‘in cold storage things are
liable to happen to them’ (1938)
„Unemployment heightens the risk of people
falling into poverty and poverty in turn
makes it more difficult for people to
return to work. This process appears to
operate in a similar way across the different
countries of the EU‟ (Gallie et al, 2002).
Value of a good benefits system - as OECD
has at last recognised.

10. Poor benefits far from ‘passive’
Inadequate benefit rates of £65.45 - undermine and
damage individual and family resilience and health,
resulting in longterm costs and lost productivity
Poor wages in work sustained by the stick of inadequate,
over-policed benefits and lack of jobs - leads to
demoralising in-and-out of work - undervalues parenting
and other caring unpaid work
Full employment for Beveridge: „decent jobs, fair wages,
of such a kind, and so located that the unemployed can
reasonably be expected to take them‟ (Full Employment in
a Free Society, 1944).
21st Century Welfare will lift 300,000 into work (Clegg) -
„at the astrology end of the validity spectrum‟.

11. PERCENTAGE CHANGE 1970-2010
(a) average earnings
(b) NI Unemployment Benefit/Jobseeker‟s Allowance
(a)
(b) down 50%
1970 2010
Note: only end points plotted

12. (c) up 1,000%
PERCENTAGE CHANGE 1970 - 2010
(a) average earnings of
(b) NI Unemployment Benefit/
Jobseeker‟s Allowance
(c) FTSE 100 CEO remuneration
Note: only end points plotted
(a)
1970 (b) down 50%

13. Freedom in the market
One investment banker‟s own account of working in the
City in the mid-1990s raises questions about the links
between financial power and social policy. As they decided
on team bonuses, he told a colleague:
„If the rest of the country knew what we were being
paid, there would be tumbrels in the street and
heads carried round on pikes‟
Who? in the City, 2008.

14. Ex-banker ‘Welfare Expert’,
now Minister for Welfare Reform
„If the rest of the country knew what we were being paid,
there would be tumbrels in the street and heads carried
round on pikes (Freud in the City, 2008, planning his
team‟s bonuses).
Lord (David) Freud, since better known, and ennobled, as
the last government‟s adviser, Reducing Dependency,
Increasing Opportunity: Options for the Future of Welfare to
Work (2007), and now coalition Minister for Welfare Reform
who is arguing definitions of homelessness are too wide
and need to be made more „realistic‟.
Not the only banker to shape our welfare state.

15. Greater inequality now
„Inequalities in earnings and incomes are high in
Britain, both compared with other industrialised
countries, and compared with thirty years ago.
„Over the most recent decade, earnings inequality
has narrowed a little and income inequality has
stabilised on some measures, but the large
inequality growth of the 1980s has not been
reversed.‟
UK National Equality Panel, Jan 2010

16. Share of total after-tax personal income of top
O.5%, 0.1% and 0.05%, 1937-2000 - from National
Equality Panel , January 2010
QuickTime™ and a
TIFF (LZW) decompressor
are needed to see this picture.

17. If you are paid more than average, you
are very likely to receive company
benefits too plus a tax subsidy from the
rest of us
Cash Package - Base Salary £60,000; Bonus £30,000;
Incentive Awards £7,500; Location Allowance £3,100;
Share Scheme estimated Value £25,000
Benefits - Pension £9,000; Company Car £8,000; Medical
Insurance £900; Life Assurance £800; Holiday £1,200
Combined annual value of pay & benefits & estimated
value of your share schemes £145,500 + other benefits
Hay 2004 example of appropriate valuation for middle management

18. Redistributing ‘upside-down’ benefits
through tax welfare
We need more study of institutional power
devoted to reducing individual and
corporate„tax wastage‟ paid to „enjoy the
protection of the state‟, Adam Smith, 1776.
Racing away? accelerated by tax reliefs
Richest 0.1% have pre-tax income 31 times
average but tax reliefs of £49,000, 86 times
average (IFS, 2008).
Why not limit to £5,000 over personal
allowances? Or a minimum tax bill for all over
£100,000?

19. ‘The art of taxation’
‘consists in so plucking the goose
as to obtain the largest amount
of feathers
with the least amount of hissing’
Jean Baptiste Colbert,
Finance Minister to Louis XIV of France,
1665-1683

20. ‘Who has a Welfare State?’
„The middle classes get the lion‟s share of
the public social services, the elephant‟s
share of occupational welfare privileges,
and in addition can claim generous [tax]
allowances to reduce their tax liability.
Who has a Welfare State?‟
Brian Abel-Smith, 1958

21. A wealthy but unequal country
In 2005 mean financial wealth holding £21,617.
But the median is only £1,091 - 1/20th
We know too little about this inequality,
but it matters:
„Mortality closely relates to wealth: more than
twice as many men, and nearly four times as
many women, from the least wealthy fifth of over-
50s die within a six-year period as of those from
the wealthiest fifth.‟ (NEP, Jan, 2010)

22. The Spirit Level: Why More Equal
Societies Almost Always Do Better
By Richard Wilkinson and Kate Pickett,
2009 - and now in paperback
‘because more equal societies work
better for everyone’
www.equalitytrust.org.uk

23. ‘Great inequality is the scourge of
modern societies’
„We provide the evidence on each of eleven
different health and social problems:
physical health - mental health - drug abuse -
education - imprisonment - obesity -
social mobility - trust and community life -
violence - teenage births - child well-being.
„For all eleven, outcomes are very
substantially worse in more unequal
societies’
Backed up by much more research

24. The high costs of ‘the evil of
inequality’, William Beveridge, 1944
„Our report shows the way economic advantage
reinforces itself across the life cycle, and on to
the next generation. It matters more in Britain
who your parents are than in many other
countries.
„Intergenerational mobility appears lower in
more unequal societies - moving up a ladder is
harder if its rungs are further apart, and those
who start higher up fight harder to ensure their
children do not slip down.‟
UK National Equality Panel, Jan 2010

25. Structural & societal problem
„The Welfare State is only a way of
redistributing some income
without interfering with the causes
of its maldistribution‟
G. D. H. Cole,
July 1955, emphasis added.
So changes need to be structural.

26. More inequality means
more poverty & social exclusion
„Inequality has a dynamic of its own‟ in The
Irresponsible Society (Richard Titmuss,1959)
„What thoughtful rich people call the problem
of poverty, thoughtful poor people call, with
equal justice, the problem of riches’ - Richard
Tawney, 1913, emphasis added.
Upstream policies needed to tackle the
„inequality [that] lies at the heart of the modern
free market‟, Philip Augar, The Greed
Merchants, 2006.

27. ‘A society for people’
Peter Townsend, 1958
We need to prevent the „preservation and
reinforcement of a class-fractured society‟.
„If that overdone phrase “a classless society”
means anything, it is a society where
differences in reward are much narrower than in
Britain today and where people of different
background and accomplishment can mix easily
and without guilt; and also a society where a
respect for people is valued most of all. For
that brings a real equality‟ (1958, p. 530).

28. ‘First things first’ Beveridge, 1948
The 1942 Beveridge Report „set out a practical
programme for putting first things first.
There was to be bread and health for all at all
times before cake and circuses for anybody at
any time, so far as this order of priority could be
enforced by redistribution of money.‟
William Beveridge, ending Voluntary Action.

29. Long-term strategies needed
Rebalance to achieve better jobs & more help
for caring - more social inclusion, less inequality
More work „upstream’ on demand-side and
sustainable strategies
Increase benefit levels, coverage & take-up
Tackle problems of poor wages, poor jobs
Engage the whole society in the objective
Then we can gain ‘A Society for People’
where the welfare state prevents poverty and
reduces inequality.

30. Keynes on Capitalism
'Capitalism, wisely managed, can probably be made
more efficient for attaining economic ends than any
alternative system yet in sight.
In itself, it is in many ways thoroughly objectionable’
J.M. Keynes, 1927, emphasis added.
And apparently more objectionable in UK, US &
NZ than many similar countries. Why? And
why do we put up with it?

31. In The Irresponsible Society today
Some deprived, many more made insecure while
others better insulated both from sharing common
risks and from contributing to public resources
needed to protect quality of life for all.
In downward-looking UK government discourse,
they exploit their „rights‟ and evade their
„responsibilities‟. Their erosion of the overall tax
base reduces the common wealth.
Upstream policies needed to tackle the „inequality
[that] lies at the heart of the modern free market‟,
Philip Augar, The Greed Merchants, 2006.

32. To view all the papers in the Whose
Economy series click here
To view all the videos and presentations
from the seminars click here