The Benefit System, Welfare to Work

Future welfare reform: the contributory principle

Future welfare reform: the contributory principle

In recent weeks, the Conservative Party launched a private opinion poll in marginal seats to survey how receptive public opinion was to a number of issues. The survey, which came with a personally singed letter from the Prime Minister, questioned respondents on a number of issues, such as energy bills and the cost of living. Much of the survey concerned the future of welfare reform. In particular, some questions focused on whether respondents agreed with reforming the welfare state along the contributory principle[1].

A contributory-based welfare state would be one in which entitlements would depend on past contributions. One proposal in the survey was for the level of out-of-work benefits to be dependent on the length that the recipient had paid into the system prior to being out of work. Under this proposal, recipients who had been working for many years would receive higher levels of out-of-work benefits than those who had never worked[1].

The Conservatives are not alone in considering reviving the contributory principle. One month ago, writing in The Observer, Liam Byrne claimed that Labour too would reform the welfare state along contributory lines[2]. This was re-iterated by Labour Deputy Leader Harriet Harman on the Andrew Marr Show[3]. Labour MP, and maverick, Frank Field, who was Minister for Welfare Reform between 1997 and 1998, has also been a consistent advocate of contributory-based welfare[4][5][6][7].

Proponents claim that the contributory principle will make the welfare system ‘fair’ by rewarding those who have paid into the system, as well as being closer to the original intentions of William Beveridge, one of the founders of the welfare state. Matthew Oakley and Peter Saunders of the think tank Policy Exchange, also argue that a welfare state based on the contributory principle would not create a ‘culture of dependency’[8].

Opponents claim that it will be a divisive measure that would end up providing greater support for well-off groups and less support to those most in need. They argue that instead, the welfare state ought to be based on helping those most in need, even if they have not contributed into the system. Nick Pearce, Director of the centre-left think tank the Institute for Public Policy Research (IPPR), expressed skepticism towards the viability of a welfare state entirely based on the contributory principle, claiming that there were limits[9].

  • Should the welfare state be based on contribution or need? Which is fairer?
  • Would a welfare state based on the contributory principle address the issue of welfare dependency? Or do the government’s current reforms address this issue? Or are different reforms altogether needed?

 By Will Archdeacon

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