Will the pandemic pave the way for welfare reform? The UK’s former homelessness tsar sets out her vision

By on 12/09/2021 | Updated on 12/09/2021
Photo by Tim Dennell via flickr

It was the devastation of the Second World War that gave birth to the UK’s welfare state, and now, argues Louise Casey, the covid-19 pandemic provides the government with a unique opportunity to fundamentally overhaul it. Karen Day hears her call for a ‘Beveridge-style moment’

“It’s a phenomenal day,” said Baroness Casey as the UK government announced it would bust its manifesto commitment and increase national insurance to fund extra health and social care spending. “We have to declare a tiny victory for people that are poor in this country – which is the government has realised it needs to spend more money.” But for Casey, a former government tsar who has served under five prime ministers, this is nowhere near enough. Speaking at an Institute for Government event, the social welfare and homelessness campaigner says the government must see the enormity of what the Covid-19 pandemic has exposed and is calling for a ‘Beveridge-style moment’ – a fundamental rethink of the UK’s welfare and social state.

Casey, chair of the Institute of Global Homelessness, isn’t alone in this thinking. As the pandemic has taken hold a growing number of figures across the political spectrum, from the Archbishop of Canterbury to the leader of the Labour Party, have called for the type of seismic change created by William Beveridge, whose report in the 1940s paved the way for the welfare state. Both Casey and IfG chief Bronwen Maddox noted that the ‘call to arms’ in the struggle against rising inequality and poverty is also being heard within Whitehall, with senior civil servants within the Cabinet Office pushing for a ‘Beveridge-moment’ for the last 18 months.

Exponential growth in poverty

Speaking at an Institute for Government event, Casey said she’d never come across “anything like” the exponential growth in poverty and inequality in Britain seen in the pandemic. “If you look at the figures from last year, 400,000 people were made redundant between March and October, that’s more than the 2008/09 recession, which is extraordinary. The number of people doubled on Universal Credit from three million to six million and if you add the people on legacy benefits, that’s a further two million.” She added that there were 1.9 million people still on furlough, the government’s popular job retention scheme, and around three million who lost work but weren’t eligible for any support.

“You are looking at 13 million people not working, furloughed or made redundant,” Casey said. “Out of a population of 66 million, that’s 20%. Those numbers are big. The argument I’m trying to stack up is that you can’t just walk away from this as a government.”

Louise Casey

Casey, also a cross bench peer, said you could ‘gift’ the government the fact that the pandemic wasn’t its choice. But she said there were strong arguments that its policy of austerity, which saw severe spending cuts for a decade from 2010, had done much to damage and weaken public services. “We could choose, and this is what they are doing today on social care, to draw a line in the sand and say: ‘You know what, we’re going to take a look at poverty and welfare in the UK. We’re going to think about the new three million people on Universal Credit, who have never been in the benefits system before, we’re going to think about furlough’.” Casey urged the government to see the pandemic as an opportunity to do things “very, very differently” – just as Beveridge used the impact of the Second World War to help create a social welfare system. “You could create a much more positive, something for something welfare state. I wish they would think about a new moment.”

While Casey called the government’s increase in health and social care spending “phenomenal”, she said it simply wasn’t enough. The rise in national insurance paid by staff, employers and those with shareholdings, dubbed the health and social care levy, will raise an extra £12bn (US$16.6bn) a year between 2022-23 and 2024-25. However, it’s already clear that the majority will go directly into the NHS to clear patient backlogs due to Covid-19, and very little into the creaking social care system for children and the elderly. “The pandemic has bought right into vision the cracks that we have all known have been there,” she said, arguing that the government needs to think about major welfare reform. “If I was sat in the Department for Work and Pensions, the Cabinet Office or Number 10 now, and I was serious about levelling up and serious about a new way of looking at Britain, I’d be having a look at welfare benefits.”

‘Fundamentally flawed’

She said the current welfare system, Universal Credit, which was designed to bring the UK’s benefits into one simpler system, was fundamentally flawed. “What they wanted to create was a system that moved and enhanced people into work. But [in real terms, the benefit income] that we hand to people is lower than 1990; that’s not workable. From the moment they enter Universal Credit, we know that 64% get into debt. So instead of keeping them steady we push them further and further away from work and that’s not what was intended.”

She said the government should review its welfare system, looking at what it achieved for families with measures like furlough during the pandemic. “We had a disease. We put millions of people on furlough, we didn’t want families to go to the wall and lose their jobs, so we put a wage benefit in place that got them through the pandemic.”

Today’s UK benefits system is designed to provide the bare minimum required to get by on, and only kicks in when people’s own savings and assets have been depleted. Instead, said Casey, government could ensure that newly unemployed people receive something close to their previous income for 6-12 months, giving them the income and stability to get themselves back into work. “You can start to see how you could create a new welfare state that is reciprocal, so I put in and I can take out. I think we have lost some of that talk in the last 30 to 40 years.” She added that she’d also throw Universal Basic Income, a payment system to ensure everyone has a minimum income level, into the ‘pot’ as the type of system she’d like to see created.

Welfare reform is an enormous task, but she told the IfG event that the upside of the pandemic has shown what can be achieved when governments are “serious”. Again, she points to furlough, where the government has so far spent over £67bn (US$92.7bn). And to its ‘everyone in’ policy on homelessness, which she led, that saw 15,000 homeless people moved off the streets and into temporary accommodation to prevent the spread of Covid. “If you want to create seismic change you need the substance of Whitehall and politics lined up behind it. That’s what social care needs, that’s what the country needs if we are going to lift up out of the way we are badly running the welfare system. We need to think big.”  

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