A fairer way than Burnham’s to reform welfare and grow the economy

Geraint Davies

Andy Burnham is right to set out a pathway towards a stronger, fairer Britain following the failure of privatisation and Brexit. There is a way to fix welfare costs, state pensions, the care system, our NHS and economy.

However, “the Labour way” proposed by Andy Burnham threatens to make matters worse, not better, so it’s important to spell out its implications and alternatives.

The new Prime Minister had already said he “won’t be squeamish about cutting welfare” after Labour previously cut overseas aid to pay for defence. After all, someone needs to pay for higher borrowing costs inflicted by the Iran war. So, as diesel prices hit £1.99 a litre, in the Labour conference warm-up act, Chancellor John Healey declared: “Cutting welfare is more than an economic must. It is a moral duty.”

The media had already been fed the message that people in the UK are lazier than their European counterparts, as fewer returned to work after the pandemic. “The Labour way” should not be to force them, including the sick and disabled, into work and cut their welfare payments.

However, Andy says: “Either we invest in our young people or we pay for failure through the benefit system. Truthfully we can’t afford to do both.” So his choice is to “require young people to take up the help presented to them” – training programmes, including internships and apprenticeships – or, presumably, lose their benefits.

However, the disability charity Scope says the proportion of under-22s receiving the universal credit health element who are in poverty would rise from half to nine in 10 if support were removed. And what about the 707,000 unemployed university graduates claiming welfare benefits?

Young people, excluding children, cost just 2.5% of the £333bn UK welfare budget, compared with 55% for pensioners. The proposal that pensions should rise by price inflation (or at least 2.5%) to protect pensioners from cost-of-living increases, then be periodically adjusted to ensure pensions don’t rise less than wages over time, is fair and sensible.

This maintains the spirit of the current “triple lock” – with pensions rising in line with the highest of price inflation, wage growth or 2.5% – but avoids pensions rising faster than wages. That has led to average disposable income for pensioners rising above that of non-pensioners, even though the number of pensioners per worker is going up.

Poorer pensioners die sooner, so increasing the pension age instead of reforming the triple lock would hit poor people hardest. For instance, a close friend of mine died this month aged 66, after a lifetime inhaling dust as a tiler, only months into receiving his state pension.

Pensioners are more likely to vote and are growing in number. Tougher measures are aimed at making people of working age work, over four million of whom claim benefits due to long-term sickness or disability. Meanwhile, nearly six million people serve as unpaid carers for loved ones, the majority of whom already balance caring and working.

Beware, Andy. Forcing carers into more work could massively increase the NHS and care costs for the people they care for, as would forcing the sick and disabled to work.

Instead, Andy Burnham should consider why there are so many sick people or carers unable to work, and then increase work in a way that supports rather than coerces them.

Employment levels

So why have UK levels of employment not recovered since the pandemic as quickly as those in other European countries? In the UK, we suffered higher death rates, and around two million people in England and Scotland have long Covid symptoms of fatigue, breathlessness, pain and “brain fog”. In Britain, Boris Johnson’s “take it on the chin” approach to Covid delayed lockdown, which increased infection rates.

In addition, Rishi Sunak’s denial of furlough payments to the self-employed forced them into coronavirus exposure. Shockingly, in 2022, post-pandemic employment, including the self-employed, was 506,000 lower, according to the ONS. However, as I repeatedly pointed out as Swansea West’s MP, Boris Johnson, at Prime Minister’s Questions, disingenuously claimed it was 420,000 higher by excluding the self-employed.

Also, poorer children denied government computers and internet access at home lost the most education, and those with self-employed parents faced both illness and reduced life chances. The families whose ability to work was harmed by the previous government during the pandemic should not simply be forced by Andy Burnham to work full time without compensatory support.

Millions of people find it difficult to go to a workplace five days a week or face a binary choice between work and caring for a loved one. Therefore, the government should embark on a strategy to encourage employers to allow people to work flexibly from home and provide Wi-Fi clouds and computers to do so. That way, more people who are carers can combine work and care flexibly, and many suffering from intermittent fatigue and other symptoms can work at a pace that is comfortable.

Already, 40% of workers work either entirely from home or from both home and the workplace. Most of these average two out of five working days at home. More remote work means less congestion, pollution, travel time and road costs.

Support

If carers and those with ill health are given the help and support they need from government and business to work flexibly from home in sympathy with their health capabilities and caring responsibilities, then there would be a major uplift in the economy and huge savings in the benefits bill.

The truth is that Andy Burnham doesn’t need to force those with health issues to work or lose their benefits, but instead can give those struggling to work the technology and flexibility to do so. That would be the caring “Labour way”.

The question after Andy Burnham’s Liverpool conference speech is whether he chooses the big stick over the helping hand. Warm words alone won’t keep those on benefits from feeling the cold, whereas providing an empowering environment to enable work can forge a new social contract for the 21st century.

Geraint Davies was MP for Swansea West from 2010 to 2024.

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