The Covid-19 crisis has exposed deep failings in the UK’s welfare system which should be addressed as part of a long-term plan to rethink and “future-proof” the welfare state, according to a new IPPR report.
Without this, the report argues, the welfare system will be equally unprepared to deal with likely shocks in the “decades of disruption” that lie ahead – including climate and environmental breakdown, rapid growth in of automation, further pandemics and a rapidly ageing population.
Government financial assistance has been decisive in protecting many people’s businesses and livelihoods during the Covid-19 crisis, the report says, but the crisis has highlighted many key failings which threaten to widen inequality further, including:
• Lack of sick pay for an estimated two million workers who do not earn enough to qualify – largely those on zero hours or insecure work contracts. And at just £94 a week this has not been high enough to prevent some of those who are sick from going to work – including in care homes.
• The need for emergency rule changes to increase the Universal Credit baseline payment for a single person over 25 from £317.82 to £409.89 per month to make it more fit for purpose during the pandemic. IPPR calculates that had the recent uplift been in place since 2015, the UK would have entered this crisis with 500,000 fewer people in poverty.
• Stark disparities between the protection given to those covered by emergency government schemes and those who are either ineligible, lose their job or are already unemployed – all forced to rely on Universal Credit.
• Failure to recognise the increase in unpaid care hours provided during the crisis, estimated at an extra 10 hours per week for those who are carers, which is largely provided by women.
People in the UK have experienced a great “risk shift” over recent decades, the report argues, as governments have cut funding for collective welfare provision such as higher and further education, social care and social security, and limited access to them. Some employers have similarly passed risk to individuals through alternative contracts that reduce entitlements such as parental leave, holiday and sick pay.
As a result, the costs of ill health, unemployment, becoming a parent or having a disability have increasingly been borne by individuals rather than by employers or the state, compared with 40 years ago. Combined with a decade of disinvestment in the welfare system this shift has resulted in five “social deficits” which, IPPR says, weaken our ability to withstand disruptions:
• Health – The slowdown in the lengthening and quality of life experienced across the UK, and growing health inequalities up and down the country. There is a life expectancy gap between people in the best and worst performing areas in the UK of 9.9 years for men and 7.8 years for women.
• Care – Unequal access to, quality of and cost of the care people receive across their lives, from childcare to old age, and inequalities in who provides it. An estimated 1.5 million older people in England are going without the care they need and are more likely to be from disadvantaged backgrounds.
• Skills – The growing number of people trapped in low-pay, low-skill jobs at the same time businesses suffer from ‘skills gaps’ and low productivity. The lowest paid tenth of the workforce saw their incomes before housing costs stagnate or fall over the eight years to 2019, and the number of semi-skilled roles has fallen, making it harder for those with lower skills to progress
• Security – The rise of low pay, poverty and economic insecurity which results in many going without the basic goods and services needed for a good life. More than two thirds of new employment since the last recession has been in self-employment or jobs that are on a part-time, agency or zero-hours contract, with fewer employment protections.
• Community – A weakening in social bonds between people – within local communities, and across the country – that are crucial for individuals and society as a whole to flourish. More than a fifth of people in England say they are often or sometimes lonely, with those who are female, younger, single, unemployed, ill or disabled more likely to experience loneliness.
Over the next year a diverse group of people brought together by the think tank, including Bishop of Dover, Rose Hudson-Wilkin, and former Cabinet minister Lord Heseltine, will begin a review of the welfare state. The aim is to start a national conversation about how the nature of our social contract needs to change as the nation emerges from the coronavirus crisis.
Clare McNeil, IPPR Associate Director who heads the think tank’s new programme aimed at rethinking the role and scope of the welfare state, said:
‘Even with the significant measures the government has introduced to support people in this crisis, it is clear that some people lack the essentials we all need to stay afloat, whether that’s the low paid workers with no sick pay or the families claiming Universal Credit but still unable to feed their children.
‘As we begin to look to the future, it is clear that the country must offer a social contract that benefits everyone. Government cannot simply be lender of last resort, it should be insurer of last resort.
‘We urgently need a national conversation about who and what the welfare state is for and how it can prevent widening inequality in future.’
Harry Quilter-Pinner, IPPR Senior Research Fellow and the report’s lead author, said:
“Covid-19 is just one of many shocks our society faces in the decades to come. Climate change, automation and ageing will all expose us to shared risks beyond our control. The best way of managing these is collectively, as a society.
“The lesson from Covid-19 is clear: we cannot wait for shocks to overwhelm us but must instead ‘future-proof’ our welfare state so we are ready next time.
“Government must deliver on its promise to increase investment in order to ‘level up’, not just in infrastructure but also social investments, like health, education and welfare. These services will play a crucial part in our economic, as well as our social, recovery from Covid-19.”