British welfare reform

June 4, 2002

Free Market Foundation

Welfare reform in Britain has been termed “A New Deal for Young People,” with four policies grabbing headlines. The first two, “welfare to work” and “making work pay,” sound familiar. The second pair, “tackling social exclusion” and “ending child poverty,” is less so.

“Making work pay” was characterised by the introduction of a minimum wage set at a level informed by the U.S. experience, and the adoption of wage subsidies delivered through the tax system that were available to all low-income families with a member working for more than 16 hours each week.

One of the purposes behind promoting the obligation to work is to compensate for the disincentives created by means-tested assistance systems. British authorities have shown particular interest in American programmes that raise employment among residents in the lowest-income public housing.

Labour’s commitment to tackle social exclusion reflects the European approach of identifying a number of facets to the problem lack of opportunities to work and to acquire education and skills, childhood abuse, disrupted families, barriers to older people living fulfilling and healthy lives, inequalities in health, poor housing, poor neighbourhoods and crime addressing specific forms of social exclusion, then engaging the local populace to address the problem.

Many of the principal concerns of the 1996 reforms promoting work and marriage, reducing births outside marriage led to systematic support for people from 18 to 25 years old that promises opportunity and income to those who are willing to work, but that is not linked to parenthood.

New Labour’s vision has been defined by an extremely effective mantra: “work for those who can, security for those who cannot.”

Source: Robert Walker and Michael Wiseman, The House that Jack Built: The Story of British Welfare Reform, The Milken Institute Review, Fourth Quarter, 2001.

For text http://www.milkeninstitute.org/poe.cfm?point=review
For more on welfare http://www.ncpa.org/iss/wel/

FMF Policy Bulletin\28 May 2002