Welfare reform: giving back to the people who have paid in

Labour can tackle both political and economic challenges through contributory welfare

I am confident that most people who have knocked on a door in an election campaign and had a discussion turn to benefits or pensions, will have spoken to a voter who has said something like:

– “I have paid into the system all my life, I deserve something back”
– “You can’t have something for nothing”

For a deep pool of current and potential Labour voters, it is important that entitlement to social security (usually just called ‘benefits’) is earned over time and not seen as being ‘handed out’ too easily.

This is nothing new of course. Contributory welfare was a core principle of the National Insurance Act of 1946, introduced by Attlee’s Labour government. In exchange for new National Insurance contributions, workers were entitled to unemployment and sickness benefits and a state pension. The state was providing a meaningful safety net for the first time – on the condition that you ‘paid in’.

All of this still applies today of course. So why is contributory welfare relevant for the Labour Party as we look towards a General Election in 2023/4 and why should it need revisiting?

I believe there are two challenges for our party on this agenda – the first is political and the second is economic. The political challenge is a lingering doubt in the minds of some voters we need to win back that Labour is ‘too soft’ on benefits and too ready to give out support to people who have not yet paid in.

The economic challenge is more fundamental – millions of people are in professions today that are not likely to exist in 10 or 20 years time. As technology and automation change our society, many more of us will need to be prepared to retrain in the future and to spend time outside of work in order to develop new skills that align to the demands of the changing labour market.

To combat both challenges, I think there is a strong case for Labour fighting the next election with a manifesto commitment to an updated form of contributory welfare.

A proposal as simple as: for every year of National Insurance payments made by an individual, they should be entitled to an extra week of jobseekers allowance payments if & when they become unemployed.

The principle is simple – in recognition of additional time worked, you are entitled to additional support.

The system would need some flexibility and such a proposal would require an increase in the social security budget, but it would be aligned to a principle that I am confident that the vast majority of the public would see as fair and proportionate.

I am clear that this reform alone would not meet the challenges of our changing world of work. As Attlee himself said in 1949, “the welfare state can only endure if it is built on a sound economic foundation”. And as well as a strong and productive economy, we need a wider debate about how the state and employers can work together to provide better training and lifelong learning opportunities for people – especially in the sectors most at risk of automation.

But this reform would send a clear message that the Labour Party values work and is thinking responsibly about the changing world of work. It would show that we agree: those who have paid into the system all their working lives do deserve something back.