THE BLOG

Redefining the Role of the Welfare State

22/02/2013 09:11 GMT | Updated 23/04/2013 10:12 BST

I am a child of the welfare state. It has been with me all of my life and I consider it is one of our society's greatest achievements. But my admiration ended when it became clear that it now stands as a guarantor to the exploitation of the working classes. Tax credits, housing benefit for working people and a whole host of means-tested benefits are now required for millions of people to make ends meet.

Of course it was never supposed to be like that. The Beveridge Report famously proposed that all people should pay insurance to provide for the sick, unemployed, retired or widowed. It was possible because people in work had sufficient means to meet their needs and only had recourse to benefits in these circumstances.

Today, a growing number of working families need access to this help. The state is, in effect, subsidising the employers. Why?

The law defines an amount which every person or family needs to sustain an acceptable standard of living. This is the amount we measure against and provide appropriate benefits to reach if there is a shortfall. But the fact that so many families are eligible for benefits today demonstrates the shortfall of compensation.

Even in the days of subsistence farming, a family's efforts were sufficient to provide the appropriate to survive. Those days are gone.

There is no pressure on employers to change this situation despite the fact that measures such as the minimum wage fall far short of an income that obviates the need for benefits. Even ideas like the 'living wage' are little more than a sop.

Shifting responsibilities

If we are to break this cycle we need to start shifting the responsibility for proper employee compensation back onto the employer. Some may deem it crazy in an age of austerity but I think it can be achieved.

To start with we must redefine the minimum wage to match the level defined by law we need to live plus the prescribed housing costs. No working family should need benefits. This would become the new statutory living wage.

The current DWP budget should be transferred to a fund payable through the PAYE system as employer tax credits. This would be used to top op the current minimum wage to the new statutory living wage.

Over a period of five years this tax credit should be reduced until the employers are meeting the full cost. A fair approach I think to solving what has become a major structural problem in our welfare state. It would allow employers time to fully resume their responsibility and for the welfare state to return to what it was created for: looking after those in real need.