“Work for those that can, security for those that cannot”:The United Kingdom’s new social...

“Work for those that can,

security for those that cannot”:

The United Kingdom’s new

social security reform agenda

Mark Hyde, John Dixon and Melanie Joyner

Department of Social Policy and Social Work,

University of Plymouth, United Kingdom

Following its election victory, the Labour governmentembarked on a programme to reform fundamentally the

United Kingdom’s post-war welfare state. The reforms areoutlined in a number of government policy consultationpapers and are intended to address neo-liberal concerns

about the welfare state, although neo-liberal panaceas havebeen rejected in favour of a “third way”. Strongly

influenced by Mead, Layard, Giddens and Field, thegovernment’s welfare reform package is premised on aconception of citizenship that emphasizes equally the

importance of “entitlements” and “obligations”, especiallythe obligation to work. We argue that this reform approachis inherently flawed: it presumes that the poor are withoutwork because they lack appropriate incentives, not because

they lack jobs that will lift and keep them out of poverty. Weargue that the government’s welfare reform strategy iscontradictory: while it aims to ameliorate poverty, the

emphasis on obligations and compulsion may have the effectof reinforcing existing economic and social divisions. In

approaching the second millennium, there is a clear need fora robust interventionist approach to welfare which

emphasizes the right to a satisfactory standard of living.

Following its stunning electoral victory in May 1997, the Labour govern-ment developed a comprehensive response to the challenge of the now

global neo-liberal welfare reform imperatives. It is driven, however, not bythe desire to dismantle or privatize the welfare state — the neo-liberalpanacea — but rather by a desire to ensure that the welfare state can effi-

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ciently, effectively and with economy provide not only security for thosewho cannot work — so as to alleviate current poverty — but alsoincentives for those who can work to seek employment and then take thenecessary steps to secure their own future — so as to prevent futurepoverty.

The reform blueprint was first outlined in a consultation paper entitledNew ambitions for our country: A new contract for welfare, published in March1998 (UK, DSS, 1998a), although the subsequent ministerial changes in theDepartment of Social Security seem to suggest that this welfare reformproject is built on shifting sands. However, the main principles and poli-cies outlined in New ambitions have been reflected in subsequent policydocuments covering the main reform areas, including disability (UK, DSS,1998b), pensions (UK, DSS, 1998e), child support (UK, DSS, 1998d), unem-ployment (UK, DSS, 1998b) and fraud (UK, DSS, 1998c). Moreover, manyof the policies proposed by New ambitions either have been introduced orare to be implemented under the provisions of the Welfare Reform andPensions Act (UK, HC, 1999). Most significantly, the language of “personalresponsibility” continues to be central to the government’s welfare reformproject.

The ideological justification for the reforms is provided by the recentideas of Mead (1998), Giddens (1998), Layard (1997) and, in spite of hisresignation from the government, Frank Field (1998). Although the gov-ernment is committed to reducing social exclusion, the new emphasis onpersonal responsibility may reinforce poverty among the five groups tar-geted by the reforms: future retirees, the long-term unemployed, peoplewith disabilities, lone parents and young people.

The social security reform imperatives

The policy milieu that contextualizes the Labour government’s social secu-rity reform is, as elsewhere in the western world, dominated by the rheto-ric of neo-liberalism (Dixon, 1995, 1998). There is certainly a convenientconjunction in neo-liberal ideology between economic imperatives — fairreturns and economic efficiency — and moral imperatives: individual andfamily responsibility, personal choice and dignity-based contractual rela-tionships. This casts a gloomy shadow over the social justice visions andhumane good intentions of the founders of the welfare state, conceived assoftening the “sharper edges of capitalism and the crowning achievementof post war prosperity” (Cox, 1998, p. 1). The neo-liberals — never the uto-pians — assert that the welfare state must be dismantled, because of itsunaffordable predisposition towards universality and generosity, which

The United Kingdom’s new social security reform agenda

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have been stretched too far. As Cox (1998, p. 2) remarks: “If the welfarestate has become a butterfly, many are still calling it a caterpillar.”

Governments around the western world are now confronted with vex-ing social security reform incongruities as they seek to reduce social ten-sions, especially those associated with anomie and despair, without de-stroying their economies (Kirsch, 1988) or losing electoral support, whichmay well prove to be mutually incompatible goals (Esping-Andersen,1996). They are thus struggling to find ways to redesign their tax-financedsocial security systems in order to reduce budget deficits and to achievemacroeconomic objectives — most notably to enhance their country’s in-ternational competitiveness in the regional and global marketplaces —without leaving gaping and glaring holes in their social safety nets, evermindful of ensuring equity for future generations, always cognisant of theprevailing welfare politics concomitant with generational tensions. In re-designing a social security system the crucial question is how to harmonizeit with policy initiatives in any or all of the following domains: employ-ment policy (to create jobs and provide retraining opportunities), wagespolicy (to deal with working poor), taxation policy (to encourage work andappropriate forms of saving), savings policy (to encourage appropriateforms of saving), microeconomic policy (to deal with structural unemploy-ment) and macroeconomic policy (to encourage economic growth and tominimize cyclical unemployment and inflation). Governments are search-ing for policies that do not totally alienate either the politically influentialwelfare lobbies (especially those focused on senior citizens or welfare pro-fessionals) or the electorally significant post-Second-World-War baby-boomers throughout the developed world. The UK Labour governmentbelieves that it has found this “middle way”.

The guiding principles of British social security reform

Eight key principles have been articulated by the government (UK, DSS,1998a) to guide its social security reform aspirations:• “The new welfare state should help and encourage people of working

age to work where they are capable of doing so.”• “The public and private sectors should work in partnership to ensure

that, wherever possible, people are insured against foreseeable risks andmake provision for their retirement.”• “The new welfare state should provide public services of high quality to

the whole community, as well as cash benefits.”• “Those who are disabled should get the support they need to lead a

fulfilling life with dignity.”


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• “The system should support families and children, as well as tacklingthe scourge of child poverty.”• “There should be specific action to attack social exclusion and help

those in poverty.”• “The system should encourage openness and honesty and the gateways

to benefits should be clear and enforceable.”• “The system of delivering modern welfare should be flexible, efficient

and easy for people to use.”The envisioned outcome of putting these principles into practice is the

emergence of a “Third Age” welfare state, with an emphasis on povertyprevention, which draws upon the lessons learned from its predecessors inthe “First Age”, the response of the Poor Law to outright destitution; andthe “Second Age”, the Beveridgean welfare state response to want, disease,ignorance, squalor and idleness.

This refashioning of the contemporary British welfare state is seen as anessential transitional prerequisite before a “Fourth Age” welfare state canemerge in 2020. This will be a welfare state built upon “three core values ofwork, security and opportunity” (UK, DSS, 1998a). These principles will beembedded in a welfare contract between the State and its citizens, one thatarticulates mutual responsibilities and obligations that create a duty for all(UK, DSS, 1998a):

to help all individuals and families to realise their full potential and live adignified life, by promoting economic independence through work, by reliev-ing poverty where it cannot be prevented and by building a strong and cohe-sive society where rights are matched by responsibilities (p. 80).

With this new welfare contract will come greater trust (in governmentmeeting its future welfare obligations), transparency (about benefit entitle-ments and their eligibility conditions), responsiveness (to communityneeds), responsibility (by individuals for satisfying their own welfareneeds and for preventing fraud) and empowerment (as people take upwork opportunities and become more independent) (UK, DSS, 1998a,p. 81). The mechanism needed for government to fulfil its “Fourth Age”welfare contract obligations will involve three channels (UK, DSS, 1998a,pp. 81-82):• a modern service (“a single work-focused gateway into the benefits sys-

tem for all those of working age who can work, providing customers witha flexible professional, personalised service”);• services ( more emphasis on education, health, job assistance and child-

care, less emphasis on social security payments);• mutual and private providers (to “deliver a substantial share of welfare

provision, particularly pensions”).


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The cornerstones of British social security reform

The cornerstones of Labour’s strategies for achieving its reform vision areits initiatives on welfare-to-work and a new partnership for welfare (UK,DSS, 1998a, 1998b, 1998c, 1998d, 1998e, 1998f, 1998g, 1998h, 1998i).

From welfare to work: The challenge of transition. An “attack on work-lessness” is at the heart of the reform agenda. The targets are young peo-ple, lone parents, the long-term unemployed and people who have a dis-ability or long-term illness. The strategy involves cash assistance, tax re-form and support services.

Getting those out of employment into employment: Preparing people forjobs. The intent is to give those out of employment a “new deal” to become“job-ready”: training and education pathways, wage and training subsi-dies and work-for-welfare measures (work in the voluntary sector or in the“Environmental Taskforce”) (UK, DSS, 1998a, p. 25).

Addressing the dependency trap: Making work pay. The British tax transfersystem effectively imposes marginal tax rates in excess of 100 per cent onsocial security beneficiaries who move from benefits to paid employment.This is recognized as providing a “strong disincentive to work” (UK, DSS,1998a, p. 29). Tax reform is thus central to the success of any welfare-to-work programme. It is envisioned that the income threshold for the pay-ment of national insurance contributions be raised to the level of that per-taining to income tax, and that the existing minimum income tax rate ap-plicable to low-income earners be halved. The clawback rates on assistancegiven to low-income earners will also be reduced. The effect will be to endmarginal tax rates over 100 per cent and reduce by two thirds the numberof low-income families facing a marginal tax rate of over 70 per cent (UK,DSS, 1998a, p. 29).

Supporting the working poor. A system of tax credits is intended to pro-vide more generous support to working families, in the form of reducedincome tax liabilities (UK, DSS, 1998d). A set of Working Families TaxCredits is to replace the existing Family Credit system, which will providemore generous support to families with children. A system of ChildcareTax Credits is to be introduced, intended to cover 70 per cent of childcarecosts for low- and middle-income families. These reforms are intended toensure that every working family with a full-time worker achieves a mini-mum income equal to about half the average wage.


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Social security load shifting: Building new public-private partnerships. A“new insurance contract” is intended, one that redefines the relationshipbetween the State, the private sector and the individual with respect to theprovision of retirement income (UK, DSS, 1998e, p. 4). Its guiding principleis that the State should “support those who cannot save [for their retire-ment] and regulate the [private] pension system effectively” (UK, DSS,1998e, p. 4).

Less cash: More services getting the unemployed back to work. That thenew welfare state is more than a reformed cash benefits system is an im-portant tenet of the reform agenda. Poverty alleviation and prevention —lifting and keeping people out of poverty — require a range of services:education, health, job assistance, childcare and nursery education, trans-port, social services and housing (UK, DSS, 1998a, chap. 5).

Rooting out fraud. Fraud is seen to undermine public confidence in thewelfare state and take resources away from those in “genuine” need. Thisis a reform agenda challenge. A high priority is to be given to detecting,deterring and preventing fraud (UK, DSS, 1998a, chap. 9; 1998c).

From entitlement to obligation: The shifting

ideological context of UK social security reform

Since the early 1980s, there has been a profound shift in the ideology un-derpinning the provision of social security benefits away from support forunconditional entitlements to an emphasis on “individual responsibility”and “self-governance”, reflected in the work of Giddens (1998), Mead(1998), Layard (1997) and Field (1998). In essence, it is argued that anumber of important economic, social and political changes have renderedthe traditional social democratic approach to citizenship obsolete.

First has been a fundamental change in the UK class structure whichhas resulted in a realignment of voting patterns. Traditional social democ-racy drew much of its political support from manual workers, but indus-trial restructuring over the past two decades has resulted in a diminutionof this electoral base. Linked to this has been the influence of growing eco-nomic affluence on changing public preferences for welfare. For Giddens(1998), the development of collective social rights was a practical expres-sion of the collectivist sentiment forged under conditions of economic scar-city during and immediately following the Second World War. Since then,rising household incomes have fuelled the demand for greater personalresponsibility in the consumption of welfare. In today’s society,


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social cohesion can’t be guaranteed by the top-down action of the state or theappeal to tradition. We have to make our own lives in a more active way thanwas true of previous generations, and we need more actively to accept respon-sibilities for the consequences of what we do and the lifestyle habits we adopt(Giddens, 1998, p. 37).

In this view, personal responsibility can be effectively promoted throughpublic measures which enable individuals to exercise greater choice inwelfare provision.

Second has been a profound shift in official perceptions of the underly-ing causes of poverty, particularly poverty among those of working age.The social democratic tradition has emphasized the centrality of factorswhich are beyond the control of the individual — such as the impact ofeconomic restructuring, the emergence of atypical and low-paid employ-ment and the practice of discrimination — and which exclude people fromadequate employment opportunities. Although Mead (1998) agrees thatthese factors may account for a very small proportion of existing jobless-ness and poverty, he argues that the principal factor underlying theseproblems is “behavioural”. Many of the poor are simply unwilling or un-able to take up available employment opportunities, even if they are awarethat this would lead to significant improvements in their material well-being. This “behaviour” in turn springs from a lack of “competence”. Jux-taposed with a pervasive sense of “hopelessness”, this prevents the work-ing-age poor from taking advantage of available work opportunities.

Echoing Murray’s work on the underclass (1994), Mead argues thatthese problems result from weak or abusive parenting. Children are notcognitively or motivationally prepared to succeed as adults, leading to alifetime of poverty. In these circumstances, the range of potentially effec-tive public policy options is limited. Job creation or anti-discriminationpolicies are unlikely to be successful, because they fail to address the rootof the problem, namely the incompetence and self-defeating attitudes ofthe poor. In Mead’s view this limitation is unavoidable because publicpolicies cannot compensate for a deficient experience of family life duringchildhood. He argues that the most effective approach to reducing povertyamong those of working age is to introduce a mandatory work require-ment for those in receipt of social security benefits. He supports this argu-ment with the findings of an empirical study of the effectiveness of variouswork welfare programmes currently operating in the United States (Mead,1998). Some of the schemes involve voluntary compliance instead of com-pulsion, while others provide education and training rather than work ac-tivities, but all have the effect of increasing work participation amongthose who are dependent on social security benefits.


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These arguments are reflected in the ideological shift that has takenplace in the United Kingdom. A key influence on the Labour government’swelfare reform project, Richard Layard, is insistent about the centrality ofpaid employment to poverty amelioration. For the poor,

the way to a better life is to work and earn. Work will give them the sense ofmaking a contribution, and earnings will provide a better income than benefitsever could. So the basic strategy for dealing with want is to get people fromwelfare into work (Layard, 1997 p. 55).

The government is also sceptical about “voluntary” approaches to ensur-ing work participation, which assume that the work ethic is alive and wellamong those who are without a job. Since he resigned as Minister for Wel-fare Reform, Frank Field has dismissed compulsion as a means of “rough-ing up” welfare claimants, but he was previously a strong advocate ofbenefit penalties:

Sanctions need to be part of the New Deal. The threat of penalisation begins toaffect the culture in which people consider how they should respond and,indeed, what their responsibilities are (Field, 1998, p. 62).

In this spirit, the four work-welfare measures that have been introduced inthe United Kingdom involve varying degrees of compulsion, with benefitpenalties for those refusing to take up work-related activities.

Acknowledging Mead’s influence, the government advocates a toughcase-management approach to the administration of its work-welfaremeasures.

A caseworker-driven approach, combining help and hassle, requires talented,well-resourced, committed front-line workers who are suffused with the workmission . . . The UK government is looking at ways of giving our local benefitoffices greater autonomy of action, more scope for innovation, and moreincentive to reduce their case-loads by helping people back into work (Field,1998, p. 63).

It has been suggested that this tougher approach to the administration ofsocial security benefits contradicts the Labour party’s traditional egalitari-anism but Mead disagrees. In a challenge both to orthodox European so-cial democratic approaches and to the New Right, he argues that trueequality has less to do with the distribution of income and more to do with“equal citizenship”.

Mead insists that while it is important to maintain the principle that allcitizens have a right to at least a basic level of social protection, when thisright is unqualified it violates the principle that all should strive to main-tain independence through participation in paid work. This is what Meaddescribes as a “moderate” approach — a “third way” — that attempts toreconcile the entitlements and obligations of citizenship.


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Dilemmas and contradictions:

Work, welfare and welfare reform

The government’s welfare reform project aims to reduce poverty by em-phasizing “personal responsibility” and by bringing about a closer align-ment between welfare and work. However, this emphasis on citizenshipobligations may undermine the potential of the reforms to ameliorate so-cial exclusion. The contradictions of the welfare reform strategy are evi-dent in its likely impact on the circumstances of five key target groups:future retirees, the long-term unemployed, people with disabilities, loneparents and young people.

Future retirees

The Labour government sees the State’s new role with respect to retire-ment income protection as one of ensuring “a secure and decent income inretirement for all”, “better pension provision for those on low incomes,and those unable to work because they are caring for children or a relativewho is ill or disabled” and “better regulation of [private] pensions as awhole” (UK, DSS, 1998e, p. 1). A three-tier system is envisaged.

The first tier is the existing basic flat-rate contributory state pension,which will continue to be provided, without the imposition of a means test,and with benefits being adjusted in line with prices.

The second tier, as a replacement for the a State Earnings Related Pen-sion Scheme (SERPS), is a “citizenship pension” in the form of a State Sec-ond Pension. This will be available to all employees, but it will specificallytarget four categories of people: low-wage earners (earning up to £9,000 ayear); previously employed carers — expected to be mostly women —who give up work because of caring responsibilities for sick or disabledchildren or adults; those previously employed who become incapable ofwork for a substantial period because of illness or disability; and moderateearners (earning between £9,000 and £18,500 a year). Under this proposal,those earning less than £9,000 a year will receive state-funded contribution“credits” so that their second-tier pension entitlement would be as if theywere earning £9,000 a year. Those earning between £9,000 and £18,500 ayear — approximately the average wage — will receive tapered additionalstate-funded contribution credits, which will be reflected in the rebatesprovided in the event of a person contracting out of the Second State Pen-sion (£1 = US$ 1.56 approx.). Thus, it is envisaged that existing SERPSmembers earning under £18,500 a year will be better off under the pro-posed State Second Pension. The Labour government’s clear intent with


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regard to its second-tier pension strategy is twofold. First, it wishes to pro-vide a minimum income guarantee to all retirees “without the stigmawhich some people associate with [means-tested] Income Support” (UK,DSS, 1998e, p. 6). Second, it wishes to encourage contracting out from theState Second Pension to occupational (but not personal) retirement incomeprotection plans, facilitated in about five years’ time by its conversion to aflat-rate pension programme.

The third tier is privately administered voluntary occupational retire-ment income protection plans, the cornerstone of which will be the stake-holder pension schemes, which are expected to be introduced from April2001.

These are privately administered, defined-contribution plans that aresubject to state regulations that will be tightly prescriptive on acceptableminimum standards with respect to simplicity of charging structures, per-mitted charges, allowable minimum contribution requirements, the ap-pointment of independent trustees, vesting and portability rights, and theprovision of information. They are to be available to all employees, espe-cially those without access to an existing occupational superannuation —likely to be those earning between £9,000 and £20,000 a year; up to 5 mil-lion people are expected to participate. Contributions will be tax-deduct-ible and the investment income earned and capital growth achieved will betax-exempt. The annuities provided, however, will be taxable, althoughthe lump sum benefit component will be tax-free. These schemes will com-pete with other products in the private pension market, all of which will besubject to regulatory strategies that are aimed at restoring public confi-dence in the sector, including the protection of pension rights in the eventof employer insolvency and dishonesty, the prompt payment of contribu-tions, tax regime reform to facilitate the phasing-in of retirement, survivorbenefit rights, and enhanced transparency and accountability.

The Labour government’s success with its reform of retirement incomeprotection is contingent upon the performance of its new partners in theprivate pension sector. Their willingness to embrace stakeholder pensionsand to accept and comply with new public governance arrangements is thekey success parameter. Unless public confidence in private pension prod-ucts can be restored — a daunting task, given the legacies of personal pen-sion mis-selling scandals in the late 1980s and the Maxwell debacle in theearly 1990s, and current industry practices — the Labour government’simplementation of its pension vision may be compromised. The State may,therefore, not be relieved as much as the Labour government would like ofits responsibility for providing taxpayers and their dependants with anadequate income as they enter retirement in the years to come.


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The long-term unemployed

The Labour government has expressed particular concern about the cir-cumstances of the long-term unemployed, a group defined as those whoare aged 25 or over and who have been registered as unemployed for twoyears or more. In part, this concern springs from a recognition of the pro-found disadvantage experienced by those who have been without paidemployment for extended lengths of time. A considerable volume of re-search has shown that material deprivation increases alongside the dura-tion of unemployment (Brown and Scase, 1991; Gregg and Wadsworth,1996). The long-term unemployed are more likely to be in householdswhere all adult members are without employment, and long-term unem-ployment is concentrated in particular residential areas, suggesting that itsnegative impact is often felt at a community-wide level.

A number of measures have been introduced or are proposed to addressthese problems (see UK, DSS, 1998a, 1998b) including the development ofa work-focused “Single Gateway” into the benefit system (see below); aNational Minimum Wage; and a work-welfare programme, the New Dealfor the Long-Term Unemployed (NDLT). Under the NDLT, those who areregistered as unemployed are currently offered work for which they arepaid their welfare benefits plus a small weekly addition. Employers pro-viding work placements are, in contrast, given substantial subsidies as anincentive to participate in the scheme. Those among the long-term unem-ployed who decline the offer of a work placement are awarded significantbenefit penalties. This initiative consolidates the strategy adopted by pre-vious Conservative governments, namely the Jobseeker’s Allowance andthe administrative practice of giving benefit officers the power to suspendthe unemployed from benefit entitlement (see Hyde, 1998).

There are strong reasons for believing that this emphasis on compulsionwill, ultimately, be unsuccessful. Many of the long-term unemployed pos-sess few marketable skills and qualifications, which is why they are unem-ployed (Brown and Scase, 1991; Benoit-Guilbot and Gallie, 1994), and arenot strong candidates for better-paid permanent jobs that could lift andkeep them out of poverty. Not surprisingly, those who do find employ-ment tend to acquire low-status, low-paid jobs, in which there is littlescope for training and occupational advancement. As White (1994) com-ments:

Given recruits with low educational standards, employers find training —beyond a simple level — too costly, and this limits the kinds of jobs anddevelopment opportunities which . . . people have (p. 50).

The NDLT is unlikely to significantly reduce material deprivation among


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the long-term unemployed because it does not combine work compulsionwith the opportunity to undertake high-quality training. The NationalMinimum Wage may have partial success in reducing wage povertyamong those in the flexible labour market but there are serious doubtsabout the level at which it has been set (£3.60 an hour for adults), suggest-ing that its impact will be modest (Grover and Stewart, 1999).

People with disabilities

The Labour government’s measures for people with disabilities spring inpart from a recognition of the profound social and economic disadvantagethat members of this group experience. They have a non-employment rateof around 70 per cent and those who are working are statistically morelikely to be in unskilled, low-paid and part-time employment (see Hyde,2000). It is thus not surprising that an estimated 45 per cent of adults withdisabilities are living at or below the state-benefit poverty line (Berthoud etal., 1993). However, the main emphasis of the reforms is on controlling andeven reducing public spending on disability benefits (see Hyde, 1998).

Although the Labour government has developed a range of measures(see UK, DSS, 1998b; also UK, HC, 1999), we focus on its supply side policiesto get those of working age on welfare benefits back into paid employ-ment. First is the New Deal for Disabled People, which is currently piloting“innovative schemes” and “personal advisers” in various parts of theUnited Kingdom.

Second is a proposal for a “Single Gateway”, a work-focused point ofentry into the benefit system. Under this measure, all people with disabili-ties claiming income replacement benefits will be compelled to attend aninterview to discuss their options for employment.

Third are measures to restrict eligibility for long-term income replace-ment benefits. The government questions the effectiveness of the currentIncapacity Benefit work test, which assesses people as unfit for work eventhough they may have a partial work capacity. Envisioned is a new worktest, the “Personal Capacity Assessment”, which assesses the scale of em-ployability, thus enabling those with a partial work capacity to return towork. Incapacity Benefit will also be restricted to those who have paid Na-tional Insurance contributions during the two years prior to their claim. Ina similar vein, those aged 20 and over will no longer be eligible for SevereDisablement Allowance. On a positive note it is argued that these reformswill release resources that can then be used to support people with thegreatest needs (those who are “genuinely” unable to work), who will havea Disability Income Guarantee.


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Fourth is the introduction of positive financial incentives to take up paidemployment. The government proposes to tackle the “unemploymenttrap” by introducing a Disabled Person’s Tax Credit and by easing currentrestrictions on the amount of paid work a person with a disability may dobefore losing entitlement to social benefits.

@T2 = On the demand side of the labour market, it will introduce a newpublic authority, the Disability Rights Commission, to coordinate the im-plementation of existing civil rights legislation for people with disabilities.

Although these reforms appear to be substantial, there are convincingreasons for believing that they will fail to ameliorate social exclusion. Civilrights legislation in the United Kingdom applies to a minority of employ-ers — those with 15 or more employees — and will prove to be of littlebenefit to the vast majority of people with disabilities seeking work. Re-search shows conclusively that a large majority of UK employers are preju-diced against people with disabilities and that when they are given achoice, they are reluctant to hire disabled workers (see Honey, Meager andWilliams, 1993). The restrictions on eligibility for Incapacity Benefit willforce many people onto unemployment benefits without improving theiremployment prospects. A recent survey of people with disabilities whohave been disqualified from entitlement to Incapacity Benefit shows that amajority have been unable to obtain paid work and remain pessimisticabout their future employment prospects (Swales, 1998).

The main emphasis of the welfare reforms on work requirements is un-likely to improve the employment circumstances of people with disabili-ties. Because they have been disadvantaged in the education system, manypossess few marketable skills and qualifications (Hyde, 1998), whichmeans that they are unlikely to obtain satisfactory employment opportuni-ties under any work-welfare measure. Although the government has intro-duced new “innovative schemes” for people with disabilities, the poorperformance of previous similar initiatives makes it difficult to predict suc-cess on this occasion (Hyde, 1998). Available evidence on the occupationalpaths of people with disabilities in the United Kingdom leads to the ines-capable conclusion that the measures for those of working age will fail tosignificantly ameliorate social exclusion.

Lone parents

The Labour government’s focus on lone parents stems from the recognizedlink between female single parenting and poverty, formed by the intersec-tion of a skill deficit, low wages, and a lack of affordable childcare. It seeksto break the link through a collection of fiscal measures and initiatives de-


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signed to enable lone parents to enter the workforce. The New Deal forLone Parents (NDLP) is a voluntary programme actively marketed to loneparents whose youngest child has achieved school age, but it is also avail-able to parents with younger children if requested. Participants are allo-cated personal advisers who offer comprehensive help and advice on jobsearches, training, childcare, benefits and financial support. The introduc-tion of the National Minimum Wage will increase wages in many of thelowest-paid occupations dominated by women. Combined with the Work-ing Families Tax Credit (WFTC), these initiatives seek to make paid em-ployment a more attractive financial alternative to receiving state ben-efits.

To address the childcare barrier, in May 1998 the government an-nounced its National Childcare Strategy, promising to create 50,000childcare places, and is tendering for bids to create out-of-school careprogrammes for school-age children. To meet the demand for carers, theNDLP includes a childcare training option, allowing lone mothers to gainnational qualifications in the field of early childhood education and care.In order to assist in meeting the cost of childcare, a Childcare Tax Credit(CTC), linked to the WFTC, will cover 70 per cent of costs up to £70 a weekfor one child, and £105 a week for families with two or more children.

The potential for success is open to debate. Early results from the NDLPsuggest that while 90 per cent of those who undergo an initial interviewagree to participate in the programme, only one third of those who receiveinvitations arranged a meeting (UK, DSS, 1999), raising some questions re-garding the uptake rate. More fundamentally, the strategy does not neces-sarily break the relationship between single mothers and poverty; itmerely changes its nature. In linking the CTC with the WFTC, the govern-ment is effectively means-testing access to childcare. This could discourageparents from pursuing job opportunities which pay slightly above the cut-off point, creating a new work-based poverty trap based on childcare af-fordability.

NDLP and minimum wage provisions do little to address women’s seg-regation into lower-paid occupations, and may in fact reinforce the gen-dered structure of the workforce. Funnelling single mothers into childcareemployment — paying them to look after other people’s children, insteadof having them stay at home to look after their own — reflects genderednotions about the nature of caregiving and places them into one of thelowest-paid and least respected job categories. Overall, the social securityreform package may allow single mothers to become economically active,but at a level which marginalizes them in terms of status and income, withfew prospects for advancement.


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Young people

Conceptually, “youth” is understood as a period of transition from child-hood to adulthood within which individuals strive to develop social andeconomic independence; moving from school to work thus represents “acritical rite of passage” (UK, DSS, 1998a, p.24) for young people. Stub-bornly high unemployment, particularly among those with few qualifica-tions, forms part of a pattern of social and economic marginalization whichbrings into question young people’s citizenship status in the United King-dom. The Labour government interprets this process of marginalization interms of the development of a “skills deficit” which leaves young peopleill-prepared for adult employment. A multipronged strategy centred onthe New Deal for Young People (NDYP), accompanied by minimum wagelegislation, seeks to address the foundations of the skills deficit. Participa-tion in the NDYP is compulsory for all young people in receipt of Job-seeker’s Allowance (JSA) for six months. Participants begin by enteringinto a four-month “gateway” in which their job readiness is assessed.Those who are readily able to take work are provided with intensive helpto locate unsubsidized employment; those who are identified as being ill-prepared are given access to a range of training options to improve em-ployability. At the end of the gateway, young people are given four op-tions:• a job with an employer, who will receive a wage subsidy of £60 a week

and £750 for training costs;• work for a voluntary-sector organization;• work with an Environmental Task Force;• full-time education or training for up to 12 months.

With the exception of the full-time education option, positions will con-tinue for a minimum of six months. All options include a significant train-ing component which will lead to a nationally recognized qualification.Continued receipt of JSA is contingent upon participation; those that fail tochoose and complete an option will have their benefit eligibility revoked.A “development” minimum wage of £3 an hour for 18-20-year-olds is jus-tified by the training costs borne by most employers of this age group andthe opportunities for improved earnings later in life provided in this “de-velopmental” phase in work life (UK, LPC, 1998).

There has been some debate about the impact of the NDYP on youthemployment. For example, the government has estimated that the numberof young people unemployed for six months or more fell by one third dur-ing the year prior to February 1999 (UK, DFEE, 1999). However, it has beenargued that much of this decrease can be attributed to an improving eco-


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nomic climate (Atkinson, 1999), highlighting the importance of a focus onthe demand side of the labour market. Because it is essentially a supply sidemeasure, the NDYP fails to address broader labour market shifts createdby economic restructuring which leave young people with few prospectsof developing a career path or financial stability. By interpreting the em-ployment question as a deficit of skills rather than jobs, it shifts responsi-bility for job creation away from business and the State and places it on theindividual young person. If jobs leading to fulfilling careers are not forth-coming, rather than empowering young people and integrating them intoadult society through work this strategy may lead to further marginaliza-tion and denial of citizenship rights.

Conclusion

Although the Labour government claims to be concerned with the needs ofthe poor, its approach to social security reform has inegalitarian implica-tions. Arguably, it is the emphasis placed on obligation that implies in-equality, although the notion that citizens should be expected to contributeto the common good as a basis of social membership has a long intellectualhistory dating back to Marx (1875). Marshall (1992) also believed that obli-gation is an essential component of citizenship, although his notion in-cluded a general duty to serve the community, to pay taxes and to serve inthe armed forces. More recently, various writers have argued convincinglythat the notion of obligation must be integral to social inclusion strategies(see Lister, 1997).

The inegalitarian nature of the Labour government’s approach to citi-zenship lies partly in the nature of the obligations that the poor are ex-pected to undertake. At one level, the employment orientation of the re-forms may be positive, because the absence of adequately paid work isclearly one of the strongest predictors of poverty. Paid work plays a vitalrole in meeting important human needs, providing income, status and asense of involvement in collective pursuits. Unfortunately, participation inwork does not guarantee social inclusion. The rewards of work are inevi-tably unequally distributed in favour of professional, managerial andsupervisory occupations. Reflecting labour market restructuring, these in-equalities have grown considerably in the United Kingdom, as elsewhere,over the course of the past two decades (Brown and Scase, 1991; Hills,1996). Workers in a “core” segment of the labour market — accounting foraround a third of the British labour force — continue to enjoy above-average salaries, greater job security, substantial fringe benefits, andgreater work autonomy. In contrast, workers in the growing labour market


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periphery have a much less satisfactory employment experience, lowerwages, fewer — if any — fringe benefits, little or no job security, leading tointermittent periods of part-time or casual employment — even unem-ployment — and little control over work tasks. This periphery has grownconsiderably in the United Kingdom, resulting in growing wage povertywhich, in time, will reinforce, under the envisaged pension reforms, in-equalities in retirement income. At the same time, the increasing restric-tions on benefits for those of working age mean that those who are unableto find paid work also have a higher risk of poverty both now and afterretirement. Paradoxically, although the government proposes security forthose who cannot work, it has failed to address the needs of those who arecapable of working but, because they are unable to find employment, re-main dependent on social assistance.

Unless a strategy aimed at getting targeted social security recipients intoemployment is supported by the availability of jobs that they are capableof undertaking, that can lift and keep them out of poverty, and that canoffer them enhanced self-esteem and an acceptable level of job satisfaction,then it may well be self-defeating. Indeed, despite the avowed aim of thegovernment to reduce poverty in the United Kingdom, its welfare reformstrategy may simply reinforce existing economic and social divisions. Aswe approach the second millennium, there is a clear need for a more robustinterventionist approach to welfare which emphasizes the right to a satis-factory standard of living.

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