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| Our welfare state is being transformed under false pretences | Our welfare state is being transformed under false pretences |
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| The government's programme of austerity and the transformation of the welfare state, which defines their response, is to become a harsh reality in April 2013 when a range of different reforms come into force. | The government's programme of austerity and the transformation of the welfare state, which defines their response, is to become a harsh reality in April 2013 when a range of different reforms come into force. |
| There are many different layers to this, including the recent decision to cut benefits and child tax credits in real terms - a decision alone that pushes 200,000 children into poverty. Another worrying aspect is the localisation of a reduced Council Tax benefit, which the New Policy Institute estimates will adversely affect 2.2 million working-age claimants. | There are many different layers to this, including the recent decision to cut benefits and child tax credits in real terms - a decision alone that pushes 200,000 children into poverty. Another worrying aspect is the localisation of a reduced Council Tax benefit, which the New Policy Institute estimates will adversely affect 2.2 million working-age claimants. |
| Further reforms, such as changes to disability living allowance and the bedroom tax, all means that many people will suddenly find themselves in the midst of a personal financial crisis. Changes to the benefits system through monthly payments of Universal Credit will not help the situation - instead of people having to cope for a few days at the end of the week with no money, it will now often be the final week of the month. | Further reforms, such as changes to disability living allowance and the bedroom tax, all means that many people will suddenly find themselves in the midst of a personal financial crisis. Changes to the benefits system through monthly payments of Universal Credit will not help the situation - instead of people having to cope for a few days at the end of the week with no money, it will now often be the final week of the month. |
| Worse is set to follow with the decision to reduce resources and remove the ring-fence from the Social Fund (which provides crisis loans to families in desperate situations). This is likely to result in the unavailability of critical emergency support, leaving vulnerable people more susceptible to the scourge of legal loan sharks in order to survive. As the social security net is restricted, many people will fall deeper into the clutches of poverty. This all comes alongside the eye-watering reductions in public funding to some of the country's most deprived cities, which will inevitably lead to essential services being cut to the bone. | Worse is set to follow with the decision to reduce resources and remove the ring-fence from the Social Fund (which provides crisis loans to families in desperate situations). This is likely to result in the unavailability of critical emergency support, leaving vulnerable people more susceptible to the scourge of legal loan sharks in order to survive. As the social security net is restricted, many people will fall deeper into the clutches of poverty. This all comes alongside the eye-watering reductions in public funding to some of the country's most deprived cities, which will inevitably lead to essential services being cut to the bone. |
| The injustice of people in poverty suffering for a financial crisis that they did not cause becomes visceral when contrasted to Goldman Sachs and JP Morgan's recent announcement of profits that defied all expectations. For some, this will result in a record bonus season, yet perversely it is people living in poverty who are portrayed as scroungers taking advantage of the system. | The injustice of people in poverty suffering for a financial crisis that they did not cause becomes visceral when contrasted to Goldman Sachs and JP Morgan's recent announcement of profits that defied all expectations. For some, this will result in a record bonus season, yet perversely it is people living in poverty who are portrayed as scroungers taking advantage of the system. |
| These starkly contrasting fortunes are a direct result of the way that the financial crisis of 2008 has been constructed as one of public debt, obscuring the reality of a flaw within the dominant model of financial capitalism that predicated growth on irresponsible free-market fundamentalism and continuous consumer spending based on unsustainable debt. | These starkly contrasting fortunes are a direct result of the way that the financial crisis of 2008 has been constructed as one of public debt, obscuring the reality of a flaw within the dominant model of financial capitalism that predicated growth on irresponsible free-market fundamentalism and continuous consumer spending based on unsustainable debt. |
| Since 2007 the UK has committed to spending £1.162 trillion on bailing out the banks. There has been a massive transfer of wealth from the public to the private realm - ultimately to prop up a bankrupt system. Yet we rarely hear about this when the arguments are made for cutting the social security net to a point that creates poverty. And not only is austerity proving to be socially unjust, Sheffield University academic Colin Hay argues that a failure to understand the causes of the crisis in the flawed model of economic growth has resulted in responses that are ultimately doomed to fail. The daily revelations of grim economic realities and the potential for a triple-dip recession appear to support him. | Since 2007 the UK has committed to spending £1.162 trillion on bailing out the banks. There has been a massive transfer of wealth from the public to the private realm - ultimately to prop up a bankrupt system. Yet we rarely hear about this when the arguments are made for cutting the social security net to a point that creates poverty. And not only is austerity proving to be socially unjust, Sheffield University academic Colin Hay argues that a failure to understand the causes of the crisis in the flawed model of economic growth has resulted in responses that are ultimately doomed to fail. The daily revelations of grim economic realities and the potential for a triple-dip recession appear to support him. |
| The logic of financial capitalism that has brought the world to its knees is reflected throughout the UK welfare system. This is built upon a flexible labour force and low levels of social protection, with a large role for the private sector in the delivery of welfare – all based on market relations that complement the dominant mode of economic growth. We can clearly see this through the use of tax credits to subsidise poverty wages, and housing benefit to pay private landlords for inflated rents. | The logic of financial capitalism that has brought the world to its knees is reflected throughout the UK welfare system. This is built upon a flexible labour force and low levels of social protection, with a large role for the private sector in the delivery of welfare – all based on market relations that complement the dominant mode of economic growth. We can clearly see this through the use of tax credits to subsidise poverty wages, and housing benefit to pay private landlords for inflated rents. |
| It is the economy that needs transforming, rather than the welfare state alone. In order to deal with the financial crisis, there must be a rupture from the current consensus of market fundamentalism that has led us to this point. The French philosopher Jacques Rancière argues that 'politics begins and ends in a dissensus.' This is the moment when the dominant narrative becomes disrupted and fresh approaches are considered. | It is the economy that needs transforming, rather than the welfare state alone. In order to deal with the financial crisis, there must be a rupture from the current consensus of market fundamentalism that has led us to this point. The French philosopher Jacques Rancière argues that 'politics begins and ends in a dissensus.' This is the moment when the dominant narrative becomes disrupted and fresh approaches are considered. |
| As Colin Hay shows, 'change our sense of the crisis and we change the range of responses considered appropriate.' Our economic failure is not the fault of the welfare state and its solutions do not lie exclusively within debates between austerity and Keynesianism. We need to begin a fundamental re-definition of our economy into one that is both socially just and environmentally sustainable, which enables a welfare state of the 21st century to develop. It is only through achieving such a transformation that recovery can truly begin. | As Colin Hay shows, 'change our sense of the crisis and we change the range of responses considered appropriate.' Our economic failure is not the fault of the welfare state and its solutions do not lie exclusively within debates between austerity and Keynesianism. We need to begin a fundamental re-definition of our economy into one that is both socially just and environmentally sustainable, which enables a welfare state of the 21st century to develop. It is only through achieving such a transformation that recovery can truly begin. |
| Dan Silver is co-Director of the Social Action & Research Foundation based in Salford. He Tweets on @DanSilverSarf | Dan Silver is co-Director of the Social Action & Research Foundation based in Salford. He Tweets on @DanSilverSarf |
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