This month when the policy paper ‘Freedom from Poverty; Opportunity for All’ goes before the Liberal Democrat federal conference we have the chance as a party to put forward a radical and unique set of proposals to tackle poverty and inequality in the UK.
If we are honest with ourselves this is a challenge which we have not stood up to for too long. While many people within the party have proposed and put into practice polices at a local level, it is now seven years since we have put forward a coherent package to tackle inequality and eradicate poverty.
After 10 years of Labour the time is ripe for us to make ourselves the only party offering genuine solutions to help the 12 million people still living in relative poverty. It is simply unacceptable that in the UK a person’s life chances still are determined more by their parents’ income and employment than in almost any other developed country.
Labour’s attempts to reduce poverty have come at the price of trapping people in dependency, with means-tested benefits. Labour seeks to move people over an arbitrary ‘poverty line’, rather than giving them the real opportunities which would allow them to play their full part in society.
Labour has failed to tackle educational inequalities, failed to get ‘hard to reach’ groups back into employment; failed to deal with the dramatic shortages of affordable housing; and failed to strengthen the pensions and benefits safety net. The Conservatives meanwhile have no sensible policies to deal with poverty and inequality at all. They want to “roll back the state and roll forward society” in a great leap backwards to nineteenth century Victorian conservatism.
It is time for us as a party to wage a new war on poverty, and give people the opportunities to succeed in life. To establish a real meritocracy where, regardless of background, everyone is given the opportunity to acquire the education and skills to succeed. Where the poorest in out society are no longer abandoned to a childhood spent in failing schools followed by a lifetime of form filling to claim means-tested benefits. But if these aspirations are to be more than merely platitudes, if we are to prove ourselves as a party of substance against two parties of spin, we must take difficult choices, and look not only to the state for solutions but also individuals and business.
For all but the most vulnerable in our society, employment must be seen as the long term sustainable route out of poverty. As Liberal Democrats we must create a new social contract. As a Government we will ensure whatever your background we will give the very highest level of education, when you are old we will give you a good pension, when you are unemployed we will give you the best support possible – but in return within reason the expectation must be that everyone will find and stay in employment. It is unacceptable that in relatively buoyant economy such as ours over four million people come from households in which no one works.
The state has shown itself to be entirely incapable of providing effective employment support, the New Deal has been trumpeted by Labour as the great triumph of employment policy, but the statistics suggest no such thing. Since its creation thousands have been on this merry go round system time after time never finding sustainable work.
Instead I believe we should abolish Job Centre Plus in its current form and fund the voluntary and private sector and make them responsible for delivering the full range of back-to-work support, tailored to the needs of the individual claimant. Research from the UK and experience in Australia has shown that involving not-for-profit and private providers who are far more flexible to local needs delivers better outcomes for the claimant and better value for the taxpayer. Job Centre Plus meanwhile could be given responsibility for administering benefits and linking people up with back to work support.
Employment support is, however, only the final cog in helping people into long term sustainable work. The first and most important is education. Although Labour has invested billions of pounds the quality of education a child receives is still based strongly on the income of their parents: we must break this link. By funding education through the pupil premium we will attach money to the pupils and thus the schools that need it most, helping schools with large number of needy children improve and encouraging schools with a good record to take children with higher levels of needs.
This money, however, cannot come out of thin air – in this paper, we propose it will be funded through sweeping changes to Tax Credits. Although Tax Credits have gone some way to reducing the number of people living in poverty, they suffer the same problems of any complex means-tested benefit: they are expensive to run, take up is comparatively low, and they are highly prone to fraud and error.
With most means-tested benefits this is accepted, as they can be targeted at a small group of people the Government wants to help ensuring the Treasury can get best value for money. Yet in the case of Tax Credits, 9 out of 10 families are eligible. It is frankly absurd that a wildly complex means tested benefit – which suffers all the pitfalls which goes with that – should be available almost universally. Our policy would be to cut back Tax Credits, targeting them only to those on below average incomes, taking over 2.5 million families out of Tax Credits – thus freeing up money to put into education and the far more widely taken up Child Benefit.
Tackling poverty and inequality is of course a highly complex task which does not stop at employment, benefit and education policies, and for that reason I urge people to read the full policy paper and also the Tax policy paper, ‘Reducing the Burden’. Together these present a radical plan to tackle the inequality that has become rampant under the current Labour and previous Tory Governments.
However, hopefully here I have given a taste of why I believe it is so important that we Liberal Democrats take forward new policies to tackle social inequality, which places equal responsibility on the state and the individual. A social contract such as this is not a new idea, but one which both the Conservatives and the Labour Party have failed to create – and one which I believe we can derive great benefit from if we as a party choose to advocate it.
* Danny Alexander is MP for Inverness, Nairn, Badenoch & Strathspey, and the Liberal Democrats’ Shadow Secretary of State for Work and Pensions. The policy paper ‘Freedom from Poverty, Opportunity for All’ will be debated at this month’s Lib Dem conference in Brighton on Tuesday, 18th September.