Will the UK topple down a ‘welfare cliff’ in three months’ time?

The US turmoil over fiscal matters has a mirror in the crisis approaching the welfare state, argues Dan Silver, as use of UK food banks rises six-fold

The six-fold increase in the use of food banks reveals a growing social crisis and the abject failure of the welfare state to provide the basic support that is required. Sadly, this is set to get worse in the New Year.

The financial crisis of 2008, which for many has discredited the dominant model of financial capitalism, has been maintained by those currently in power. It has been reconstituted as a debt crisis caused by government deficits. Indeed, Ian Duncan Smith has argued that not only did welfare transfers (such as the tax credits that provide support to many underpaid workers) increase

people’s dependency on the state – worse still, it pushed the public finances almost to breaking point.

This has lead to significant changes in government fiscal policy, which will define politics and policy for years to come. Such logic also provides further credence to the erosion of the redistributive role of the welfare state – as the government declaims about more ‘fairness to the taxpayer.’ What began as a financial crisis in the banking sector has now become a social crisis for some of our most marginalised and vulnerable communities.

This will become more intense in 2013 – as the true impacts of austerity and welfare reform hit. Whilst the Labour Party is correct to discuss the impacts on people throughout the country, and Neil McInroy of the Centre for Local Economic Strategies clearly argues that ‘inequality has no compass points,’ the north of England will undoubtedly be at the forefront of this looming social crisis. The huge and disproportionate cuts to local authorities, which Polly Toynbee points out are neglected by a London-centric media, mean that the essential services that support a wide range of communities will be stripped to the bone – and sometimes taken away completely. Indeed, the council leaders of Newcastle, Liverpool and Sheffield wrote a letter published in Sunday’s Observer, which anticipates social unrest as a result.

This is not another alarmist doomsday prediction, but is a valid concern that is rooted in the reality of what is happening in many areas.

Universal Credit (UC), which is a single monthly payment for people looking for work or with low income, is set to be piloted in the North West region of England. With payments being made directly to claimants on a monthly basis, around 20-30 percent of tenants may well struggle to pay the rent on time when UC comes in, and many more people will experience difficulties with the new model (not to mention a financial reduction in real terms).

There is also a significant withdrawal in funding for advice services, at a time when they will be more vital than ever in providing support for people to navigate the system. As the implications of the fiscal cliff in the United States appear set to dominate the coming political commentary, there needs to be more debate about the welfare cliff that we will experience in the UK from April 2013 – when many of the reforms come into force, and austerity hits our communities in new ways.

The two issues highlighted above are part of many more which increase hardship, a programme of reform which consistently reveals a stark political choice about where, and on whose shoulders, deficit reduction falls. We must not fail in our duty to highlight this fact.

However, of equally important note is the fact that the government is leading us towards increasing poverty and crisis management, and away from any hope of the long-term preventative solutions based on early-intervention that are required to tackle many social problems, and indeed save money. This appears a clear political choice, not an inevitable fact of a post-Lehman Brothers’ world. For instance, tax credits of £28 billion and the Housing benefit of £22 billion are essentially subsidising employers and private landlords, when a living wage policy and increased house building would allow for the state to target resources elsewhere.

The transformation of the welfare state is truly set to take hold next year. Instead of a progressive change that empowers communities and aims for long-term improvements that meet the challenges of a changing society, we are likely to see decimation of services, crisis and increasing poverty. In the end, this will benefit nobody.

Dan Silver is director of the Social Action and Research Foundation based in Salford. He Tweets on @DanSilverSARF.

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