David Willetts – 2002 Speech to Conservative Future

The speech made by David Willetts, the then Shadow Secretary of State for Work and Pensions, at the Conservative Future conference on 27 February 2002.

Tomorrow I go to Birmingham for the first of our One Nation Hearings. Throughout the year Iain Duncan Smith, myself and other colleagues will be visiting some of Britain’s most hard-pressed communities. Our purpose is not to give a lecture on how people should behave but instead to listen to the experiences of our poorest fellow citizens. We will also meet the teachers, social workers, the faith-based groups and the local volunteers who are dedicated to helping these communities. We will listen and we will learn. We will be honest about the limits of what government can do but we will also see at first hand what works and what doesn’t so that our policies can be more effective.

I will visit some of the poorest parts of Birmingham to see how people are being helped to overcome problems such as indebtedness, homelessness, drug addiction and family breakdown. My time in Birmingham will conclude with a meeting with professionals to learn from their experience of serving hard-pressed communities. It is just the first of a series of visits.

Over the course of the coming year the Hearings will cover urban areas – both inner-city and much neglected out-of-town housing estates. We will also be visiting rural communities where the reality of poverty is different but often as deep. We will be going to all parts of Britain. The second Hearing will take place in Kent where the Conservative County Council is pioneering a strategy to reduce welfare dependency by intervening early and by strengthening civil society. The process will culminate in November at a special Hearing with Iain Duncan Smith.

This exercise will get us back in touch with parts of our country which fear that politicians in general and we in the Conservative party in particular have forgotten about them. And they might have forgotten about us as well. After all, political relationships have to work both ways.

The exercise will also get us back in touch with the finest traditions of our own party. We are calling this project One Nation Hearings as a reminder of the One Nation tradition in Conservatism. That expression goes back to a powerful, passage in Disraeli’s novel ‘Sybil’. It is worth reminding ourselves what he said. He describes:

“‘Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by different food, are ordered by different manners, and are not governed by the same laws.’ ‘You speak of -‘ said Egremont, hesitatingly. ‘THE RICH AND THE POOR.'”

That passage can still send a frisson of emotion through us today. It reminds us that throughout our history Conservatives have tried to tackle what used to be called the Condition of England question though it applies equally across the whole of the United Kingdom. We may have been the party of property, but we recognised the obligations to the community that property brought with it. We are the party of the free market but we understand that a free market does not operate in a vacuum. It is rooted in a society and that brings with it obligations to our fellow citizens which we must honour.

At Lord Hailsham’s memorial service the other week I was reminded of his observation that economic liberalism is “very nearly true”. Free market economics may be valid but there is more to life – and to politics – than economics. Because Britain’s problems in the 1980s were above all economic, we shone an intense searchlight beam of economic analysis on them. We appeared to become the economics party. But economics, like patriotism, is not enough.

Nowhere can we see this more clearly then when we reflect on poverty. It is in a way as starkly materialistic a question as you face in modern politics. When Governments set rates for benefits they are deciding how much our poorest citizens should live on. But it is no good just trying to tackle poverty in this way. It has to be part of a much wider debate about deprivation and social decay, family breakdown and the abuse of drugs and alcohol.

Back in 1999, Tony Blair said: “Our historic aim will be for ours to be the first generation to end child poverty, and it will take a generation. It is a twenty year mission but I believe it can be done.” Since then the experts have warned, in the words of the Rowntree Foundation, that “The latest available data on the number of children and people living in poor households reveals little change, confirming the slow start for the Government’s policy commitment to eradicate child poverty within a generation”. But however admirable Tony Blair’s aim, there is another problem as well. His measure of success is exclusively a financial one. Eliminating poverty is defined by ministers as no children in families with less than 60% of median income. They appear to believe they will eliminate poverty with extra spending on welfare benefits. Of course, money is important. But all the evidence from all the post-war attempts at eliminating poverty by expanding benefits is that it can’t be done that way. And what if a family that does receive this extra money is unable to let their children out to play because there are used syringes on the stairwell outside their flat? And what if their children are unable to learn because of an endlessly changing cast of supply teachers at the local school? Isn’t that poverty too?

This evening I am going to look at each of these issues – the financial and the social – in turn. Then we might also see some common themes between the two ways of thinking about poverty.

It is easy to understand why we start by thinking of poverty in terms of incomes and benefits. There are millions of people in this country who are struggling to make ends meet on incomes that you or I would struggle to manage on. They face a relentless battle to get hold of what most people regard as life’s essentials. The figures are stark. 14 million people live on less than £151 a week or £7,850 a year.

In the past we Conservatives got ourselves into the situation where we appeared to deny there was a problem. Well, there is a problem. There are millions of people in our country who are in need. They are our fellow citizens. We do have an obligation to our fellow citizens at times when their incomes are low. We should not begrudge people the help that they need then. The old ways of discharging that obligation through the traditional welfare state may have failed but that does not extinguish the obligation; it adds to it. Our further obligation is to think afresh about how we can help our fellow citizens. That must include tackling welfare reform, which Labour promised to do so emphatically but where they have sadly recorded one of their most conspicuous failures.

The more than £100 billion a year, we spend on social security benefits is a very powerful intervention in the lives of millions of people. It affects their behaviour and their values. It can do good, not least in the simple and most obvious form of providing people with money when they otherwise wouldn’t have any. But it also has the potential to do harm. And one of the most pernicious ways in which it can do this is by trapping more and more families on means tests. There are now millions of British families who know that if they work a bit harder or save a bit more they will be barely better off. They feel the system is making fools of them.

Labour ministers used to be clear about means-tests. In 1993 Gordon Brown said, ‘I want to achieve what in 50 years of the welfare state has never been achieved. The end of the means test for our elderly people’. But since Labour came to office means-testing has increased inexorably.

When we entered office in 1979, 57 per cent of pensioners were on some form of means-tested benefit. By 1995, this had fallen to 38 per cent. This figure is now rising again. In fact, according to the House of Commons Library, once the Pension Credit has been introduced in 2003, we will be back to around 57 per cent of pensioners on means-tests. Eighteen years of progress will have been reversed in just six years.

We are also seeing a big increase in the number of non-pensioners in receipt of means-tested benefits. According to the House of Commons Library, 38 per cent of all households will be on means-tests by next year.

As means-testing becomes more common, the problems inherent within means-tests become more widespread. For example, take-up of all the main means-tested benefits is on the decline. This is precisely what the Prime Minister predicted when he admitted in 1998 that ‘there are problems if you move to too much means-testing, as you can see with pensioners who do not take up Income Support’.

Gordon Brown has decided deliberately and consciously to go for means-tests that taper out very gradually and go further up the income scale than ever before. This has two consequences, which fatally undermine his war on poverty.

First, you spend a lot of money on these more extensive means-tested benefits because you are paying them out to people on middle incomes who were not previously within the system. That means you increase spending on benefits by billions of pounds without getting much more money to the poorest people. That is why Gordon Brown has increased spending on benefits and credits by so much and yet has had such little impact on poverty.

Secondly, means tests have corrosive effects on behaviour about which Frank Field has warned so eloquently. If you save a little, or study to get that extra vocational qualification, or work some extra overtime, you are barely better off. This is debilitating for precisely the people and communities we most want to help. It is exactly the wrong message. There must be a better way. And in our One Nation Hearings I want to explore what that might be.

One person we can learn from is Beveridge. It was his great insight that you could target help on people who need it without means-testing if you define categories of benefit recipients carefully enough. Nowadays we tend to assume means-testing and targeting are synonymous. But they aren’t. Means-testing is just one way to target help. There are other ways. Another way to target help is by age.

We know that poorer families tend to be families with young children. That is when a parent, usually the mother, may still withdraw from the workforce for at least a few years. The arrival of the first child in particular can be a real burden for the family finances, as they suddenly move from double income, no kids to one income and three mouths to feed.

The same argument applies at the other end of the age scale. We know that older pensioners tend to be poorer. That extra 25 pence on the pension which you get when you reach the age of eighty causes great anger to pensioners because it is so small. But it is the last vestigial remnant in the system of recognition that older pensioners tend to have lower incomes and also higher expenses.

One of the ideas which I want to explore in the Hearings is whether there is scope for targeting help on younger families and older pensioners as a way of tackling poverty without such heavy reliance on means-testing.

It is easy to imagine Gordon Brown and Ed Balls poring over their computer screens in the Treasury as they fine-tune ever more intricate adjustments to the incomes of millions of people. In the end we all become like toys for them to play with as they fix our incomes down to the last penny. But the problem of Britain’s tax and benefit system is not that we lack enough tax and benefit instruments to fine-tune the income distribution. Our problem is the opposite. Our problem is that our poorest fellow citizens are trapped in a system that is so complicated that many of them do not get the benefits to which they are entitled. How can Gordon Brown expect a family to master the difference between the Working Families Tax Credit, the Childcare Tax Credit, the Children’s Tax Credit, the Baby Tax Credit, the Child Tax Credit, and the Working Tax Credit? And it’s not just complicated, it’s humiliating too. No wonder his tax credits have such a low level of take-up.

That is why welfare reform is so important. But it is not enough on its own. Beveridge spoke very powerfully of the giants to be slain in his famous report of 1942: ‘Want is only one of five giants on the road to reconstruction … the others are Disease, Ignorance, Squalor and Idleness’. That powerful list, with what must have been its deliberate echo of Bunyan’s Pilgrim’s Progress, reminds us that social security cannot be tackled on its own as some technocratic subject. It has to be part of a wider social vision.

One simple but little known fact about all these means-tested benefits shows vividly how they shape and are shaped by wider changes in society. The main recipients of these benefits are women. Female recipients of Income Support, the main means-tested benefit, outnumber men by two to one (2.7 million females and 1.3 million males). Poor pensioners are predominantly elderly widows living on their own. Poor families are disproportionately headed by lone parents. Lone parents in low paid jobs make up more than half of all recipients of the Working Families Tax Credit. Poverty in this country above all afflicts women and children.

This must be related to massive changes in the family. In the past one of the many functions of marriage and the family was to transfer income from working men to non-working women. Take away the man and his income – either by death, or divorce or unemployment or abandonment – and many women find themselves in poverty. As the family has proved less able to support women and children so the tax and benefit system has nationalised some of these functions. Earners sustain non-earners via taxes and benefits instead of through a personal relationship. And in our poorest areas the two parent family has proved particularly fragile. This is not because people are bad. In fact, I applaud lone parents who are doing their best to bring up their children after the father has walked out on them. But we can’t be serious about the causes of poverty and how we tackle them unless we think about the family as well. It is difficult to envisage the renewal of our poorest communities without a strengthening of the family.

The problem of poverty is increasingly a geographical one. That is why we have to think about communities and neighbourhoods too. Poor people often live in poor areas. It is no good simply handing over benefit payments if an area remains a breeding ground for poverty and decay. But equally there is no point spending lots of money on physical improvements to an area, including investing in new housing, if it doesn’t help the people who live there. Indeed there has been some very challenging research showing that sometimes urban renewal projects leave poor people worse off than they were before with higher bills for public services and in the shops as well. The challenge therefore is to help both poor people and poor areas. That is why successive governments have launched area-based initiatives. They have expanded enormously under this government. Here is a list of all the area-based initiatives which are in operation at present:

· Action Teams for Jobs.
· Active Community Programme
· Children’s Fund.
· Coalfields
· Community Champions
· Community Chest
· Community Empowerment Fund
· Community Legal Service Partnerships
· Creative Partnerships
· Crime Reduction Programme
· Early Excellence Centres
· European Regional Development Fund
· Excellence in Cities.
· Health Action Zones
· Healthy Living Centres
· Healthy Schools Programme
· Neighbourhood Management
· Neighbourhood Renewal Fund
· Neighbourhood Support Fund
· Neighbourhood Wardens
· New Deal for Communities
· Playing Fields and Community Green
· Single Regeneration Budget
· Spaces for Sport and Arts
· Sports Action Zones
· Sure Start
· Sure Start Plus
· Urban Regeneration Companies

That adds up to thirty different area-based initiatives. What is your reaction to that extraordinary list? One response, which I am sure many people feel, is that at least Labour are trying. These schemes might not all work but at least some will some of the time. The commentators probably feel that at least this list shows Labour’s heart is in the right place.

But now instead of responding to that list as an observer, imagine instead that you are a resident in one of our most deprived areas. Imagine that you are a lone parent in a run down estate who wants to set up a group for under fives, or you are a shop keeper fed up with vandalism and harassment who wants to know how to get CCTV installed. Then the sheer multiplicity of these schemes itself becomes yet another barrier. You don’t feel that this is a great example of innovative social policy. Instead as someone who has to navigate their way through them, it seems more like an obstacle course.

You may think that I am exaggerating the size of the problem. After all, not every scheme applies in every part of the country, so in practice you can’t apply for every scheme – another source of confusion and unfairness incidentally. But I have asked the House of Commons library to calculate how many of these schemes apply in our most deprived wards. Here is their list of the number of schemes in our ten most deprived areas:

Our poorest communities, which are desperately short of people to help them, have to sustain this elaborate structure of special projects. Are 21 separate initiatives the best way to help Tower Hamlets?

Even the government knows that it has got a problem and that the growth of these area-based initiatives is out of hand. Let me quote Peter Mandelson in 1997 when he was a Cabinet Office Minister: “There is a proliferation of programmes with insufficient collaboration between the different agencies involved at national, local, and area level. As a result we are spending vast sums of money, often over and over again on the same people through different programmes, without improving their ability to participate in the economy and society.”

He recognised that the splurge of activity in different departments after Labour won in 1997 needed to be co-ordinated. They set up the Social Exclusion Unit therefore. It was supposed to carry out a cull of these schemes and ensure that they were better focused. Two years later on there was another enquiry into the problem of area-based initiatives. The Performance and Innovation Unit reported in February 2000 as follows: “the clear evidence from those on the ground and from the PIU’s own analysis is that there are too many Government iniatives, causing confusion; not enough co-ordination; and too much time spent on negotiating the system, rather than delivering. … Area-based initiatives … have created a very substantial bureaucratic burden for those on the ground.”

Then late last year, one of Peter Mandelson’s successors in the Cabinet Office, Barbara Roche, gave a speech in which she said: “Area-based initiatives are often necessary and can make a real impact. They allow for the introduction of new ideas and for deep-seated problems to be tackled. Yet they seldom represent a long-term solution. Too often a lack of integration between Departments has contributed to fragmentation and separation of initiatives.” More than four years on, this was precisely the problem that Mandelson had identified.

The response is typical of New Labour. We get another unit – a new Regional Coordination Unit inside the Cabinet Office. But they keep the old unit, the Social Exclusion Unit, as well. Schemes multiply, reports on the multiplicity of schemes multiply, units to tackle the multiplicity of schemes multiply, and meanwhile the problems multiply as well.

That is not the end of it. Much of this money is allocated by a process of competitive bidding. This is an imaginative idea but it is now out of control. All around the country decent people who want to be running youth clubs or caring for elderly people are instead putting all their time and energy into filling out pages and pages of forms to bid for penny packets of money under some special scheme. Our hard-pressed communities are often desperately short of dedicated people, volunteers or professionals, who will give their time and effort. The last thing they need is such an enormous diversion of their energies into this extraordinary time-consuming and dispiriting process.

The other day I met someone whose job epitomises Labour’s style of government. No, he was not a spin doctor. But I think his job captures the spirit of Labour just as well. He was a bid writer. Day in, day out, his job was to write bids for money from special government schemes. Many local authorities have special units whose sole job is to bid for money under these schemes. The larger charities employ bid writers too. And a head teacher recently told me that if he bid for money under every Department of Education scheme, he could expect a 50% success rate. He would then spend the money in exactly the way he would have spent it had it been allocated as core funding. But putting in all the bids was taking up half of his time as head teacher.

I asked the bid writer what his success rate was and he described it just like a professional gambler in Las Vegas. He said he had some good runs when a lot of his bids got through but then he went through a bad patch when he was off form and sometimes did not succeed in a bid for weeks. He said the secret of winning was to discover the key words that the people administering the bids wanted to hear. And how did you discover the key words? You went to lots of meetings. Once you got yourself in the network and were at meetings and seminars with the officials and consultants running the schemes you knew the right buzz words. But there is no link whatsoever between the likelihood of getting to the right meetings and actually having a good project for hard-pressed areas. The schemes that succeed are well-advised and well-connected. That means the larger agencies who can put in the time and effort to learning the rules of the game. The whole system is systematically biased against the small and the local, the innovative and the voluntary.

There has got to be a better way. During our One Nation Hearings we will be asking people from our most deprived areas how we can construct a system that works for them better. One of the most exciting developments in social policy over the past few years has been the idea of social entrepreneurs. People with the skills of the entrepreneur – above all, inventiveness and vigour – turn them to tackling social problems. The Bromley-by-Bow Centre is at the heart of this movement. It is at the heart of the battle against the bureaucratisation of not just public services but the voluntary sector as well. That is a battle they are fighting on behalf of everyone who cares about decent services for people in our deprived areas.

Earlier this month, during a visit to Glasgow, Iain Duncan Smith observed the work of a successful community project serving one of the poorest urban communities in Europe. The project operates out of previously hard-to-let council flats that had become heavily associated with drug abuse and crime. Local people reclaimed the flats and now operate youth, literacy and family support services from them.

Let me give you now an indication of how I think we should set about reforming this extraordinary apparatus. The central principle must surely be that we fund institutions and professions not schemes and consultants. What happens now is that a shifting kaleidoscope of consultants appear in a deprived area in order to advise on schemes, and then when the money comes in it has to be doled out on very restrictive terms for special projects. But meanwhile the core funding for the most important public services in the area, health or education or police, does not grow much at all. And in order to get more money all these public services have to start playing the bidding game as well.

The problem with all this is not just the waste of effort and the humiliating games that people have to play in order to get money. There is something else that gets to the heart of the problems in our most deprived communities. There have been so many schemes over the years, under successive governments, that many people in our deprived areas have become deeply cynical about all of them. They have seen consultants come and go. They have seen schemes come and go. They will extract some money from them if they can but they do not take any of them very seriously. What they respect and value is people who stick with them.

We have got a very deprived council estate in my constituency, Leigh Park. Looking back on my ten years as the MP for Havant I am struck by how many changes there have been in the employers, the senior police officers, the health managers, the social services staff, the people running the social housing in our area. They all individually are behaving in a perfectly understandable way as their careers develop and they move on and move up. But what the community really needs is stability. What they really value is the teacher or head teacher who has not gone on a promotion to a new job but is staying with them year on year. They value the local policeman who has been out on the beat so long that he has real local knowledge. One of the strengths of our GPs is how many of them, once they become partners in a practice, will stay in an area for years.

Even the teachers, the doctors and the police officers drive home in an evening away from the estate. Again I do not blame them for it. The strains and stresses of their jobs are so intense that they would get completely burnt out if they were there day and night. But that is why I have come to value particularly the quite extraordinary service to our deprived communities from the clergy. They do still live amongst their flock. They are often the only professionals who live day and night on our tough estates. The enduring presence of our Methodist, Catholic and Anglican priests in our most deprived areas is real Christian witness and something of which our churches can be proud. Many of Britain’s other faith communities demonstrate a similar level of commitment. They intuitively grasp something very important which has passed the Government by. Instead of innovation, change and instability our most deprived areas need constancy, commitment and stability.

Now we are in a position to see the links between social security and financial policies to tackle poverty and the wider social issues as well. What we can see is that they both suffer from exactly the same problem of relentless experimentation on the very people and communities who are least able to sustain the pressures. How has this happened?

I don’t want to question the motives of Labour ministers. Many of them are personally committed to attacking poverty. It is what many of them claim brought them into politics and I have no reason to doubt them. But I have to say that New Labour’s preoccupation with the media has deeply damaged their approach to poverty. The needs of the poor people in our deprived communities are exactly the opposite of the needs of media management. And it is the media agenda which wins. Ministers feed the media with new schemes and new announcements and new initiatives. Their obsession with the media is indeed the cancer at the heart of the Labour project. It is the stuff of tragedy – the behaviour they learnt in order to gain office is itself the biggest obstacle to a successful policy for tackling poverty once they are in office. What we must offer with the steady integrity of Iain Duncan Smith is to bring straightforward honesty into politics.

The renewal of our approach to poverty is not just essential for people living in our most hard-pressed areas. It is also crucial to the renewal of Conservatism itself. It forces us to think afresh about how our principles can be made relevant to our poorest fellow citizens.

They have been let down by the state. Indeed one of the most striking features of these areas is that they are highly dependent on the public sector for both money and services. It was an opportunity for the public sector to show what it could do. But the reality is that it has been a sad disappointment. I do not believe that ever more public sector involvement is the right solution. But we cannot leave people to sink or swim. Rolling back the state does not of itself solve an area’s problems.

The Chief Rabbi has challenged us to break out of the stale market versus state arguments and think more freely: ‘The Right may blame the State. The Left may blame the market. But neither diagnosis is correct. The road we have begun to travel, of economic affluence and spiritual poverty, of ever more powerful states and markets and ever weaker families and communities, cannot but end in tragedy.’

The fact is that the old policy levers are not enough. Hundreds of thousands of people living in hard-pressed communities are not being touched by rising stock markets, government initiatives and technological innovations. They lack the basic skills and confidence to take the opportunities presented by our times. They need a deeper more personal care that cannot be provided by the market or the state.

The way ahead must surely be the revival of all those people-sized institutions which stand between the individual and the state. These are the institutions that provide people with personal care and challenge. They help all of us meet life’s greatest challenges. They provide us with our identity and a sense of belonging. We want to see stronger local communities and networks of neighbourliness. That is what society is all about. We have been busy preaching the virtues of civil society to the old Soviet Bloc whilst at the same time our own civil society has been enfeebled. It has suffered from twin attacks from an intrusive state and the remorseless spread of commercial values into every corner of life.

I have long believed that the future for our party is as the party which stands for not just the individual on his or her own but the individual in voluntary association with others. Individuals need not just work together through the state or through a commercial enterprise. They can also do so through all the rich variety of civic institutions which have historically been one of the most distinctive features of our country. I called this Civic Conservatism. Oliver Letwin in his fine speech recently gave it the rather better name of the neighbourly society. That must be the way ahead for our party. It is the way ahead for our most hard-pressed neighbourhoods. It is the way ahead for our poorest and most vulnerable fellow citizens. It is the way ahead for our country.