How Britain's new welfare state was born in the USA07 November 2010
The gathering was small and discreet and made no headlines at the time - but its significance for the future of our welfare state and for David Cameron's vision of a "big society" will become clear this week.
It was on a warm day in June that Professor Lawrence Mead, who inspired many of the US welfare reforms of the 1990s, strode into 10 Downing Street. The American guru had been invited by Steve Hilton, Cameron's chief strategist. Also present were senior Whitehall officials from the Treasury and other government departments. They were joined by Neil O'Brien, director of the rightwing thinktank Policy Exchange.
Mead was immediately struck by how eager the assembled team was to hear his ideas. "I was surprised how interested they were," he said.
Under detailed questioning, he told his inquisitors that attitudes to welfare in Britain had been characterised by a culture of "entitlement" for too long. The jobless knew they could get benefits while doing nothing in return, he warned.
In the US, attitudes had apparently moved on long ago and it was high time the UK followed suit. Welfare should no longer be seen as a "lifestyle" option. "Serious reform means ending entitlement by clearly imposing work as a requirement for aid," said Mead - and his words struck a chord. Even the disabled should be expected to work. In some cases benefits could be time-limited to help shunt people into jobs, he suggested.
"They really wanted to know how it could be done. It surprised me," Mead told the Observer.
This week, five months on from that meeting, the work and pensions secretary, Iain Duncan Smith, will publish a white paper on welfare reform. It will outline plans to make jobseekers take 30-hour a week job placements for periods of four weeks.
If they refuse or fail to complete the placements, their benefits will be stopped for three months. The buzz phrase of the new system will be "conditionality" - the idea of working for benefits under a contract with the state. Ways of talking about the unemployed are already changing even before the white paper is out. Yesterday the Department for Work and Pensions said the reforms aimed to "break the habit of worklessness". A few years ago such statements from Whitehall would have been unthinkable.
Such US-inspired policy changes on welfare will be far-reaching in themselves. But after six months of the coalition government, it is now clear that they do not exist in isolation. As one Labour MP who applauds some aspects of the coalition's thinking put it: "Something far bigger is going on. It is to do with redefining personal responsibility across the range. After all the talk of cuts in spending, we are starting to see what this lot are all about in philosophical terms."
That MP and policy experts are beginning to see a consistent theme driving government policy on everything from schools to higher education, policing, prisons and the health service. It is a process that - like it or loathe it - is finally beginning to give some shape and meaning to Cameron's hitherto ill-defined big society agenda.
For years the Tory leader struggled to explain what big society meant. In opposition he initially called it "social responsibility" and flogged the idea endlessly to unenthusiastic audiences. With the product failing to sell, it was then rebranded as "the big society" before the May general election. But again MPs found no enthusiasm on the doorsteps.
Nick Seddon, deputy director of the independent thinktank Reform, says the Tories promoted the idea before fixing the detailed narrative that would frame it. But now through a blizzard of policy announcements, the theme is emerging.
Just as the welfare reforms place a responsibility on the jobless to get into the "habit of work", so the coalition is promoting ideas of personal responsibility as a way to cure society's ills as a whole. At the Home Office and Ministry of Justice, Nick Herbert is impressed by US-style policing methods. Citizens who complain about too much crime and a lack of police on the street will be given a stake in the issue through a right to elect local police commissioners. Police chiefs will answer directly to the people. Power is to be pushed outwards.
Similarly Michael Gove, the education secretary, believes parents who moan about poor state schools should be given the power to establish new ones - drawing on models in Sweden and the charter schools of the US. And in the National Health Service, GPs will be entrusted by the health secretary Andrew Lansley with the power and responsibility to commission medical services themselves, freed from central control.
The overarching theme is that the coalition believes it can free people to find their own solutions by rolling back what it sees as an interfering, bureaucratic and stifling state. That state, it argues, can anyway no longer be sustained in its present form, at a time when the £155bn deficit must be slashed. So students will no longer be funded by the state but will have to take responsibility for paying back the cost of their education later in life.
Seddon says it is an agenda on which Tories and Lib Dems in the coalition have found themselves able to unite for different reasons - but ones that suit both parties' political visions. "For the Lib Dems, spinning power outwards has always been about devolution. For the Tories it is probably more about changing and reducing the role of the state and increasing the role of individuals and communities."
As the scope and pace of the change become clearer, the arguments are beginning to rage - not just between political parties but within them. The white paper will provoke huge controversy. Labour is keen not to be seen to be against benefit reform or personal responsibility - indeed some of the ideas about conditionality build on those being developed by the last government. But some forces on the left suspect a sinister agenda. They believe the big society is just a fig leaf for an ideological mission to shrink the state and dismantle the means to protect the most vulnerable.
The June emergency budget and last month's comprehensive spending review have already been widely criticised for hitting the poor hardest. As the Observer reports today, the government has abolished the social exclusion taskforce in the Cabinet Office - a unit established to stop people ending up on the margins of society. Government documents show it has been reborn as an office called "Big Society, Policy and Analysis".
In a taste of the arguments to come, Jon Trickett, a shadow minister with responsibility for social exclusion, describes the direction in which the coalition appears to be heading as "deeply disturbing". He added: "In no civilised society does the government wash its hands of our duty to the poorest. Yet this is what these changes signify. Both ministers and the backbenchers should hang their heads in shame."
Tim Horton, research director of the Fabian Society, likens Cameron's big society to George W Bush's "compassionate conservatism". He believes elements of the Tory right are under the influence of the anti-tax, anti-state Tea Party movement that had such a profound influence on the Republican surge in last week's US midterm elections. "Tax-funded public services are perhaps the best possible example of the big society," said Horton. "But the Tories simply can't see it that way."
Even some Tories are getting worried about the combined social consequences of drastic cuts and the drive to change attitudes towards personal responsibility. When mayor of London Boris Johnson said he would resist "Kosovo-style" social cleansing in relation to housing benefit cuts, he articulated in extreme language a residual fear among many Conservatives that the vulnerable could be left behind in the whole process. Mark Field, a London Tory MP, has also voiced his worries.
There is concern among his colleagues that state-backed projects for one-to-one tuition in schools that have helped underprivileged children will wither and die under coalition reforms. There is anger too among Conservative councillors across the country about the way local authorities are being stripped of responsibility for local education policy.
Last week MPs on the cross-party public accounts committee said the headlong drive for financial savings might be unrealistic and that as a result there was "serious risk" that ministers would end up slashing frontline services even more.
Observers see inconsistencies in the big society model. Professor Alan Deacon of Leeds University, an expert on welfare policy, says there is a big contradiction at the heart of Iain Duncan Smith's reforms, because the heavy hand of the state will be required to enforce the "on yer bike" approach to benefits. "At one level there is a tension between the authoritarianism of work enforcement through the work programme and the emphasis upon personal freedom and getting government off our backs," he says.
Others point out the contradiction at the heart of Gove's approach, with local authorities being stripped of responsibilities for schools policy while increased power to manage the parent-power revolution is being placed in the hands of the secretary of state. Professor Alan Smithers, director of the Centre for Education and Employment Research at the University of Buckingham, also points out that there are critics of the charter school system in America. They suggest that such schools thrive because they take children from motivated backgrounds, potentially weakening other schools in their areas. Some argue that free schools in Britain could have the same effect.
As for charities - placed by Cameron at the heart of his vision of a new energetic and civic society - they too are worried. Dr Peter Kyle, deputy chief executive of the ACEVO (the Association of Chief Executives of Voluntary Organisations), said there were inconsistencies in the policy. He said the sector had doubled in size in 15 years partly because of greater delivery of public services. Public spending cuts will hit charities hard, along with the VAT increase to 20% and an expected fall in giving. The result, according to ACEVO, will be a £4.5bn funding black hole.
Kyle said government urgently need to remove obstacles facing voluntary organisations that wished to take on delivery of public services. "Otherwise when the transformation does occur, there will be no charitable sector to speak of able to rise to the challenge," he said.
In America there is still heated debate about whether the approach to welfare now being championed here really works. One of its supporters is Charles Murray, author of the controversial book The Bell Curve, and a leading voice at the highly influential conservative thinktank the American Enterprise Institute.
"In America we have got the underclass off the public agenda," he says of the impact of the welfare reforms. "Britain has a much worse time with crime, welfare dependency, single-parent mothers and men who are able but long-term unemployed. You are still in a much worse state than the US was in the 1980s and 1990s."
But there are other views. One US phenomenon that might serve as a warning is that of the so-called 99ers - people who lost their jobs and have been unable to find work for 99 weeks - the point at which their unemployment welfare is turned off. There are now upwards of 1.4 million 99ers in America facing a life with no benefits and few prospects for finding a job in a market in which companies are still not hiring.
In continental Europe, other countries are already marching in a different direction. Though time-limiting of benefits is used, providing security for individuals is seen as vital. Many have been inspired by an idea that has its root in Denmark, where the former social democrat prime minister, Poul Nyrup Rasmussen, coined the phrase "flexicurity".
This was developed to respond to two competing pressures: the need for businesses to flexibly adapt to globalisation and new technologies, and the desire among workers for security. Flexicurity is about providing security for individuals, not jobs, and protects them as they move between employers. It works by encouraging regular training, tailored support for job seekers and equal opportunities for men and women.
Many politicians and academics in Europe believe that the principles that lie behind it are the ones we should all be following.
Back here, Horton argues that if the idea of the UK coalition government is to pare down services and the role of the state too much in the name of the big society, then it will not work. The British, he says, will not accept it.
"The Tories have long looked to the US Republicans for their inspiration. But they will struggle to import the same kind of politics to the UK. Britain was not founded on a tax revolt, and Brits are highly attached to their public services. That's why David Cameron spent the election campaign promising to protect frontline services."
Lessons from abroad
The American dream?
Politicians have not copied what they have witnessed in the US - but they have been inspired by it. Take welfare. George Osborne, the chancellor, has even borrowed language from his American counterparts. He has spoken of people thinking of benefits as a 'lifestyle choice'. Ideas in health and education also seem to have some roots in the US - although Scandinavia has also provided its models. Another source of inspiration has been Australia, where MPs have picked out ideas about payment by results.
Much has been made of how the Conservative party has been inspired by Sweden in implementing its free-schools policy, which allows parents or other groups to set up schools. But many point to the US as well and its charter school revolution, particularly in the case of academies. Here - like there - the drive is to free up schools from government control. But a key difference is that in the US those running schools lose their contracts if they fail to make them successful.
These are the people whose unemployment welfare has been turned off because they have been out of work for 99 weeks. There are upwards of 1.4m 99ers in America, perhaps driven by the fact that the country's jobless rate is lagging behind other signs of recovery. People face losing their homes and often build up huge debts as they turn to credit to survive. Many are lobbying for the Americans Want to Work Act to extend jobless benefits for a further 20 weeks.