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This article was first published in The Guardian in ‘Comment is Free’ on Wednesday 30 July 2008

By Jonathan Rutherford

Poverty is the new political battleground. In Liverpool on Tuesday, Chris Grayling launched the Conservative’s plans to tackle the social gulf between the rich and poor. He said (pdf):

Britain today is a divided nation, where the poorest in our society are growing poorer while the fortunes of the richest are rising.

The Conservatives are taking on New Labour in its heartland and New Labour can no longer bluster outrage at this Tory hypocrisy. It has moved too far to the right and compromised too much on its own egalitarian tradition to point the blame at Margaret Thatcher and the 1980s.

New Labour is now seen as the party of the establishment and the party of insecurity. Nowhere is this more in evidence than its plans for welfare reform.

When the history of the end of this government comes to be written, welfare reform will be found inscribed on its coffin. James Purnell’s green paper, published four days before the Glasgow East byelection, was a fatal misjudgment. Glasgow’s low-paid workers failed to fall for the scapegoating of the city’s 55,000 incapacity benefit recipients. More significantly the government’s punitive rhetoric and blind faith in markets has handed the Conservatives an opportunity to dismantle the public structure of the welfare state.

As one Tory strategist put it:

The likes of Purnell are making it acceptable to question those welfare recipients who see handouts as a way of life. This is good for us; it means we can be radical without any of the usual finger-pointing.

The government moves rightward and the Conservatives accuse it of stealing their policies. But both collude in attacking those living in poverty. They both share the idea of an underclass, best known through the work of the rightwing US writer Charles Murray (pdf). Murray describes the underclass as a “certain type of poor person defined not by his condition but by his deplorable behaviour in response to that condition”. There is no evidence that such an underclass exists. There are too many variables in people’s social conditions and relationship to the labour market.

For both New Labour and the Conservatives, rhetoric about inequality and social justice involves blaming those living in poverty for their failure to grasp opportunities. Neither are willing to tackle the structural economic dynamics of inequality. The proposed solution is not redistribution, but punitive state intervention to instil personal responsibility and restore social order. As Purnell makes clear, “If there is work these people should take it”. If they don’t there will be sanctions. Chris Grayling is not to be outdone:

A culture of dependency is being passed on from parent to child … in a disturbing number of homes in our most deprived areas, addiction is a way of life.

Both New Labour and the Conservatives fall over one another to claim the mantle of David Freud, the banker whose 2007 report provides the business model for privatising welfare reform. George Osborne says Freud has not gone far enough: “We should seriously consider a bold ‘no-win, no-fee’ approach to getting people off benefits – in other words payment by results.”

James Purnell retorts “We are going further than Freud. Politics is a war for radicalism and we need to speed up.” Meanwhile, Freud admits he knows nothing about welfare, which doesn’t stop him pontificating about incapacity benefit providing a life of ease.

This is an ersatz war on poverty. It is less about social justice than the ambitions of politicians. Both parties have an almost pathological contempt for dependency. No one is sick enough not to work. They help promote the myth that the majority of people on incapacity benefit are not ill. There is no evidence for this generalisation. But it has not stopped them peddling it. They have swallowed the ideas of the private insurance industry whose attempts to reclassify illnesses like ME are designed to reduce their claims payments. Sickness is redefined as a deviant social role, and mental illness becomes “subjective”. The American insurance giant Unum has been at the forefront of this culture war. Its centre at Cardiff University has been a powerful influence on the Department for Work and Pensions (DWP) and the reform of incapacity benefit.

Both parties embrace the mantra that for the poor and sick “work is good for you”. “Work works”, says James Purnell. “There is overwhelming evidence that being in work is a key component of mental and physical wellbeing”, states the Conservative green paper, Work for Welfare. The mantra is repeated endlessly by government to justify its workfare policies. The source of this generalisation is again Unum’s centre at Cardiff. Gordon Waddell, an orthopedic surgeon with academic interests in the field of back pain, was commissioned by the DWP to write Is Work Good For Your Health and Wellbeing?

Waddell answered in the affirmative. Perhaps not surprising given his role as scientific adviser to the US company Medrisk. Medrisk works with insurers like Unum to help them reduce medical costs and “improve” their claims outcomes.

There are two groups of casualties in this “war”. The first is people living in poverty. They have become the scapegoats for Labour’s protracted failure to reduce inequality, and the targets of Conservative plans to downsize the welfare state. Their fate is to be a market for corporate profitmaking, trapped by a punitive, under-resourced welfare system, rising unemployment and a chronically insecure labour market. The second is the truth. The public accounts committee found that 40% of people moving into work are back-claiming jobseeker’s allowance within six months.

Of the 2.4 million on incapacity benefit, just under one million do not receive payment. They get insurance credits only. Those who do get money receive a pittance. The basic annual rate is £3000. The cost of a banker’s cheap holiday.

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