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Making a Contribution - Social security for the future
In a new TUC report, Kate Bell and Declan Gaffney address one of the key strategic policy issues of our time: how to regain public support for a redistributive welfare state. Their new analysis shows that strengthened contributory benefits could help this country to address labour market and demographic challenges that threaten all attempts to return to prosperity.
What this pamphlet calls the ‘nothing for something’ welfare state is the result of a generation of successive cuts in National Insurance benefits, which have been accompanied by rises in National Insurance contributions. William Beveridge’s welfare state offered protection from poverty and guaranteed a minimum level of support for everyone who had made a contribution. But today’s workers too often get ‘nothing for something’, paying into the system for little in return.
A third of a century ago, a worker would typically pay 6.5 per cent of their earnings in contributions and in return receive benefits that could include an earnings-related supplement and extra payments for dependent children and adults, as well as access to a system of reduced benefits for workers with an incomplete contributions record. Today, most of those enhancements have been lost, the real terms value of benefits has plummeted and the contributions rate has nearly doubled to 12 per cent.