Experts hold this to be one radical prospectus for welfare reform, and in many ways, they are right. Nothing like this has been attempted before. For hundreds of thousands of people who have their lives and futures resting on its success, I genuinely hope the government pulls this one off. But the radicalism should not stop there. The economic and social barriers that blight so many lives and communities in the UK will not be torn down by this policy, even if it is an emphatic success.
In a nutshell, the Work Programme is a major supply-side reform which, if successful, will deliver a stronger, skilled and more flexible labour market in the UK. In theory, people will secure work, hopefully sustainably, and thus enjoy all the fruits that one accrues from a life in employment, whether higher incomes, better standards of living, skills acquisition and development, and so on.
But there’s something missing. The Work Programme fails to address a major social deficiency inhibiting social progress in the UK: the gross and growing inequalities in wealth and assets. With the recent abolition of two successful redistributive asset-based welfare measures, the Child Trust Fund and the Savings Gateway, this problem is set to only get worse. Excluding property, the distribution of wealth has sharpened widely. In 1986 the bottom half of the UK population possessed 11 per cent of the nation’s wealth; in 2006 it was only 1 per cent. This is not an easy issue to solve, but adopting a radical and new hybrid approach, combining asset-based welfarism with micro-finance, could help engineer a decisive shift away from growing wealth inequalities in society. Micro-welfare would empower individuals who find themselves shut out of the jobs market, but have the ambition and initiative, to set-up their own collaborative and community-based enterprises.
This idea is based on the reputable micro-finance concept, which provides small loans in the developing world to poor, excluded or asset-less individuals. The loans have multiple purposes, but are predominantly used for setting-up small micro enterprises and businesses. They are designed to provide new sources of income and opportunities in some of the poorest regions in the world. Micro-welfare is built on this principle, but seeks to neuter the risks involved in micro-finance and engineer a more decisive development of social capital in communities throughout the UK.
It would achieve this by creating genuine collaborative ventures, with start-up loans going to groups rather than individuals. Groups of between five and ten unemployed and employed individuals would club together to form enterprise units. They would then be required to develop a business plan, with the help of business mentors and advisers from the DWP. They could appoint a leader to assume executive functions, but ultimately these are collectively owned and governed enterprises. We want as many to share in its wealth enhancing prospects. If approved, they would be able to access funds from a government micro-welfare budget. In contrast to most micro-finance initiatives, these can only be formed by groups. This will not only share the responsibility and burden of their entrepreneurial aspirations, but will genuinely bring people together in communities and help as many develop the vital work skills necessary for life. Repayments will be revenue contingent, but debt-proof for people: so failures and incursions of debt will be written off, thereby avoiding one of the perennial problems and concerns of micro-finance.
Micro-welfare’s aim is to offer people excluded from the labour market the opportunity and power to be author’s of their own destiny. Rather than singular initiatives, like the governments enterprise allowance encourages, they are group-based business enterprises driven by local people. Participants will develop their personal and professional skills and exit a life from welfare servitude. Importantly, it spreads asset acquisition and formation. Bringing people together who are unemployed and employed, a condition of the policy, helps give both the excluded and hard-pressed in society the chance to build their own businesses and a stake in society. It will help bridge the ever polarising divide that has plagued welfare in this country for the past decades, which reinforces a ‘them’ and ‘us’ attitude.
Public support, and critically understanding of welfare issues and problems, is vital for a welfare system fit for the 21st century. This policy and its ethos of ‘we’ and ‘us’ would help achieve that. And with Britain’s poorest communities being raided to fund an ideological fixation in tackling the deficit, social capital has never been more important to them. Premised on self-help, and more specifically self-help delivered collectively, micro-welfare could hold the key to our nation’s revival and reversing a slide into a depressing social deficit.
Image: Jacob Christensen
can you say what work you think this”stronger,skilled,flexible labour market” will be doing and can you give an an example,or say, five examples ,of the small business enterprise you envisage.
do you mean like in The Full Monty where a group of men became strippers?
This approach has its benefits, but it is important to get the scale right and to understand that this can only be a small part of the solution. The ‘micro-welfare’ approach would boost the informal sector – and this has been shown to cause a worsening of labour conditions. Also this begs the question as to what sort of economy we want to have – a modern hi-tech economy or one full of informal sector low level small businesses. There simply has to be a serious role for government in rebuilding a modern industrial economy. Also the micro-welfare approach risks saturation and displacement. Saturation where, to take the example of The Full Monty raise by the last commenter, there is a limit to the number of groups of males stippers in any town. So we couldn’t turn a whole factory full of unemployed people into strippers – the idea worked for one group, but wouldn’t work for all. And this applies to the whole of the informal sector. And related to this is displacement – we might be helping one group of people to start up a business, but in the process we could be driving others out of business, so no net improvement. In other words micro-welfare needs to be thought through very carefully.