Are inclusive growth policies compatible with the current model of welfare?

This guest blog post from Dr David Etherington and Professor Martin Jones discusses the research they have conducted on inclusive growth in the Sheffield City Region. It highlights the potential for new models of growth and the importance of inclusive devolution and welfare and labour market reforms.

We have just completed our research on Devolution and Disadvantage in Sheffield City Region: An assessment of employment skills and welfare policies where we focus on the impact of policies on the economic and social needs of disadvantaged groups. Much of the devolution debate and policy agenda has been focused on ‘growth’ but for whom? A relevant question to address given now that there is a considerable interest in inclusive growth.

Our collaboration brought together various disciplines and research projects relating to devolution and the implications of welfare reform. Martin as Principle Investigator leading on an ESRC project “Spaces of New Localism: Stakeholder Engagement and Economic Development in Wales and England,” involves Sheffield City Region (SCR) as a case study area.

Second, work undertaken by David and Anne Daguerre (Middlesex University), on welfare reform and benefit conditionality, completed in 2015 raised a number of issues about the local implementation of welfare policies which we were interested in pursuing in this study.

Finally Sheffield City Region – once the centre of the coal and steel industry; a tradition of trade unions and labour movement organisation, and a centre for the 1984-85 Miners Strike is now bearing the scars of many years of de-industrialisation and economic and social exclusion. This presented a relevant and interesting lens through which to analyse how devolution is going to work out in a severely de-industrialised area.

The research involved addressing three questions; what is the nature of economic and social disadvantage? What policies are being implemented to address this? What are the barriers to accessing welfare, employment and skills?  30 policy stakeholders (including Central Government, City Region, local authorities, Colleges, voluntary sector and trade unions) were interviewed, we also conducted a focus group of unemployed people, many documents were analysed and we held a Policy Forum to discuss the findings and our recommendations. In addition we submitted evidence, drawing from our research to the Department of Business Innovation Skills Select Committee Enquiry into the Northern Powerhouse.

Devolution is reinforcing economic and social disadvantage?

The biggest question around devolution is how the current growth strategies work in tandem with the implementation of employment and welfare policies within the City Region. We found that they don’t and in fact many benefit claimants are facing a harsh welfare regime which is creating social disadvantage (70,000 benefit sanctions were implemented between 2012-2015). As one Advice Worker commented:

The circumstances of people coming through our doors are far worse than those of the 1980’s. Reliance on Foodbanks, Benefit Sanctions on a massive scale, sick or disabled workers, without a hope of being employed, found ‘fit for work’ are some of the issues that our team of advisers have dealt with this year. Policies which are supposed to be about helping people to move closer to the labour market are in many cases damaging to health, self-defeating and at their very worst, causing deaths and contributing to suicides

The Government may be softening on the deployment of benefit sanctions but they still seem to be used as punishment when often more support is needed. (The majority of our focus group had experienced sanctions). Delays in benefit payments are also common and more worrying is the way the benefit system actually encourages complete disengagement from the system. Frank Field’s study of the welfare system and a study from Oxford University suggests that many people disappear from the system altogether. The fact that many people are entitled to benefits who do not claim them must also be a cause for concern.

We managed to obtain up to date data from various sources including Professors Christina Beatty and Steve Fothergill from Sheffield Hallam University on how the welfare changes have impacted on places and people. Their study identifies two local authorities in the City Region, Bolsover and Barnsley which are in the top 50 local authorities most adversely affected by the welfare changes. On average, households with dependent children are hit particularly hard by the reforms - in Sheffield, for example, this involves 64,000 households with dependent children accounting for around 28 percent of all households in the city.

The welfare reforms are moulded by austerity with an increasing focus on cuts to benefits. This is justified by an argument that reducing benefits will incentivize people to look for work. Breaking the vicious low pay low skills cycle is extremely difficult under current policies because meeting targets for ‘upskilling’ people is a tall order given current levels of funding. There are significant numbers of people with low-level qualifications in the SCR and the lack of sustainable jobs is an issue. The Resolution Foundation identified the Sheffield City Region comprising the highest proportion of people in work paid below the living wage. There is a convincing argument backed up by what our interviewees have informed us (including Work Programme providers) that welfare to work is feeding the low paid and zero hours labour market.

Inclusive Growth needs to address Welfare Reform

A number of recommendations were discussed at our Policy Forum held 11 May 2016. Devolution needs to take account of the way welfare reforms combined with austerity cuts are disproportionately impacting on disadvantaged groups and areas. There is a cost benefit case for an enhanced role for public services in supporting growth. We consider that there also needs to be a focus on demand-side approaches, such as guaranteed work placements combined with training which can be targeted at disadvantaged groups and an overall greater integration of the employment and skills system. We have put forward case study examples of good practice (Unionlearn/bargaining for skills and the Danish model of Job rotation) as inclusive labour market instruments.

Nevertheless the message from our Forum is that Inclusive Growth has to address the negative impacts of welfare reform. In this respect a cross trade union Welfare Charter supported by the TUC, Unemployed Centres Combine, Unite the Union, Unite Community and Public and Commercial Services Union provides a framework for a more inclusive social security system.

The Charter makes concrete proposals to improve the system which include better representation of unemployed people in the claimant system and improving job brokerage and career advice and end to the existing Sanctions Regime and Work Capability Assessments for disabled people. Inclusive Growth needs to promote a narrative about social security which challenges stereotyping of benefit claimants and benefits. In 2017 the Work Programme contract finishes and in the Sheffield Deal there is an opportunity (maybe) for partners to co-design welfare to work. As well as putting pressure on Central Government in relation to welfare this maybe an opportunity to address the shortfalls in the current system?

Dr David Etherington is Principal Researcher for the Centre for Enterprise and Economic Development (CEEDR) at Middlesex University. Professor Martin Jones is Director of the White Rose Social Science Doctoral Training Centre at the University of Sheffield. They are both members of the Inclusive Growth Commission's Research Advisory Group.