Introduction

In 2006 significant policy reforms were developed in the areas of child support, pensions, and more generally for recipients of out-of-work benefits. In each case the government set out agendas for reform that would have major long-term consequences, although with little happening immediately. To what extent, therefore, has New Labour been laying down new foundations for social security in the future? How far do the reforms imply a break with the past, and in what ways do they represent a continuation of key New Labour themes?

In this review we focus on the three main areas of reform, after setting out the relevant context. A later section more briefly discusses other policy developments taking place in 2006.

Background

Britain has long had a complex system of social security, with complex benefits (and tax credits) based on a range of different principles of eligibility (McKay and Rowlingson, 1998). Among its key features are a flat-rate system of contributory benefits, a high reliance on means-tested benefits to alleviate poverty (often set at levels exceeding contributory benefits), and universal benefits to meet some of the costs of children or disability. Over time, and particularly during the 1980s and 1990s, the emphasis on the contributory side of benefits was much reduced. These became a less important part of social security, which shifted towards income testing as the basis of eligibility.

Since Beveridge, social security has also tried to preserve people's incentives to provide for themselves. This has been particularly true for pensions. Voluntary private arrangements, through employer and personal pensions, have long been available for people to provide a higher level of retirement income. Where people are able to make their own provision, this is encouraged through generous tax breaks on the contributions made, and National Insurance rebates for those contracting out of the State Second Pension (previously the State Earnings Related Pension Scheme [SERPS]).

Policy since 1997

Academic discussion of social security under New Labour has tended to focus on their earlier years in office. The government's approach has been analysed as having strong degrees of both populism and pragmatism (Powell, 2000). It has also been notable for a strong emphasis on the role of paid work, and economic concerns more generally. A recent commentator described social security under New Labour as having become a “work-focused benefit regime” (Kemp, 2005, p 30).