In a speech given at the Manning Networking Conference in March 2015 in Ottawa, Iain Duncan Smith, U.K. Secretary of State for Work and Pensions, explains how British Conservatives have shown that theirs is the party of compassion and effectiveness in helping alleviate poverty.
By Iain Duncan Smith, April 13, 2015
In 2004 I set up an organisation which I named the Centre for Social Justice. At that time, the Conservatives were going through a difficult time in the UK, for Tony Blair as the leader of the Labour Party was riding high having won two elections, sweeping all before him. Conservatism was in despair and the angry debate about whose fault it was raged within its ranks, to such an extent that it was difficult to get the Party to focus on regaining Government.
Argument raged between the self-styled ‘Mods and Rockers’, or the modernisers and the traditionalists. Hardly a day went by but that a new theory was announced by one or more Conservatives.
Some said we should accept that too few wanted Conservatives any more – that we should burn the party and re-form a new modern party from the ashes of the last. On the other side, the solution was to return to the halcyon days of Thatcher, and sharpen and increase our critique of the ‘arch-charlatan’, Blair.
Yet Conservatism on both sides of the Atlantic has survived because it is based not on ideology, but on unchanging values.
This has always allowed Conservatives to accept change where necessary, shaped, however, by the unchanging values which underpin our politics: strong families creating strong communities -- grounded by personal freedom -- whose boundaries are governed by democratic consent and arbitrated by the rule of law.
It is through these perennial values that we weigh and assess the need to preserve that which is good, with that which must change. As one of the founding fathers of modern Conservatism, Edmond Burke, wrote: “We must all obey the great law of change. It is the most powerful law of nature.”
The question, therefore, is not just what or whether, but when and how.
Challenges of the time
In Britain, for too long, Conservatives had allowed themselves to be defined by a narrow number of policy areas: taxation, immigration, and law and order.
More than that, Conservative speeches too often were inclined to lecture people, whilst looking back at past triumphs which gave previous leaders mythical status. Margaret Thatcher’s reforms of the trade unions, the liberalising of the economy and tax reduction became for many the definition of what it meant to be a Conservative.
So instead of applying our values to new challenges, we were to be defined by challenges of the past. I think that may sound familiar to Conservatives the world over.
On the other side, some would propose complete change. They too are wrong, for you don’t meet the challenge of being too narrow by trying to become something you are not.
No, you meet it by showing that your values cover a wider, broader agenda -- applying enduring principles to contemporary challenges.
All this brings me back to the Centre for Social Justice and why I set it up.
I had believed for some time that we could not achieve a modern flexible economy, holding its own in the global market place, unless all in our society who were able, played a productive part. Yet under the last Left-wing Labour Government, a quarter of the working age population was left economically inactive and millions languished on out-of-work benefits.
Such dependency would, I believed, not only go on to cost taxpayers huge sums of money -- but worse, leave these people and their families trapped – too often by the very system that should have been helping them to get back on their feet.
In visit after visit to some of our more deprived areas of Britain, I came to see how they had become places without hope or opportunity. In neighbourhoods blighted by worklessness, where gangs were prevalent, debt and drug the norm, families broken down, those living there had one thing in common: they were for the most part dependent on the state for their daily needs.
With income inequality the worst for a generation, whilst the middle class majority were aware of the problems in poor communities, they remained largely unaware of the true nature of life on some of our estates. For too long we let these problems be ghettoised as though they were a different country.
At the root of this problem was that Conservatives had abandoned the subject of poverty to the poverty lobby and the liberal Left. Perhaps our main contribution to the subject was that whenever Conservative politicians did speak about poverty, they did so with fingers wagging and harsh punitive language.
My party, the party of Wilberforce and Shaftesbury, seemed to have forgotten that we had always had a historic mission to help people improve the quality of their lives -- not just taking the easy option of sustaining people in dependency whilst looking the other way.
At the Centre for Social Justice, we were to reveal the true state of the nation in terms of social deprivation, uncovering a Britain blighted by multiple and overlapping social problems, often perpetuated over generations. But our purpose was also to do something else: it was to show that Conservatives cared about people trapped in dependency. That far from wanting to punish people, our vision was to transform people’s lives -- putting hope back where it had gone and allying aspiration with hard work, spurred on by strong moral values of fairness, opportunity, and compassion.
By contrast, the Left would have it that a sympathetic approach is to sustain the most disadvantaged on slightly better incomes. But the reality is that there is nothing laudable about handing out money, if in doing so it labels individuals ‘incapable’ or stops them moving into work; if it means parents are better off living apart than together; if it places families in housing that they could never afford if they took a job.
There is no kindness in a system that traps people – leaving them in a twilight world where life is dependent on what is given to you, rather than what you are able to create. Where for most people, their life’s direction of travel is dictated by the informed decisions they make: can they afford a large family? Should they move in order to take up a better-paid job? Can they risk a mortgage to get a bigger home?
Yet for too many of those locked in Britain’s welfare system, that process of making responsible and positive choices had become skewed. Those who cleverly played the system were most likely to be rewarded; whilst those who tried to do the right thing found endless stumbling blocks in their way.
Meanwhile, those who did nothing at all – sitting on welfare, unwilling or unable to move into work – had money paid out to pacify them regardless, with no incentive to aspire for a better life.
As Conservatives, our mission must be to challenge the accepted wisdom of the Left: that poverty is only about money and that more state money alone can cure it. For whilst a welfare cheque might protect against hardship, it can never substitute for a loving parent, an inspirational teacher, or a hard-earned pay cheque.
Whether it is debt, family breakdown, addiction, educational failure, or worklessness, our aim must be to tackle the pathways that lead people into disadvantage in the first place -- supporting people to regain control over their own lives, springing themselves from the poverty trap.
In Government since 2010, our single-minded aim has been to act on this vision for change. It is a proud legacy that a Conservative-led Government was the first in the UK to make social justice a lasting ambition. Not a political whim or quick win, but rather putting in place the structures necessary to deliver real change for years to come.
It is to this end that we have undertaken the most significant set of reforms in modern times – reforming Britain’s welfare system, education system, justice system and more -- so that these systems work together, turning round people’s lives now and transforming the chances of future generations.
First and foremost, this life change starts with the family – promoting strong family relationships, at the heart of which lies marriage, forming the bedrock of strong communities.
This isn’t about Government interfering in family life. Rather it’s about recognising that stable families matter – for our society, in the fight against poverty, and in setting children on the path to success. It’s about parents taking responsibility for their children.
And it’s about Government realising that we have to create a level playing field for the decisions that people make about family. In doing so, we should trust people – optimistic about the choices that they make for the common good.
That is why on coming into office, we set about redressing imbalances that had skewed people’s choices for too long, through a system tilted against poor families wanting to stay together, and at its heart tilted against marriage.
Now in the UK, we are reducing the couple penalty in the welfare system, as well as reversing the bias in the tax system by introducing a marriage tax break that will benefit up to four million couples. In Canada, here too we see Conservatives cutting taxes for families through income-splitting – no longer penalising households where one parent works, but supporting hard-working families to make the choices for that are right for them.
In the UK, now we are at last beginning to see improving family stability, with more children living with both their parents in recent years. Across both sides of the Atlantic, we know that we can only afford these policies now because of the difficult decisions we took during the tough times -- cutting our country’s deficit so that we can cut taxes too -- that discipline and determination, now paying off.
With the family first, then comes children’s education.
Here our reforms are about ensuring that schools – within the framework of clear discipline – offer structure, routine, and a fairer chance at success, no matter what a child’s background.
Through what we call the Pupil Premium – worth almost $2,500 per child this year – we are providing additional help to disadvantaged children, ensuring a positive platform for all children to fulfil their potential.
This investment in the early years stands to pay dividends further down the line, equipping individuals with the knowledge, aspiration and social capital they need to prosper. Thus we are ensuring that once again education is seen by struggling families as the pathway to a better life for their children.
Where people’s lives do go off course, the welfare system must be there to offer a second chance -- a system that allows everyone to take their life into their own hands, given an opportunity to achieve and take pride in that achievement. No one – whatever the difficulties they face – should be left behind in their ambition to shape and control their future.
Of course, in the most severe cases of sickness and disability, welfare must support individuals, but even then, it must be about more than sustainment alone.
That is why we are transforming disability benefits – not aimed at saving money, but saving lives – rightly helping disabled people to meet the extra living costs they face, but making sure they won’t lose that money if they do take up a job, leaving open the door to work.
Where people can, we know that work is the best way for individuals to secure that future. For work is what develops us, lifts us, and offers us self-worth and security. The money we earn is always more powerful than the money we are given. That is why, through our welfare reforms, it has been so vital to bring an end to the something for nothing culture that too often meant moving into work left people worse off.
A fair contract
This we are achieving through Universal Credit – the greatest change to our welfare system for a generation – rolling out a new benefits system gradually across the country, which simplifies back-to-work benefits and makes work pay.
In doing so, now everyone is required to sign up to what we call a ‘claimant commitment’ as a condition of receiving benefits – making clear claimants’ responsibilities to the taxpayer in return for support.
Such is the system that we have created in Universal Credit, that if you do the right thing – working as much as is expected of you – then you will move out of poverty. This, I believe, is the clearest commitment we can make to helping people get on in life – through a new welfare contract with the people of Britain.
On Government’s part: we will invest in targeting our support at those who need it most, and in restoring work incentives for the rest.
For taxpayers, we will restore fairness – not least through capping benefits at average earnings, so that families on benefits face the same choices about where they live and what they can afford as everyone else.
But so too for those once trapped in a system which meant it was more worthwhile sitting benefits than going to work. For even as we have capped how much people can receive in out-of-work benefits in the UK, we have exempted those receiving in-work credits – once again, leaving open the door to work.
For those receiving state support, this is our commitment: where once welfare was a way of life, now you can be sure that work will pay -- meaning the right choice is also the logical one.
The opportunity, now, is yours to make that choice, a fair contract, which lifts people out of poverty.
This change will not be achieved overnight. Surely not, for these are not simple fixes for short-term gain.
Yet in the UK, even already we are seeing signs of a meaningful cultural change, restoring our society one life at a time. For the young person: once with bleak prospects, but now one of a growing proportion in employment or education, who has their foot on the first rung of the ladder, able to move onwards and upwards.
For the long-term unemployed: for whom worklessness had become entrenched – too often written off in the past, but now receiving meaningful help to overcome the problems that hold them back – through what we call the Work Programme, the largest payment by results programme ever of its kind, helping people back to work on an unparalleled scale.
For the older worker: previously forced out of their job and onto the scrapheap when they reached pension age – but now able to choose when they retire, continuing to bring their wisdom to the workplace if they wish, filling the demand for jobs and keeping our economy growing.
When it does come to our pensions system, we have introduced radical reforms as well:
- improving worker participation through automatically enrolling people into workplace pensions;
- lifting the default retirement age;
- and creating a new, simpler state pension that reduces the means test and makes all savings pay.
This is the welfare legacy on which we as Conservatives will stand: it pays to work and it pays to save. In other words, reform that is not just about the benefits system, but about social renewal, part of that Conservative vision I described right at the start, of strong families and strong communities, upholding both personal freedom and personal responsibility.
Yet there is one last and equally radical reform that is necessary to complete this process – and that is to shift the way Governments, both local and national, fund social improvement projects -- opening this up to investors beyond the state.
By putting a monetary value on a given positive social outcome and underwriting the return, Government can allow these investors to buy into what we call a social impact bond. If the programme delivers the outcomes, investors see a return, whilst Government pays not for the process of tackling the problem, but for success at the other end.
Already, the UK is a world leader in putting this principle into practice – with 24 social impact bonds up and running, 10 of them financed by my Department’s Innovation Fund, which I set up four years ago.
This has proved the concept with cutting-edge programmes, seeing a return on investment through positive educational and employment outcomes for some of our hardest-to-reach young people.
So too in establishing social impact bonds more widely, where the UK Government has done a lot to put the infrastructure in place. Here we have created Big Society Capital, collecting up the money from dormant bank accounts and introduced a social investment tax relief, which could generate up to nearly £500 million or around $1 billion Canadian over five years.
Transforming Government’s role
Without doubt, there is still much more to do if we are to realise the full benefit of this nascent market.
Yet I believe the potential is enormous – with social investment standing to make the single, most significant difference to how Governments fund and deliver social services in years to come.
Not just through a more efficient use of taxpayer pounds or dollars. But in growing the money available for social programmes beyond Government or philanthropy alone, harnessing investment from businesses, trust funds, entrepreneurs and more – groups who might never before have seen themselves as part of positive social action.
With it, that money brings the rigour and discipline of the private sector, and the innovation of our most savvy entrepreneurs, as well as what I call the ‘fidelity guarantee’: an assurance – to use a British phrase – that what you pay for ‘does exactly what it says on the tin’.
This value of this guarantee cannot be underestimated. For it stops what has so often been the downfall of social programmes in the past, that in implementing a programme that is proven to work, it ends up being modified – tinkered with, to the extent that the programme you started with, isn’t actually delivered.
With social impact bond, on the other hand, if the project ends up being changed, no results means no pay-out – saving money by ensuring that successful programmes are delivered properly.
But what’s more, social investment shores up Government finances because the whole premise is of a return, linked to a meaningful outcome – be it getting someone into work, into rehab, off the streets or more.
Over time, it is my hope that this will turn the tide in the whole culture of Government spending -- no longer pouring money in and hoping for the best, but commissioning outcomes and paying for what works. Every pound or dollar for life change. That must be the opportunity of a lifetime.
If we can get this right, I believe the effect that social investment could have on society is dramatic.
For too long, a disparity between the top and bottom of our society has prevailed. We have a group of wealth creators at the top who have little or no connection to those at the bottom.
Yet in so many cases what divides the two is little more than a different start in life. I believe social investment gives us an opportunity to lock not just wealth back into our most disadvantaged areas – but something else as well. Just imagine a social enterprise working in a particular deprived neighbourhood – be it in London or Toronto, Glasgow or Montreal.
Investors buy into it and as with any investment, will want to see it flourish. Because they are risking their money – money that could otherwise be reaping a return elsewhere – those investors will want to see that social programme succeed, taking an interest in that community where they would otherwise be totally detached, brought back into contact with our most disadvantaged individuals and families, for mutual benefit.
For too often what is lacking in these areas is not just money, but hope and aspiration – the belief that the cycle of poverty can be broken.
Thus these wealth creators could have a powerful influence on the communities themselves -- a human interface between two polarised worlds, bringing success to the doorstep of failure, and two ends of our society closer together.
Reuniting the City and the inner city. Reuniting Bay Street with Main Street.
This rather rapid explanation of our reforms I hope helps explain why I think Conservatives can, and should, regain the moral high ground on social change. The simple truth is that we cannot be prepared to see a growing number of our fellow citizens fall into an underclass of hopelessness and despair. For without them we will be unable to create a modern competitive economy.
Compassion some say is soft. I have heard it argued that it is the preserve of the Left. I disagree.
There is nothing compassionate about increasing dependency by spending more of taxpayers’ money to sustain someone in a lifetime on benefits. No, Conservative compassion is about getting someone back to work, taking the tough choices to move someone clear of the benefits system.
It is about checking if someone on sickness benefits is fit for work, even though it seems harsh to some, or sanctioning someone who fails to do their utmost to find work.
This compassion has at its heart the certain knowledge that if a family has work then their lives will be improved.
In that, Government has a vital role to play, but it cannot be simply to dispense public money, stopping people from controlling their own lives.
Too often in the past, the Left interfered where it was unwanted, and was absent where it was needed. It subsidised people who made the wrong choice, and penalised those who tried to do the right thing.
No – Government’s role must aligned to the task of helping people to succeed in a modern world. A Government bringing cohesion to society, one that is on people’s sides, but not on their backs.
Above all, no one wants to know that they gained at the expense of those worse off than them.
That is why it is a historic Conservative mission to help improve the lot of the working poor. To give them the right to hope and the chance to aspire. That is the human dimension of all that we do.
It is that which will allow the voting public to look at us and say: “You know they’re OK. You know they deliver. And, they do the right thing for the right reasons – bringing security and hope to me and my family.”
Most of all, I want people to say that Conservatives are “good for me, and good for my neighbour”.
Rt. Hon. Iain Duncan Smith MP, is U.K. Secretary of State for Work and Pensions. This is an edited version of his speaking notes.
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