Social security policy and work incentives

At the centre of social security policy for working age people is a perceived policy contradiction; that if the needs of people who are not in waged work are relieved, they will be disincentivised from taking waged work when it is available or incentivised to leave work for unemployment (Grover, Reference Grover2016). Work incentives have been the focus of a range of policy-related literature, including that concerned with social security policy (including Whiteford and Bradshaw, Reference Whiteford and Bradshaw1994; Walker, Reference Walker1998; Benda et al., Reference Benda, Koster and van der Veen2020); labour market economics (for example, Maki and Spindler, Reference Maki and Spindler1975, Reference Maki and Spindler1979; Atkinson and Flemming, Reference Atkinson and Flemming1978; Kay et al., Reference Kay, Morris and Warren1980; Britton, Reference Britton and Philpott1997) and that concerned with relationships between social policy and capitalist imperatives (for instance, Offe, Reference Offe1984; Novak, Reference Novak1988). While being embedded in different intellectual traditions, what unites these literatures is a concern with how social policy, and more specifically social security policy, might act to encourage or discourage people to commodify, to sell, their labour power.

This is clearly articulated in O’ Brien and Penna’s (Reference O’Brien and Penna1998, p. 66) observation that the capitalist state ensures labour power is a ‘commodity to be exchanged in a competitive economic system’. The most important way in which it does this is by defining who, and when and under what conditions they, can claim to be legitimately outside of labour markets (Offe, Reference Offe1984). There are various means through which states might do this, for instance, via what Clasen and Clegg (Reference Clasen, Clegg, Clasen and Siegel2007) describe as the ‘levels’ and ‘levers’ of conditionality and, more importantly for the purposes of this article, the level at which benefits are set. While, as work on policy (Grover, Reference Grover2016) and public attitudes (Hudson et al., Reference Hudson, Lunt, Hamilton, Mackinder, Swift and Meers2016) suggests, concern with work incentives is long-standing, it is possible to argue that in recent decades it has become particularly important. Drawing upon van der Veen and Trommell (Reference van der Veen and Trommell1999), for example, Wright (Reference Wright2012, p. 319) frames developments in ‘welfare to work’ policies since the 1990s through the idea of the “‘incentive paradigm’… which views behaviour as driven overwhelmingly by individual economic gain” and is central to contemporary activation policies. As Dinan (Reference Dinan2019, p. 4) argues, such activation may be introduced ‘by merely reducing benefit generosity’. Such an approach to cutting the value of benefits has the theoretical impact of increasing the costs of waged work inactivity and, in an ideal-typical sense, can be described as being a ‘negative’ (Bonoli, Reference Bonoli2010), ‘defensive’ (Torfing, Reference Torfing1999) and/or ‘liberal’ (Barbier, Reference Barbier, Lind, Knudsen and Jørgensen2004) approach to activation-related policies. As Hussain et al. (Reference Hussain, Ejrnæs and Larsen2020) note in their analysis of racialised differences in benefit levels in Denmark, lower benefit levels operate on the premise that they intensify job search activity and reduce opportunities for claimants to be too selective in their choice of work. They do this by impoverishing people, an issue that in Britain has been central to debates about, and the practice of, limiting benefit income.

An aborted benefit limit

The 1979 Conservative Party’s election manifesto noted that if elected a Conservative government would ‘restore the incentive to work’.Footnote ³ While it primarily argued this would involve cuts to income tax, when in power it soon became apparent that the first Thatcher government was also concerned with the intersection between wage and benefit levels. This should not be surprising for at least three reasons. First, externally there was concern with the issue of the duration of unemployment and explanations of it (Norris, Reference Norris1978a, Reference Norris1978b). ‘Voluntary unemployment’ and work incentives were central to such concerns. Vocal backbench MP, Ralph Howell, economists and analysts, and pressure groups and the Trade Union Congress were in various ways questioning how the social security system affected financial incentives to do waged work (for example, Maki and Spindler, Reference Maki and Spindler1975, Reference Maki and Spindler1979; Howell, Reference Howell1976; Atkinson and Flemming, Reference Atkinson and Flemming1978; Kay et al., Reference Kay, Morris and Warren1980; Nickell, Reference Nickell1980).

Second, within the institutions of social security there was interest in work incentive issues. So, for instance, in the context of increasing unemployment and a belief among local office staff that a ‘good number of Supp Ben [Supplementary Benefit] claimants are better off on benefit than in such work’Footnote ⁴ in 1975 the SBC felt a need to inform senior staff of the point at which it financially paid unemployed people to be in work. Then in 1978 the Department of Health and Social Security (DHSS) commissioned a longitudinal cohort survey of unemployed men that, in part, was to examine work incentives (Clark, Reference Clark1978).

Third, work incentives had been a longer-term concern of the Conservative Party. The 1970–74 Heath-led Conservative government, for example, introduced as a work incentive measure the first-ever means-tested benefit (Family Income Supplement (FIS)) in Britain solely for people in full-time work. It was a consequence of concerns raised in the 1960s about families (thought to be 140,000) whose in-work incomes were estimated to be below their social assistance entitlement (Ministry of Social Security, 1967) and which the 1964–1970 Labour government was argued to have failed in policy terms (Banting, Reference Banting1979). By 1979, however, the politics of work incentives had changed. The Heath government was informed by One Nation Conservatism, the 1979 Thatcher government by neoliberalism, which suggested the economic dilemmas Britain faced could be explained by state-induced passivity and ‘dependency’ (Hickson, Reference Hickson2010). In this context, the work incentive issue was held to confirm the folly of state intervention, a theme that framed discussions of the possible introduction of a benefit limit in 1980.

The idea was first raised in discussions about the possible abolition of the Earnings-Related Supplement to social insurance benefits.Footnote ⁵ Howe was asked by the influential Ministerial Committee for Economic Policy (E Committee) to arrange a study of factors affecting work incentives.Footnote ⁶ This was conducted by the Ad Hoc Committee on Work Incentives and Income Compression. Its report argued it was empirically difficult to establish the ‘precise scale and shape of the in work, out of work and poverty trap problems’. Nevertheless, Howe believed the ‘problems certainly exist’.Footnote ⁷ He accepted the Committee’s view that the incentive to work (the in work/out of work problem) was more important than poverty trap, but argued its analysis was lacking because it:

Howe’s argument was informed by his belief, set out some two decades earlier, in “a ‘neo-liberal’ Conservative approach to the welfare state” (Page, Reference Page2015, p. 64). Page (Reference Page2015) argues, Howe rejected the tenets of social democracy in favour of free market provision and solutions, including freedom of individuals from state intervention, self-help and selective social welfare provision for those ‘whose need could not be questioned’ (Hillman and Clarke, Reference Hillman and Clarke1988, p. 45). Benthamite in tone, Howe’s analysis can be understood as being part of the ‘negative’ traditions in activation-type policies, for, he argued, ‘above all’ was the issue of the amount of benefit payable to people outside of work.Footnote ⁹ ‘The relative benefits the non-worker can receive compared with in work incomes’, Howe went on, contributed to the ‘imbalance in our society which lies behind much of our present economic trouble.’Footnote ¹⁰ This included a shrinking GDP and, perhaps more importantly, stagflation, to which it was thought benefit levels were contributing by increasing unemployment and fuelling wage inflation.Footnote ¹¹ In the immediate future, Howe argued, this ‘trouble’ could be partly addressed by ‘examin[ing] again the possibility of cut-off or Wage Stop arrangements.’Footnote ¹² Acknowledging that such a move would be potentially contentious, Howe nevertheless argued that it was ‘offensive to many people to see a man out of work who, simply due to the fact that he has a large family, is collecting – untaxed – any reasonable proportion of a national average wage.’Footnote ¹³ In addition to gendered assumptions about male ‘breadwinning’, the implication was that the main concern of social security should not be the ‘needs’ of families (defined by the number of people in them), but how their benefit income compared to average wages.

Howe was asked by E Committee to arrange for officials to examine the ‘possibility of imposing some kind of cut off on the size of benefit payments.’Footnote ¹⁴ In the meantime, he wanted to announce in the rapidly approaching 1980 Budget that such a limit would be forthcoming. Opposition from the DHSS and the SBC deterred him from doing this and helped establish reservations that meant the idea of a benefit limit would soon be aborted.

Given the abolition of the Wage Stop only five years earlier,Footnote ¹⁵ one of the main concerns was how the introduction of such a limit would be perceived. The Treasury was warned it was under-estimating how politically controversial a new benefit restriction would be. Patrick Jenkin (Secretary of State for Social Services), for instance, argued a new benefit limit would ‘offer a slogan to our critics’ and questioned whether the Conservatives wanted to be ‘branded as the Party that reintroduced the detested wage stop?’Footnote ¹⁶ Public opposition to a benefit limit would come from the SBC. Although it had not been the most enthusiastic supporter of the Wage Stop’s abolition in 1975,Footnote ¹⁷ the Treasury was told, it was almost ‘certain to oppose such a proposal strongly and publicly.’Footnote ¹⁸

Jenkin also thought plans for social security that had already been agreed in Cabinet and were to be included in two 1980 social security acts were controversial enough. He noted: ‘No Government has previously attempted to either remove benefit, or to reduce their value; and we shall be doing both at once.’Footnote ¹⁹ And with the addition of a benefit limit, Jenkin also thought it would be impossible to resist calls for the development of hardship provision, which would be difficult to implement because of a ‘squeeze’ in DHSS worker numbers,Footnote ²⁰ part of the first Thatcher government’s desire to ‘roll back’ the state.

Officials worked up three possible models of a benefit limit: a ‘cut-off’ set at a proportion of average earnings; one related to households’ circumstances and a compromise between the two, an approach that used average earnings, but which was also adjusted for family circumstances.Footnote ²¹ Officials had sought ‘a solution which would be both simple to administer and fair to the beneficiary.’ Such issues were acknowledged as being in conflict – ‘a simple scheme may be arbitrary in its effects and no solution is free from administrative difficulty.’Footnote ²² The proposed schemes would be problematic, albeit for different reasons.

Relating social assistance to average earnings meant recipients would ‘be seen to be receiving a lower income than the generality of those in work.’ Such a limit had the administrative advantage of being simple to apply, and was said to have the advantage of being similar to the operation of labour markets: ‘Like earnings levels, there would be no variation according to individual or family circumstances.’Footnote ²³ The lack of relationship to individual circumstances, however, was also its main difficulty. It would not be ‘individually fair’, but could be justified on the basis that a benefit payment higher than the given proportion of the average wage ‘would be wrong because it undermines work incentives.’Footnote ²⁴ Officials acknowledged such an approach would particularly impact upon households containing ‘large’ families. It would, therefore, ‘undoubtedly cause hardship’Footnote ²⁵ and would be criticised as being ‘anti-family’.Footnote ²⁶

Linking the benefit limit to individual circumstances did not have such disadvantages as it was more likely to affect childless households. In addition, such an approach would be administratively fairer, but more expensive, as it would be more complex to administer and open to greater scrutiny through appeals.Footnote ²⁷ The compromise position of starting with average earnings and then adjusting the restriction to family size had the advantages and disadvantages of both, although in watered-down forms.

Overall, the report outlining the three proposals suggested concern with work incentives was more an issue of policy presentation and the principles to which social assistance might adhere, than addressing a particularly large problem. It was estimated that a benefit limit set at 100 percent of average earning would affect under 500 households; 12,000 households at 50 percent of average earnings and 90,000 households at 40 percent.Footnote ²⁸ The gross number of households, however, was a poor measure of potential effectiveness, for many of those households that would be affected by a benefit limit would not have been those targeted by it. If, for example, the benefit limit was set at 40 percent of median income it was estimated 80 percent of those affected would not have had an out-of-work income higher than their expected in-work income.Footnote ²⁹ Such households would be having their benefit restricted for no work incentive reason.

While some at the Treasury supported limiting social assistance to average wages and then adjusting for family size,Footnote ³⁰ the Chancellor of the Exchequer was no longer convinced of a benefit limit’s efficacy. Howe informed Margaret Thatcher that the ‘options would be attacked as unfair and discriminatory and would require additional staff.’ In this context, he argued, the ‘rationale for a scheme of this kind – that it would have a broad psychological effect in helping incentives across the board – is insufficiently strong for us to act at this stage.’Footnote ³¹ To avoid the difficulties associated with the suggested benefit limit models, Howe’s view was something broader was required than adjusting the benefit incomes of a limited number of recipients. He thought action was required to reduce levels of Supplementary Benefit, for instance, by restricting annual increases (as the 1980 social security acts had done) and holding back increases in the Supplementary Benefit children’s scales rates.Footnote ³² Jenkin was scathing of this idea. He pointed to the 1979 Conservative manifesto’s pledge to provide ‘more effective help to those in greatest need.’ He warned: ‘We ought not to give our opponents any room to challenge our record on this score.’Footnote ³³

Howe suggested the introduction of a benefit limit should be revisited in the autumn of 1980, but it never was. While the idea of restricting benefit income was not pursued, concerns with work incentives continued in the context of the Fowler review of social security policy in which the focus was upon increasing in-work incomes through selective wage supplements (the replacement of FIS by the more generous Family Credit). While consideration of a benefit limit was an expression of long-standing concerns with work incentives, its introduction in 1980 was resisted by the DHSS, reflecting Lister’s (Reference Lister1991) observation that the Treasury did not have everything their own way in 1980s social security provision, and was defeated by political concerns with its potential presentation and impacts upon families whose main income was social security benefits. In this context, further reducing the out-of-work income of the poorest households was thought to be politically unwise because of already agreed changes that were later to be described as the ‘great welfare chainsaw massacre’ because they demonstrated that ‘benefits may not constantly expand, [and] that gains previously extended may be lost’ (Mesher, Reference Mesher1981, p. 126).

Underpinning these concerns was the changing nature of social security provision in Britain. A review of social assistance in the mid-1970s (DHSS, 1978) had recognised a need for its simplification in the context of its mass role in social security provision, a role that would only be expanded by the changes announced to national insurance benefits in the 1980 social security acts. These changes would increase the number of claimants reliant upon means-tested benefits, thereby reinforcing both the need for simplification and the Conservative Party’s pledge to support those most in need. The benefit limit was to have acted against both these. Three decades later, however, the HBC was successfully introduced, the reasons for which are discussed in the following section.

The Household Benefit Cap

It was seen in the previous section that in the early 1980s restricting benefit income by relating it to average wages, although administratively simple, was deemed problematic because it was not ‘individually fair’ and would create hardship through a disproportionate impact upon ‘large’ families. Such an approach, however, was taken with the introduction of HBC in 2013. How might the different outcomes of 1980 and 2010 be explained?

Material differences can be highlighted. So, for example, despite both periods being marked by stagflation, the headline economic indicators suggest the economic situation was more problematic in early 1980s. The unemployment rate was rising quickly, by 22 percent between 1979 and 1980 and a further 41 percent between 1980 and 1981. In the later period, although the unemployment rate was higher (7.9 percent in 2010 compared to 6.8 percent in 1980), it was increasing at much slower rate (4 percent between 2009 and 2010 and 3 percent between 2010 and 2011). Unemployment reflected and contributed to the economic collapse of the 1980s, with GDP falling from 3.7 percent growth in 1979 to a 2.0 percent contraction in 1980. In 2010 the economy had returned to economic growth (an increase in GDP of 1.7 percent) following contractions in both 2008 (0.3 percent) and 2009 (4.2 percent).Footnote ³⁴

In other words, the discussion of the possible introduction of a benefit limit in 1980 came amid an economic crisis, while the HBC was announced following the worse effects of the North Atlantic Financial Crisis and when Britain had returned to albeit weak economic growth. This might suggest economic conditions are important in explaining the rejection of the benefit limit in 1980 and announcement of the HBC in 2010. This, however, should not be over-emphasised. There is not an easy relationship between economic circumstances and policy change and, of course, economic circumstances do not provide policy answers. There are various possibilities that are framed by administrative, ideological and political considerations, rather than economics alone.

Administratively, the social security system had changed significantly by 2010. It was seen in the previous section, for example, that in the early 1980s the increasing importance of means-testing acted against the benefit limit. Such a limit would have complicated the administration of social assistance when its role was being extended and at a time when it was administered by hand, because computerisation had not reached local social security offices (Margetts, Reference Margetts1991). As the operation of the Wage Stop until 1975 had demonstrated, it was not impossible to limit benefit payments under such administrative conditions, but a benefit limit would have been staff intensive and therefore expensive to administer. By the 2010s, however, Britain had a mature social assistance benefit regime that was primarily administered digitally. Like the early 1980s, social assistance in the 2010s was facing substantial change. A new, single means-tested benefit (Universal Credit) was announced in 2010 as a replacement for six such benefits – but unlike the 1980s the shift to digital administration meant the HBC would not be staff-intensive and, therefore, costly to administer. In addition, the pressure for ‘hardship’ provision had been reduced by the government announcing in 2010 both a reduction in funding for such provision and the passing of responsibility for it to local authorities (Grover, Reference Grover2012).

Harris (Reference Harris1992) argues that material pressures (and one could add opportunities) can only ever provide a partial analysis. She suggests, therefore, that ideas are important in explaining policy change. In macro-terms, however, the ideas framing social security were similar in 2010 to what they were in 1980. There was ideological consistency, broadly rooted in neoliberalism, between the 1980s and 2010s, which provided a general critique of the size and scope of the state. The first Thatcher government, for example, boldly proclaimed that ‘public expenditure is at the heart of Britain’s economic difficulties’ (HM Treasury, 1979, cited in Lister, Reference Lister1991, p. 91). In 2010 the ‘days of big government’, the Coalition government equally boldly argued, ‘are over… centralisation and top-down control have proved a failure’ (HM Government, 2010, p. 7). Reflecting this, and, more specifically, in both periods there was a search for substantial social security savings, with which in 1980 the benefit limit was thought to not be consistent because of its need for additional administrative staff. In 2010, however, the HBC was seen as being an element in restraining spending on social security benefits.

In addition, in both periods work incentives were framed by discursive ideas embedded in the politics of resentment (see Hoggett et al., Reference Hoggett, Wilkinson and Beedell2013), notably appeals to ‘fairness’ between people in and out of work. Howe’s view that it was ‘offensive to many people to see a man out of work… collecting… any reasonable proportion of a national average wage’Footnote ³⁵ was similar to later Prime Minister David Cameron’s argument that: ‘When you work hard and still sometimes have to go without the things you want because times are tough, it’s maddening to know there are some people who could work but just don’t want to’ (cited in Jensen, Reference Jensen2018, p. 124). These tropes placed waged work, and the perceived role of the state in disincentivising it, centre stage by drawing upon what Young (Reference Young, Maguire, Morgan and Reiner2002, p. 482) in an analysis of late modern vindictiveness describes as the ‘weak spots of [the public’s] character armour.’

There were, however, differences between the two periods regarding ideas relating to relationships between what was described as ‘hardship’ in 1980 and work incentives, and in relation to the institutional basis of responsibility for poverty-relief. One of the last pieces of legislation the 1997–2010 Labour governments introduced was the Child Poverty Act 2010. Its main aim was setting targets related to the eradication of child poverty by 2020/21. It received support from the political parties later forming the 2010–15 Coalition government. It might, therefore, be surprising that the Coalition sought to introduce a social security policy that, as was pointed out by the government’s impact assessment (Department for Work and Pensions (DWP), 2012), would act to impoverish ‘large’ families. Stewart (Reference Stewart, Holden, Kilkey and Ramia2011, p. 176) argues that under the Coalition government families with dependent children were no longer understood as a ‘priority group for welfare spending’ as they had been under preceding Labour governments and, relatively speaking, it might be argued, under the Thatcher and Major Conservative governments before them.

As was seen above, in the first Thatcher government there were dissenting voices opposed to the benefit limit, even if their concern was with how the policy would be received and administered, rather than being concerned with its substance. Some policy makers seemingly had little difficulty with the ‘hardship’ that a benefit limit would cause, but there were moderating voices in the DHSS and the SBC (and one or two in the Treasury) in debates about the development of possible benefit limit. They pointed to the policy and political difficulties with restricting benefit income at a time of other cuts and a manifesto commitment to deliver ‘more effective help’ for those in greatest need. The relationship between financial resources and ‘hardship’ was highlighted, even within the context of the desire to improve work incentives.

Thirty years later ideas about the relationship between financial resources and poverty had been weakened in favour of what Page (Reference Page, Fenger, Hudson and Needham2016, p. 94) generously describes as a ‘more holistic anti-poverty strategy.’ While the Parliamentary Conservative Party had supported the Child Poverty Act 2010, it also argued it would focus upon the ‘causes rather than the symptoms of poverty.’Footnote ³⁶ As the Coalition government’s social security green paper, 21st Century Welfare (Secretary of State for Work and Pensions, 2010) demonstrated, work incentives were to be central to this focus. By defining wage-labour as an anti-poverty measure, those mechanisms concerned with work incentives could themselves be defined as helping to address poverty. Given Dinan’s (Reference Dinan2019) observation, noted above, that work-related activation can occur by reducing benefit levels, this was always going to be problematic for unemployed households because in this logic reduced benefit levels could be justified as being an anti-poverty measure. The 2015 Conservative manifesto made the argument. In the context of understanding waged work as being ‘the best weapon against poverty’, it noted that the HBC would be reduced in value to help ‘reward work’.Footnote ³⁷ As a consequence, recent British governments seemingly have had few qualms about pushing families deeper into poverty in the name of work incentives. The impoverishing effects of this were recognised in the Welfare Reform and Work Act 2016. It replaced the Child Poverty Act 2010 with the Life Chances Act 2010. In doing so, it abolished the financial measure poverty targets. This was a consequence of the Conservative government’s preference for addressing what it saw as the causes, rather than the symptoms, of poverty, and the fact it had little chance of meeting the targets because of the announcement in 2015 of a further £12 billion per annum cuts to social security, which included lowering the HBC.

In such observations, continuity and change with the ideas of 1980 are visible. Change is reflected in the indifference by the 2010s to the hardship that restricting benefit income would create. There had been a move away from ‘social security’ to a concern with waged work, reflected, for example, in the replacement of the Department of Social Security with the DWP, structured by a ‘commitment to forging and consolidating the relationship between welfare and work’ (McCafferty and Mooney, Reference McCafferty, Mooney, Mooney and Law2007, p. 214). Concern about the ‘welfare’ of individuals has been lost to, and had become defined by, the relationship of individuals to waged work. In this context, penury became the mechanism to incentivise people to take such work. While the 1980s discussion of a benefit limit was informed by such concerns with work incentives, it was also tempered by a post-WWII institutional concern with social protection expressed by Patrick Jenkin and officials at the DHSS and the SBC, and some voices within the Treasury. By the 2010s this had been replaced by, as Carmel and Papadopoulas (Reference Carmel, Papadopoulas and Millar2003) describe it, a concern with ‘support’ policies aimed at changing the behaviour of individuals. Such developments did not occur to pave the way for the HBC’s introduction, but they helped create a policy environment which lessened potential objections to a new benefit restriction. In brief, within government there was less concern with the state’s role in inducing poverty in the 2010s compared to the early 1980s. The implication was that if poverty were to be addressed, it would have to be done by institutions outside of the state in a way that maintained the incentive to work.

For working age people, the 2010’s decade of ‘austerity’ shifted the focus from redistribution to ‘predistribution’. The idea of predistribution first gained traction in Britain in the Labour Party in what can be understood as a ‘weak’ or ‘limited’ version of it (Ussher, Reference Ussher2012; Lansley, Reference Lansley2014). Then Leader of the Labour Party, Ed Miliband (Reference Miliband2012, p. 6), for instance, argued: ‘Centre-left governments of the past tried to make work pay better by spending more on transfer payments. Centre-left governments of the future will have to also make work pay better by making work itself pay’. Such ideas helped inform critiques of the so-called ‘tax credit economy’ (Cameron, Reference Cameron2006), a neologism describing attempts to incentivise work through the supplementing of low wages via means-tested cash transfers (which, as noted above, were first introduced by the Heath-led Conservative government elected in 1970). The emphasis in predistribution was upon increasing wages, rather than the state supplementing wages.

The issue of wages was raised in discussion about the possible introduction of a benefit limit in 1980. A minimum wage, officials highlighted, might appear to be ‘an obvious answer’ to work incentive issues.Footnote ³⁸ They, however, also acknowledged that such a development was ‘against the general thrust of Government Policy.’Footnote ³⁹ The government’s position was that to address unemployment the costs of employing workers had to be reduced. Hence, it abolished the remaining Wages Councils that had regulated wages in selective and various industries since the first decade of the 20^th century.

The situation had changed by the second decade of the 21^st century. Britain’s first-ever National Minimum Wage was introduced in 1999 by a Labour government. Minimum wages were opposed by Conservative politicians who argued they would destroy jobs (see Michael Portillo, then Secretary of State for Employment, Employment Committee, 1995). In contrast, David Cameron, as the new leader of the Conservative Party, acknowledged in 2005 that the NMW had been a success. Central to Cameron’s brand of Conservatism was the idea that while there was a need for collective responses to economic and social dilemmas, such responses did not have to be via the state (Ellison, Reference Ellison, Holden, Kilkey and Ramia2011). As a weak form of predistribution, the NMW was consistent with such ideas, which shaped the announcement in the same 2015 Budget in which the HBC was reduced that the government intended to develop the NMW into a (mis-labelled) National Living Wage for workers aged 25 or over.

The combination of the increased minimum wage and the cuts to benefits, the Chancellor of the Exchequer, George Osborne, argued, would help shift Britain ‘from a low wage, high tax, high welfare economy to [a] higher wage, lower tax, lower welfare country.’Footnote ⁴⁰ Although because of their different distributional bases, increases in the minimum wage could not make up for the cuts to benefits, the former were held up as a means of off-setting cuts to benefit incomes by placing greater responsibility on non-state institutions (employers, in this instance) for supporting workers and their families. This, it was hoped, would have had the dual effect of increasing work incentives and reducing the responsibilities of the state.