Introduction

In this chapter, we consider the changes made to social security – increasingly known as ‘welfare’ – during the period of the Conservative–Liberal Democrat coalition government, and in the early days of the majority Conservative government. First, we set the context in terms of the amount of spending on social security policy. As the largest single budget of any government department, social security was clearly a key target for a coalition government determined to reduce public spending. However, policies were driven not just by fiscal goals, but also ideological aims in terms of changing individual behaviour and reducing the role of the state in preference to the market.

The chapter then gives an overview of the key social security reforms before focusing separately on policies relating to those of working age and those over state pension age. This has become an increasingly important distinction since 2010, with those of working age (whether or not with children) being the key target for reform, leaving pensioners relatively protected from austerity cuts.

The chapter then reviews the impacts of the reforms alongside the key themes of reform, identifying the influence of the Liberal Democrats on coalition policy. It then compares these recent reforms with those of the previous New Labour governments (1997–2010) and the prior Conservative governments (1979–97). We conclude that there is much continuity but also some radical change, not least the introduction of benefit caps and the effective abandonment of policy to reduce child poverty. An intensification of the neoliberal project is further being pursued by the 2015 Conservative majority government.

Background: the 2010 context

Following the 2008 financial crisis, the New Labour government provided the banks with £124 billion in the form of loans or share purchases, which required a transfer of cash from the government to the banks (National Audit Office, 2011). At the same time, social security expenditure was increasing due to rises in unemployment. The coalition government came into power with a key focus on reducing the public sector deficit and national debt. As the largest single budget of any government department, social security spending would be a key target. At £210 billion in 2010/11, or over 13% of gross domestic product (GDP), spending on social security was around twice as large as spending on the National Health Service (NHS).