My purpose in this first chapter is to establish just what the welfare regime in Britain looked like on the eve of the COVID-19 crisis. The decade of welfare austerity, signalled in George Osborne's Mais Lecture on 24 February 2010, had already come to a rather faltering close with Chancellor Sajid Javid's Spending Review at the end of the summer of 2019. And this shift was consummated with the new Chancellor Rishi Sunak's first budget in March 2020, which promised growth in public expenditure of 2.8 per cent for the years between 2020/21 and 2023/24. This initiative committed the government to building and funding a public sector larger than it had been at any time between the 1980s and the financial crisis of 2008 (including all of the years of New Labour government prior to the crisis). This future scenario was almost immediately overtaken by (unanticipated) events. Thus, Rishi Sunak's first budget also included a series of emergency spending measures designed to deal with the developing crisis surrounding the outbreak of COVID-19. These turned out to be just the first, now rather modest-looking steps in what was to become an unprecedented peacetime programme of public spending, designed to save the economic life of the nation, while protecting its collective health. As we shall see in Chapter 5, COVID-19 took us into a new world of public expenditure and public indebtedness. The hard-won savings that had been eked out over a decade of austerity were blown away in a couple of months as the Treasury committed itself (initially) to an additional £218 billion of borrowing for 2020/21.

While the pandemic, and the wealth of measures taken by the government to counteract it, has had a profound impact upon our welfare order (and our well-being), it has not simply ‘undone’ what was there before. As we shall see, while some changes will endure, and while the impact of some of the more temporary measures will have a lasting effect, much of what the government did was self-consciously designed to be short term – to ‘do whatever it takes’ to get us through the crisis. The longer-term consequences of these shorterterm changes – plus the impact of simultaneously moving to a post-Brexit world of work and trade – may take a generation to emerge. For now, they remain profoundly uncertain.

At last, we have reached the future! In this chapter, I think about possible welfare futures in the light of everything that has gone before and in the shadow of the challenges that lie ahead. I should begin by reiterating this key point: unless we experience a catastrophe that makes our present way of life unsustainable (and in which all bets are off), the welfare state is not going to disappear. Into the foreseeable future, whoever governs, we shall have a large state that uses the dynamics of taxing and spending to redirect resources to services and benefits for (especially its older) citizens. Here I am concerned with the much narrower, but also much more difficult, question of what a welfare regime that constituted some sort of ‘strategy for equality’ could look like. I begin by looking at three of the biggest challenges that we currently face. I then turn briefly to some of the most widely canvassed ‘solutions’ that are already out there. Finally, I raise some more radical alternatives which have the virtue, for me, of squaring up resolutely to the difficult but unavoidable question of who owns what – and of how we might change that. How all of this might be impacted by COVID-19 is the topic of a separate chapter.

It is now some 25 years since Paul Pierson alerted us to the coming age of ‘permanent austerity’ in developed welfare states (Pierson, 1998). For him, this had three key components: slowed economic growth (associated with the expansion of the service sector of the economy); a sort of ‘growth to limits’ in existing governmental commitments to welfare; and the ageing of the population. All three of these developments have had an impact upon the kind of social democratic strategies we considered in Chapter 3, not least because virtually all social democrats came to believe that economic growth could and should be used to finesse the distributional conflicts associated with growth in the generosity of welfare states. It is a serious problem if this is no longer an option. I begin here with the third element singled out by Paul Pierson: the (continuing) demographic challenge.

Perhaps the most basic of all the lessons to be learned from our experience of COVID-19 is that we can't get by without the state. We may not like it. And it may have shown itself repeatedly to be unfit for purpose. But it is hard to see how we could hope to navigate our way through this crisis – or indeed the next one – without it. And this state remains, first and foremost, a welfare state. In practice, modern states spend most of their time and energy (and resources) funding and organising welfare. All states tax and spend. They are huge engines of revenue generation and distribution. And even the ‘meanest’ of welfare states reduce market-generated inequalities significantly. In Britain, for example, the reduction in the Gini coefficient before and after taxes and transfers is close to 25 per cent. But states do this now in societies that have become much more unequal – socially and economically – and in which those inequalities seem to be ever more firmly entrenched. The task I set myself in this book was to consider if and how we could devise (or, in the first place, begin to imagine) a new welfare regime that might embody a ‘strategy of equality’ for these changed circumstances. To do this, we had first to look backwards to make sense of what had happened, before thinking about how we could do something different in the future.

In Chapter 1, I looked at the welfare state as it was at the cusp of the COVID-19 pandemic, and after ten years of Conservative management. Austerity was certainly a key theme in this period – but so were conditionality, dependency and paid work (at almost any price). In the shorthand that we use to describe these processes, this might be called a strategy of inequality. While inequality did not quite take off in the ways that some people feared and/or supposed, almost nothing was done to address historically high levels of unequal access to income, wealth, health and opportunity. Significant sections of the population were made poorer and child poverty – which is a good barometer of a society's intention to look after its disadvantaged – was allowed to grow by at least 500,000 across the decade.

When the Labour Party was swept back into power on 1 May 1997, with an unprecedented majority and the realistic prospect of securing two full terms in government, the reform of the welfare state was high on its to-do list. What this actually meant was not always clear. Reportedly, when Tony Blair called Alan Milburn three days after the election to invite him to be the new minister of state for health, he told him ‘We haven't got a health policy … Your job is to get us one’ (Timmins, 2017: 589). But the broad agenda for welfare, and its centrality to the New Labour project, seemed clear enough. Three of the five pre-election pledges made by the party concerned welfare: reducing class sizes, shortening NHS waiting lists and getting 250,000 young people off benefits and into work. There were two key components to this agenda: the first was to encourage the move ‘from welfare to work’, captured in the mantra ‘work for those who can, security for those who cannot’; the second was to direct greater resources into public services, and to achieve a step-change in the quality of provision. As we already have a number of excellent accounts of this reform programme, I confine myself here to a brief reminder of Labour's policy agenda (among others, Ludlam and Smith, 2004; Powell, 2008; Timmins, 2017). I devote rather more attention to the outcomes of these reforms, as this has been less comprehensively covered and is the source of considerable misunderstanding – and misrepresentation. In the final part of the chapter, I explore the claim that between 1997 and 2010 New Labour somehow manged to forge a ‘new’ sort of social democracy. In fact, I think that it is more appropriate to think of this as the last social democratic welfare state of its kind.

The New Labour programme

New Deals

The earliest and definitive expression of New Labour's first welfare commitment was the New Deal. Originally created for 250,000 under 25 year olds who had been unemployed for six months or more, the programme combined work or work experience, training or education, all with the support of a personal adviser. Benefit payments were made conditional upon participation in the programme. Further New Deals were introduced across time for the long-term unemployed, for lone parents, for the over 50s and for disabled people.

Nothing changes everything. Given the scale of the disruption and desolation that the pandemic has wrought – from the truly global to the irreducibly intimate – it is tempting to think that COVID-19 is the exception. But it isn’t. Other pandemics have been and gone. We will not be living in a siege economy and society for ever. And a combination of herd immunity, vaccine and collective boredom will allow some sort of everyday to re-emerge. But we shall not be returning to the world just as it was, nor any time soon. The Global Financial Crisis (of 2008) now looks quite modest by comparison to COVID-19 but when the pandemic struck we were still in the process of recovering from that earlier disaster. As we saw in Chapter 1, the financial crisis ushered in an economic ‘lost decade’ and, as we also saw, the associated economic costs and losses were very unevenly distributed. The Global Financial Crisis was a ‘temporary shock’ with ‘persistent effects’ (Hanlon, 2017) – and this is one useful way to think about the COVID experience. Of course, in the latter case the ‘temporary’ is pretty long-standing and the ‘persistent effects’ are still extremely unclear, but certain to be profound – and to persist for at least a decade, probably much longer. What we also know is that, as after 2008, these consequences will be differentiated by class, gender, ethnicity, location and perhaps by age.

‘Scarring’, both social and economic, is something which always has its origins in present injuries. Although the world after COVID is clouded in uncertainty – not least knowing when it will ‘end’ and what that would mean – there is plenty that we do know. And a significant part of our still quite uncertain future is determined by what has happened already – not just the pathway of the disease but also, for example, the scale of public indebtedness. The challenge of the public debt is, of course, principally a threat – but it is also an opportunity (to do things differently). In this chapter, I concentrate on what is happening to our welfare regime (broadly conceived) in the wider context of an ongoing recession. I focus first on the recent past and the near-present. A little later, I turn to what may happen in the near-future.