Radical reform of the social security system is rare as it affects the lives of so many people. Spending on social security was anticipated as being £196 billion in 2010/11, an increase from £143 billion (real terms) in 1997/98. This may be expressed as an increase from 12.6% of GDP to 13.4%. A sizeable rise, therefore, but smaller than had been seen in either the NHS (5.2% to 8.7%) or in education (4.6% to 6.1%) over the same period. The extensive reach of the system, therefore, makes it difficult to reform, but it also makes it a target for those hoping to make public expenditure cuts.

This chapter argues that the Coalition government looks set to have important aspects of continuity with the approach of New Labour, but also some important areas of difference. Following on from previous work assessing Blair's legacy in relation to social security policy (McKay and Rowlingson, 2008), this chapter assesses the kinds of reforms proposed against the yardstick of Hall's (1993) orders of change. Hall characterises ‘third-order’ change as involving changes to policy goals and also involving a paradigm shift. The next, ‘second-order’, level of change involves keeping the same policy goals but changing policy instruments and ‘first-order’ change involves keeping the same policy instruments but changing the levels or settings. Early indications from the Coalition government suggested that while there was likely to be much first- and second-order change, there would be little third-order change.

In assessing the Coalition's approach, we divide social security into a number of key areas. First, we look at poverty, a policy issue that clearly distinguished New Labour from the previous Conservative government. The Coalition government are still using the ‘p’ word (poverty) but explain it even more in terms of individual attitudes and behaviour, requiring slightly different tools to fix the problem. Second, we look at making work pay. Since 1997, a key aspect of policy within social security has been to move people from unemployment (and some other kinds of inactivity) into paid work, and to ensure that having a paid job is financially rewarding. This overall strategy reflects Labour's original vision of ‘work for those who can’, or alternatively of work being the best form of welfare.