Income Maintenance for the Unemployed in Britain and the Response to High Unemployment

Abstract

In principle, the modern welfare state provides income support for the unemployed, guaranteeing a certain level of income. This is no doubt one of the reasons why the high unemployment rates in Britain in the late 1970s and 1980s have met with so little public and electoral response. Many people believe that there is an effective system of social insurance, coupled with an income-tested safety net. In practice, income maintenance for the unemployed in Britain is incomplete and inadequate, and in the face of unemployment measured in millions,,the reaction of the government was to make the scheme less, rather than more, generous. As described in Section I of this article, the majority of the measures taken in Britain over the past decade have been to limit the extent and coverage of National Insurance unemployment benefit and to reduce the effectiveness of the safety net. In the same way, in the United States G. Burtless has shown how there has been a tightening of eligibility requirements, and reduction in the extended benefit program, which has been associated with a 25 percent drop in the number of recipients of unemployment insurance relative to the number of job losers.' Section II of the article examines some of the motives for providing unemployment benefit and how far they can explain why the response to rising unemployment was not to remedy the inadequacies of benefit but to make the system less generous. Was this the response chosen by the majority of the electorate? Has there been a shift in the attitudes of the employed majority? Section III develops the analysis further in con-