Redistribution in an Age of Neoliberalism: Market Economics, ‘Poverty Knowledge’, and the Growth of Working-Age Benefits in Britain, c. 1979–2010
| Published date | 01 August 2019 |
| Author | Peter Sloman |
| Date | 01 August 2019 |
| DOI | 10.1177/0032321718800495 |
| Subject Matter | Articles |
https://doi.org/10.1177/0032321718800495
Political Studies
2019, Vol. 67(3) 732 –751
© The Author(s) 2018
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DOI: 10.1177/0032321718800495
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Redistribution in an Age
of Neoliberalism: Market
Economics, ‘Poverty
Knowledge’, and the Growth
of Working-Age Benefits in
Britain, c. 1979–2010
Peter Sloman
Abstract
The expansion of cash benefits to low-paid workers has been one of the most significant
developments in recent UK public policy. Since 1979, transfer payments to working-age
households have trebled in real terms, helping to offset increases in wage inequality. Adopting
a discursive institutionalist approach, this article argues that the growth of transfer payments
partly reflects the influence of what John Kay has called ‘Redistributive Market Liberalism’ – the
belief that poverty and inequality are best alleviated through income transfers outside the market.
Although its roots can be traced back to the 1940s, Redistributive Market Liberalism came to the
fore after 1979 in the context of a reaction against trade union power and renewed confidence
in neoclassical microeconomics, and reached its apogee in New Labour’s child poverty strategy.
The 2008 financial crisis, however, appears to have disrupted the ascendancy of this free-market
philosophy and prompted a return to more interventionist forms of distributional politics.
Keywords
British politics, neoliberalism, redistribution, social policy, work
Accepted: 23 August 2018
Introduction
The 2008 financial crisis and the decade of austerity that followed have pushed distribu-
tional questions to the top of the political agenda across the West for the first time in a
generation. In Europe and the United States, anti-austerity groups such as Occupy have
mobilized public concern about the power of the financial sector and the growing
University of Cambridge, Cambridge, UK
Corresponding author:
Peter Sloman, Churchill College, Cambridge CB3 0DS, UK.
Email: pjs93@cam.ac.uk
800495PSX0010.1177/0032321718800495Political StudiesSloman
research-article2018
Article
Sloman 733
concentration of wealth in the hands of the ‘1%’. Within British politics, the period since
2010 has been characterized by a renewed focus on low pay and economic insecurity,
pioneered by Ed Miliband and think tanks such as the Resolution Foundation but increas-
ingly taken up across the political spectrum. The National Living Wage for workers aged
25+, introduced by George Osborne in April 2016 and due to rise to 60% of median earn-
ings by the end of the decade, is designed to reduce reliance on in-work benefits and make
Britain a ‘higher wage, lower tax, lower welfare country’ (Osborne, 2015). In the wake of
the UK’s vote to leave the European Union, Jeremy Corbyn and John McDonnell have
sought to outbid the Conservatives by promising to extend the National Living Wage to
18- to 24-year olds and increase it to ‘the level needed for a decent life’ – expected to be
more than £10 an hour by 2020 (Labour Party, 2017: 47; McDonnell, 2016).
This bipartisan commitment to raising the wage floor is striking because it represents
a reversal of a half-century-long trend in British public policy: of moving away from
direct intervention in the economy and relying instead on cash transfers to alleviate pov-
erty. Jacob Hacker (2011: 35) has drawn an influential distinction between ‘pre-distribu-
tion’ policies, designed to influence the initial ‘distribution of economic power and
rewards’ through the structure of labour and product markets, and the ‘redistribution’ of
income between households through the tax and benefit systems. Since the 1970s, the
UK’s political economy has been reshaped both by the processes of privatization and
deregulation associated with neoliberalism – rolling back the ‘pre-distributive’ interven-
tions of post-war social democracy – and by the continued growth of welfare spending,
from 4% of gross domestic product (GDP) in the late 1940s and 8% in the mid-1970s to
more than 12% in 2010 (Figure 1). The growth of the social security budget has partly
been driven by demographic changes such as the rising number of pensioners, but it also
reflects the growing use of benefits to supplement the incomes of working families.
Indeed, transfer payments to working-age adults and children have trebled in real terms
since Margaret Thatcher took office in 1979 (Figure 2). Although support for unemployed
and disabled people has undergone important changes, the most striking quantitative shift
Figure 1. Social security expenditure as a percentage of UK national income, 1948/1949 to
2020/2021.
Source: Institute for Fiscal Studies, ‘Social security spending’, 29 September 2015: www.ifs.org.uk/tools_and_
resources/fiscal_facts/public_spending_survey/social_security.
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