March 1998

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Frank Field and Shirley Williams discuss British welfare reforms with Finnish politicians

The news about Tony Blair’s welfare reform plans drew Finnish opposition politicians to London to hear what the Minister in charge of the reforms, Frank Field MP, had to say about Labour’s plans. The meeting, hosted by the Finnish Institute, also heard Baroness Williams’s critical comments on the Government’s welfare ideas from the Liberal Democrats’ point of view.

During the course of the meeting, it became clear that the common ground between the Finnish and British centre politics – the audience was reminded that Labour has spoken about "radical centre" – lies in the emphasis on the merits of working life. Where Labour speaks of "Welfare to Work", the Finnish Centre Party has launched its "Work Reform" programme.

The head of the Finnish delegation, Centre Party leader and ex-Prime Minister Esko Aho said that even if the system in the two countries is different, in both countries people should endeavour to fulfil their aspirations in life through wage labour.

Frank Field said that the Labour approach to welfare reform is similar to many other countries in Europe where the emphasis is changing from a passive benefit system to a proactive approach. According to Field, it doesn’t mean compelling people into work except in the case of under 25-year-olds, who after interviews and individual help will be expected to adhere to the principle that "everybody who can work will have to work".

Baroness Williams complained that even under Labour Britain is an under-taxed country. The Liberal Democrats would be ready to tax the wealthier segments of the population in order to finance a decent social security and education system. The party would also tax harder the use of unrenewable natural resources.

Both Field and Williams expressed interest in looking at welfare reforms in a European context. The Finnish social security system and its problems were explained by Ms Maria Kaisa Aula, the Deputy Leader of the Centre Party. Aula said that the Centre Party recommends a simplification of the complicated social security system in Finland.

"Our priority is to co-ordinate the existing minimum allowances towards a less complicated system of universal basic allowances financed by the state. That would be complemented with streamlined compulsory social insurance, the costs of which should, however, be covered by insured individuals themselves to a greater extent than is the case now."

The emphasis echoed Labour priorities when Aula said that instead of leaving people passive, the new social security system should function as a springboard to active membership in society.

"One should remember that in Finland social security is complemented by extensive public services such as day care, health and education that are either free or almost free. At the same time, we need to overcome the traditional borders between public, private and voluntary organisations to create viable and flexible combinations. To be successful, new welfare policies have to be combined with more flexible labour market solutions and a system which decentralises part of decision-making to the level of local business."

In the search for innovations in social security, the Centre Party doesn’t exclude the possibility of using basic income or negative income tax ideas.

"At the moment we are sceptical of a universal ‘pay-check for everyone in society’ but like the idea of ‘a participation income’. This kind of basic income is delivered against a citizen’s ‘application’ and a contract between citizens and local officials. This should include some active participation in society (voluntary organisations, care of child or elderly people). Local experiments in this field should be encouraged."

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The meeting was held on budget day: Frank Field worried about the time while Esko Aho chairs the meeting

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With her international experience, Baroness Williams put the British welfare system in a world-wide context

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