Matt Kerr: Breaking the pact between workers and the welfare system will take £500 million from Scottish families

William Beveridge’s founding principals for the system outlined a basic pact between workers and state. In return for an income-related payment, workers would receive financial support in the form of sickness benefits if they became ill and unfit for work; the means to get fit again through a National Health Service and a guaranteed income by means of the national state pension when they were beyond working age.

This pact has stood the test of time through prosperity and recession. But now, just as the welfare system itself approaches pension age, the contract is set to be broken for the first time.

No longer will the payment of National Insurance contributions guarantee indefinite access to sickness benefits. Limiting benefit, in its present form of employment support allowance (ESA), to just one year (or two if a House of Lords’ amendment stands uncontested) breaks the contract and leads to real concerns that we could be witnessing the beginning of the end for National Insurance, the NHS or the state pension in their current forms.

Breaking the deal between workers and state will blow open the door for private protection insurers who will stimulate fear and uncertainty and, if history teaches us anything, hard-sell protection insurance that may prove to be unfit for purpose. For many such insurances may be unaffordable and for those with any kind of history of previous illness may also prove completely unattainable.

This raises the scenario whereby someone working for 40 years and paying National Insurance each month becomes too ill to work at age 60 is then left without any income in the years between the ending of their ESA and the beginning of their state pension.

The consequences of this and other changes are severe. The Forum is a cross-party group of elected members with a particular interest in battling poverty and together with our partners in Rights Advice Scotland we earlier identified that changes to welfare will remove more than £500 million from the pockets of families in Scotland with subsequent impacts on the economy, jobs and public services.

It is imperative that local authorities understand the full impact of all the changes on the people and communities in our areas. For it is to local authorities that those affected by the welfare changes will look for help and support. More people than ever before are going to need more help than ever before and we must prepare now to ensure we are ready to provide that support.

• Councillor Matt Kerr is chairman of the Scottish local government forum against poverty and executive member for social care at Glasgow City Council