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Socialist Review Index (1993–1996) | Socialist Review 170 Contents

Socialist Review, December 1993

Notes of the Month


Welfare checks

From Socialist Review, No. 170, December 1993.
Copyright © Socialist Review.
Copied with thanks from the Socialist Review Archive.
Marked up by Einde O’Callaghan for ETOL.

The arguments put by politicians and our rulers in Britain on welfare spending are almost identical to those put by every other capitalist class. ‘The country can’t afford it,’ they cry. Even worse, the population is gradually getting older, and the proportion of those working to those on benefits is set to fall which means that, they claim, a higher proportion of the wealth produced as Gross Domestic Product will be taken up with welfare spending. Unless there are drastic cutbacks, then more and more money will go on benefits, and less and less on producing things.

Their motive is the same the world over: to push the burden of welfare onto workers, and so make them pay a higher proportion of their income to welfare provision – in effect paying twice over.

In fact, welfare spending in Britain is relatively low. There has been a steady but fairly slow increase in the amounts spent as a proportion of national wealth. And ‘the relative scale of Britain’s welfare state is smaller than that of most industrialised countries – 17th out of the 21 countries listed in the provisional figures for 1989, down from 13th in 1981. In the European Community, only Portugal had a lower share.’

This, and many other fascinating conclusions can be found in a new study The Future of Welfare by John Hills, published by the Joseph Rowntree Foundation. Hills makes the point that welfare spending is not out of control, or anything like it. ‘In the three years up to 1992-3, its share of GDP rose from 21.4 to 26.4 percent.’ This means that just over a quarter of national income goes on all of health, education, pensions, housing, the unemployed and the sick.

Will these figures shoot up as the old live longer and receive better medical treatment? Not according to Hills. He says that if we assume age patterns for 50 years’ time (when over 65s are forecast to be 24 percent of the population, compared with 16 percent now), spending would of course rise – but not by the sort of amount the Tories claim. It would give an increase of around 3.8 percent of GDP at 1992 spending levels. The ageing population would ‘imply spending growth at a rate of 0.32 percent per year over the next fifty years’.

The amounts involved are relatively small; and Britain’s situation is relatively favourable in relation to its competitors internationally. And ‘not all welfare spending goes on the elderly population, so a 50 percent rise in its population share only adds 17 percent to average spending.’

Hills argues there is no fundamental crisis in welfare spending: ‘even if benefit levels were to keep up with overall living standards the net effects [of higher pensions and an ageing population] on the public finances over the next fifty years would add up to 5 percent of GDP – no more than the recent increase related to recession over the past three years.’

The Tories attack benefits and state pensions, but ignore the huge levels of state subsidies going to the middle classes in the form of tax concessions. In 1992-3 these included £5.2 billion for mortgage interest, £8.1 billion for occupational pension schemes and £2.4 billion for personal pension schemes.

In addition, the government ignores the fact that the welfare state is not a honeypot which millions benefit from but put nothing into. In fact, it acts as a kind of ‘savings bank’ with millions contributing to it throughout their working lives, and then receiving some benefits towards the end of their life (many, especially working class men, die around retirement age anyway, thus receiving hardly any of the benefits for which they have paid).

And benefits are – in a very small way – a means of distributing money from the rich to the poor. Universal benefits, with everyone receiving them and the rich having the money clawed back through tax, are the best means of helping the poor and the lower paid.

The international attack on benefit levels and the availability of benefits is not a serious argument about what can or cannot be afforded. This is a government which continues to maintain a gigantic defence capability, and which is prepared to spend millions of pounds on complete irrelevancies – introducing a ‘corporate image’ among DSS staff has already cost £1.7 million in uniforms and administration.

The money is there to maintain and extend the level of welfare. It is the priorities of the system which are wrong. The ideological onslaught is about taking more from the poor and ordinary working people to maintain the profit levels of the already rich. In the process the ruling classes feel that they have to tamper with – and possibly roll back – the welfare settlement on which postwar prosperity was based.

Already throughout Europe much of the discontent is about cuts in welfare provision. The sorts of attacks suggested by the likes of Portillo will provoke even greater howls of rage.

The Future of Welfare by John Hills is available from the Joseph Rowntree Foundation, The Homestead, 40 Water End, York Y03 6LP, price £8.50

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Last updated: 1 March 2017