The welfare state and its discontents by Jacob Armstrong

The welfare state is increasingly under attack from across the political and socio-economic spectrum. Mainstream media and ‘populist’ politicians appeal to sensationalist viewpoints in order to condemn the welfare state as outdated and unjust. George Osborne even went so far as to suggest that the crimes of Mick and Mairead Philpott were influenced in the main by the state funding their lifestyle. Even those living in some of the most deprived wards of our country vilify their benefit-claimant neighbours.

While there are some examples of individuals exploiting welfare payments and deliberately sinking into benefits-dependency, this does not justify the condemnation of all benefits recipients as scroungers, as opposed to ‘strivers.’ There are scroungers and strivers across class boundaries. Upper-class heirs and heiresses, who live off huge allowances, are a case in point, and yet those on the bottom rung are demonised. To make a judgment, we have to examine the welfare state as it was originally designed, as well as the situation now, to determine whether it should be reformed or consigned to the history books.

The 1940s Beveridge Report identified five giant evils in society: squalor, ignorance, want, idleness and disease. The first Labour government’s creation of the welfare state and NHS, as well as its economic policies, were greatly influenced by the report’s conclusions. After the Second World War, few in Britain wished to see a return to the deprivation and instability of the 1930s, seeking to see the living standards of the working classes elevated by government policy. Benefit payments were intended to supplement the income of low-paid workers or to provide a safety net in case of redundancy. Progressive taxation was an essential government measure to facilitate greater economic equality and future growth.

Fast-forward to 2013, and we have a very different picture. Since the greater emergence of free markets in the 1979, the UK has experienced a series of governments to whom full employment is no longer a worthwhile goal. The disappearance of heavy industry and manufacturing severely damaged workers by ushering in a generation of structural unemployment, felt most strongly in the north. The apparent replacement – services industries – ushered in greater prosperity for the south east and resulted in an over-financialised, crisis-ridden economy. Easy availability of credit and an unfettered property bubble gave the illusory impression of prosperity when industry and our trade balance were dwindling. Almost everyone is familiar with what happened when the bubble burst.

Individuals and corporations who became rich in post-liberalisation booms didn’t and still don’t want to pay taxes. They have a greater ability to evade them due to all-too-easy income diversions into tax havens and poor policing for fear of spooking the entrepreneurial spirit. This has a severe impact upon government revenue and means that borrowing in order to fund welfare and public-sector spending has only increased. Companies do not see taxation and redistributive spending for what it is: an investment in current and future demand for their products, as well as in the health, happiness and productivity of their workers and customers.

Working people have endured many years of frozen wages, in which renumeration for work in real terms has been reduced further and further for the purpose of labour market competitiveness. Since 2010, wages have declined by 5.5% in real terms.

When the welfare state was designed, unemployment benefits were intended to keep recipients in relative poverty; current unemployment benefits currently lie at around 13% of the average wage. Yet one common criticism of the welfare state is that some may receive more in benefits than they would otherwise do in work. This is not a design flaw of the welfare state. Rather, it is a problem surrounding Westminster’s reluctance to legislate a living wage and the persistent limitation of union power. Many workers are given little choice other than to accept low paying, zero-hours contracts or cuts to working hours, severely limiting their earning capacity. One of Iain Duncan Smith’s adages is ‘making work pay;’ despite his pretences, this cannot be achieved by dismantling the welfare state.

Not all visitors to emergency food banks are unemployed. The fact that working families need food aid in order to tide them over illustrates a serious flaw in our society. High and persistent levels of anxiety among the working classes surrounding where the next meal will come from or how gas and electricity bills will be paid will only exacerbate the already poor productive potential of our economy. The aforementioned legions of zero-hour contract workers would in all likelihood perform better if given fixed hours and stable incomes, rather than being subjected to uncertainty.

The high unemployment and underemployment resulting from Britain’s recent economic woes has damaged thousands of people who need benefits and supplementary aid to survive. This does not yield to the ideals of efficient and equitable economic management which politicians of every party celebrate. Quite clearly, the post-Beveridge goals of eliminating idleness and want are not being held to.

Despite these extenuating circumstances, the majority still maintains the easier viewpoint, vilifying benefits claimants as lazy ‘good-for-nothings,’ showing a resurgence in the nineteenth-century concept of the ‘deserving poor.’ I would rather see people claim benefits at the taxpayer’s expense than living destitute, homeless, and condemned to absolute poverty and its undesirable effects, which would make the prospect of their employment an even harder goal.

At the same time, I would also want to see economic management by the government that aims towards full employment and a better incentive system in which working people are paid a living wage. Redistributing wealth downwards, which enforced progressive taxation and welfare spending would achieve, would create a consumption-driven recovery and economic growth, which would not be led by the easier availability of credit. We should not fall into the tempting trap of blaming the victims of severe mismanagement, those who depend on benefits to survive. To do so is overly simplistic and uncompassionate.