Since 2010 the coalition government has been a loyal followers of Beveridge’s doctrine; spending on health, welfare and international aid has been ring fenced from the cuts that have been require to bring down our public spending deficit. After three years of relative pain it’s now clear that slashing back on defence, the arts and policing will not be sufficient to bring our finances under control. So what has changed since 1942 and how do we modify our approach to put things right?
Since 1942 the main change in our society has been increasing life expectancy, which has risen from 59 years to 77 years in the last 60 years. At the time of the Beveridge report retirement was a minority sport and as such was low cost, today most of us could expect to have 20 years of retirement if we stop full time work and 65. This adds enormous strain on the pension and health service provision and, in 30 years, has resulted in health and social security expenses growing from a third to a half of the UK’s public spending.
|Sir William Beveridge - loving the hair cut!|
Any new model should have at its heart two concerns, fairness and affordability. Fairness is a great political football and no one doubts the need for progressive taxation, the rich must not only pay more but pay proportionately more tax that the less well off. But it’s at this point the progressive redistribution of wealth should end, we must stop penalising our wealthy and wealth creators at every turn. The present government seems hell bent on throwing out the principle of universal benefits, child allowance and winter fuel allowance to name two. This might seem like an obvious way to save money but it saves little whist doing untold damage. Wealthy tax payers must continue to receive these universal benefits to sustain their contract with state. Fairness also implies a standard of personal responsibility that is applied universally; whilst some may be able to afford more everyone must contribute through tax or other contributions. This needs to be mandated not voluntary as in Cameron’s ‘big society’. Fairness should also imply that in some instances contributions should be made by those who use the service (road taxes and tolls for motorists), whilst avoiding the obvious pitfalls of widening this principle too far – smokers should still expect to receive health benefits. Finally fairness requires some transparency. The current system, where almost all taxes disappear into a single bucket to be redistributed at the government’s whim, is a scandalous state of affairs. We need to know where our money goes and ideally more contributions should be made explicitly for specific services.
The second principle we need to embrace is affordability; and this needs to be linked to the idea of personal responsibility and personal contribution (defined contributions). In general we should all be able to secure a basic state service for a define contribution and we should be able to acquire additional services at our own cost from the private sector. State education augmented by private funding for university is a good example of how this works. Why should non graduates pay for universities? We should be asking ourselves whether A level students should also make some kind of contribution after school? In the same way we should all pay for basic pension, that starts at 70, we might choose to top this up to lower our retirement age but that’s an individual choice if affordable. This idea of basic state provision funded by discrete contributions should be applied across the board to all aspects of welfare. In housing the state should offer a standard housing benefit to those unable to afford their own home, but this should be capped at a modest level, so that families who can’t afford their own property will have to think hard about the size of their family and where they can afford to live, which is what those in private housing have to do. Even the sacred cow of health needs to be broken down into basic services we all may need to access services such as A&E and hospital treatments. The basic contribution might offer web diagnosis and a district nurse but we would have to pay extra if we want our own GP. Defining where to draw the line for basic services and getting over the emotional drama that money does by some freedom to access other services are both huge issues to be resolved, but they both require urgent attention. There is no doubt that the state needs to lower its sights on the safety net it provides for all types welfare and the rest of us need to recognise that money can’t buy love but it can (and always will) buy better services.