Saturday, 29 September 2012

Making Welfare Popular

Consider the following conundrum.

The NHS is a universal public service, funded out of general taxation, which is designed to provide help to people at times when they are unable to do so themselves. It is enormously popular with the public, so much so that it has been said to be the closest thing Britain has to a national religion.

The welfare state is a universal public service, funded out of general taxation, which is designed to help people at times when they unable to do so themselves. According to the latest British Social Attitudes Survey support for spending on the welfare state is in long term decline, and sympathy for its recipients is in very short supply.

Why the difference?

People say that you can’t help getting ill, but you can get ‘on your bike’ and find work if you are unemployed, implying that unemployment is basically voluntary. If you think this, you must also believe that the huge rise in unemployment at the end of 2008 was due to millions of people simultaneously deciding to enjoy more leisure time. As Joe Stiglitz has pointed out, the Jarrow Crusade was not a hiking holiday, people are made unemployed by economic changes they cannot control. They have the same moral right to state help as people who get sick, so why does the public dislike welfare?

Rather than blame media representations of benefit recipients, I would suggest that the answer lays in the fact that the welfare state in its current form does not help the majority of people who have to pay for it. At the moment, if you lose your job and you have savings, the state will not help you, even if you have been paying in to the system all your life. This is the inherent problem of universal ‘safety net’ provision. The level below which the state will not allow a person to fall is too low to be acceptable to people higher up the income scale, yet an extravagantly generous level would make work pointless (and be ruinously expensive for the state).

In the end, asking the working population to continually pay in to a system that does nothing for them is politically unsustainable. They will eventually vote for a party which will dismantle the system. A state run welfare system must have the support of both its recipients and those who fund it. How could this be achieved?

Frank Field MP has spent his entire career thinking about these problems. His answer is to make the welfare system contributory, which basically means that the more you pay in the more you get out. A summary of his argument can be found here. To fund such a scheme, Field has in the past suggested pooling National Insurance contributions in to a state run investment fund (effectively a United Kingdom sovereign wealth fund). With the economic situation as grim as it is, it is perhaps time to consider radical solutions like this one. The alternative seems to be a gradual withering away of the welfare state.    

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