Walker's World: Brits reform welfare

By MARTIN WALKER, UPI Editor Emeritus  |  March 5, 2012 at 6:30 AM
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LONDON, March 5 (UPI) -- The world's most ambitious current attempt to redefine the social contract for the 21st century was passed last week by British lawmakers.

It has two main principles. The first is that no household, however many the children or dependents and however sick or disabled, can receive more in public money than someone on average pre-tax wages of $50,000 a year.

The second is to put all the dozens of different benefits currently on offer, including unemployment pay, sickness and disability and housing benefits, into a single system. The goal is to ensure that work will always pay better than any combination of welfare benefits.

"This marks the end of the culture that says a life on benefits is an acceptable alternative to work," said Welfare Secretary Iain Duncan Smith, a famously unsuccessful former Conservative Party leader, now transformed into a crusading reformer.

Inevitably, the new legislation has evoked lots of criticism from the usual suspects of the state's miserly ways and of the hard-hearted Conservative Party that leads the governing coalition. There are accusations of racism by households where some Muslims maintain multiple wives and claim vast sums on benefits for their many children. Because of the swollen family size, some live in gigantic houses where six-figure annual rents are paid by the public.

And yet these reforms appear to be widely popular. This is odd because Britain has long been quite proud of its welfare state and the principle of fairness. Indeed, some have called its National Health Service the nearest thing to a national religion.

A series of polls by YouGov, published in the latest issue of the indispensable monthly magazine Prospect, indicated that 74 percent of the public asked agree that the government pays out too much in benefits and that welfare levels overall should be reduced. Only 17 percent of respondents said they disagree.

Conservative voters agreed by the overwhelming margin of 91 percentage points -- 94-to-3; Liberal Democrat voters agreed by a very wide margin (74-15); and even Labor Party voters agreed by nearly 2-to-1 (59-32).

On the whole, 8 percent of the British public said they reckoned they received more in public services and benefits that they paid in taxes and 55 percent said they paid more into the system than they received.

They are probably wrong, when one includes old-age pensions, free education, the National Health Service, universal child allowances and various middle-class support systems like tax relief on private pension payments, savings and mortgage payments. But there is no doubting the sentiment that the British public no longer believes the system to be fair.

It certainly costs a great deal. British gross domestic product this year is running at roughly $2.5 trillion. Of this, pensions cost $204 billion, the health service costs $206 billion and welfare costs $176 billion -- about 7 percent of government spending.

One of the questions the YouGov poll asked was: "Some people talk about scroungers who lie about their circumstances in order to obtain higher welfare benefits (for example, by pretending to be unemployed, or ill or disabled) or deliberately refuse to take jobs where work is available. How many claimants would you say fit this description?"

Two-thirds of those polled replied it was either a majority of all claimants, or around half of them or "a significant majority." It wasn't just majorities of those in all political parties who said this; so did 60 percent of those on and below the poverty line of $15,000 a year who were asked.

Seven out of 10 agreed that "Our welfare system encourages a culture of dependency. People should take more responsibilities for themselves and their families."

The only majorities for keeping some benefits unchanged, and they were very narrow, were for helping the elderly and most severely handicapped. But 44 percent said they would cut benefits for single mothers if that would help lower taxes.

It is interesting that Prospect magazine should have launched this new debate by publishing the poll. A few years ago the same magazine (disclosure: the author has written for it for many years) offended the politically correct with a stirring essay by Editor David Goodhart that suggested that mass immigration was undermining public support for welfare because it blurred the perception of national solidarity; "welfare was no longer seen as helping people like us."

Reform may have started but there is a long way to go. Welfare takes just more than 7 percent of Britain's GDP and pensions and the health system each take another 8.5 percent; so about a quarter of the country's GDP in spent on the social budget.

Education takes just less than 6 percent and defense takes just less than 3 percent.

But remember that every time a politician talks about the need for cuts in public spending of higher taxes, or the retirement of the baby boomers, what they are all talking about, in Europe as in the United States, is that we have no choice but to rethink and reform the social system. It was designed for an era when men (mostly men) worked until they were 65 and died before they were 70.

Those days are gone; a new social contract has yet to be defined. The Brits have made a start.

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