Some arguments about the UK government's welfare reform programme - They are not, exactly, aiming to abolish the welfare state
- Category: Analysis
- Published on Tuesday, 21 October 2014
- Written by Richard Atkinson
- Some arguments about the UK government's welfare reform programme
- 1. They are not trying (very hard) to reduce welfare expenditure
- 2. They do not want, at all, to reduce welfare dependency
- 3. They are not interested in getting people into work...
- 4. ... because they don't know what to do with people when they are working
- 5. They are not, exactly, aiming to abolish the welfare state
- 6. … not least because the present welfare state is their own, neoliberal, creation
- 7. They are converting the DWP into a punitive arm of the state
- 8. They are looking to create a low waged, unskilled, precarious workforce
- 9. They are enforcing a patriarchal discipline on women and families by means testing
- 10. They are winning ...
- 11. ... and Universal Credit will seal their victory for a generation
- 12. They have a problem with pensioners, which they have yet to sort out
- 13. Labour are as deeply committed to these aims as the Tories
- 14. Why it’s Welfare, not Social Security
- 15. Why it’s back to 1601 not 1834
- 16. No-one asked for welfare
- 17. Against welfare: for class independence
- ADDENDUM - On proposals for an Unconditional Basic Income.
- All Pages
5. They are not, exactly, aiming to abolish the welfare state…
British capitalism has done well out of the welfare state. It kept the social peace after the war and was largely paid for by the working class who used it through National Insurance contributions and consumption taxes. Its expansion, which really began in the 1980s, has opened up new possibilities. In-work benefits have funded the expansion of low paid and part time employment. Housing Benefit - about a quarter of all working age benefit expenditure - has been turned into a hidden subsidy underlying the huge expansion of the private rented sector and its new class of rentier capitalists. A new, multibillion pound, industry has developed on the back of government contracts for welfare provision. And all the while the growth of indirect taxation, like VAT, has universalised the cost, spreading it right across the population.
People on benefits pay tax, quite a lot of it. The contrary impression is created by a discourse on taxation that is as skewed and misinformed as that on benefits. Income tax, the only tax the government, and other spokespeople for ‘taxpayers’ like to mention, makes up only around 25% of all tax income. The true position is that around half of all tax receipts are accounted for by indirect, consumption, taxes and duties. These taxes are regressive; the lower your income the higher the proportion that goes on indirect taxation - because poor people necessarily spend all their income on immediate, taxable items while the rich can invest and save. Because of the combined effects of taxation and benefits the scale of the net transfers of income towards the poorest people is much smaller than is supposed or apparent. Work by Simon Duffy of the Centre for Welfare Reform has established that, as of 2009, people whose income fell in the lowest 10% of the population received a total transfer (roughly: benefits less tax paid) amounting to just £1,500 a year. The same people used much less than average of the services (education, NHS etc) provided by taxation so that, after allocating this cost saving, their net use of the welfare state in all its forms was negative. The maximum tax actually paid, by contrast, by the 10% on the highest incomes, net of benefits and services received, was about 27% - a remarkably good deal for the rich, given that these figures do not even touch on inequalities of property and wealth.
They are not going simply to abolish something so useful for them. They are going to reconstruct it to meet capital’s needs. British capital, increasingly unable to find profitable openings in the production of commodities or the supply of services, needs access to all the revenues of the state, needs to have every transaction opened to it. Old style privatisations, where whole corporations were transferred from public to private sector, turned out to be not enough (capitalists still had to produce something in return for their new preserves). Better to tap straight into government income streams and auction off the rights of access. The Roman Empire had a crude form of the same idea with its tax farming. Absolutism introduced the sale of state offices. Under the modern version each and every state function can be let out to the highest bidder, avoiding any formal transfer of sovereignty or responsibility while allowing private capital a cut in every transaction, everywhere. That overall costs are inflated wildly in this process is of concern only if one believes that government is concerned with efficiency and economy: they are not; they are concerned with profits. The resulting extra expense after all is met by taxes and the deficiencies in service are of concern only to those who use them, not to our rulers.
Hence the reduction of the NHS to a brand, hollowed out and depleted, but not formally abolished. Hence the, still far from complete, spread of private contractors in welfare. Hence the entry of private finance into social housing and the resulting rent inflation. A welfare state of sorts will still exist in the future of capitalism but it will not be one socialists should lay claim to.