It’s time to stop the middle classes using public services as an endless cash machine, and focus on those who need help the most
In an essay written in the 1920s, John Maynard Keynes distinguished between the agenda and non-agenda of government. He devised the idea to separate himself from nineteenth-century Liberals who saw little useful role for the state. But it could equally be used to cordon off areas where the government has no business interfering with citizens or needs to restrain its influence.
Over the years, the agenda has expanded, as the ambitions of the state have grown. Establishing what is agenda and non-agenda calls for a revaluation of the social protection model – especially in the politically explosive and bank-busting budgets of health, social care, welfare and pensions.
Some things should no longer be provided. Some things should be provided at a cost.
The principle of the Beveridgean compact was that the individual had high levels of responsibility. The basis of the welfare state was ‘something for something’. If you were out of work you would do what you could to get a job.
Fast forward, and we have created a culture of entitlement that celebrates rights without responsibility. We have become accustomed to the state providing services from a tax base that is shrinking relative to the demands made upon it, and with a rapidly ageing population.
Spending on welfare increased even when the economy was growing; rather than reforming welfare to support enterprise and social mobility during the period of growth, entitlements were expanded to groups not in need.
The cost of the Winter Fuel Allowance, free bus passes and free TV licences runs into the billions. Yet the Institute for Fiscal Studies has shown that around 60% of winter fuel payments are spent on things other than fuel. Higher-income families have been encouraged to use the welfare state as a cash machine while poor families are left with scraps. This undermines the integrity of the welfare system.
Ending universal provision of services and benefits will enable better targeting of support for those in need. Contrary to some views, targeting spending where it is most needed will strengthen, not weaken, social solidarity.
Our sense of our own futures must also change. We should expect to work longer, save more, and delay retirement: we should be better educated to prepare for our futures. We will also need to get used to the idea of spending more of our accumulated assets on our care – the obvious source for contributions is the equity in housing – rather than holding on to them for posterity.
Some answers were provided in the report of last year’s Commission on Funding of Care and Support, chaired by Andrew Dilnot, which emphasised that people should make provision for their own long-term care. Once we have established a principle for individual contributions to social care, the same approach should be applied for health care, ie, the NHS.
This is tantamount to heresy when talking about what Nigel Lawson called the closest thing the English have to a national religion. But an NHS funding model that relies entirely on the taxpayer is fundamentally unsustainable.
Alongside more private contributions, we need more private participation or action. Since the most powerful determinant of health is lifestyle and behaviour, the game-changer is to change behaviour. As William Beveridge put it: ‘The individual should recognise the duty to be well.’
The welfare state cannot succeed unless users and citizens recognise their own role in helping services and communities to do more with less. Savings can be made in the most intransigent public services – by preventing problems rather than merely coping with them.
Change will be hard but it is necessary – and it will bring opportunities as well as pain.
Nick Seddon is deputy director of the Reform think-tank. He will be speaking at the CIPFA conference being held in Liverpool on July 3–5
This article first appeared in the July/August issue of Public Finance