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The welfare state

 The British welfare state has variously been decribed as `the jewel in the crown’ or `a millstone round the neck’ of the country. It consists primarily of four pillars:

-          The National Health Service: free health care to all British citizens

-          A state pension for all citizens

-          Free education for all children up to the age of 18

-          Unemployment benefit for people who find themselves out of work.


 The National Health Service (NHS) can trace its current form to the Beveridge report in 1945, which was implemented by the Labour government immediately after the second world war. In effect, this nationalised what had until then been a network of independent local doctors’ practices and hospitals. Staggeringly, the NHS employs almost a million and a half people: it is the world’s third largest employer (after the Chinese army and the Indian railways). The total population of Britain is about 60 million. The very laudable concept is to ensure everyone, even the most vulnerable members of society, can have the best possible health care.

Because the NHS is free at the point of delivery, it is inevitable that demand for its services is unconstrained. Many people visit their doctors or hospitals more frequently than is really necessary. This puts a strain on the available resources. It means that waiting times are longer than they need be and the amount of attention the dedicated and well-qualified staff can give to individual cases is small. No government in recent times has seriously attempted to do anything about this. It is electorally impossible: no-one would vote for a politician who would make them pay for something they get free now.

 The NHS is phenomenally expensive. It costs 8% of British GDP (to put this in context, the total revenues of the Philippine government is about 16% of a much smaller GDP). Even so, the amount of money available for the NHS is finite. Resources are theoretically prioritised so that front-line services come first (but there is one notable exception dealt with below). Therefore the buildings are shabby and dirty compared with many other countries. There is a special set of diseases which people catch mainly by going to hospital.

 The Labour government has recognised this and is attempting to correct it by pouring extra money into the NHS. This superficially sensible move is in fact misdirected because the vast majority of the extra money is being eaten up by pay rises (not unreasonably: nurses’ pay in particular has been derisory for years, and many have to be recruited from overseas), and wasted in bureaucracy. It is not unusual to find more than 50% of the staff in a hospital doing paperwork and not looking after patients. Sadly, therefore, all the extra money has not resulted in a noticeable improvement in patient care. Add this to the unconstrained demand, and it is clear why the service continues to deteriorate and why more people are joining private medial schemes.

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 A universal old age pension was introduced in 1945. At that time, the retirement age was set at 65 for men and 60 for women.

 Since then, average life expectancy has increased by ten years, but the retirement age has not changed. So the cost of providing pensions has risen colossally. It is mildly ironic that, despite this, Britain is better off in this regard than most other European countries. In the 1960s, taxes in Britain rose to stupid levels. Pension contributions were (up to a certain amount) deductible against tax. So, many companies set up occupational pension schemes as a way of rewarding employees without all the fruits of their work going to the Government to be wasted. Then, in the 1980s, as Britain’s uncompetitive economy was revitalised by the government of Margaret Thatcher, job security declined; the government created incentives for people to set up their own personal pension schemes directly with insurance companies. These two actions dramatically reduced the risk to the State from increasing pension costs.

 Nonetheless it is a real problem. Over the next 50 years, the number of pensioners will steadily rise compared to the number of people in work supporting them, from 1:4 now to 1:2 by 2050. The only credible solution to this is to increase the normal retirement age, but politicians have so far lacked the guts to do anything about it. The alternative of expanding the working population by allowing more immigration has three problems: (a) the country is already pretty full, (b) there is no guarantee that all the immigrants would find reasonable jobs, and (c) when the immigrants themselves came to retire, it would create another pension `bulge’.

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 Education, `by which means alone we are rendered fit members of regularly organised society’, is another flagship of the British social welfare system. As with health, the underlying concept of the education system is that everyone, even the poorest and those from less advantaged backgrounds, can benefit from the highest standard of education. Sadly, as with health, the reality does not live up to this noble aspiration.

 All children are entitled to a free nursery school place from the age of four. Primary schools take children up to about eight, followed by junior schools which take children until either 11 or 13. Secondary schools take children up to 18, beyond which (in theory) the most able can proceed to university. Standard tests are taken at 11 and 13. Major examinations, which count as qualifications for employment later, are `GCSE’ (normally nine or ten subjects taken at 16), and `A levels’ (normally 3 or 4 subjects taken at 18).

 State secondary schools are known as `comprehensive’, which means that they have a comprehensive range of subjects and pupils with a comprehensive range of  abilities. Many of these schools are good. But all are obliged to take all children from their catchment areas. So some schools, particularly those taking pupils from rougher areas, have a significant proportion of disruptive pupils. A few able children can still do well in such schools, largely thanks to good parental support, but they need a huge strength of character to overcome the bullying and negative peer pressure from the bad element.

 The law doesn’t help. It is illegal for teachers to give any physical punishment to pupils, whatever their offence. Further, teachers are too scared even to touch pupils for fear of being accused of harassment or abuse. Many of the worst pupils know this, and flagrantly use it to taunt their teachers and make life a misery for their fellow pupils. Any children who are shy or weak willed are marked down as easy prey by these bullies, and seriously underachieve (or worse) as a result. In such circumstances, any genuine attempt to teach the basics of civilised behaviour such as good manners, deportment and elocution are doomed to failure.

 Successive governments have attempted to deal with this problem in various ways. The Conservatives tried to do it by publishing league tables of school results. This competitive element is good, but capacity is limited at the best schools so few parents are able to exercise the choice to send their children to the better performing schools. The Labour government responded by setting targets for such essential basics as literacy and numeracy. This again is good, but the practical effect is to `dumb down’ the tests and exams to give the appearance of continual progress without the unpleasant need actually to make any.

 Under these circumstances it is not surprising that many people who can afford to send their children to independent schools. These are outrageously expensive (typically more than 10,000 per annum for day schools, 20,000 for boarding) but generally give a good quality education and produce confident, articulate and well-rounded children, able to participate fully in society. Unfortunately it lays the parents (and pupils) open to accusations of snobbery or `elitism’ (a favourite demon word of socialists) by people who are ideologically opposed to excellence or choice, or who are envious of other peoples’ ability to exercise this choice.

 Of course not all pupils excel at private schools, and there are some children of wealthy or intelligent parents who become disruptive. But independent schools can expel such renegades more easily. The stark fact is that independent schools are much better, and those fortunate enough to benefit from them find it worthwhile.

 British universities vary widely in standard. They include some world class institutions; Oxford, Cambridge and London are internationally excellent in most subjects. Many other universities have individually excellent departments such as Keele for veterinary science, Bristol for law, or Hull for catalysis.

 Unfortunately the present government has set a target of having 50% of British children go to a university. They have failed to match this with funding to increase capacity. They have also neglected to nurture institutions which will bring more practical subjects up to rigorous degree standard to suit people of different aptitudes. So, once more, the target can only be met by lowering university standards to a level capable of being achieved by more people. As with targets for testing, this will achieve the target but defeat the object. Furthermore, universities charge tuition fees of up to 3,000 per annum. Add living expenses on top, and a student can quite easily finish his course groaning under a burden of 20,000 debt. This can deter students from poorer backgrounds, for whom such debt is both terrifying and counter-cultural – thus ensuring precisely the opposite effect to that intended.

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 Unemployment benefit creates the widest difference of views on the welfare state. Together with other welfare payments which are really unemployment pay in disguise, eg income support and incapacity benefit, it is essentially a safety net to ensure everyone in the country has a basic minimum income, and thus eradicate absolute poverty. It has achieved this goal, but at a cost.

 The argument in favour of unemployment benefit is a moral one. In a relatively affluent society, no individuals should be allowed to starve or freeze to death for want of a minimum income. This principle has existed for centuries, from the old poor laws passed in the 16th century. The responsibility was taken on by the state in 1945.

 The counter-argument is essentially moral hazard: by paying people who do not work, you encourage some people to avoid trying to work – a dependency culture. These people become benefit scroungers and effectively freeload off the rest of society. In theory the level of unemployment benefit is set sufficiently low to deter this effect, but in practice there are many people who become adept at maximising their various benefits and live extremely comfortably without ever doing a stroke of work. Also, it encourages fraud (eg people having black market jobs but still claiming benefits). The cheats and scroungers therefore sour the taste for the majority of honest people for whom unemployment pay can be an invaluable bridge to tide them over between jobs. They feel, with justice, that having paid their taxes they should get something back occasionally.

 An argument one seldom hears is that support for people who find themselves in distress has been the role of charities since the concept of charity was invented. Unemployment pay in simply institutionalised charity. But by the state taking on this role, people have come to look on it as a right not a privilege. They therefore have no incentive (other than their self respect, if any) to fulfil their corresponding obligation by finding work as fast as possible.

 Foreign scroungers beware: Entitlement to these benefits is restricted to British citizens. So sneaking into Britain in order to freeload off the state does not work.

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