By Charlie Kimber
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The welfare stakes

This article is over 11 years, 4 months old
The Tories want to do a lot more than just slash public spending. They want to fundamentally recast the nature of the relationship between the state and society. Charlie Kimber looks at what's at stake in the government's plans for the welfare state
Issue 357

The slogan “Stop the cuts” is absolutely natural and correct for the demonstrators on 26 March and after, as it was for those who besieged town halls last month. The battle against the £81 billion of public spending cuts is the central issue for all of us.

But in truth the Tories are not just trying to force through cuts. They have a far more fundamental, and dangerous, programme. They are not just trying to reduce the amount of money going into vital public services, annihilate hundreds of thousands of public sector jobs and cut wages. They are also out to reshape British society further in the interests of capital.

The Tories want to use this period of crisis to make structural and strategic advances that will enable them to make even greater profits in the years ahead, and to win long-lasting victories against the working class. It is a class programme that goes far beyond any limited period of “austerity”. Many people recognise what the British government – and others – are doing. As a placard on the Wisconsin protests put it, “Don’t piss on my leg and tell me it’s raining.”

David Cameron and Nick Clegg want to force the market even deeper into society, increase privatisation, weaken workers’ collective strength, and make the welfare state serve capital rather than fulfil any of the needs of the majority.

It is their version of the kind of structural adjustment programmes that the International Monetary Fund has imposed on countries across Africa, Asia and Latin America over the last three decades to drive through market “reforms”.

So not only are there less resources for the NHS, but the government intends a vast “reform” which will devolve power and funds to GPs. Except, of course, that it will not be GPs who end up running our health service; they will increasingly pass that responsibility on to private providers.

The Keep Our NHS Public campaign has expressed the intention of the government’s plans very well. It is nothing less than the “opening up the whole of the NHS to the private sector. The bill encourages ‘any willing provider’ to cherry pick profitable slices of NHS services. It’s the biggest ever privatisation of health care anywhere in the world.”


As the business manager of the giant health consultancy firm Tribal said, “This white paper could amount to the denationalisation of healthcare services in England and is the most important redirection of the NHS in more than a generation, going further than any secretary of state has gone before.”

In education, not only will there be less money, but there is also the threat of the mass march of the academies, deepening a two-tier system. Not only are there tripled university fees and the abolition of the Education Maintenance Allowance, there is also the shift in money away from “soft” subjects like arts and social science, and towards science, vocational and business courses that can more directly boost capital.

Not only is there even less council house building or money for social housing, but also there are assaults on council house lifetime tenancies so that council housing is relegated to a temporary resort for the poorest which can be taken away when they get jobs.

Not only is there less money for public services, but also the privatisation of Royal Mail and the onward march of outsourcing as cash-strapped councils hand over their work to cut-price private operators. The strategy is therefore about more than “saving money”.

Such moves represent a significant acceleration of the dismantling of the post-1945 settlement that led to the creation of the welfare state. The Tories’ assault is designed to entrench and extend the gains for the ruling class of the neoliberal assault over the last 30 years.

Wealth and wages

A TUC report, “Unfair to Middling”, from 2009 spoke of a “sustained wage squeeze in which average earnings have been rising more slowly than productivity. In addition, the share of national wealth going to wages has been in sharp decline – peaking at 65 percent in 1973 but running at 53 percent today”. The situation is actually even worse than these figures suggest because the super-rich have grabbed a greater and greater share of the amount of national wealth that does go to wages.

The transfer of more than 10 percent of national wealth away from wages to profits is an extraordinary achievement for the bosses. It took place at a steady pace under both Tory and Labour governments (the sharpest fall in wages was under the 1974-9 Labour government). It was possible only because of the sustained assault on trade union organisation, the stripping away of regulation and workplace rights, privatisation and the surrenders by union leaders who accepted that globalisation meant that workers could not stand up to the demands for “flexibility”.

While labour felt the pain, bosses collected in even more. One of the most glaring examples is taxes on profits. Over the last 15 years corporation tax rates in Europe have fallen by nearly 12 percent. The current average level of 23.2 percent is lower than the formal rate in the United States (though the real rate in some US states is much lower than this).

What’s at stake?

What does all this mean for the welfare state? Could it actually be abolished by the Tories?

We have to understand that the NHS, comprehensive education, state pensions, council housing, care for older people and other similar services were produced by two pressures. On the one hand there was the drive for reform by the working class and its political representatives. Class struggle and the fear of explosive revolt from below induced a series of governments to make concessions to workers even though they represented a drain on profit. And as the vote was eventually extended to all adults, elections could be won by promising welfare.

But at the same time some expenditure on health, education and public services was welcome for capital. The frailty of army recruits at the time of the Boer War (1899-1902) famously panicked the British ruling class into demanding a more robust system to produce sufficiently muscled human material for the factories and the killing fields. As the Earl of Roseberry said, “An empire such as ours requires as its first condition an imperial race, a race vigorous and industrious and intrepid.”

At various points capital is prepared to see resources diverted to collective health and education because it will benefit employers in the long term. They may chafe at having to pay tax towards the costs, but if you want a workforce that is educated and healthy enough to compete globally then it is necessary to shell out for such services. And at times when the working class is on the offensive it may be necessary to concede reforms that go beyond the immediate requirements of capital.

It is the two-sided nature of welfare that means the ruling class will always be seeking to pare down and narrow the services provided but also impose limits on how far they will go. And the class struggle shapes the result.

So today the Tories want to go back to something much more like the education system in the 1950s when the public schools prepared the children of the ruling class to rule, the grammar schools selected middle class (and a few working class) children who were suitable to be managers and administrators, and the secondary moderns turned out workers for lower grade tasks in industry and offices.

Two-tier education

Comprehensive education threatened that pattern, but also raised the quality of working class children in order to do the more complex tasks of modern business. Today the Tories want to keep a slice of well-educated workers to beat off competitors, but are happy for others to be left to sink schools, underfunded colleges and the dole if they can get away with it.

What’s true of education is also true of health, pensions, benefits, care and so on. We can expect an increasing drive to install two (or three) tier systems and to make workers themselves pay for the services that are provided. So the semi-decent pension schemes that have been won over the last 30 years are being systematically dismantled and workers will have to pay more to receive less. At the same time the state system is allowed to degenerate to cover only the most basic level of existence.

Any pretence of a “cradle to grave” system of social protection is now abandoned. Instead all the Tory talk (building on what Labour pioneered and planned) is of “welfare to work” and of “making work pay” in comparison with miserable benefits.

All of this is backed up by a vicious ideology that seeks to blame the poor for their poverty, to drive the unemployed back into low paid work through the threat of absolute poverty and social stigma, and to scapegoat disabled people.

We face a very serious challenge. The Tories hope to make once in a lifetime changes that drive deep into the welfare state. But this is also a very risky strategy. Cameron and Clegg are going at breakneck speed and fighting on a whole series of fronts simultaneously. They are not just attacking a few; they are attacking us all. There is absolutely no reason why they should be allowed to get away with it.

Sources:;; Back to the Workhouse? by Ann Rogers, International Socialism 59 (Summer 1993).

Webb of money

At the start of last month Steve Webb, a coalition welfare minister, declared that the poorest people in society were being far too greedy and must stop their outrageous behaviour.

Webb, who says he joined the Lib Dems in horror at Margaret Thatcher’s regime, announced that the destitute people who qualify for means-tested benefits were applying for too many crisis loans to tide them over in emergency situations. This, said Webb, meant the budget was under strain and could lead to cuts so that genuine claimants might be forced to go to loan sharks.

His department issued a press release called “Protecting the Vulnerable” that said from April the DWP was “no longer paying Crisis Loans for items such as cookers and beds”. However, in a grand gesture of generosity “there will be some residual support for people following a disaster such as flooding”. This means that people who still demand luxuries such as beds and cookers will be forced to look elsewhere – to loan sharks in fact.

In 2006 Webb sold his studio flat in Westminster for £195,000 and bought a one-bedroom property less than 100 yards away for £280,000. Both are within walking distance of the House of Commons. As a result, his claim for parliamentary expenses for his mortgage interest payments jumped from £678 to £1,158 per month.

Shortly before selling the first flat, he had it cleaned at a cost of £277.47, which he claimed back from the Additional Costs Allowance. The claim included £1.27 on Harpic and 99p for two dusters.

He said, “The old flat was a bedsit with rather thin walls where I was finding it increasingly difficult to sleep at night owing to noise.”

Not having a bed also makes it quite hard to sleep.

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