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Universal Welfare Without the State – almost

John Moss
03 January, 2012

The debate in 2011 was whether Capitalism had failed – many said it had, despite little evidence that capitalism was in practice. No bank – the providers of capital – failed. Those who got in to difficulty were propped up by Governments with lashings of cash printed or borrowed from future generations. This is not capitalism, it is nationalisation of a kind socialists in the immediate aftermath of WW2 could only dream of.
The basic problem remains. Governments are spending more than they collect in tax and this has to stop. We cannot go on borrowing from the taxes of future generations in the vain hope there will be enough of them to repay the bills for our health, education, university studies and our pensions. But how to stop?
Just throwing the brake and slashing spending will not work. Greece has shown how the deep dependence on state spending means this is a recipe for disaster. That they cannot take the usual capitalist route out because of their membership of the Euro – default, deflate and devalue – make austerity their only option, but the treatment is killing the patient.
The UK perhaps offers a better exemplar. Outside the Euro it retains all the potential tools to cure itself and it is using them. Money has been printed, interest rates are near zero and the Government is, finally, slowing the rate of growth of state spending. About time when one considers that the last time the UK balanced its books was in 2000-01!
But the “CUTS!” – as screamed by the socialists – are minute and will be implemented slowly. Even minor changes to state employee pensions which will still leave those employed by Government with one of the best deals on the planet will not bring real savings for a decade or more. So? How to go further, faster, but without unleashing either Greek-style economic collapse, or open social unrest?
Two things the UK Government are doing point towards potential avenues. In Education, schools are being rapidly liberated from the dead hand of state control. “Academy” schools - first created in the last years of John Major’s Government, re-branded and tentatively expanded by Blair’s, but frowned on by Brown’s – have been turbo-charged by the radical Education Secretary, Michael Gove. These schools will soon be the majority of all state-funded schools and each term more apply to be allowed to run their own affairs rather than, as now, being subject to control by local councils. Instead of being forced to buy in to collectivist ownership, building maintenance, administration etc, theses schools can take charge of all these things and in return, receive all the funding available.
Gove has also gone one step further. “Free Schools” are new schools, opened by parent groups and funded directly, (legally, they are also “Academies”), A few were opened in September 2011, less than 18 months after the new Government was formed. This is a remarkable achievement, but many more are in the pipeline and the socialist trade unions are up in arms. They recognise the end game of these policies. An end to state control of schools and a fundamental shift in the route that funds flow. Pretty soon, it will be parents who decide which school gets their slice of state funding, not Minister, or Councillors, or bureaucrats. They hate it because they know the next step will be individual contracts for teachers and the end of the need for collective bargaining. In effect, the end of socialism in education.
Across at the Department of Work and Pensions (Social Security to you and me) Iain Duncan-Smith is slowly putting together similarly radical shift. Gone will be several disparate welfare schemes. In will come “Universal Credit”. A single payment based on household need with an absolute guarantee you will be better off in work than out of it. The carrot is also offset with a stick, quite a big one, a maximum weekly figure for welfare of £500 a week if nobody in the household works.
Both these ideas will change thinking. Parents will think more about their childrens’ schools, households will think hard about taking work. They will move from thinking what can I get to what can I do to get what I need. All good things.
But the point of this article is to say where else Government can go. Universal welfare is a given and nobody will be elected on a libertarian platform suggesting a return to mid-nineteenth Century ideals of charity as an alternative. But politicians who offer to use the power of the state to collect and re-distribute income, so that those in need get the help they need, but who then step back from the field and allow the people to make choices will prove greatly more popular than those who cling to the insistence that Government knows best.
Funding the users of services, not the providers, opens up the real opportunity for greater competition, more choice and an increasing role for private and small business in the provision of services. Just think of this example. An elderly person, funded directly to purchase the care they need, choosing to pay their daughter to care for them. The elderly person gets the care they want from somebody they trust, the daughter is compensated, but not with a miserly “Care Allowance” as now, with a proper wage for doing a proper job and the market is set free to work its magic. Raising standards and lowering cost all at the same time.
So those of us who believe in markets and capitalism and – most importantly – in people should pose a simple question. Why do you want politicians and bureaucrats to make these choices for you? After all, who trusts politicians?


About the Author

John Moss

John Moss is a Conservative Party candidate in the London Assembly elections in May 2012 and was a candidate for election to the UK Parliament in 2005. He is a Chartered Surveyor by profession and has worked in real estate for both the Government and in the private sector. He co-authored Principles of Social Housing Reform for Localis in 2009.


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