Cuts by Labour, reforms from the Tories
David Willetts
THE STATE OF WELFARE: THE WELFARE STATE IN BRITAIN SINCE 1974 edited by John Hills Clarendon Press, £40, pp.412 In the public sector you get more money by saying how bad things are. So the sup- porters of the welfare state spent the last decade saying it was terrible, and blaming `the cuts'. This drove the Government into the equally odd position of simply boasting how much money it was spending. But somehow those boasts always seemed to be delivered through gritted teeth. The tone was never cheerful. It was more like an irri- tated husband telling his former wife how much alimony he was paying her.
The welfare state takes a quarter of our economy's total output, so it deserves rather better discussion. Now a group of academics working on the Welfare State Programme at the London School of Economics have produced a magisterial analysis of spending since 1974 on educa- tion, health, housing, personal social ser- vices and social security. There are two dates which stand out in their excellent history — and 1979 is not amongst them.
First, the IMF cuts of 1977/78 were the only serious reductions in spending on the welfare state throughout this period. It is a sound Treasury rule that nothing beats a good old financial crisis to get spending ministers to agree to cuts, And the biggest financial crisis of post-war Britain yielded by far the biggest cuts.
The other key date is 1988. But you have to delve behind the spending figures to the actual policies to see it's significance. That year saw the Education Reform Act, the NHS review, the Griffiths report on com- munity care, the implementation of Norman Fowler's social security reforms, the white paper on student loans, and the Housing Act encouraging public sector tenants to opt for private landlords. Only the Butler/Beveridge programme at the end of World War II can rival that annus mirabilis for ambition and radicalism. It is one of the many ironies of the welfare state that nothing matched the last Labour government for cuts and nothing matched Mrs Thatcher's government for reforming zeal.
The bulk of the book comprises detailed assessments of the different programmes. They show the extraordinary inertia behind the major welfare state pro- grammes — it takes enormous effort to achieve quite small changes in the direc- tion of policy or levels of expenditure. Perhaps the clearest example of this prob- lem is in education. Pupil numbers were falling throughout the Eighties. The course of least resistance was to keep all the teachers and take the benefit of the demo- graphic change entirely in falling pupil- teacher ratios. Having sat in a class of 48 in my primary school, I can certainly see the case for some reduction in class sizes. But a bolder approach would have been to make a serious effort to reduce teacher numbers and pay the remainder more. That would have been denounced by the teachers' unions (the president of one notoriously observing that 'there is no such thing as a bad teacher') but it would have thought he was nice, but it turned out he was just lazy.'
done more to boost the quality of teachers and teaching than yet further reductions in class sizes.
The book is not just a series of disparate studies of different parts of the welfare state. The chapters are held together by two distinct arguments. The first, sees the welfare state not as a burden but as a con- tribution to what the Fabians called `national efficiency'. The welfare state takes on tasks which would otherwise have fallen to firms and individuals. Indeed the development of the welfare state is seen as a sort of specialisation of labour — with paid professionals taking over jobs which used to be done haphazardly by others. This is true up to a point. But it is too tidy- minded — a view of the world in which uniform public provision replaces 'patchy' private initiative. It does not solve the problem of how to combine innovation, change, experiment, and local sensitivity with the inevitable disciplines of public administration.
The second LSE thesis is more novel and interesting. It is that the welfare state has been captured by the middle classes they staff it and they benefit disproportion- ately from many of its services. It has not proved to be a vehicle for 'redistributing power and wealth to working people'. Some of the LSE's experts have come up with interesting evidence of this phe- nomenon — such as for example that a middle-class person is likely to get a longer consultation from his GP than a poorer member of the community. This book tries to test the thesis against its prediction that governments would have found it easier to cut back programmes that went to poorer people. If true, it would be a powerful argument against the possibility of targeting help on those in greatest need — in a democratic political system a rather different target group would end up receiving the benefits. But the evidence from this book does not entirely support the thesis. Universities are one of the more conspicuous examples of the regressive workings of the tax and expenditure system as poor people pay taxes to finance university places for the affluent. But they have if anything done rather less well than primary and secondary schools over the past 10 years. Indeed Mrs Thatcher seems remarkable in her being willing to take on the vested interests of people who might vote for her. Such bold- ness is not predicted by the LSE theory.
Finally, the book only devotes two pages to a truly record-breaking welfare pro- gramme. Guess the fastest growth of any welfare state spending since 1979. Doubled? Quadrupled? No. There is one budget which has gone from £10 million in 1979 to £1,300 million in 1990. It was large- ly created by a minor change in regulations in 1980, to enable social security fully to reimburse the cost of nursing and residen- tial homes. That is one for The Guinness Book of Records.
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