Social benefits benefit everyone

A combination of domestic and global circumstances is being exploited, by some deliberately and by others inadvertently, and used against the welfare state. There are those who ideologically oppose the very notion of wealth distribution to create a more just society, while others, despite supporting it, are afraid that it is becoming unaffordable, especially at times when economic growth is sluggish and there are other urgent and compelling reasons to divert public money to competing public goods.

Neither group is calling for the abolition of what amounts to a redistribution of wealth, but the first group would like it to be permanently limited to the very minimum, and the other only when its fiscally prudent. Both sides are missing the essence of the welfare state, which serves both the direct recipients of its benefits and those who pay for it through their taxes, for the good functioning of society as much as the moral reasons.

The budgetary priorities set by the current Labour UK government, which came to power less than a year ago, are increasingly taking the affordability approach, and this is causing disquiet among its traditional supporters as well as many backbenchers in Parliament. In the past few months the government, rather shockingly, cut winter fuel payments to pensioners, as well as cutting disability benefits to the tune of £5 billion ($6.6 billion), leaving the most vulnerable in society exposed in these times of exponential rises in the cost of living. There can be a case for abolishing universal benefits, but not at the expense of those in desperate need. Come the next general election Labour will be largely held accountable by the voters if it has not managed to save the welfare state after nearly a decade and a half of its gradual and deliberately imposed decline under the Conservatives.

A modern health service literally gets people back on their feet

Yossi Mekelberg

An earlier notion of the welfare state emerged in the 19th century, first in Bismarck’s Germany, as an institutional response to negative side-effects of industrialization in order to protect individuals, workers, and their families from several risks during the course of their life. These were, most importantly, loss of income due to disease, work-related accidents, unemployment, and old age. In the UK, it was the adoption of the Beveridge Report, titled “Social Insurance and Allied Service,” which proposed that all people of working age should pay a weekly national insurance contribution, and in return benefits would be paid to those who were sick, unemployed, retired or widowed.

At the heart of the report was Beveridge’s view of society and economy: He believed that vested interests should not hinder what he saw as the top priority for government, which was to abolish the “Five Great Evils” that plagued society: want, disease, ignorance, squalor, and idleness. This led in the post-Second World War era to the establishment of the National Health Service, a major public housing program, and massive investment in public education. It was also obvious that it would not be enough to treat just some of the “evils” and not others, but instead to address all of them concurrently, as they are in most cases interlinked. It was a departure from considering helping those in need as an act of charity. Alas, the establishment of a social security system is charitable, with strong moral and ethical underpinnings, but charity it is not, because when it is successful, it also enhances two of the most important pillars of society: prosperity and security.

The classic argument against the welfare state is that it is bound to become a “nanny state” that restricts initiative and enterprise, and anyway it is not the responsibility of the collective to cater for the needs of the individual, and certainly not to create social justice through redistribution of wealth. This argument looks at social security benefits, or universal services free at point of delivery, such as national health and education services, as a burden on a free market by imposing high taxes and therefore discourages those who work hard and contribute most to society.

When the welfare state is at its best, it is inclusive of all in society

Yossi Mekelberg

Seeing society only through this narrow prism of a free market and low taxation is oversimplistic, and conveniently ignores, for instance, that a modern and efficient health service literally gets people back on their feet and back at work, enabling them to earn, spend, and pay taxes (and not live on benefits), which keeps the economy thriving. A first-class education system for all produces generation after generation of those who generate wealth, not to mention responsible citizens. When the welfare state is at its best, it is inclusive of everyone in society, including the less fortunate, but equally it must be seen as an investment.

Those who oppose welfare are quick to blame the safety net of social security benefits for creating a culture of dependency, even a poverty trap, or say that there are those who find ways to defraud the system. Either argument points to a system that is not perfect and not free of loopholes. Nevertheless, in the UK, the estimated percentage of fraud in the social security system is around 3 percent of total benefit expenditure, and in most other OECD countries it is similar or even lower. This certainly calls for better safeguards against fraud, but it is hardly significant enough to do away with social security. Moreover, in the case of pensioners for instance, it is no more than partial repayment of what they paid into the system throughout their working lives; and furthermore, a healthy society should be proud of not leaving behind those who due to their unique circumstances need the support of the rest of us, even if it is for their entire lives.

In times of slow economic growth and competing pressures on public expenditure, such as the current need to invest more in Europe on defense due to the war in Ukraine, the easiest route is that of cutting social security. However, there is a case to be made for increasing borrowing within strict rules and limits to protect the most vulnerable — otherwise by the time the economy grows again, the societal decline would exact much higher economic and social costs. After all, the welfare society is a marriage of morality and expediency, and both are united in the cause of creating a better and more prosperous society. 

• Yossi Mekelberg is a professor of international relations and an associate fellow of the MENA Program at Chatham House X: @YMekelberg