Wealth or welfare in the UK?

There is a story of a Conservative Politician listening to the tale of the Good Samaritan, where the emphasis was on helping those less fortunate, and of the importance of showing care and compassion for the welfare of others. After hearing the story the Conservative remarked that the only reason the Samaritan was able to help was because he was a good capitalist and had accumulated wealth. This presents a question, does the accumulation of wealth really lead to welfare, are the two complementary or are they actually conflicting? 

The accumulation of wealth is recorded frequently in biblical and other texts, a feature of Persian, Greek and Roman empires. Whilst these are interesting the ability to provide for all, in terms of housing, employment and health has only really come about as a result of both an industrial and technological revolution, together with advances in medicine. The industrial revolution is interesting because there are examples of outcomes directed mainly at increasing personal wealth as well as outcomes where wealth was used in the provision of welfare.

In Lancashire and Yorkshire in the 19th century the green valleys soon disappeared with the building of cotton and woollen mills, shafts were sunk for coal pits, canals were dug and later a rail network established, but the change also involved mass migration from rural areas to new towns. As towns grew rapidly the demand for food and other goods to be transported increased, the demand for sanitation to prevent disease spreading increased, and the conditions under which people worked came under scrutiny.

Sadly we can find many examples of the abuse of children working in narrow seams of coal underground, or with unsafe machinery in the mills. We can find adults working incredibly long hours in appalling conditions for low pay and living in squalor. On the backs of these people who suffered so much were built empires for a new class, the capitalists. Their homes and parks were their monuments, the showpieces that boasted of their wealth.

There were exceptions, Titus Saltaire built a model village for the workers at his mill. Those houses had tap water, and baths. The village had a hospital, a school, a park and a library. He was one of the few who showed a desire to use some of the wealth that he had created for the welfare of his workers and their families. There were others over the next century with similar ideas, the Cadbury family, the Lever family, both established villages with good housing. However these were exceptions, for most the creation of wealth meant accumulation of personal wealth.

Progress in welfare was made when child labour laws restricted their use and churches were involved in provision of education, but the initiative was not taken up by the state until later. The horrors of the Great War and the Great Depression saw state intervention in provision of benefits for the sick and for the unemployed. Following the Second World War we saw state intervention in the provision of a national health service. Following the war there was also a large increase in the construction of housing, including that built for social housing. By the 1960’s we had developed a society that regarded industry and financial services as being the creators of wealth and the state as the provider of welfare. We were also experiencing other changes, a rise in the service economy and a shortage of labour had led both to an influx of immigrants and the employment of more women in the workplace. Welfare provision was in a healthy position because so many were working and making contributions from earnings. This might be regarded as almost a ‘Golden Age’ in using wealth for welfare and the UK placed emphasis on helping other nations, particularly in terms of encouraging education and health provision.

What has gone wrong? The National Health Service suffers now from lack of funding to provide resources and staff to adequately provide for the welfare of a fairly stable population. There are shortages of affordable housing, both for purchase and for rent, and the numbers of homeless people are increasing month by month. Upon reaching retirement age fewer people are finding that their pension provisions are adequate, they fall into poverty along with an increasing number of low paid workers. The state is frequently blamed for the failure to provide adequate welfare and support, but the state is also failing to provide infrastructure for transport, support for students of all ages, and of failing to have any long term planning. Can we say that the State is failing?

I believe that answer is far too simple and we need to consider the balance between wealth creation and welfare provision. A balance can only be achieved if a proportion of wealth is given to provision of welfare. This means that taxation must provide for that portion of wealth to be collected. A number of changes have made this increasingly difficult.

Globalisation is seen as a positive force by many, bringing about increased trade. At the same time the collection of taxes related to revenue has become increasingly difficult for a number of reasons. The first is that companies can base operations in a number of areas and by creative accounting only pay tax in the lowest area. The second is that large organisations usually have large numbers of employees and thus have considerable political clout to avoid taxation. The rise of online marketing makes this process even more difficult since the origin of goods is not always clear. If companies are able to pay taxes only in countries that have low tax rates this is likely to favour those states that have the lowest standards of welfare to the detriment of those, such as the UK, trying to sustain higher standards of welfare.

A second reason is the rise in robotics and the use of computing. Any business that could improve efficiency by adopting new technology, and so increase productivity and reduce costs, was likely to follow such a course. However, improving productivity in this way can either reduce the need for skilled labour, or sometimes can increase the need for unskilled labour. So, for example, using robotics in engineering can reduce the need for skilled persons whilst using technology in marketing might mean recruiting large numbers for low-paid work in call centres. Both of these actions will reduce the revenue that is collected for welfare, putting pressures on how to provide welfare.

This changing nature of employment is a third reason for welfare issues. The introduction of the minimum wage rather than a more constructive living wage results in a large number of employees working either for minimum wage or a rate that is close to the minimum. The effect of this is that often families find the minimum wage is not enough and their low income entitles them to benefits as support. At first glance this seems reasonable, that society is providing welfare for low income families. In reality there is a drain on the welfare pool as employers are able to pay low wages, employers are being subsidised to allow them to make higher profits. The increase in part-time employment also means many family incomes are being lowered. At the same time higher earners have received tax breaks, again lowering the amount in the welfare pool.

A fourth reason is the nature of welfare and how the success of welfare has actually increased problems of provision of welfare. As the health services improved, along with working conditions and education the life expectancy improved and greater demands were made upon both the health service and in the provision of pensions. The system of taxation has failed to take account of these increased demands. As those with private pensions are being encouraged to ‘cash in their pension’ the future demand on welfare will increase as savings dwindle.

All of these, and other factors, have helped in changing the balance between wealth and welfare. The current balance has weighted wealth creation above that of welfare provision, increasing the division between the rich and the poor. Nationalism within the UK places more emphasis on wealth, the recipients of benefits often being denigrated by the media. Within the European Union we see a similar struggle between wealth creation and welfare of the citizens of member states. Trade deals are made for the benefit of companies operating within the member states for the creation of wealth. The provisions for welfare are expressed in various treaties.

The position in the UK is often expressed as a ‘crisis’ for the National Health Service, a ‘crisis’ of homelessness, a ‘crisis’ in housing, all suggesting that we need to look at the provision of welfare. Why do we not discuss the crisis in wealth creation? Why not look at what we are producing to create that wealth? Why not consider how the way of life we have chosen is influencing the balance between wealth and welfare?

For years we have been addicted to fossil fuels and that addiction continues even though we know that there are alternatives for many situations as alternative sources of energy. Coal, oil and gas exploration and exploitation has created wealth. However are we making good use of the wealth created when have alternative sources of energy to create wealth? Pollution of air and contamination of soil and water resulting from fossil fuel exploitation have created health hazards that have increased demands on welfare. We have made advances in the fields of communication yet we also fallen into a situation where we are prepared to buy new smart phones almost yearly and discard the previous one as ‘waste’. We create plastic waste at an enormous rate and continue to do so even though we are aware of the long term environmental damage we are contributing to. Such actions are also altering the balance between wealth and welfare, using existing wealth for personal gratification and benefit and ignoring the welfare of future generations.

As political parties indulge in the bluster of how they will improve welfare I find they are almost silent on how they will finance their promises from wealth. Environmental issues, including climate change, are discussed and then quietly discarded as the attraction of wealth creation proves a better platform for winning votes. As we drown in a deluge of arguments both for and against Brexit we are also in danger of missing out on the wealth and welfare debate that will be so important to future generations. The future of young people is being sacrificed for an ideology that pays little attention to welfare now or in the future.