When the Welfare State was created, Archbishop Temple argued that it was an expression of national benevolence and believed would be a means of enabling community. We are now faced with a financial situation where it is not possible to continue the aspirations that created the Welfare State without raising taxes. But it seems that the willingness to pay for services through taxes has diminished. Do we now have different aspirations from those which made the Welfare State possible? The Church has a responsibility to provide theological and ethical reflection on our understanding of the situation which faces us.
GDP now four times as high as it was in 1948 (in real terms)
As GDP has grown, spending patterns have changed radically, with ‘luxuries’ growing much faster than necessities such as food.
This shift is not restricted to private consumption, but has been seen, for example, in a steady growth in the share of NHS spending.
This growth has continued throughout the post war period.
Significant growth is also seen in social security (the peaks in the mid 80′s and mid 90′s reflect very high unemployment at those times)
Education has also grown steadily, more than doubling its share over the period (the peak in 1975-6 reflects the school years of the post war baby boom)
Half the households in the UK lived in 2005-6 on incomes of less than 18,800 (adjusted for family size). Only 10% had incomes in excess of £40,000.
The inequality of the income distribution leads to inequality in tax payments, especially income tax payments, with the top 1% paying almost one quarter of all income tax paid.
The net effect of government in the UK is very substantial redistribution.
This shows the redistribution in percentage terms, and underlines the central message of the presentation. The activity of the state in the UK in the post war period does not reflect a model of behaviour based on narrow individual financial self interest. Activities like the NHS, the social security system and the education system do not respond to the need to make the economy work more efficiently (although they may to some extent achieve that too). They are fundamentally about doing what is felt to be right, and in particular about protecting and supporting those who cannot protect and support themselves. The western welfare state grew up in a period dominated by a Judaeo Christian understanding of the world, and the redistribution we see reflects such a world view, and explains what we do much more effectively than one based on a narrow model of self interest.
There is a genuine choice to be made about the size and role of the state, as reflected by the diversity of levels of taxation across the OECD
The growth of the National Debt looks daunting …
… until set in historical context.
There is, though, a serious problem presented by public sector borrowing. We do not have to cut public spending, but we do have either to cut public spending or to raise taxation. There is an urgent need to consider how reform might be achieved, and a significant role for the Church in taking forward theological and ethical reflection on the nature of the choices to be faced in deciding what sort of health care, education and social security systems we should aim for. Such choices are inescapably moral – it was from moral debate that these systems grew, and any reform and redirection should be steeped in the same discussion.