The Right Sort of Change?

1 THE SOCIAL SERVICES

`Benefits for all are . the enemy of care for the few'

By J. ENOCH POWELL, MP rr HE social services today reflect the legislation I of twenty years ago and the thinking of thirty years ago. Even if they would have been right

for the 1930s, it would be miraculous if they fitted the 1960s. In fact, they do not. Only the difficulties and inconvenience of adapting and reforming them prevent this being more widely admitted. Over the coming years a substantial fraction of the national income which is now re- distributed indiscriminately by these services ought to be put to better use: either concen- trated more effectively on existing needs, or devoted to new and better common services, or entrusted, for consumption or saving, to those who receive it initially.

In retrospect, it will seem incredible that in 1964 the sum of 8s. a week was being paid by the State to every family in Britain with two children. Where the family income equals average male earnings in industry, this sum increases it by a. little over 2 per cent. If there are three children, the family allowances of 18s. increase the same gross income by just over 5 per cent.

In order to make these payments to families of two and three children, nearly £100 million a Year is raised in taxation:The majority of the recipients pay part of them back in tax.

The inquisitive will discover that these pay- ments were enacted in 1945 before the war ended, at 5s. and 10s. respectively, then repre- senting about 5 per cent and 10 per cent respec- tively of average male industrial earnings. They were raised to 8s. and 16s. in 1952, and to 8s. and 18s. in 1956, since when they have been Unchanged.

This is how it happened. Once upon a time there was a report called the Beveridge Report. This Report said that for every child in the land after the firstborn there ought to be paid by the Government in cash or kind the full cost of that child's subsistence; that is, the State ought to keep all the children except the first. The Coalition Government agreed. In 1945. it reckoned a child's subsistence at 9s. a week. Deducting the estimated value of free milk, school meals and other benefits in kind, this left Ss. a week to be met in cash. Hence the family allowance which I draw over the counter in the House of Commons Post Office and enter °n my income tax return.

To describe this social service as obsolete is praising it too highly. It never should have been. The underlying proposition, that the State ought

!hto keep all children except the firstborn, is one at could only have been made or listened to In a nation besieged. Yet we have these pay- ments still in 1964, their origin forgotten,* their value eroded. Nobody says much about them nowadays: the Labour Party do not press for their increase; the Conservatives have given up muttering about them at conferences. Still, there they are.

*In fairness to the originators, they specifically tisclaimed any intention of influencing the birth-rate. the so happens that during the last eight years, while tle value of the allowances has steadily fallen, the birth-rate has risen at a steady and phenomenal rate. In the same years of war the State undertook to keep not only the children but everyone who was old or retired—everyone, that is to say, from then onwards; for the ,undertaking was retro- spective only for certain classes. The principle was: everyone over seventy (women sixty-five) and everyone not working between sixty-five and -seventy (women sixty and sixty-five) would be 'paid in cash a sum sufficient to live on. The money would be raised partly by general taxa- tion, partly by a payroll tax on employers, and partly by a standard deduction from all wages and salaries. The latter two sources were called 'in- surance contributions,' because, like Hippoclides who danced with his feet in the air, the nation stood on its head and declared it was insuring itself and 'encouraging thrift.' Everybody ac- quired an 'insurance record,' and a vast machinery was set up, as Aneurin Bevan once put it, to count ourselves to see if we are all here.

Andrew Freeth

In the course of this operation, something ap- proaching £1,000 million is at present raised annually by these forms of taxation. A substan- tial number of the recipients pay part of their pension back in tax.

Jim Griffiths, the Labour Minister who legis- lated the Beveridge-Coalition-Attlee Government scheme into existence in 1946, declared 'the Government's intention to hold the cost of living at about 31 per cent above the September, 1939, level' (Hansard, February 6, 1946, col. 1742), and he fixed the amount of the payments accord- ingly. Alas, it was not to be. The payments have almost been trebled since then, not only to offset inflation, but to raise their real value in line with the general rise in living standards. In order to avoid the unpopularity of an equally steep increase in the standard deductions from all em- ployees' earnings yet not put more of the cost on to general taxation, it was thought desirable in the last Parliament to 'graduate' the deduc- tionS, so that more was taken from the larger wage packets. But this in turn was not held politically practicable without promising a reward.

So the higher contributors were promised that when eventually they come to retire, in this cen- tury or the next, they shall have a 'graduated' addition to their pensions. The result is a further mass of individual records and calculations,

complicated by the right to 'contract out' of the graduated scheme on condition of paying a higher standard contribution.

The supreme irony after all this is that since the scheme first came into force, the pension has never once been enough to live on. At best it has only been enough to live on rent-free; at other times the deficiency has been greater.

Hence a sum of well over £100 million a year, charged on general taxation, is paid by the National Assistance Board to old people, either to supplement the pension or to maintain those who are not qualified for it at all because the scheme was not retrospective for everybody.

Once again, to describe such a social service as obsolete is a misuse of language. It is the basic conception that is wrong—to make the State responsible for keeping everybody in their declining years, whether 'keeping' means keeping body and soul together or 'half pay in retire- ment.' A few months before he introduced the scheme in 1946, the same Jim Griffiths, speaking on the family allowances, had said: 'We are moving slowly but surely towards a national policy which will establish a minimum standard of human needs and welfare below which no one will be allowed to fall' (Hansard, March 8, 1945, cols. 2284-85). That is the right principle, and we must get back to it. Or rather, we must get forward to it; for with a rapidly rising national income it becomes an ever more gross

and palpable absurdityt to say that the vast majority of the nation cannot be responsible either for maintaining their children or for pro- viding for their old age—or, what is more, for housing themselves.

Here there is not even the crazy consistency of a universal State responsibility: the State has only taken a catch-as-catch-can responsibility for housing 40 per cent of its citizens. The 60 per cent of the population who own their own homes or rent uncontrolled flats or houses are left to pay for their accommodation. The others are subsidised. The tenants of controlled houses enjoy a right vested in them by Parliament to have the article at an arbitrary price below its current value. But while the numbers of controlled tenancies are rapidly shrinking, those of council tenants are growing. The general taxpayer pays about £85 million a year, and the ratepayers another £25 million a year, to reduce the rents of council tenants, all of whom, by the way, pay rates and taxes themselves. It would not appear credible, still less toler- able, if we were not so used to it, that this privileged part of the population are a hap- hazard selection, the great majority of whom differ neither in income nor in other circum-

t It is yet another count in the indictment against inflation, that it has tended to obscure this ab- surdity and enable us to live with it longer than would otherwise have been possible.

stances from the great majority of the rest. There are, indeed, among all householders those whose means are not sufficient to procure the housing they reasonably require, any more than the food, clothing and other necessaries they require. Rather than pay this tiny minority the current price of the housing they need, we sustain the indefensible apparatus of housing as a 'social service.'

Well, then, granted that payments to the amount of a round £1,250 million a year arise from the assumption of a universal (in one case, semi-universal) responsibility of the State for housing its citizens, providing for their retire- ment and maintaining their children—where does this lead? Does it matter? Why wake up these quiescent dogs—the pension dog is pretty wide- awake, actually!—when the Conservative Party is well known to be a pragmatic party and doesn't bother about principles or theories? These are transfer payments, anyway: the State does not take the money and spend it itself, but shunts it back again to another set (partially, indeed, the same set) of citizens, who spend it in .their own ways. Why get excited?

This demands an answer and a candid one.

It is perfectly true that these are transfer payments, and as such do not feature in the make-up of national income and expenditure. But unless one argues that there is no practical limit to what a government can deduct in a free society from the individual citizen's income, then the larger these universal transfer payments, the less the community has in practice available for other purposes.

The most obvious effect is that the community cannot afford as high a standard for the minority of its citizens who are actually dependent on it for their individual needs as it could do if it was not trying to cater for everybody's needs. Benefits for all are the enemy of care for the few. Surely no one disputes that a higher mini- mum income could, and would, be guaranteed for the old, the sick, the incapacitated, if we were not sustaining the Atlantean bulk of a so- called insurance scheme which insists on making identical payments all round?

But though this is the most obvious, it is not the only or perhaps in the long run the, most important effect of the present system. Rightly or wrongly, the State has also accepted respon- sibility for the education and for the medical care and treatment of its citizens. This accep- tance was not inevitable, though it was histori- cally conditioned. The theorist could plausibly argue that a less than complete State responsi- bility, which left certain sectors to be covered by private or corporate initiative and charity or by the citizens themselves, directly or through various forms of saving and insurance, would in the long run produce a pattern of service corre- sponding more closely to people's desires and reacting more sensitively to changing knowledge and possibilities. Certainly it would be stupid sabotage to forbid or prevent the citizen from assuming or exercising a concurrent responsi- bility with the State, as he does in choosing to Pay directly for the education or the medical care of his family. But it is just as idle to deny the large element of community concern in edu- cation and care of the sick—nations and cities, no less than churches and benefactors, have pro- vided for both from time immemorial—or to pretend that in Britain in the last third of the twentieth century the rate of advance in both ww111 not be governed primarily by the size of the share of the national income which the State allocates to them. Out beyond these two social services there is the great and growing range of activities by• which only the' community, national or:local, can influence the environment of its citizens' lives: the whole infrastrUcture of living, the range of 'public utilities' in the widest sense, groWs more complex and demanding with technical progress. The community's role as a great patron of the Arts and the Graces is not a modern socialist invention, but a characteristic of civilised life in almost all times and places, and one which it could be argued that Britain does not fulfil on a scale proportionate to our affluence. Again, I happen myself to believe that our treatment and care of the delinquent members of society, though improving with painful slowness, is still grossly starved of physical resources and human effort. In general, the rapidly changing environ- ment of our lives will not cease to create, or to reveal, new purposes which only community action can. achieve.

The possibility and the scope of all this is limited by the share of the national income which can in practice be accorded to it. Every pound redistributed as a transfer payment is a pound less available for all these common purposes. The political decision to maintain as much as £1,250 million a• year of transfer payments is, therefore, a political decision on a grand scale affecting—and limiting—the future of the entire range of community services. •

These are facts which more than justify the rousing of sleeping dogs. Let it be plainly stated, however, that a reduction in transfer payments must mean an increase in the inequality of gross (though not necessarily of net) incomes. The com- munity would either spend on its own purposes, or would leave to be spent or saved by the original recipients, income which at present it transfers to others. There is a straight decision of principle here, however flexible the practical application can be. Is our.main objective simply to reduce the inequality of gross incomes? Or do we prefer to give the minority who are dependent on the community a higher standard, to give the community itself more scope to develop the common services and improve the common environment, and to give the citizen more control over the disposal of his income rather than less?

I am aware that the £1,250 million of transfer payments represent, in their present form a vast mass of vested rights and expectations and that the habits of life of millions of families have partly been shaped by them. No sudden shift would be either practicable or right. Only gradually can the pattern be altered, as new decisions fall to be taken—for instance, at the next revision of the national insurance benefits. Nearly always it is right to make changes in the widest possible context, as in 1952 the

'Sometimes l feel I received. the Call too late in

life.'

elimination of the universal food subsidies took place in the context of changes in taxation and transfer payments. The opportunities will present themselves over the years. But they will not be seen, much less taken, unless we know for what purpose we are 'seeking them. There is a proverb to the effect that 'he travels farthest who knows not whither he goes.' -The trouble is that he' is unlikely to arrive at the right destination.