Another reminder of the sad and basic fact that we cannot afford the welfare state that we’ve already promised ourselves. The ageing of the population through that demographic shift means that all the things we gleefully voted for decades back, and didn’t pay for, now do have to be paid for. And as it turns out we’re not paying enough in tax for those things we did vote for.
The implication of this should be obvious. We can’t and won’t have any extension to that welfare state on the grounds that we’re not even willing to pay the bill for what we already think we’ve got. Here it’s local council finances:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] David Phillips, an associate director at the IFS, said: “Current plans for councils to rely on council tax and business rates for the vast bulk of their funding don’t look compatible with our expectations of what councils should provide.” The shifting demands of an ageing population mean the current 3% cap on annual council tax rises would mean adult social care would require 60% of local tax revenues within 15 years, up from 38% now, according to the report. Phillips said a national debate was required on how much citizens would be willing to pay for services. [/perfectpullquote]Well, how much are we willing to pay? Currently tax revenue is some 34% of GDP. That’s an historical high for this country. We can’t go and tax the rich more, we’re already at that Laffer Curve peak if not a little over it. We definitely tax the poor too much – just look at the taper on Universal Credit, 60% or so as a marginal rate. Corporations don’t pay tax, only people do. There’s not really some God in the Machine to provide the extra revenue.
But we have promised ourselves all those nice things. Social care in old age for example. Sure, good thing to have, certainly don’t want to return to the days when the elderly childless died and rotted in their garrets.
But we do still face this basic fact. We’re not willing to pay for what we’ve already promised ourselves, voted for. Thus there’s no real possibility of an extension of that welfare state, is there?
Oh, and all those people shouting that we’ve got to raise taxes because….what they are indeed therefore saying is that we can’t afford the welfare state we’ve already got, aren’t they? That’s exactly why they are shouting that we’ve got to raise tax. Because we were promised things but didn’t agree to pay for them at the time.
The language we use matters - it provides clarity to our own thoughts and enables…
It is now generally acknowledged that the structure of the NHS needs to be overhauled…
In the film Apollo 13, a loss of oxygen causes the crew to start inadvertently…
There's an idea out there which seems intuitive but then so many ideas do seem…
When we think about the darkly opaque goals of modern central bankers as they relate…
As the papers recently filled with the distressing images of desperate souls looking to escape…
View Comments
PART 2
------
Secondly, the 'cost to society' of the 'aged' issue is affected by the proportion of people deemed beyond working age. And particularly that proportion of people who have not (for some reason) made adequate financial provision for those years between entering retirement and entering those last three or so years of life. This is the period for which the extent is increasing; and it is a period for which funding is not increasing in adequate proportion; and the latter issue is one with cause that falls largely to government (though some potentially useful steps on increasing the age at which state pension starts have been made by government). On this, it is distressing to see that many employers are not adjusting upwards their contractual employment arrangements WRT compulsory age of retirement - though people with such employment pensions are very likely less a load on the taxpayer than are others.
Thirdly, there is more to welfare policy than just its funding (of social care for the aged or otherwise). Even if our society could afford the Welfare State we have promised ourselves, SHOULD we afford it? One view is to ask just what proportion of our population should be viewed as unable to provide adequately for themselves? Another view is to ask what minimum absolute standard of living should we guarantee to UK residents? [Aside: and I agree we should provide that at some level.] A further view is to ask what minimum relative standard of living should we guarantee to UK residents? [Aside: and I am much less certain that we should provide that.] On top of this, IMHO quite rightly, taxpayers fund children with both education and healthcare - to protect them from the inability or unwillingness of parents to fund same. But should such things be funded through taxation-based wealth transfer (as we currently have in the UK) or through means-tested benefits?
Best regards
What's wrong with the state printing money in it's own currency and using that to fund the welfare state?
If it causes a bit of inflation we can then increase taxes to remove that inflationary pressure.
This idea came from a Professor so I'm sure he's done the sums 8-)
The welfare state seems to be in crisis everywhere. What seems to be the problem. Is it that its no longer compatible with the goals of morden societies??
It never was. It's a Ponzi scheme. Hence the efforts now to import vast numbers from elsewhere. But they include vast numbers of the low skilled, so will make the problem worse...
Once upon a time care was primarily provided by the family, and elderly care by children. Setting up the welfare state involved the care coming from all those families being shared in common. Hence one incentive to have a family was removed, as the costs fell on the parents but the benefits were shared. Hence the decline in families and birthrates.
I find with most socialist ideas an attempt to scale up ways of life that work fine at the scale of a family, even an extended one with some personal friends thrown in, but do not work when scaled up to large populations.
IMHO that is the reason socialism gets popular support from many ordinary people with experience of families and little else.
Of course it's appeal to actual socialists is more to do with advancing their personal status and power.
PART 1
------
[I posted this comment, seemingly successfully, at 09:18; shortly before 11:25 it disappeared. In case this is a length issue with Disqus, I am reposting in parts.]
Tim writes under the title: "We Already Can’t Afford The Welfare State We’ve Promised Ourselves".
There is IMHO a fair degree of truth in this statement. However, it is by no means the whole story. I expand below.
Firstly, Tim then writes: "The ageing of the population through that demographic shift means that all the things we gleefully voted for decades back, and didn’t pay for, now do have to be paid for." Well, my view (and experience, through seeing how elderly parents are cared for) is that it is the last 3 years or so of life that are the ones where a great deal of social care is necessary. And this seems to me to be largely (though not totally) irrespective of whether average life expectancy is 70 years, 82 years or between or greater. Accordingly, the social load of the elderly is dominated by the proportion of people within the last three or so years of their life; this much more-so than it being dominated by the proportion of people over any specific age.
Indeed, on average, the NHS spends as much on someone's last 6 months as it did for the rest of their life... Not sure if that's sensible.
Whenever the subject of income is raised I like to think about consumption, because it is consumption that defines the wealth (and debt) of a country. You could argue that the state pension should not be universal, because many retired people don't need it, but what difference would its removal make? Consumption would not change by very much, but people would leave less money in their wills, which would also have little impact on consumption.
If a country consumes more than it produces then the exchange rate and other variables will adjust to remove the imbalance, so I guess I'm saying that over-promises on benefits don't matter too much, because the system will adjust automatically.