Labour: rebuild the welfare state

Submitted by Matthew on 24 May, 2017 - 11:53 Author: Gemma Short

The welfare state created by the 1945 Labour government was a little bit of the “political economy of the working class” carved out of a still capitalist economy (a phrase Karl Marx first used to describe the victory of the fight for a ten-hour working day).

To some extent the ruling class has been forced to accept a minimal level of state provision. There is a constant battle over what proportion of profits is redirected, over who should receive support, and what sort of support is given. The ruling class has been winning that battle for some time.

The space carved out of capitalism by the working class where people are provided for according to need, not means to pay, is being ever narrowed.

Thatcherism was an abrupt attack on the welfare state. The internal market was introduced in the NHS, which also went from crisis to crisis as funding was restricted; the first moves to take schools out of local authority schools started with grant-maintained schools and privately-sponsored City Technology Colleges (today’s academies and free schools being their vastly more widespread descendants); council house tenants were given the right to buy their homes cheap and the social housing stock plummeted; homelessness ballooned; child poverty more than doubled; the proportion of pensioners living below the poverty line went from 13% to 43%; unemployment benefits were cut and benefits means-testing expanded.

For many millions of working class people the election of a Labour Government in 1997 signalled hope that the welfare state would be restored, despite signs to the opposite from Blair. As we commented at the time “people expected Blair to be better than his promises”. Thatcher said that “Britain would be safe in his [Blair’s] hands”. This general election has a decidedly different feel.

The support behind Labour, which appears to be increasing, is based around a manifesto which contains clear policies to reverse cuts to the welfare state and redistribute income. In the end the Blair and Brown governments did increase spending on the NHS and schools, and introduced tax credits and pension credit. But a great amount of the new money went to PFI schemes and to subcontractors. Marketisation grew.

Under the Tory led governments since 2010 the welfare state has been repeatedly raided and in some areas it has simply ceased to exist. Labour needs to do more than just stop further raids. It needs to rebuild. In some ways the policies in the Labour manifesto do this, in others they are lacking.

The Labour manifesto calls for a National Education Service. Deliberately designed to echo the National Health Service, the manifesto describes it as a “cradle-to-grave education service, free at the point of use”. The flagship policy of the NES is the abolition of university tuition fees.

Given that Labour Students continues to fight against free education in NUS and only a few years ago Labour only proposed a cut in fees to £6000, this is a huge victory for the left. An entire system of competition between Higher Education institutions and marketisation of education has been built on top of tuition fees. Abolishing them severely undermines this. Labour should also reintroduce maintenance grants linked to the cost of living. Current graduate debt should be written off, and the Teaching Excellence Framework abolished.

Labour has pledged to abandon the Tories′ new schools funding formula which would see some schools lose as much as 35%, and has also said it will address the existing chronic underfunding of schools. The most significant erosion of school education has been the academies programme which has caused a collapse in local education authorities (the council-run bodies which previously ran almost all state schools). The very basis for a democratically planned and run education system has been taken away. Services which rely on being shared across schools, music lessons, special educational needs services, school transport, educational psychology services etc., have stopped existing in many parts of the country. 87% of academies say they are buying services they used to get from the local authority from other (private) providers.

Local authority organised supply teacher provision has gone, in favour of unscrupulous and expensive private supply agencies. Each academy decides its own admissions policy, and increasingly local authorities have difficulty finding a school place for some students. The Labour manifesto pledges that no school will be forced to become an academy. Yet with 65% of secondary schools now academies, damage has already been done. Labour should “remunicipalise” school education, put school funding back in the hands of local authorities rather than schools directly, and rebuild local authorities with school workers, parents and students having a say in the running of schools.

Everyone promises to fund the NHS, but there is a very stark difference between the Tories’ pledged £8 billion and Labour’s £30 billion plus capital investment. Labour′s manifesto also proposes to halve fees paid to management consultants, scrap the “Sustainability and Transformation Plans”, and make the NHS the “preferred provider” to run services. Between April 2010 and April 2015 86% of contracts for pharmacy services, 83% of contracts for patient transport services, 76% of diagnostic services, 69% of GP/Out of Hours services, 45% of community health services, and 25% of mental health services were awarded to non-NHS providers.

According to Keep our NHS Public, that amounts to £10 billion of NHS contracts going to private providers, with between £5-10 billion wasted In the procurement process. Labour should make the NHS the only provider not just the preferred one. Debt £2 billion flows straight out of the NHS annually in PFI debt payments. St Bartholomew’s and the Royal London hospitals pay £2 million a week in PFI debt interest alone. The Labour manifesto says nothing about PFI debts. Labour should pledge to write off the £80 billion NHS PFI debt, levied to pay for hospitals which cost £11.5 billion in cash terms.

Theresa May on 22 May accused Corbyn of “playing politics with social care” — as if the £4.6 billion cut from social care budgets and the 1.2m older people whose care needs go unmet are not a political issue. A fundamental part of the crisis in the NHS, is a simultaneous crisis in social care. As councils cut social care provision to the bone, frail patients cannot be discharged from hospitals to the community. The same patients, without support and care in the community, end up at A&E.

While the Tories’ “dementia tax” places the burden of paying for care onto those who need care, Labour’s manifesto promises a National Care Service, again echoing the National Health Service, with £8 billion of funding over the lifetime of the next Parliament and an additional £1 billion in the first year. This will mean care providers can pay a real living wage to staff, including paid travel time, and end 15-minute care visits. Between 2009 and 2013 15% of adult social care jobs shifted to private providers from local authorities. That means a shift from local government control, and a shift to lower paid jobs with worse conditions. A National Care Service should mean public sector jobs, not further funding for private care companies.

The Tories have turned the benefits system into a system of pauperisation, especially for the disabled. The bedroom tax, cutting housing benefit for under 21s, benefit sanctions, cuts to child tax credits, work capability and Personal Independence Payment assessments, cuts to Employment and Support Allowance. According to the Resolution Foundation think-tank the poorest third of families have borne the burden of 67% of benefit cuts. A single parent with a baby earning £17,000 a year faces £610 in benefit cuts, from measures planned by George Osborne which came into effect this April. Further pre-planned cuts are due to roll out over the next few years.

According to the British Attitudes Survey, attitudes on benefits have suffered a long-term decline, but mostly after Thatcher had left power, and thanks to Blair. The level of agreement with spending more on welfare benefits for the poor fell from 61% in 1989 to 27% in 2009, and was 30% in 2014.

Attitudes also vary by type of welfare spending. In 2014 67% placed pensions first or second in their priorities for extra spending, but only 13% said benefits for unemployed people should be one of the top two priorities for additional spending. 45% support less government spending on the unemployed.

The Labour manifesto is a marked shift from this attitude. The section on social security begins “poverty in Britain is rising due to the Conservatives’ attempts to balance the books on the backs of the poorest. They have slashed social security over the last seven years, leaving more people in poverty, subject to a punitive sanctions regime, and reliant on food banks.” It pledges to “scrap the punitive sanctions regime, scrap the Bedroom Tax, reinstate housing benefit for under-21s, and scrap cuts to the Bereavement Support Payment.”

The rate of job seeker′s allowance has fallen far below the cost of living. Labour should be bolder and make sure nobody lives in poverty for lack of a job. The ability of people to keep a roof over their heads and feed themselves and their families should not be dependent on the decision of bosses over your job. If the risk of extreme poverty on losing a job was reduced, more workers would feel confident to stand up bosses driving down wages and conditions.

Tories like to boast that Thatcher built more council homes than Blair, and sadly it’s true. Under Thatcher’s government 2.63 million homes were built, of which 18.9% were council homes (mostly built in Thatcher′s first three years when her policies had not yet worked through). Between 1997-2010 2.61 million were built, but only 0.3% were council homes. Instead the Blair/Brown governments shifted social housing to housing associations and arms-length organisations, but even they built few new homes. The Blair/Brown governments failed to repeal Thatcher’s right-to-buy policy and pushed councils to transfer their stock to housing associations.

According to figures from the House of Commons Library house building since 2010 has been at its lowest since the 1920s. Private renters are paying an average of 47% of their net income on rent (72% in London). House prices in England have risen 140% since but average wages have only increased by 33%.

The Labour manifesto promises to build more housing, including social housing (council and Housing Association), and give councils back the power to build council homes as they need. It will introduce secure three-year tenancies for private renters with an inflation cap on rent rises, ban letting agency fees, and conditionally suspend of the right-to-buy scheme (councils can resume sales if they replace homes like-for-like). It lacks the vision of a council home building scheme that could transform working-class peoples’ lives — a scheme where decent, maintained homes are seen as a standard provision for people, not a temporary measure to help the very worst-off.

The Labour manifesto is a significant shift from decades of neo-liberal consensus where the “political economy of the ruling class”, the rule of the market in every aspect of our lives, has almost destroyed the “political economy of the working class” carved out of capitalism in the shape of the welfare state. The importance of the Labour manifesto lies less with the actual policies and more with the significance of its break with the neo-liberal consensus. If carried out in full it only goes part of the way to reversing the damage done by the Tories since 2010, let alone of Thatcher and Blair since 1979.

On the election of the Labour government in 1997 we said: “The fall of the Tories has unleashed what is for the ruling class and the new government a dangerous mood of expectation. Nobody has any reason to believe that Blair will prove untrue to his own nature and his own politics, and go on to satisfy the hopes of all those enthusiastic crowds celebrating the fall of the Tories. The release of hope is what is important here… Hope is a commodity more precious than government promises, or, for that matter, government deeds.

“When those raised up now to unwarranted hope in the new government learn that they can’t rely on Blair, they may carry that hope over into doing things for themselves and develop out of it a belief that it is possible for them to do things. A belief that many things, long thought impossible, really are possible now that the heavy tombstone of Tory rule has been shifted. Hope will stimulate and liberate desire. Desire and hope will stimulate action.”

The idea of the “political economy of the working class” has been put back on the table. We can start to carve it out of capitalism again.