The essentials of life are food, water, clothing, shelter, healthcare and a livable income in times when a person cannot work through want of a job, disability, illness or old age. Most people most of the time can afford to pay for shelter, food, water, heating and clothing from their private resources. Most could not afford the rest of the essentials and very few indeed could survive long term unemployment without state aid.
It is important to realise what small incomes the majority of Britons have. Take these figures from the Government’s Regional Household Income Comparison 2004:
“Inner London had the highest disposable household income (after tax) per head of population (£16,500) in 2004. The area continued the trend of previous years and in 2004 was 29 per cent above the UK average of
£12,800. This was lower than in earlier years. In 2000 it was 36 per cent higher than the UK average. Tees Valley and Durham in the North East had the lowest household income per head at £10,800. This was 16 per cent below the UK average in 2004.” (http://www.statistics.gov.uk).
The uncomfortable truth is that even the average disposable British household income is insufficient to comfortably bring up a couple of children, pay an average mortgage and make substantial pension contributions. Worse, much of the population has less than average household incomes, many very substantially less. But even those with household incomes substantially above the average – many of whom support the idea of private provision for those “who can afford it” – would find themselves deeply embarrassed if they did have to meet the cost of everything they now receive from the state.
To take a concrete example, that of a middle class husband and wife with two children with a net annual household income of £40,000. At present they can, if they choose, educate their children free at state schools. The entire family can be treated under the NHS. Until they are sixteen, the children will not even pay prescription charges. If their children go to university, as they probably will being middle class, much of the cost of the education will still be met out of taxes (tuition fees even at their new levels do not come near to meeting the full cost of a university education). If either parent falls ill or is injured, the taxpayer will provide basic support. The same applies in the case of unemployment. If any member of the family isunfortunate enough to be the subject of a criminal assault, the Criminal Injuries Board will compensate them. The family will receive child benefit which is not a means tested benefit.
Just imagine what it would cost to either provide such services by buying them directly or through insurance if one could find an insurer willing to issue cover. A decent private day school education would be at least £12,000 for two children and could well be a good deal more. A university education would cost tens of thousands of pounds.
Private health insurance for a family to cover everything covered by the NHS cannot be obtained, but even the best that could be purchased – and it will provide a much inferior cover to that of the NHS – would cost several thousand pounds a year and will not cover existing conditions either at all or for several years – those who doubt this should check out the BUPA website and see what even their most expensive plan does not cover (you will get a very nasty shock). Drugs, including prescription drugs, will have to be purchased at their full cost. If the family has a member with a chronic condition requiring regular treatment or a condition requiring expensive one-off treatment, they will soon find their private insurance will not cover the treatment or will do so for only a restricted period. Mental health problems and long term nursing care are rarely if ever adequately covered by private insurance. Where private insurance will not pay, the family will be left with bills which at best will severely constrain their lives and at worst bankrupt them. (The most common cause of personal bankruptcy in the United States is medical bills.)
Private insurance for sick pay and unemployment pay is both very expensive and strictly limited in the time it is paid – a year is normally the longest period covered. The same applies to mortgage insurance cover. There would be no child benefit or criminal injuries compensation available without public provision.
If the cost of providing for the family is restricted to just the items discussed above the family would be hamstrung by the bills even if no major disaster such as a serious operation hit them. A mortgage to purchase even a modest house in most areas would be out of the question. University education would become a very big gamble for the children. If a major disaster did hit the family, they would not be able to cope for an extended period because any private insurance they could purchase would soon run out.
The family I have described is by normal standards comfortably off. It might be able to struggle along provided it did not hit a catastrophe which robbed the household of its breadwinner(s) or an emergency such as a serious medical condition which swallowed up vast amounts of money, but it would not be a materially comfortable or psychologically secure family. Most families (and individuals) have considerably less income than this fictional family and a substantial minority live on an income well below the average, while half the British adult population have no meaningful savings or occupational pensions. The large majority of the population would be utterly unable to provide for themselves in times of hardship such as sickness, old age and enforced unemployment.
Those who claim that all the poor in Britain are only relatively poor should reflect on this stark statistic: the latest Inland Revenue figures for marketable wealth distribution ( 2002) show the top 1 per cent own 23% of national wealth and the bottom fifty per cent of the population have a staggeringly small 6% (Office of National Statistics (ONS) website – published 2004).
In short, the majority of the British population live as they have always lived: from one pay packet to the next. They do not have the resources to withstand the withdrawal of state provision and are very vulnerable to the competition of immigrants and offshoring, which either destroy their employment or reduce their pay.
What applies to what might be termed social provision applies to all other public charges – such as defence, policing and the justice system. Most individuals do not have to bear the full cost of these because they pay far less tax, direct and indirect, than is needed to finance a per capita share of total public expenditure. A quick calculation will demonstrate this. The projected public expenditure for 2006/7 is £488 billion. There are approximately 45 million adults in Britain. £488 billion divided equally between them runs out at nearly £11,000 per adult head.
The future is even bleaker because of the absurd cost of housing, the rising cost of a university education and the likely high cost of energy and water supplies. There are even suggestions in current price movements that cheap food may be a thing of the past and the price of manufactured goods from China and its Asian cohorts is also showing signs of inflation as their populations’ wages and living standards rise and they consume more of what they make.
The effect of everyone “paying their way” just for things such as education and healthcare would have a severely depressive effect on already dangerously low Western breeding rates as people had fewer children because of the increased costs falling on the individual.
The moral value of general provision
If public provision is necessary should it be available to all? Why should it not be granted only to those who through a means test show that they cannot support themselves from their own resources? The answer is threefold: personal dignity, practicality and the engendering of social cohesion.
Anyone who has had the misfortune to claim means tested benefits or who has assisted someone to claim will know what a frustrating and degrading experience it can be. The rules relating to claiming are Byzantine in their complexity and a simple error on a form (which can run to 20 pages or more) can result in benefit being withheld or delayed. But even when the forms are correctly completed and the criteria for the benefit are met, the delivery of the benefit is frequently seriously delayed because the volume of claims and their complexity simply overwhelms the administrative capacity of the public servants dealing with them.
If all public provision was means-tested, including NHS treatment and education, the administrative cost would be massive and the efficiency of the delivery of the provision greatly reduced. The additional administrative costs would have to be set against any saving gained by denying provision to people.
General provision also underpins social provision. Where all are eligible, all feel that they have a stake in the Welfare State. That improves social cohesion. Exclude the better off and the odds are that eventually political circumstances will arise which allow those with the power to reduce or even destroy utterly public provision. At best, if social provision is seen as only for the poor, it will gain a stigma and the quality of the provision will be of little or no account to those who do not benefit from it.
The provision of public services gives everyone rich or poor the assurance that if the worst comes to the worst they will not be utterly without the means to live. That is the bottom line of having the privilege of being a British citizen.
Apart from simply making life more pleasant and secure, a socially cohesive society has considerable cost benefits, because it will experience less anti-social behaviour. That translates into fewer police, fewer trials, fewer people in prison and, indeed, fewer laws to moderate social behaviour to administer – regrettably many laws are passed in response to moral panics.