Latest news with #welfare state
The Guardian
4 days ago
- Business
- The Guardian
As dark financial clouds gather, Labour has to heed its past: when it chooses austerity, it loses elections
Britain is in danger of going bankrupt. It may happen slowly or quickly, but since Labour took office this possibility has increasingly been promoted and discussed in the press, by opposition parties and in the City of London. What exact form will this bankruptcy take? The prophets of doom tend to be vague about the timescale, but more certain about the cause of the coming meltdown: the state spending too much, generally on people who have little. 'Rip up the benefits system and start again,' was the headline of a column by the usually measured Matthew Parris in the Times this week. The welfare state, he wrote, is 'in danger of toppling the whole economy'. Unsustainable numbers of claimants are 'joining the bandwagon as it careers towards the abyss'. Such warnings appear to be given credibility by worried bulletins from the Office for Budget Responsibility (OBR), a Conservative-Lib Dem creation intended to build confidence in Britain's fiscal position but in practice more often doing the opposite. 'The UK's public finances have emerged from a series of major global economic shocks in a relatively vulnerable position,' said the OBR last month. 'Underlying public debt is now at its highest level since the early 1960s and is projected to rise further … An ageing population and rising costs of healthcare and other age-related expenditures are … projected to push … debt above 270% of GDP by the early 2070s.' Already, a sustained rise in the cost of government borrowing, disappointing economic growth and tax revenues, and a little-questioned push to increase defence spending are all worsening the situation. This autumn, the chancellor, Rachel Reeves, will probably have to produce a budget in an atmosphere of acute financial anxiety, and possibly outright panic. Labour chancellors have been here depressingly often before: in 1931, during the Great Depression that helped destroy Ramsay MacDonald's government; in 1976, when confidence collapsed in the finances of Jim Callaghan's administration and the UK had to get a loan from the International Monetary Fund; and in 2008, when Gordon Brown's chancellor, Alistair Darling, warned that economic circumstances were 'arguably the worst they've been in 60 years'. On each occasion, the financial thunderclouds built up during late summer. With parliament not sitting, leaving a void for speculative news to fill, and many voters approaching the end of holidays and beginning to think about autumn belt-tightening, in August Britain may be particularly receptive to bleak forecasts about government borrowing. Yet far less attention is paid to the doom-mongers' political assumptions. When journalists, economists and politicians say sternly that Britain 'can't afford' certain things, they rarely mean nuclear weapons that will probably never be used, or bailouts for reckless banks, or the rapidly growing grant for a royal family that already has highly profitable estates. When sweeping austerity is called for, the most entrenched establishment interests are usually exempt. Nor do these supposed tellers of hard financial truths often consider whether the UK can afford low taxes on the rich, by international and historic standards, or the deterioration in public services already caused by cuts, with all its damaging consequences for productivity, social relations and public health. The surprise at the angry, run-down state of the country still expressed by many commentators – from the Financial Times to the Daily Telegraph – suggests a determination not to see austerity, social divisions and political upheaval as in any way connected. It's a sign of the enduring influence of Thatcherism that so many people can look at our ever harsher society and economy and still conclude that the solution is not more government support for citizens, but less. Thus, a panic about the size of the state is created yet again. What can the government do to stop it – assuming it actually wants to? In 1931, 1976 and 2010, Labour responded to fiscal crises in what is revealingly regarded, across mainstream politics, as the conventional way: by proposing cuts. There remains a puritanical side to the party – perhaps partly a legacy of its origins in tightly run cooperative societies – that enjoys trying to prove that Labour governments are more frugal than Tory ones. When Labour has an expansive, confident leader, such as Tony Blair in the 1990s, spending restraint can make the party look measured and responsible: being careful now in order to spend more later. But under less persuasive leadership, cuts can become a trap. Some voters will always believe that Labour is profligate in office – and others that it is never generous enough. The party lost all three general elections after MacDonald, Callaghan and Brown's governments chose cuts. Tentative Labour governments can be too influenced by pro-austerity interests. After the 1976 crisis had subsided, and the Callaghan administration had enacted sharp spending reductions, his chancellor, Denis Healey, discovered that the government debt forecasts he had been given by Treasury officials had been far too pessimistic. 'The figures were billions out,' he told me decades later. 'The big problem they have in the Treasury is getting governments to control spending. So any excuse they can find for getting spending cut, they will take.' Now, the scale of the government's problems seems less open to interpretation. This week, the respected National Institute of Social and Economic Research warned that 'the chancellor cannot simultaneously meet her fiscal rules, fulfil spending commitments and uphold manifesto promises to avoid tax rises for working people. At least one of these will need to be dropped.' Global financial markets, which have become even more interconnected and powerful since Labour's last fiscal crisis in office, and which are operated by people who won't bear the brunt of British public spending cuts, will scrutinise the budget with their customary coldness. Yet somehow Labour needs to break free of the argument, almost a century old now, that its more progressive policies and poorer people's living standards are the first things that should be sacrificed in hard times. Perhaps one way is to highlight austerity advocates, past and present, such as George Osborne and Kemi Badenoch. Can the country really afford more of that kind of haughty, socially disastrous politics, Labour could ask. But then it would have to set out an alternative: a centre-left politics that can survive financial crises – or avoid them altogether. After so many fearful retreats, that work has barely begun. Andy Beckett is a Guardian columnist
The Guardian
5 days ago
- Business
- The Guardian
The gambling industry is a licence to print money. Tax it properly – and turbocharge the fight against child poverty
From 1945 to 1951, a Labour government, struggling to pay down Britain's war debts in what became known as the 'age of austerity', created Britain's welfare state, pioneered a free National Health Service and implemented family allowances. In the 1970s, facing an oil shock and rising deficits, Labour introduced child benefit for 7 million families. By 2010, despite a global financial crisis, the government had raised tax credits from zero in 1997 to £30bn, taking millions of pensioners and children out of poverty. It is to the credit of Keir Starmer and Rachel Reeves that within days of entering office, they set up the child poverty review with a remit to ensure an 'enduring reduction in child poverty in this parliament'. Now, for a fraction of that £30bn spent in 2010, they can resume Labour's historic role and immediately take the first 50,000 children out of poverty without dropping manifesto commitments. As a former chancellor who understands why it matters to balance the books, I sympathise with Reeves's fiscal inheritance. This autumn, as growth is hit by tariffs and trade restrictions, and the fiscal position weakens as we come to terms with defence requirements, a history of low productivity and steep interest payments, the window for long-promised social improvements might appear to be closing. But having been invited to respond to the government's consultations on both child poverty and gambling taxation – and following recent reports from the Social Market Foundation and the Institute for Public Policy Research (IPPR) – it's clear that we can identify sources of revenues to fight the war against child poverty. The first step is raising billions by taxing the extraordinarily profitable gambling and betting industry, without affecting lotteries or bingo. There is an urgent need to act. I have not seen such deep poverty since I grew up in a mining and textiles town where unemployment was starting to bite hard. Now, each night, 1 million children in the UK try to sleep without a bed of their own. Two million households live without cookers, fridges or washing machines, and many are without toothpaste, soap or shampoo. It is heartbreaking that 3 million children go without meals because their families run out of food. The decisions of previous Tory governments have pushed 4.5 million children into poverty. This is a national scandal and a stain on our country's soul. Britain is now enduring the worst levels of child poverty since modern records began, even worse than in the Thatcher-Major years, and far worse than in most European countries. Yet without action to improve family incomes, the numbers will, on the government's own definition of poverty, rise to a wholly unacceptable 4.8 million children by 2029. These are austerity's children, the victims of 14 years of Tory rule, an era whose most vindictive act was to treat newborn third and fourth children as second-class citizens, depriving them of all the income support available to their first and second siblings. By next year, every other child in cities such as Manchester and Birmingham will be condemned to poverty. In 2010, the Trussell Trust ran 35 food banks in the UK. Now, along with independent ones, there are 2,800. Since the election, the number of homeless children in temporary accommodation in England has risen by 17,510 to 169,050. This summer, Dickensian levels of poverty have been reported by the children's commissioner. If we look into the eyes of these young Britons, we won't like what we see: instead of a generation filled with optimism about the future, we'll see among too many a deep, impenetrable sadness reflecting a loss of hope. Yet without action the government will have little chance of meeting its well-publicised target that 75% of children will be ready for school at age five. The child poverty review, when it is published, will deserve credit for proposing more breakfast clubs, free school lunches, family hubs and additional childcare. Moving thousands into better-paid jobs will also help. Sadly, however, none of these measures will prevent child poverty continuing to rise. School lunches are worth £12 a week per child, and breakfast clubs £9 a week, but under the two-child benefit cap families have lost £66 a week for their third child. If they have a fourth child, the total is £132 a week. The Conservative party cultivated the myth that poverty is the fault of work-shy parents and a culture of dependency. Yet 70% of children in poverty live in families where someone is working but on pay too low to make ends meet. Many of the rest are single parents unable to work because they cannot afford childcare or are coping with illness in the family. Abolishing the two-child rule – what the children's commissioner says has to be 'the foundation for all else' – would cost £2bn in 2025-26 and £2.8bn by the end of the parliament. As the Resolution Foundation has shown, almost 500,000 children can be lifted out of poverty by 2029-30 at a total cost of £3.5bn. Inaction will cost more. Currently, local authorities and the NHS are picking up huge bills for ill health, homelessness and the cost of supporting children in care. For every 100,000 children, each 1% increase in child poverty forces an additional five of them into care. Each child looked after by the care system costs an estimated £1.2m in terms of lost productivity and their use of public services. Excluding the lottery, betting and gaming was an £11.5bn sector last year that incurred only £2.5bn in tax. As much as £3bn extra can be raised from taxing it properly. Remote gaming duty (effectively the tax on online slots games) is about 35% in the Netherlands, 40% in Austria, 50% in Pennsylvania and 57% in tax haven Delaware, two of the few US states where it is legal. Yet the same activity is taxed at just 21% in the UK, raising only £1bn. Applying a 50% levy – much less than the 80% tax on cigarettes and the 70% tax on whisky – would raise £1.6bn more. Raising the general betting duty on bookmakers' profits from 15% to 25% could generate an additional £450m, after returning £100m as additional support to boost the horseracing industry. To achieve parity with their online equivalents, machine game duty payable on the revenue from in-person slot machines should also increase from 25% to 50%. According to IPPR estimates, this would raise an additional £880m. The government could then start to reduce child poverty. Unlike almost all other businesses, most gaming and betting is exempt from VAT. Its most addictive practices are responsible for social harm that costs the NHS and other public services more than £1bn a year. Gambling levies aren't the only source of revenue that could pay to alleviate child poverty. But this should be one straightforward budget choice. The government can fulfil today's unmet needs by taxing an undertaxed sector. Gambling won't build our country for the next generation, but children, freed from poverty, will. Gordon Brown was UK prime minister from 2007 to 2010 Comments on this piece are premoderated to ensure discussion remains on topics raised by the writer. Please be aware there may be a short delay in comments appearing on the site.
The Guardian
31-07-2025
- General
- The Guardian
Judy Robinson obituary
My friend Judy Robinson, who has died suddenly aged 73 after a brain haemorrhage, was a powerful advocate for the voluntary sector and its contribution to the welfare state, as general secretary of Greater Manchester Centre for Voluntary Organisation from 1991 to 2002, and then leading Involve, its Yorkshire equivalent, until 2016. She was chair of Navca (the National Association for Voluntary and Community Action), supporting voluntary and community services, from 2020 to 2023. A force to be reckoned with, Judy provided an articulate, well-informed challenge to successive governments, seeking to persuade them to recognise the community sector's experience and knowledge, and the voices of its service users. Born and raised in Scunthorpe, Lincolnshire, she was the only child of Anne (nee Jackson), a homemaker, and Fred Robinson, known as Robin, a clerk in the steelworks. She was always grateful for the opportunity Scunthorpe grammar school gave her, a working-class girl. Judy's community work began on council estates in Sheffield while still a student at Sheffield University, where she took a combined honours degree in history and biblical studies. It continued into her first job as a community worker, employed by the Church of England, in Leigh, a declining Lancashire mining town. She quickly began assisting local tenants in their protest against Wigan council's plans to demolish swathes of terrace housing, pressing instead for refurbishment so communities might thrive again. She was instrumental in setting up Lamp, a lively community bookshop in Leigh town centre, to which the young Lemn Sissay was a regular visitor. The present state of Leigh, its people neglected by the state, troubled her deeply. She loyally returned there until her death, travelling 60 miles from her home in Sheffield to her dentist and hairdresser. In pre-computer days, Judy was skilled at cutting and pasting typewritten articles for community newspapers and for Christian Statesman (later Christians Today), a radical Christian quarterly that she co-founded in 1977 and whose stance earned the ire of the Daily Telegraph. Subsequently she worked nationally for the organisation Christians Against Racism and Fascism, and at Sacred Trinity, a multi-faith education centre in Salford. During her Leigh days she met and married Ian Stubbs, a vicar, and moved to the Oldham area. They separated in 2002 and divorced in 2005. In retirement Judy gave her time freely and tirelessly to chairing Navca and, from 2017, Healthwatch Sheffield. In March this year, she gave a keynote speech at the Taking Action on Poverty Summit in Sheffield, challenging the audience to tackle inequality by working together from their different perspectives. Throughout her working life Judy mentored many of the future leaders in the voluntary sector, setting an example with her wisdom, energy, compassion, imagination and commitment to social justice, and in her defence of the north of England. A love of nature and the arts infused her life; she enjoyed bird-watching, the theatre, visits to galleries and walks by the sea. Judy was generous in time, hospitality and carefully chosen gifts. She had several official and unofficial godchildren, and her many friends were her family.
Times
14-07-2025
- Business
- Times
Kemi Badenoch is right that the welfare system is a fiscal disaster
The leader of the opposition alerted the nation to an alarming statistic last week: 28 million people are working hard and paying taxes to support the livelihoods of another 28 million. Kemi Badenoch argued that Britain is becoming 'a welfare state with an economy attached', such is the vastness of uncontrolled spending on benefits. That might sound like hyperbole, but she has identified one of the most serious issues stifling growth and the country's prospects. Ms Badenoch's speech was her first notable economic intervention since she became the Conservative party leader last year, and one that was overdue. While few can question her success in campaigning for a national grooming gangs inquiry, or fighting for women's rights, she has had less success in articulating an alternative economic vision to that of the Starmer government or Nigel Farage's Reform UK. Her call for a return to a 'Protestant work ethic' articulated an important theme: the need for economic opportunity. Although the Tories bear some responsibility for the millions of Britons who are economically inactive, particularly in the wake of the Covid-19 pandemic, the party is the only one willing to state hard truths about the mess of the UK's labour market. Ms Badenoch argued that the word 'disabled' has lost its meaning, with one in four working-age people now classified under the term. With the health and disability benefits bill set to rocket to £100 billion by the end of the decade, she is right that the current situation cannot go on. • Give struggling 16-year-olds state-paid jobs, says key adviser The accusation that the welfare system makes it too easy for people to claim benefits is hard to dispute. So too is the danger that welfare is becoming a lifestyle choice. It is clear that radical reform, not mere tinkering, is required. According to the Centre for Social Justice think tank, a recipient of the highest level of sickness benefits earns £2,500 a year more than someone on the national living wage. It is unsurprising that some will therefore opt for this over a life of work. Ms Badenoch invoked the legacy of Lord Tebbit, the Thatcher-era minister who died last week, to argue that the Tories must remain the party of work. Acknowledging mistakes of the past, she said, 'people should do all that they can to be in work, that is the ethics that I want to be very clear about now'. The Tories are right to grasp this difficult issue, as their political rivals appear unwilling to. Ms Badenoch dismissed Mr Farage as an 'unserious' figure: 'Jeremy Corbyn with a pint and cigarette'. She would be wise not to underestimate his everyman appeal, something that does not come as naturally to her. Yet she is right that Reform is increasingly and unwisely tilting leftwards when it comes to public spending in its desire to appeal to disenchanted Labour supporters. After the debacle on the cuts to disability benefits, it is unlikely that the Starmer government will act decisively, or at all, when it comes to welfare reform. Despite the drumbeat from Labour MPs calling on the government to scrap the two-child benefit cap, this is precisely the opposite of what the prime minister should be considering. Instead he should heed the advice of Alan Milburn, former Labour health secretary, who cautioned against any effort to 'run away' from reform. He is right that the costs of sickness benefits are unsustainable, both for the economy and the state of society. There is an obvious gap in the political market that Ms Badenoch can fill: the cause of fiscal restraint. The Tories should never have given up their belief in a smaller state, but it is welcome to see them return to it. It is ever more likely that the UK is heading for a financial crunch this autumn, as Rachel Reeves's mishandling of the economy risks creating a vast fiscal black hole. The unsustainable welfare bill is at the heart of the problem and voters now appreciate that it must be tackled. The time for hard truths is fast approaching.
