For a couple of years now at least, the watchword and campaigning slogan to counter the drive to war has been Welfare not Warfare (often coupled with Wages not Weapons). And it is a powerful one.
The basic proposition is that in simple terms our population being healthy, well-clothed,-fed, -housed, and -educated, and therefore happy keeps us safer than warfare does.
To really understand this, we need to zoom out and take a longer view linking warfare to the redistribution of wealth to the already wealthy.
Neo-liberalism
In the sixties and seventies, once the post-war welfare state really got going, we kept out of wars. Since the eighties we have been involved a series of them – Falklands, Gulf, former Yugoslavia, Afghanistan, Iraq and now, indirectly, Ukraine and the Middle East, to mention but a few.
At the same time our welfare has deteriorated. There seems to be a detrimental cycle governing it in operation.
Welfare is cut, rhetorically to improve economic growth but actually to make the rich richer. Thatcher did this.
The rich then have more cash than ever to invest overseas but they need compliant governments. Trying to arrange this leads to wars.
Consequently more money needs to be spent on arms. This worsens welfare and boosts profits further.
Don’t just believe me, check the numbers! But first, an aside about the word “welfare.”
What is ‘welfare’
By welfare I mean more than just pensions and benefits. I mean it widely, to embrace health, learning, social care, homes, travel, food, clothing. I also mean alongside these things, affordable energy, water services and communications.
Now, what about that growth boost pretext for cutting welfare?
Neo-liberalism cut economic growth
In the fifties, sixties and seventies the economy grew at a rate of 3.2% a year on average.
Since then, it has grown by only 2.1% a year.
After the financial crash, growth has fallen even more, to 1.2% a year.
So no, reducing our welfare and engaging in warfare from about 1980 on did not improve economic growth. Instead, it made it much worse.
But what it did improve is the wealth of the very rich.
The share of national income taken by ordinary households in wages and salaries (rather than by the owners of capital in profits) rose from 57 per cent in 1948 to 64 per cent in 1975.
This means the wealthy got correspondingly less each year.
But starting with Thatcher, the share of the economy to wages and salaries fell back again, to 52%, meaning the wealthy got more each year.
Pay for most of us is 2% less than it was in 2008. In the seventies top executives were paid 20 times what the rest of us got. Now it is 120 times higher.
Neo-liberalism redistributed wealth to the richest
The wealth of the top 10% has more than doubled as a proportion of national income between 1980 and today.
National income has grown, so that’s over 5 times as much in today’s pounds.
If you look at the top one per cent of the population, the growth of their wealth is even more astonishing. I don’t have the figures but you can read about it in the papers. The UK now has nearly two hundred billionaires and plenty more ‘super rich’ knocking on their door.
It is important to see clearly from these figures that if the rich get richer the poor get poorer. And at the same time there will not be much growth. In fact, as the rich have got richer, the growth rate has gone down.
The money all comes out of the same pot. We make the cash every year. It is our national product. Welfare went down, the rich got richer, we got involved in wars, military spending went up, welfare went down more.
How was welfare reduced? We have already seen it was partly by changes in pay, up for the top, down for everyone else. But it was also by taxation, and by public spending, which almost always went down, except for spending on war.
In the last forty years, Labour and Tory governments alike have borne down on the tax rate on high income and extreme wealth, and let rip on military spending and wars. They have done this by bearing down also on welfare spending – in the wide sense.
Now the present government is going even further. It is preparing to get us involved in warfare between foreign adversaries, like Ukraine and Russia, and Israel and Iran. This will entail raising military spending even more. This is ill-advised. It will impoverish millions more.
Let’s look more closely at taxation
Since 2010
Most people are paying more tax than in 2010. In today’s pounds, the 40% rate starts at below £50,000 a year compared to over £70,000 a year in 2010. VAT has gone up from 17.5% to 20%.
Meanwhile, the richer you are the lower the percentage you pay in tax. Since 2010 the top rate of income tax was cut from 50% to 45%. But the main tax reductions have been on profits and wealth gains.
The tax rate on corporate profits has fallen from 28% to 19% since 2010. Those whose income mostly came in the form of disposals of shares and other financial assets, a lifetime limit of £1 million was introduced.
This cut the tax paid by the very wealthy to a tiny fraction. For example, gains totalling £100 million from say age 35 to 55, averaging £5 million a year, pay tax of a million pounds.
In other words, they are taxed at the rate of only one percent. The figure was 18% in 2010.
So, the tax take for such a person dropped from £18 million to £1 million. There are thousands of such people in the UK, resulting in a loss of billions of pounds every year.
Since 1980
Going back to 1980 the change is even more striking. Then the wealthy paid a much higher rate of tax than everyone else. Now they pay tax at a much lower rate, if at all.
The top rate of income tax has fallen from 83% to 45%. The top rate of investment income tax has fallen from 98% to 45%.
Capital gains tax for the very wealthy fell from 30% to 1% since 1980. Inheritance tax fell from 75% to 40%.
Benefits
At the same time social security benefits have fallen and spending on public services has been cut.
Unemployment benefit has fallen from 18% of average wages in 1980 to 15% in 2010 and 12% now.
Incapacity benefits are much more targeted now than in 1980 or even 2010. Typically, they have dropped from nearly 20% of average wages to more like 15%.
The state pension has remained roughly the same since 1980 mostly ranging from 20 to 25% of average wages.
Schools, NHS, local services
Unlike military spending, what matters for personal services – schools, the NHS and local services – is how much is being spent to address the need, so that means per person.
Schools spending per pupil stagnated from 1980 until Labour came into power in 1997. By 2010 it had doubled. It then fell until 2024 since when there has been a slight rise.
NHS spending per head went up throughout the fifties, sixties and seventies, and also in the early two thousands. It stagnated in the eighties and nineties, and has done so again since 2010.
During the periods when it was increasing, NHS spend even went up as a proportion of national income. In 1980 it was 4% of GDP. In 2010 it was 8% of GDP.
Most of this increase occurred before the early 1980s and in the early 2000s. In between and since 2010 NHS spend grew either at the same rate as the economy or even slower than the economy.
Local services spending, excluding housing, fell as a proportion of GDP from a little over 5% in 1980 to a little under 5% in 2010 and a little under 4% now.
Spend on house building was running at 2% of GDP in 1980. It had been as high as 3% of GDP in the sixties and early seventies. By 2010 it was running at about half a percent of GDP.
Energy, water, communications.
These utilities were privatised 30 to 40 years ago. Rail was renationalised recently but the rolling stock is still privately owned.
Prices went up and have been held high. Look at energy bills, Royal Mail charges, water bills, broadband bills.
For all of these services, outsourcing to private profiteers has mushroomed. And utilities have been privatised. So, the spend per head partly bleeds away to the wealthy. This leaves even less money over for meeting the needs of the household and the community.
To sum up, the tax rate for the wealthy has dropped like a stone. Spending on public services and benefits has fallen and the cost of utilities and the rate of taxation for the rest of us has gone up.
But what about military spending?
Military spending
Annual military spending in today’s pounds was some £50 billion in 1980, £60 billion in 2010 and is now £66 billion. The government plans to increase this to £84 billion in the next four years.
So in conclusion, the country is preparing for war, again. Need I say more?
Yes, at the time the Tories did it, Labour, even its right wing (check out Ball parliamentary replies to Treasury statements), opposed privatisation, tax cuts for the rich, benefits cuts and spending cuts.
It should be reminded now to reverse what it opposed all the way through while it was being done, and redistribute wealth back to where it came from.
There are various forms of public ownership. The cooperative movement practises community forms of ownership for example. John Lewis and others practise worker ownership.
Historically the labour movement has also been a consistent advocate for peace and reconciliation as well.
For Britain’s true welfare, survival even, the labour movement needs to renew those commitments at the time, and press ‘its’ government to deliver the reversal it promised in opposition.
shalondon.co.uk 