Reinventing the Welfare State. Ursula Huws

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СКАЧАТЬ taxpayers’. But it is also displaced onto overseas workers, seen as stealing jobs from British workers, and onto migrants, who, in addition to stealing jobs and undercutting wages are also often perceived as consuming public resources, such as housing, education and health, which should by rights belong to native workers. The search for groups to blame does not stop there, however. Another favourite target is the elderly, adding an intergenerational wedge to the other divisions forced into the working class – splintered not just by employment and citizenship status but also by age.

      BLAMING THE BABY BOOMERS

      The elderly form a large and growing portion of the UK population. There are nearly 12 million people aged 65 and over in the UK, of whom 5.4 million are aged 75 or over and 1.6 million 85 or over. The Office for National Statistics estimates that by 2066 there will be a further 8.6 million UK residents aged 65 or over, who will make up over a quarter (26 per cent) of the population.¹³

      Life expectancy is, however, falling, in a reversal of a long-term trend. The Continuous Mortality Investigation revised its Mortality Projections Model in 2019 to predict that life expectancies at age 65 had fallen by around five months for both males and females, to 19.8 years and 22.4 years respectively,¹⁴ a trend it is difficult not to attribute to austerity policies.

      Small wonder, then, that the pension bill is a prime target for those wishing to cut public expenditure, despite the fact that pensions in the UK are low compared with other European countries, at £141 per week, compared with £507 in Germany, £304 in France and £513 in Spain.¹⁵

      The 2010s saw a path being prepared for future cuts. Several interrelated themes have been visible in the popular discourse, but they add up to a general message that the current generation of retirees is privileged, and that these privileges are gained at the expense of other groups in the population, especially the young, including their own children.

      One common theme is that the baby boomers’ pensions are being paid for by those ‘hard-working taxpayers’ who featured so prominently in the rhetoric of New Labour as well as Tory government propagandists. This misrepresents the reality to quite a considerable extent. During the 1950s, 1960s and 1970s, when most of the current crop of pensioners entered the labour market, the UK pensions system was still as it had been established under the 1946 National Insurance Act: contributions were paid by those in work, and their employers, into a common pot from which unemployment benefit, sickness benefit, retirement benefit (pensions) and other benefits were paid. Pension coverage was not universal (married women and some self-employed workers were excluded from it), but the principle was that everyone contributed to a system from which everyone then benefited.

      The baby boomers thus spent the first two, three or even four decades of their working lives contributing to the basic state pensions of the generation that preceded them. Some were, of course, also enrolled in employer-provided pension schemes which provided additional income in retirement, but by no means all (in the case of women working part-time and people working for small companies, only a very small proportion).

      Over the ensuing decades a series of changes placed pension schemes more and more into the hands of private providers and shifted the logic from one whereby people currently working paid for the pensions of their elders concurrently drawing pensions, to one where working people paid for their own future pensions, a principle whose most recent formulation was in the Pensions Act of 2008, with its ‘defined contribution’ principle that whatever the ‘job-holder’ puts in he or she should then take out.

      This is quite contrary to the principle ‘to each according to need, from each according to ability’ that underpins most socialists’ idea of what a welfare state should be about. It also strays away from the idea that contributions into a common scheme should be obligatory, a principle which even Winston Churchill recognised as necessary (in relation to unemployment insurance) because if it were not compulsory for everyone to pay into the system then only the bad risks would take out such insurance, leading to the failure of the whole scheme.¹⁶

      Baby boomers have, in other words, being paying into the system throughout their working lives, though it is only in the latter part of their working lives (and in the case of many women and self-employed people, hardly at all) that many have been paying into their own private pension pots. Contrast this with the companies who benefit from tax credits, many of which are registered in tax havens and pay little into the public purse.

      A second common theme is that baby boomers, often portrayed as selfish squatters, have benefited disproportionately from the rise in house prices and are occupying high-value properties that would otherwise be available for young people to live in. Again, let us leave aside the obvious point that in many cases young people, in the form of the baby boomers’ own children and grandchildren, are already living with them in these properties, albeit perhaps sometimes with all parties wishing that they had a bit more privacy and control of their living space. There are some other myths here that need debunking. A few facts about the history of housing in the UK may help. During the twentieth century, owner occupation of homes grew from 10 per cent to 68 per cent, with most of that increase taking place in the last four decades of the century (it actually fell between 1938 and 1951). A high proportion of the rented accommodation (a majority from the 1970s onwards) was in housing owned by local authorities or (from the 1980s) housing associations. In the twenty-first century these trends have reversed a little, with a resurgence in the role of private landlords, so that by the 2011 census the breakdown was: 7.2 million homes owned outright, 7.8 million owned with a mortgage, 4.2 million privately rented and 4.1 million socially rented (of which 2.2. million were from local authorities and 1.9 million from other social landlords).¹⁷ Nearly 70 per cent of homes, therefore, require the payment of either rent or mortgage to secure ongoing occupation. If the residents cannot keep up the payments, they will be booted out.

      The majority of baby boomers were brought up in rented accommodation and started their working lives paying rent. Some, but not all, switched to paying mortgages when they could afford to do so (often driven as much by fear that rents were becoming unaffordable as by the desire for the proverbial ‘home of one’s own’). Those who chose to acquire mortgages had to sacrifice a considerable chunk of their incomes to pay them off. (Let us not forget that for every pound of the purchase price of the property you pay off with your mortgage you pay at least as much again to the bank, building society or mortgage company that lent you the money to buy it with.) Except in a minority of cases where it was inherited, the property these baby boomers now own was thus anything but a windfall (except to the moneylenders). Like their pensions, it was paid for from the wages of a working lifetime.

      It is certainly true that many of these properties, including the former public housing that tenants were encouraged to buy from the 1980s onwards, have increased enormously in value. But let us look at what precisely was going on when the Thatcher government decided to sell off the cream of Britain’s public housing stock. First, the cost of most this housing had already been amortised: the initial cost of building it had already been recovered. If the logic of the spirit in which welfare states were ostensibly set up had been followed, the rents of these publicly owned homes should have been very low. If there was no need to make a profit from them, all that the local authorities who owned them should have needed by way of income was enough money to cover the costs of maintenance and repairs and a contribution towards the cost of building additional new housing. So the tenants to whom these homes were sold off were in effect being asked to buy something that was already publicly owned and paid for. And since they had to get a mortgage in order to do so, half of what they paid was in effect a gift (in the form of interest payments) to the financial services companies that were such strong supporters of the Thatcher government, as well as beneficiaries from its policies.

      But surely, readers might think, the people who bought these properties nevertheless benefited hugely from doing so, didn’t they? Well, perhaps some did. But it is СКАЧАТЬ