Recent Publication- Working Welfare
Working Welfare: Contributory Benefits, the Moral Economy and the New Politics
Frank Field MP
Mr Field explains the new economic and political constraints:
Future governments will be obliged to constrain public spending. Mr Field traces the decades of bloated public spending when governments ran up big debts to win votes, leaving taxpayers to pay the bills. Today’s priority, of cuttingdebt and deficit, will be followed by the constraints of the new economics, as governments are forced to keep public spending levels within 40 per cent of GDP.
Voters will refuse to pay higher taxes or NICs. Political constraints will be equally tight. Voters,sceptical about paying for budgetary excesses, and are now refusing to pay higher taxes. As Field warns, voters, ‘rich and poor... are unprepared to accept the tax rates necessary to meet the costs of the goods and services for which they happily vote’.
As people live longer lives costs and expectations for healthcare and retirement pensions are rising.Pressure for pensions and healthcare will nonetheless expand and as people live longer lives, greater sums will be needed to meet rising expectation at a time of demographic ageing.
How then can higher costs be met without rising tax?
Field proposes a new deal between government and people. National Insurance contributors should own and control their National Insurance funds through new mutuals acting on their behalf. Voters, he says, ‘are willing to enter into a new contract... [to finance] national insurance benefits – in particular pensions, unemployment pay, and... to cover care’.
He proposes that:
·The new system ‘could mirror [that] of the John Lewis Partnership...’ with individual member ownership and control through elected boards. So members set the direction for the company and hold chief executives to account.
·Government should stand aside from control or ownership of the new system or its funds. Its sole aim should be to establish the legal framework and ensure that benefit is linked to contribution.
·Work should begin by the Labour Party in the run up to the next election on how such a fundamentally restructured National Insurance scheme could work.