Country Case Studies and Links
by Nicole Faher
The United Kingdom's current welfare system began to take shape after World War II and has continued to change for the following thirty years. As many other countries in the 1980's, the U.K. encountered serious economic problems. Most important among the changes during the 1980's was of the rise of Margaret Thatcher and the Conservative Party after 1979. Its impact on British politics would be felt for the next 18 years. Having the same political party in power for so many years makes the U.K. a unique case and thus, rather different from other E.U. nations, especially because the Thatcher government left a considerable imprint on the British welfare system.
Eventually Margaret Thatcher was replaced by John Major. During that time, the issue of welfare reform was high on the agenda. The importance of the welfare state in the U.K. can also be gauged when one considers that the government spends two-thirds of its budget on the welfare state and the services provided by it. Since the same political party ran the U.K. for so many years, it had the capacity to pursue its welfare agenda in whatever direction it chose. Yet, the Conservative government also had to keep in mind how popular the existing welfare arrangements were with the voters.
The Conservative political government, during the1980's and 1990's, made several important adjustments:
- Welfare benefits in the U.K. include five separate groups of services, which are cash benefits, health care, education, housing, and the personal social services. The most widely used form in the U.K. are cash benefits that make up around 10% of the Gross Domestic Product (GDP). The category of cash benefits can be broken down into three subgroups, which are national insurance, means-tested, and non-contributory benefits. The national insurance system makes up the lion share of the social expenditure in the U.K., while the non-contributory benefits rank second and means-tested benefits last. A problem in the U.K. have been the low benefit levels. For example, pension benefits are less than half of a person's active salary.
- Health care is the second major part of the U.K.'s welfare system. It is organized through the National Health Service (NHS) and financed by taxes. The system is popular and relatively cost effective by the standards of other countries. As it is universal, it covers the entire population and is virtually free to people. Priority is given to those in dire need of medical assistance. Yet, those who need non-emergency medical services must wait sometimes up to one or two years.
- Education is available to all school age children through the ages of five to sixteen. Yet, as children reach the age of sixteen, fewer lower class children move on to further their education and move, instead, directly into the work force. In short, the system of higher education does reflect a class bias. The responsibility for the British education system lies with the central government, local government and other professional interests. All three have a part in the public school system. The central government provides for a legislative framework for the schools, while local governments generally focus on the organization of the schools. Professional interests tend to influence the curriculum and testing procedures.
- Public housing consists mainly of council-owned rented housing. The owner-occupation housing, however, is the most popular in the U.K. mostly because it is based on a taxation subsidy system. In fact, three-fourths of working class homeowners in the U.K. live in sub dwellings. Council housing is controlled by the local government and usually provided by applying a means test.
As in most other western countries, the aging of the population is one of the biggest challenges for the welfare state in the U.K. The government in the U.K. is faced with a growing elderly population requiring more assistance and services. Yet, the demographic problems are not as pronounced as in some other European countries.
Another very important issue affecting social policy is the level of unemployment. It skyrocketed in the 1980's to 13%, but has come down to about 6% in the mid-1990's. The problem of unemployment also coincided with high rates of inflation. The Conservative party responded to these challenges by promoting job training, especially to younger people. The reason was that high unemployment occurred mostly among untrained manual employees.
Following supply side economic policies, the Conservative government relied on cutting taxes, deregulations and privatization to pull the country out of its lasting economic high. Some of their measures "spilled over" in to the welfare sector. The tax cuts often did not help the people most in need of public assistance and income equality increased in the U.K. While the Conservative government did not go as far in terms of privatization as it intended, the idea of relying on the market and self responsibility was taken further in Britain, than anywhere else in Europe. A revived economy and, more favorable demographics and a less expensive social security system places the U.K. in a better position than many of its European competitors. The Labor government of Tony Blair is likely to continue the general course of the previous government.
Vic George and Peter Taylor-Gooby (1996). European Welfare Policy; Squaring the Welfare Circle St.Martin's: New York.
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