We Already Can’t Afford The Welfare State We’ve Promised Ourselves

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Another reminder of the sad and basic fact that we cannot afford the welfare state that we’ve already promised ourselves. The ageing of the population through that demographic shift means that all the things we gleefully voted for decades back, and didn’t pay for, now do have to be paid for. And as it turns out we’re not paying enough in tax for those things we did vote for.

The implication of this should be obvious. We can’t and won’t have any extension to that welfare state on the grounds that we’re not even willing to pay the bill for what we already think we’ve got. Here it’s local council finances:

David Phillips, an associate director at the IFS, said: “Current plans for councils to rely on council tax and business rates for the vast bulk of their funding don’t look compatible with our expectations of what councils should provide.” The shifting demands of an ageing population mean the current 3% cap on annual council tax rises would mean adult social care would require 60% of local tax revenues within 15 years, up from 38% now, according to the report. Phillips said a national debate was required on how much citizens would be willing to pay for services.

Well, how much are we willing to pay? Currently tax revenue is some 34% of GDP. That’s an historical high for this country. We can’t go and tax the rich more, we’re already at that Laffer Curve peak if not a little over it. We definitely tax the poor too much – just look at the taper on Universal Credit, 60% or so as a marginal rate. Corporations don’t pay tax, only people do. There’s not really some God in the Machine to provide the extra revenue.

But we have promised ourselves all those nice things. Social care in old age for example. Sure, good thing to have, certainly don’t want to return to the days when the elderly childless died and rotted in their garrets.

But we do still face this basic fact. We’re not willing to pay for what we’ve already promised ourselves, voted for. Thus there’s no real possibility of an extension of that welfare state, is there?

Oh, and all those people shouting that we’ve got to raise taxes because….what they are indeed therefore saying is that we can’t afford the welfare state we’ve already got, aren’t they? That’s exactly why they are shouting that we’ve got to raise tax. Because we were promised things but didn’t agree to pay for them at the time.

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