Never trust a Trust (1993)

 

From the November 1993 issue of the Socialist Standard

The government has recently announced that thirty more district health authorities are to become self-governing in the fourth wave of trusts, and that the remainder will follow suit within two years.

The National Health Service enjoys considerable public support and attempts to return to private medicine have to be carried out cautiously whilst protesting vociferously that there is no such intention. But despite this cautious approach at least three-fifths of all self-governing trusts have run into financial difficulties. And in August, four London hospitals announced that they were going to cancel routine operations for the rest of this financial year. With seven months to go, from the date of these cancellations, to the next financial year, the waiting list for treatment will continue to grow, with pain and discomfort for patients.

The financial difficulties experienced by the health service trusts is only to be expected as an internal market does not put any more money into the system but costs considerably more to administer it. Whilst administrative costs have risen sharply to cope with the extra paperwork many newly-qualified nurses have been unable to obtain jobs and others have been given temporary contracts, only to find themselves unemployed three or six months later.

Despite the greater technological expertise required for modem nursing, the number of qualified nursing staff fell by 5.2 percent between September 1990 and September 1991 according to the Department of Health. But unqualified staff have increased by 17 percent. (Nursing Times. 1993, no.7)

The increase in total staff has been necessary to compensate for the removal of student nurses from the wards into colleges for the Project 2000 training courses. This change from traditional training methods has been introduced to improve academic standards and technical knowledge but also to pay students less by giving them grants instead of employing them as salaried workers.

Despite the dearth of jobs, financial hardship and the prospect of unemployment at the completion of training has led to a 5.5 percent wastage rate for Project 2000 students compared with 4.7 percent for students undertaking traditional training (Nursing Times). While the government juggles with the figures and nurses find out the hard way that professional status counts for little in the job market, the waiting list for treatment has increased by 60,000. A number of hospital trusts have changed nurses’ patterns of shift work, worsening their conditions of service and reversing some of the hard-won gains of the last thirty years. The Bradford Hospital Trust announced up to 300 redundancies shortly after it became a trust.

During recessions the bargaining power of workers is weakened and they are vulnerable to attacks upon their living standards. This will always be the case while capitalism lasts because trade unions tackle effects and not causes. Thus, any gains made during booms will be attacked by employers when there is a surplus of labour during a slump.

The government has repeatedly stated that it wishes to reduce public expenditure. Indeed, public health service employees have been held to a 1.5 percent pay increase this year (equivalent to a pay cut after allowing for inflation), and a proposed wage freeze for next year.

At first glance it seems curious and inconsistent to try to reduce expenditure on the one hand and to increase it on the other by opting for a system of management which is much more expensive. But a consideration of the ideological and political motives underlying the formation of the National Health Service and the reasons for the attempts to dismantle it show that both courses of action are consistent with capitalism’s priorities. When Henry Willink, Conservative Minister of Health in the wartime Churchill coalition government presented the 1944 White Paper setting out the proposals for a unified national health service, free at the point of use, centrally funded and administered by Local Authorities it was because it was recognized that after the sacrifices made by the working class in fighting a lengthy war to protect the capitalists’ interests they were not prepared to accept a return to the heartbreak conditions of the 1930s. It was also recognized that, with an acute shortage of labour, a reliable health service would be needed to conserve workers’ health in the critical postwar years of reconstructing industry. It was also necessary to provide concessions to blunt working-class militancy as strikes would have placed British capitalists at a disadvantage with their competitors.

A centrally-administered health service was more efficient and cost effective than the fragmented, piecemeal provision of health care which had hitherto been available in the 1930s. But by the 1980s, capitalism’s priorities had changed. A worldwide recession had reduced the capitalists’ profits making less money available for social programmes; a large pool of unemployed labour had weakened the power of the trade unions and made it no longer necessary to conserve the health of all the workers. The National Health Service now represents a cost against production that the capitalists would prefer to see drastically reduced if not abolished.

The NHS is an institution welcomed by the working class and its abolition, however desirable from capital’s point of view, is politically damaging, therefore, the moves towards replacing it with private services have been gradual. Laundering, catering and Portering services have been contracted out private companies in the last few years with reduction of staff, lower wages and poorer working conditions in the majority of cases.

Once all district health authorities become self-governing trusts it will be possible to break the power of the trade unions by dismantling the Whitley Council which negotiates health service employees’ pay. The trusts will be able to set their own pay and conditions which will lead to further downward pressure on wages. And with each trust being independent and no longer part of a nationally administered service then a national strike by health service employees over a dispute in an individual trust would be considered to be an illegal "sympathy" strike. Also with an internal market in place it will be possible for a hospital trust to break a strike by sending patients to other hospitals.

It has been claimed that the internal market, with buying and selling of health care on business lines, can make the most efficient use of resources and expertise by sending patients to other hospitals for services which may be in short supply in their own areas, but the 60,000 increase in the waiting list for treatment shows this not to be the case. There is a consultation process between health districts, regional health authorities and the public at each trust application but the public’s response is not disclosed by the Department of Health. We can be certain that if the public’s response to hospital trusts was enthusiastic then this would be widely publicised and trumpeted as a vindication of the government's policies. The secrecy surrounding this information is an attempt to conceal the lack of support for their plans. The announcement by the Government that it intends all health districts to become trusts within the next two years makes a mockery of the so-called consultation process and makes the public meetings little more than a declaration of intent.

In addition to the plans for NHS trusts, the 1989 White Paper Working for Patients (sic) provides for a range of optional extras such as single rooms, television and a choice of meals for those who wish to pay for them which will create a two-tier system with only basic amenities being provided for the poor and better services being provided for the not-so-poor.

A visit to any of the older district general hospitals will provide evidence of expensive refurbishment having been carried out on some of the surgical wards whilst, in many cases, even basic repairs are not carried out on the geriatric wards, reflecting capitalism's attitude to non-producers. Obviously, the majority of elderly patients will be unable to pay for "extras’' out of their pensions. A return to Victorian values, particularly the Victorian workhouse, is beginning to look an unpleasant reality for the poor and needy.

The government’s policies have caused problems for the mentally handicapped. Dr David Tod, President of the National Association of Fundholding Practitioners, told the Conservative Party conference in October that he cannot accept any more mentally handicapped patients in his practice without extra funding (Independent, 9 October).

The proportion of pay which general practitioners earn from the number of patients that they have on their books has been increased from 46 percent to at least 60 percent and this has, predictably, led to a reluctance to treat patients requiring a lot of medical care. There is no doubt that further attacks will be made on the NHS and that the present cumbersome structure is being set up with a view to selling it off to private speculators in due course. For the poor, only the most basic provision will be retained, and the mentally ill will continue to swell the ranks of the homeless as long-stay hospitals continue to be closed without adequate alternative care being allocated.

But the attacks on the NHS provide an object lesson to those who wish to reform capitalism. The reforms were gained only after years of struggle, implemented when it was no longer in capital’s interests to obstruct them, and are being reversed when it was no longer expedient for capital to accede to workers' demands and a recession makes it difficult for workers to resist the encroachment upon their living standards. Nothing less than the complete overthrow of capitalism and its replacement by socialism can prevent this happening to reforms over and over again.

Carl Pinel

Capitalism is mental (2025)

From the August 2025 issue of the Socialist Standard

Tony Blair emerged from his coffin recently to declare ‘We’ve got to get the younger generation back to work’ and ominously warned against ‘medicalising the ups and downs of life. You’ve got to be careful of encouraging people to think they’ve got some sort of condition other than simply confronting the challenges of life’.

Anyone who’s been through a challenging period knows that of course it can impact your mental health. Yet Blair insists that too many young people are ‘choosing not to work,’ and calls for benefits reform. Now, Labour wants to cut Personal Independence Payments and has signalled it’ll tighten eligibility rules, with shadow ministers suggesting PIP ‘is not working as it should.’

Starmer’s proposed reforms to cut disability benefits provoked a rebellion by well over 100 Labour MPs who argued the plan would strip support from up to 800,000 people, deepen poverty for 300,000–700,000 more (including 50,000 children), and create a two-tier welfare system that abandons the most vulnerable. Critics, including grassroots movements like Disabled People Against Cuts and disabled constituents, warn this is a continuation of austerity, with MPs likening it to ‘the biggest attack on the welfare state since George Osborne’. Charities insisted cuts wouldn’t boost employment and demanded a pause, transparency, and genuine consultation with disabled people. Labour MPs were pledging to vote against and calling for alternative reforms like taxing the super rich instead of penalising those in need.

Since then, following public backlash and intervention by the UN, Parliament voted on 1 July to remove the clauses tightening PIP (formerly Disability Living Allowance) eligibility. These measures are now to be deferred pending a review led by ‘Sir’ Stephen Timms, expected in autumn 2026. Existing PIP claimants are said not to be affected by the current legislation. However, changes to Universal Credit remain in place: from April 2026, new claimants of the Limited Capability for Work Related Activity element will receive reduced support. Existing recipients will continue receiving full payments, adjusted for inflation through 2029.

The Rosenhan experiment

The Rosenhan experiment (1973) exposed flaws in psychiatric diagnosis. Psychologist David Rosenhan and seven others feigned auditory hallucinations to gain admission to psychiatric hospitals. Once admitted, they acted normally, but doctors still diagnosed them with serious mental illnesses and kept them institutionalised for weeks.

The study highlighted the subjectivity and unreliability of psychiatric labels, showing that once someone was labelled as mentally ill, even ‘normal’ behaviour was interpreted as pathological. In a follow-up challenge, a hospital claimed it could spot fake patients and identified several, only for Rosenhan to reveal he had sent none.

Colonisation of the mind

This is not just about a few misguided doctors. The Western medical model has long been, in part, a tool of oppression. Colonisers have always arrived with missionaries, medics, mercenaries, and merchants. Psychiatry was part of that arsenal, often pathologising indigenous cultures, crushing resistance, and justifying forced assimilation. Traditional beliefs and ways of life were conveniently labelled as madness.

Psychiatry helped run residential schools, enforced sterilisation, and packed institutions, all aimed at breaking indigenous communities. On occasion, psychiatric diagnosis was used to pathologise cultural difference, frame indigenous resistance as insanity and justify colonial policies of confinement and re-education. The same logic still operates today. Psychiatric labels are often used to control people rather than help them.

‘Mad bints’

Women have always been prime targets for psychiatry’s controlling hand. Those who refused to fit into patriarchal roles were labelled hysterical or locked away in asylums. Psychiatry became a handy tool to silence women who challenged capitalism, patriarchy, or both.

Colonisation made this worse for indigenous women who were branded insane for practising traditional healing or resisting colonial authority. Today, women—especially those who are neurodivergent or marginalised—are still dismissed, misdiagnosed, and overmedicated. Psychiatry continues to treat women’s distress as personal pathology rather than a response to social and economic oppression.

A true alternative would focus on community care, autonomy, and dismantling the structures that create suffering in the first place. But when the profit motive comes into play it stops being about helping and about making people useful.

Adaptive response to capitalism?

Humans are nothing if not adaptive; that’s how we’ve survived this long. Under capitalism’s relentless pressure, people, especially those who are marginalised, develop ways of thinking and acting that do not fit into narrow boxes labelled normal.

Neurodivergence is not purely created by capitalism; it has always existed and would exist under other systems. But the way it manifests today is shaped by the demands and pressures of this system.

Traits like hyperfocus, pattern recognition, and creative thinking can help people resist the nonsense of capitalism. Yet capitalism only values these traits when they increase productivity. Difficulties with executive function or sensory processing become disabling because of rigid, noisy, and punishing environments.

If we lived in a society structured differently—one that prioritised people instead of profit—neurodivergence might look very different, both in how common it is and how it is understood.

Class war in our minds

Capitalism is not just a class war; it is a war of the mind. It demands conformity, punishes difference, and uses trauma as a tool of control. Still, resistance keeps bubbling up. Neurodivergent people often develop ways of thinking that refuse to follow capitalist logic, question authority, and imagine new ways of living.

The pushback against capitalism is in many ways also a neurodivergent pushback—one that questions authority, re-imagines community, and refuses the dehumanisation that capitalism enforces.

Capitalism will always find new ways to divide us, control us and blame us for the suffering it creates. The only real cure is to get rid of the system making us sick in the first place.

The fight against capitalism must also be a fight for neurodivergent liberation. We need to see the links between capitalism, trauma, and neurodivergence if we want a world where all minds are valued, not just those that keep the profit machine running.

A.T.

Labour in sickness and health (2025)

From the July 2025 issue of the Socialist Standard

We are told the NHS is a ‘national treasure.’ That it was built by socialists. That it belongs to us. That if we just had the right funding and the right managers, it could be restored to its former glory.

But we know better. The NHS is often cited, especially by those still enthralled by the Labour Party, as an example of ‘socialist’ legislation passed during the 1945–1951 Attlee government. Even people who now admit Labour is not socialist cling to the NHS as proof that it once was.

Let’s be clear: the NHS was never socialist. It wasn’t created to empower workers or take profit out of care. It was built to keep the workforce functional – to patch us up and send us back to work. A healthy worker is a productive worker – and a productive worker generates value for the boss. That’s why the capitalist class signed off on it. Not out of compassion. Out of calculation.

Sure, there was high-minded rhetoric at the time. Aneurin Bevan, considered the founder of the NHS, said: ‘No society can call itself civilised if a sick person is denied medical aid because of lack of means’. And William Beveridge, architect of the welfare state, said: ‘A revolutionary moment in the world’s history is a time for revolution, not for patching’. Later he stormed the barricades of the House of Lords as he became a Liberal peer.

The real context was fear. The ruling class had just dragged us through mass unemployment and a world war, and it now faced an angry, armed working class returning home. It saw what had happened in Italy. Reforms were made not to end capitalism but to save it from social and industrial unrest.

Bevan once asked: ‘How can wealth persuade poverty to use its political power to keep wealth in power?’ He blamed the Conservatives, calling them ‘vermin’. But take the party labels off, and the question becomes sharper. The problem isn’t just the Tories. It’s a system that ensures poverty exists in the first place.

Bevan couldn’t see that. For him, the enemy wore a blue rosette. For us, the enemy is the wages system, the class system, the profit system. That’s what’s killing the NHS. That’s what’s killing us.

Now, 75 years on, they’re not even pretending. The NHS has become a marketplace. Drugs are bought from profit-hungry pharmaceutical firms. Cleaning is outsourced to contractors who cut wages and corners. Just this month, a scandal was revealed over botched cataract operations performed by private clinics cashing in on NHS contracts.

We used to joke the NHS was held together with duct tape and goodwill – now they’ve outsourced the duct tape and privatised the goodwill. They say this is a Tory problem. But what has Labour done?

Wes Streeting – dubbed ‘Wes the Rat’ by campaigners – is Health Secretary and says he’s ‘not ideological,’ which is odd for a politician. He wants to ‘use spare capacity in the private sector’. He calls patients ‘customers.’ He says the NHS is no longer ‘the envy of the world’ – not because it’s been gutted, but because it hasn’t been modernised. That’s code for markets, contracts, fragmentation. The same failed model, just rebranded.

Starmer campaigned in 2020 on ending NHS outsourcing. That pledge disappeared like a junior doctor’s lunch break. Now it’s all about ‘outcomes,’ ‘efficiency,’ and ‘value for money’. In his worldview, health is a product, not a right.

He’s cited NHS England as an example of excessive bureaucracy, duplications, and inefficiency. NHS England’s functions are now being absorbed into the Department of Health and Social Care. The transition will take about two years – less time than it takes many trans people to get a first appointment on the NHS waiting list.

Around 9,000 jobs are being axed in the process, as AI systems take over. One of the main tech firms involved is Palantir, a data analytics and armaments contractor with deep ties to the American MAGA state.

Palantir’s NHS involvement began with a £1 (one pound) trial contract in March 2020, part of the pandemic response. Then came:

• July 2020: £1 million contract
• December 2020: £23 million, two-year deal
• June 2023: £25 million contract
• November 2023: £480 million for the Federated Data Platform (FDP)

Now, the NHS is locked in.

Palantir was co-founded by billionaire Peter Thiel, a Trump backer who once called the NHS a ‘monstrosity’. The company built software for the US Immigration and Customs Enforcement agency (ICE), the CIA, and for predictive policing systems. Its platforms – Gotham and Foundry – have been used for deportations, drone strikes, and surveillance. The CEO, Alex Karp, bizarrely refers to himself as a ‘socialist’ and a ‘neo-Marxist,’ despite running a firm helping military and police forces worldwide. He studied the Frankfurt School and Marxian philosophy but now says Western tech should serve national power and defence. In his book The Technological Republic, Karp argues that declining interest in Western civilisation has left tech without ‘patriotic duty’. Palantir, in contrast, builds tools for ICE and the US military – showing where its duty lies.

This company now runs NHS data infrastructure. There was no public debate. No vote. Just a quiet, technocratic handover, sold as ‘integration’ and ‘efficiency’. It sounds like an IT upgrade. In reality, it’s a power shift – from public stewardship to corporate control.

Palantir claims it doesn’t own the data. Maybe not. But it owns the system. The architecture. The infrastructure. That’s vendor lock-in – like getting a free coffee machine and finding the pods cost £12 each and are only sold in Texas.

This isn’t reform. It’s enclosure. The same old privatisation, dressed up as innovation. And the outcome? A two-tier system. A burnt-out workforce. A public service run like a business where care takes a backseat to cost-cutting.

They say the NHS is free. But people pay for it – with taxes when they pay them, with our labour and with our time. It’s not free. We are. Free to wait. Free to suffer. Free to die while shareholders get dividends and algorithms determine care.

The Socialist Party stands for more than better management or fresh branding. We advocate the abolition of the wages system. The end of profit in care. A world where there are no customers, no contracts, no markets – just people, meeting each other’s needs.

Health is not a service. It’s a condition of freedom. The NHS can’t be saved. It must be superseded – by a system where care is not rationed, outsourced, or monetised. Where no one waits, no one pays, and no one profits. That’s not utopian. That’s socialism. And we’re not asking for it. We’re organising for it.

A.T.

The Death of the Welfare State (1996)

From the July 1996 issue of the Socialist Standard

Supporters of capitalism have always denied the need for a fundamental change on the grounds that the system can take care of the 
poor through state help and welfare, now the welfare state, the
 sacred cow of reformists everywhere, is being attacked 
from every direction

Labour and the Tories have, it seems, moved closer together than ever with respect to their attitudes to the welfare state. On 8 May the Guardian reported Labour’s Chris Smith, shadow social security secretary, saying:

"Surely it is time to get away from the sterile battle lines of public and private. . . The principle must surely be that the state acts as guarantor of all provision, the regulator of all provision and the administrator of some. ”

How they intend to guarantee those provisions that they don’t provide, which will presumably have to be provided by individuals for themselves through insurance, is not made clear; in fact not a lot is made clear. What is crystal clear, though, is that Labour has abandoned its commitment to the welfare state along with Clause Four; the to-and-fro of reform and counter-reform between the major parties, such as it was, is over.

This to-and-fro was never, of course, a simple external relation between the parties but has been just as much a part of their internal make-up since the Second World War. Labour introduced the NHS but also introduced prescription charges and charges for dental and optical treatment; the Tories under Macmillan expanded the council house building programme; the current cause of much argument and agonising within Labour—child benefit—was introduced by the Tories in 1945 before Labour took office that same year. The case of child benefit is perhaps particularly interesting and informative, given the possibility of the next Labour government abolishing it for 16-18 year olds.

Family Allowance, the immediate forerunner of child benefit, was agreed in principle in 1943 by the wartime coalition government, and introduced by the Conservative government of May-July 1945, gaining the royal assent on 16 June 1945. The Labour movement was split on the issue, with many trade unions opposed to this reform—but why? Wasn't it to benefit working-class families? In fact, it wasn’t, anything but, the capitalist establishment wanted to introduce this reform because they felt that capitalism in the UK couldn’t afford not to. In 1940, Eleanor Rathbone MP, chair of the Family Endowment Society, argued in favour of the introduction of Family Allowance, saying that a “man with a wife and family is much less likely to act (revolutionarily) than one who has given society no such hostage”. Family Allowance was to be an incentive for working-class men to have dependent families—which could then be effectively held hostage by the state should he question capitalist authority. The ruling class also favoured the introduction of this “benefit" on a more basic level; the unions, hardly revolutionary' themselves, would have been less inclined to oppose it otherwise. The Tory MP L.S. Amery, again arguing in favour of this reform (in the Times, 14 January' 1941), said that Family Allowance would “afford a logical basis upon which a stand could be made against all further wage increases”. It was thus seen as a method of keeping wage bills down.

Who benefits?

If Labour now want to abolish child benefit for 16-18 year olds, is it in order to correct past mistakes, to somehow pass on a real benefit to working people after all? No chance. While they haven’t said exactly what they would spend the money on, they have gestured vaguely in the direction of education; but whose education would it be spent on? Many working-class families have, over the years, come to rely on child benefit, particularly to help support children in further education. If child benefit is abolished for precisely those of the age to go into further education, how will the less well off working-class families be able to afford to keep them in education? The simple answer is, they won’t. The only options for many will be for 16 and 17 year olds to try for places in the already over-subscribed YTS system (adding further to the already massive pool of cheap labour for bosses), to directly enter the employment market with little or no chance of a job and no benefits, or to leave home and beg on the streets. What a marvellous range of choice capitalism offers.

There is another option of course, at least for those families with at least one wage-earner—to fight the employers for higher wages to compensate for the money lost. But if this was thought even vaguely likely, Labour would have been more reluctant to have considered this particular cut. The last thing they want is to encourage class conflict, particularly under their own administration; but the relative weakness of the trade union movement at the present time makes an immediate escalation of class struggle unlikely.. this doesn’t mean that it won’t happen; workers may find themselves forced to fight by sheer material circumstances. But the point is that the ruling class, at least in the West, is being forced to take back reforms that have been previously granted and supposedly reformist parties are being forced to institute and administer the process.

On the one hand, capital feels it can no longer afford reforms, on the other, it also feels that it must take past reforms away and to bolster itself at the direct expense of the working class because of the relative weakness of the trade union movement. This is happening right across the west, with the temporary' exception of France where the government keeps trying to cut back on the welfare state but where workers’ solidarity has so far forced them to back down. They will keep trying, though, because French capital is no more isolated or “sovereign” than anywhere else. In other parts of the world, such as the Far East, home of what western capitalists habitually refer to, with some envy, as “tiger” (“dynamic market”—note the use of this term in labour’s new Clause 4) economies, there have often never been any reforms, even basic democratic ones, to roll back, while countries such as Vietnam refer to themselves as socialist while they introduce some of the most vicious, exploitative capitalist economic structures in the world. Global capitalism is precisely that; nobody is insulated from pressures on profits, which under capitalism is where sovereignty always really lies.

The to-and-fro of reform and anti-reform has always been the pattern to some extent, but things appear to have reached a state where reform has effectively lost its impossible fight. Reformist parties such as Labour have almost entirely capitulated; they were never going to introduce socialism anyway, having only ever been at most state capitalist parties, but now they have given up entirely. A never-ending pissing into the face of a gale has left them wet and weary and has exhausted what emancipatory desire they might once have had. All their desires now are masturbatory and egotistical, focused on nothing more than the plaudits of high office that mask a basic sterility.

There are few more frightening, deadly or apt symbols of the failure of reformism than the world-wide rise of tuberculosis. The steady and virtually inevitable erosion of welfare reforms has caused the number of cases of TB to rise steadily in the west over the last few years after most people had thought it had been effectively eradicated. In other parts of the world, of course, it had never gone away in the first place. A recent article on TB in the Guardian Weekend (27 April) put this point quite succinctly. In the 1970s there was a general optimism in the west that TB was effectively gone for ever, thanks to vaccine research and improved living conditions. But only in the west:

“Admittedly, no one country ever wiped it out completely. And in the third world, things remained not much better than they hail always been. But, hell, they were free to buy our superdrugs weren't they? ”

Well, no, they weren’t. They couldn’t afford them. Profits, as ever, came first. As they do with HIV research, even while HIV is forming what the same article designated a “devil’s alliance” with TB, not that it’s on the increase again in west. Who is most at risk from TB? The poorest and weakest members of society of course, the elderly homeless and immigrants shoved into cramped and poverty-stricken living conditions. But as the welfare state is dismantled, it seems highly likely that TB will spread further, and it will spread first through the poorer sections of the working class. As the Guardian article

again puts it:

". . .  tuberculosis is universally recognised as the disease of poverty. And as such, it acts as a chillingly efficient barometer of the human physical condition. Today, that barometer has swung right off the scale throughout the third world, and at the same time it is beginning to rise in Britain and other advanced capitalist states. ”

Reformism has failed and how the reformist project is collapsing; as it does so, evils we thought were wiped out or at least under control, are coming back with increasing vengeance. TB is not just a disease, in the contemporary world it’s also a symptom of the failure of reformism within capitalism.

In the film Apocalypse Now, Captain Willard says of American hypocrisy in war: “We cut them in half with a machine gun and we give them a band-aid.” Reformism was always a similarly inadequate response to capitalism’s violence in the name of profit, trying to patch up the symptoms of the disease that capitalism itself is. Now, though, the ruling class can’t even afford to keep the first aid kit stocked up. It’s high time the rest of us realised the necessity of taking on and eradicating the disease itself.

Jonathan Clay

The Unkindest Cut of All (1996)

From the July 1996 issue of the Socialist Standard

It is rather amusing for Socialists to listen to the various apologists of capitalism try to justify their support for welfare cuts on the grounds that it is either “immoral” for the state to impose high taxes (the source of state expenditure), or that it is in the interests of the “nation” that welfare payments are kept to a minimum

That the double-speak beloved by newspapers and economists is a key clement in the ideological battle waged by the ruling class against the workers should be evident enough to anyone with a notion at all of class and class struggle. It is hoped by the bosses that the drip-drip-drip of this Chinese water torture will unbalance even the most rational of minds. Sometimes the newspapers and economists join together in a combined offensive on a particular topic of concern to their paymasters—the capitalist class. Recently the object of their ire has been welfare expenditure.

Robert Skidelsky, biographer of Keynes, and ennobled for his services to bourgeois economics, wrote on this theme in the Sunday Times on 11 February. His key argument was summed up in the headline of the piece — “Cuts To Benefit the Nation”. Coming in the wake of Peter Lilley’s announcement of planned changes and cutbacks for the social security budget, Skidelsky aimed to demonstrate why welfare cutbacks and other reductions in state expenditure would benefit “the nation”. By this he did not, of course, mean everyone. In fact, he probably meant only a small number of people at all would directly benefit, though he did not specifically say this. But who could the beneficiaries be?

Nation or Class?

The “nation”—primarily the productive resources of a state like Britain— is not owned in common or on anything like an equitable basis. Britain, like every other country, is a state divided on class lines between those who own and control the means of living and those who do not. For instance, recent statistics from Social Trends, an official government publication, show that one out of every 20 adults has a stake in the means of living equal to the other 19 put together. The top five percent of the population own 53 percent of all financial assets. It is the capitalist class—those who do not need to work for a living—who by-and-large own “the nation”, setting their wage slaves to work to put more wealth in the form of profits back in to the capitalists’ hands.

Although lackeys like Skidelsky present it as such, cutbacks in welfare expenditure and the like are not designed to benefit wage and salary earners. Workers receive an amount sufficient to keep them and their families in a fit condition, with skilled or highly educated workers usually receiving more than the unskilled. Their wages, properly speaking, are a real amount intended for this purpose not a hypothetical sum, and so the burden of taxation (which finances welfare payments) ultimately falls on the capitalist class. Workers may pay some taxes, but the burden specifically falls on the surplus value accruing to the capitalists and not on the wages and salaries of the workers, hence the interest of the capitalists and their representatives in keeping taxation as low as possible. High taxation eats into profits and reduces the amount available for accumulation as new capital.

The state currently takes about 42.5 percent of Gross National Product in Britain, about a third of which is taken up by social security expenditure, currently a colossal £92 billion. This means a large amount of tax taken out of profits, and the proportion has been moving up in most advanced countries for decades, with the state stepping in to cushion the fall from market failures and being further burdened by demographic change.

State expenditure acting as a drag on profits and capital accumulation is the real bottom line for the capitalists, but Skidelsky has a more lofty way to justify the competitive money-grubbing of the capitalists:

". . . the main argument for slimming down the state is moral: it is wrong that governments should take 40 percent and more of our earnings and decide to spend it as they see fit".

Skidelsky goes on to declare himself in favour of cutbacks in state health and education services, on the ground that this can only benefit “our earnings”, but it is a strange kind of morality which has to go to these lengths to defend the wealth of the privileged and justify taking a few more crumbs back oft' the poor. But then when has the morality of capitalism ever been concerned with anything more than the sanctity of profit?

Britain already has some of the lowest benefit levels in the western world so savings made from the unemployed or single mothers will be minimal, though this in itself will not stop the government from trying to stop people claiming benefit or cutting back on payments, as recently with Unemployment Benefit. This is part of the reason why an even greater line of attack has been waged on pensions, with employees being encouraged to take out private schemes to supplement the state pension. Since the 1980 decision to link state pensions with prices rather than earnings the basic state pension has fallen from 22 percent of average male earnings to 15 percent and no government of capitalism in Britain is likely to be able to offer pensioners anything better. The number of those living beyond 75 is expected to double from 4 to 8 million over the next fifty years and this demographic change alone will put further pressure on government expenditure, particularly the social security budget.

Hard Labour

The apologists for capitalism—whether Lord Skidelsky or, for that matter, Tony Blair—see little wrong with attacking the poor when capitalist profit dictates it, and no one should be fooled that attacks on welfare are merely the preserve of the right-wing of capitalism’s political apparatus. The pressures on them from the competitive market economy are the same. The last Labour government from 1974-9 had an equally bad record with inflation eating away at benefits and savings, together with real cuts in wages and salaries. As with the Conservatives, unemployment also rose and along with it job insecurity.

Given his infatuation with private pension schemes and the welfare arrangements beloved in the Far East, Blair and his cohorts offer nothing really new from what the Tories offer now. All that has changed in the world of welfare reform has been some of the language used justify further attacks on a beleaguered working class— the “drip, drip, drip”, this time with an allegedly moral dimension. Skidelsky has in fact put the argument of those who wish to attack benefit levels most succinctly— how despicable of the poor to drain the capitalists of profit! What he—and they— conveniently overlook, though, is that the workers made the profits for the owning class in the first place.

Lord Skidelsky is actually chairman of the Social Market Foundation. A more bizarre title for an organisation could not be found, for given the class nature of capitalism and the attacks it unleashes on the poor, what could be more anti-social than the market? But then such is the double-speak of our times.

Dave Perrin

Slicing the pork barrel thin (2024)

From the December 2024 issue of the Socialist Standard

The Labour Party’s new autumn budget, presented by Chancellor Rachel Reeves, has made notable changes to universal credit and other benefits. However, these updates have raised concerns for vulnerable communities.

We’ve been speaking with people currently on benefits, universal credit, and Personal Independence Payments (PIP) about their experiences in the UK today.

Claire, 35, who transitioned from ESA to universal credit and works part-time in administration in Sheffield, is disabled due to genetic and autoimmune conditions. She also receives PIP. Claire says ‘The job centre is horrible; it’s not set up to support disabled people properly. They lack time, resources, and training.’

Toni, 44, is self-employed in events management in London, but her part-time universal credit isn’t enough. ‘I was fine when I worked in Europe; my business thrived for nearly a decade. But since Brexit, the cost of living crisis, and COVID, my business has tanked. Event venues are closing, and there are no opportunities for those without access to Europe. I have no options unless I retrain at my age!’

Starting in April 2025, benefits including universal credit will rise by just 1.7 percent. This means only a few extra pounds per month for claimants who have been struggling to make ends meet from one capitalist crisis to the next.

Claire believes the support is inadequate for disabled individuals wanting to work, saying it falls short of previous options like disabled tax credits, which provided more effective assistance.

Reeves announced a cap on universal credit deductions for debt repayments, lowering it from 25 percent to 15 percent of the standard allowance. This aims to ease financial pressure for over a million households, potentially saving them around £420 a year.

‘It’s disheartening,’ Claire reflects, on her feeling of alienation from society. When asked about the impact on her mental health, she added, ‘Yes, the challenges of universal credit deepen my sense of isolation.’

Toni feels society has abandoned her: ‘I worked hard for years and paid into the system, but when COVID hit, my business got no help. I was dumped on the dole and left to fend for myself, which only makes me feel more alienated’.

Claire adds ‘They’re just continuing the previous government’s policies. I didn’t agree with them then, and I still don’t. The system doesn’t support disabled people or consider different levels of disability.’

They’re also concerned about the new measure allowing the DWP direct access to bank accounts. This approach to combating fraud feels like a surveillance tactic that will erode trust among unemployed workers. What they feel they need are real job opportunities, not increased government intrusion into their lives.

Labour will uphold the Conservatives’ reforms to the work capability assessment, making it harder for disabled workers to qualify for the highest level of incapacity benefits. This could affect over 420,000 people, resulting in a loss of about £5,000 in annual support for many.

A new £240 million ‘Get Britain Working’ initiative aims to provide work, skills, and health support for people with disabilities and long-term health conditions. This includes the already controversial idea of sending job coaches into mental health wards to push the severely ill back into work.

The earnings threshold for carer’s allowance will rise to £10,000 a year, allowing more unpaid carers to qualify for support. However, we note that the broader social care system remains underfunded and profit-driven.

Labour has also decided to keep the two-child limit on benefits, which denies extra support for families with more than two children and pushes many deeper into poverty.

Claire expressed her concerns about no longer receiving cost of living payments and the reduced eligibility for the Warm Home Discount, making it harder for her to heat her home amid rising costs.

The budget fails to adequately address the financial strain on the UK’s most vulnerable. Small increases, targeting the working poor with threats of prosecution and debt recovery measures, don’t meet the real needs of those struggling, especially when many families rely on food banks or multiple jobs just to get by.

Claire remarked, ‘We will struggle even more than before.’ She envisions a truly socialist society prioritising adequate material support and holistic health care for everyone.

Neither the Labour Party nor the Tories can solve these issues. The current government may offer minor increases, but they remain trapped in a system that prioritises market whims over people’s needs. ‘The market giveth, and the market taketh away.’

Names have been changed to avoid potential targeting or sanctions.

A.T.

The workfare state: enforcing the wages system (2005)

From the December 2005 issue of the Socialist Standard

The changes which have taken place in what passes for welfare provision in Britain over the course of the last two decades were analysed in a book by Chris Grover and John Stewart, The Work Connection: The Role of Social  Security in British Economic Regulation, that came out in 2002. Largely inspired by Marxist economics, it represented a lucid  account of a domain where the harsh economic realities of capitalist exploitation contradict the illusions of reformist politics.

In many ways these illusions were fed by the extraordinary ideological success of the post-war Beveridge reforms, frequently presented as the triumph of half a century of reformist action led by Liberal, Labour and – to a lesser extent – Tory administrations. Any remaining illusions are now being dissipated. What welfare coverage and rights existed in the immediate post-war period are now being whittled away or simply done away with in order to more closely serve the form of capital accumulation which is now on the agenda. This new ‘inevitability of gradualism’ – to use the term adopted by the Webbs – means more exploitation and fewer rights of access to the means of subsistence for anyone unfortunate enough to have to try to find work for a living.

There never was a golden age of the welfare state. The history of income maintenance in Britain has been the history of coercion, discipline and surveillance. As the first functioning capitalist country, England experienced the workhouse test, ‘less eligibility’ and the doctrine of ‘deterrent’. It’s still one of the most miserly and punitive ‘welfare systems’ in Western Europe, although the other European countries are now catching up. (New rules in France mean that workers on the dole have fewer rights to refuse poorly paid jobs, the same is happening in Germany and Spanish workers are forced to be more mobile in the search for work. Whether the government is right or left changes nothing.)

However, now a new layer of social control has been added since the advent of British ‘workfare’, a policy loosely based on American precedents. In the past, maintaining labour discipline was a fairly simple task. Unemployment insurance benefits tended to be low compared to average wage rates. In a buoyant job market, the only workers who wanted to stay on the dole for a long period were the genial layabouts of the claimants’ unions, people who were using benefits to finance studies on the sly, actors ‘resting’ between roles and artists etc. In this situation, it was relatively easy to identify workers who were dodging work although, in practice, control procedures against the so-called ‘scroungers’ were not applied systematically. Nobody really had an interest in staying on the dole for too long but some did, much to the horror of Daily Mail readers.

The situation has now changed considerably. Successive governments have been trying to lower the wage levels of unskilled and semi-skilled workers (so-called ‘entry-level’ jobs) putatively in order to combat inflation. American ideas about the so-called ‘underclass’ popularised in the highly toxic pseudo-sociology of Charles Murray have replaced the episodic scrounger-bashing campaigns orchestrated by the Tories in the 1970s and 80s. Thus, whereas in the past the unemployed (now known as ‘jobseekers’) could refuse offers of work which didn’t correspond to their levels of skill or even standard trade union rates, now they are hassled into poorly paid jobs as quickly as their legs can carry them. This, in itself, has a particularly depressing effect on wage levels especially in the more lowly-paid occupations.

To make this process go even faster both Conservative and Labour administrations have introduced benefits to workers in low-paid jobs (in-work benefits) modelled on the Family Income Supplement set up in 1971 by the appalling Keith (later Sir Keith) Joseph, a Thatcherite bovver-boy and closet eugenicist. Officially, in-work benefits provide incentives to unemployed people – pardon, ‘jobseekers’ – to take on poorly paid jobs and to leave the supposedly luxurious world of inactive welfare dependency. In actual fact, subsidies to low paid jobs tend to have a depressive effect on wages. Employers know that they can get the labour power they need for less cash, the state stepping in to make up the difference. And of course, the increase in the number of workers coming onto the labour market increases supply and lowers price.

All this continues unabated under New Labour, indeed, with many subtle and often cruel refinements. These include the fine combing of the population of the partially disabled and their gradual inclusion in the reserve army of labour and the particularly brutal treatment meted out to lone mothers. Of course, New Labour has introduced the national minimum wage albeit on an extremely low level. But this only means that over the long-term the depressive forces working on wage levels will result in the legal minimum becoming the maximum paid out for unskilled work, the trade unions having been weakened by two decades of legal meddling.

In the final analysis, welfare administration is really only the problem of policing the frontier between the reserve army of labour – people who are on hold for later exploitation – and the surplus population – people who are simply maintained at low cost outside of the labour market. ‘Labour market activation’ – the trendy term for these new policies – is really about making some formerly excluded workers available for a spot of exploitation. Social welfare policies don’t solve the underlying problem of capitalist exploitation. But then again who would ever look to the Labour Party or New Labour to solve that problem?

MM

Tiny (URL) Tips (2010)

The Tiny Tips column from the December 2010 issue of the Socialist Standard 

The corporate clout of the mining industry trumped political ideology in Canada when members of all political parties helped to narrowly defeat a bill late last month that would have imposed standards on Canadian mining companies operating in developing countries:

[Dead Link.]

Up to 200,000 Haitians could contract cholera as the outbreak which has already killed 800 is set to spread across the battered Caribbean nation of nearly 10 million, the United Nations said:

[Yahoo News, Dead Link.]

A Christian woman has been sentenced to hang in Pakistan after being convicted of defaming the Prophet Mohammed:

[Daily Telegraph, Dead Link.]

Unemployed workers will be barred from claiming benefits for up to three years if they repeatedly refuse job offers under radical plans to reform the welfare system:

[Daily Telegraph, Dead Link.]

Israel will begin constructing a barrier on its border with Egypt within the next two weeks. The government has said that the central purpose of this fence is to keep the growing number of illegal migrants from infiltrating the country:

[Link.]

Six years after it first debuted, the $1,000 frittata at Norma’s in New York’s Le Parker Meridien hotel continues to draw attention. Called the “Zillion Dollar Lobster Frittata”, the dish is made with six eggs, lobster claws and 10 oz. of Sevruga caviar:

[Fox Business News, Dead Link.]

Poor ‘Will be pushed out of southern England'. Bath, Chelmsford, Newbury and Maidstone are among towns that will become “no-go” areas for the poor within 15 years because of the coalition government’s plans to cut housing benefits. The claim, made by the Chartered Institute of Housing, followed the Archbishop of Canterbury’s intervention. He said he was worried by the proposal of Work and Pensions Secretary Iain Duncan Smith to threaten the long-term unemployed with benefit cuts:

[The Week, Dead Link.]

Some 42,389,619 Americans received food stamps in August, a 17% rise from the same time a year ago, according to the U.S. Department of Agriculture, which tracks the data. That number is up 58.5% from August 2007, before the recession began. By population, Washington, D.C. had the largest share of residents receiving food stamps: More than a fifth, 21.1%, of its residents collected assistance in August. Washington was followed by Mississippi, where 20.1% of residents received food stamps, and Tennessee, where 20% tapped into the government nutrition program:

[Link.]

Greasy Pole: Blair backs down (2001)

The Greasy Pole column from the December 2001 issue of the Socialist Standard

On a battlefield it is called a strategic retreat – conceding ground to make it easier to defend what is left, to conserve an army’s strength, to regroup for an effective counter-attack. Sometimes it means giving up ground which has been won in an attack which has in fact left the attacker crucially exposed to the enemy. But in the long run it is worthwhile – as any soldier who spent time harried by German observation and bombardment in the Ypres salient in World War One would have agreed.

The same principle can apply in the battlefield of politics. In a recent attack, which turned out to be strategically something of a mistake, on working class conditions the Blair government announced an intention to charge people who apply to Employment Tribunals for compensation alleging unfair dismissal, discriminatory practice at work or whatever. The plan was to introduce a charge for an application and then another (in the low hundreds of pounds) for a hearing of the case. This was, the government assured us, a necessary reform “a new, modest charging regime . . . to reduce the cost burden to the taxpayer” was how a Downing Street press release described it. Perhaps it was assumed that all those workers who are misled into a belief that they are “taxpayers” would have been so beguiled by such smooth assurances that the proposals would have been able to slip past like troops silently infiltrating enemy positions.

If that were the case, what the government had overlooked was that there are too many “taxpayers” applying to the Tribunals – about 130,000 a year at present – to allow the charges to go through unnoticed. In fact the Tribunals get more and more attractive; over the past ten years applications have increased threefold. It was predictable that there would be an outcry of protest: “contrary to the principles of the Human Rights Act and the principle of free, fair and open access to justice” was how TGWU General Secretary Bill Morris put it. Some Labour MPs were so impressed by the fervour of the opposition that they daringly considered doing the equivalent of deserting from the front line – voting against the proposals.

TUC

Of course the Blair government is well accustomed to shrugging off protests about their anti-working class policies – like the 1916 generals in their chateaux who were able to ignore the casualty figures and the battered soldiers at Ypres. But on this occasion there were other considerations to be put into the balance. The TUC conference was due to begin a few days later, when Blair was expected to have to face a barrage of wrath on the issue and on others such as the financing of hospitals, schools, transport systems. In the overall cause of strengthening the government’s position it was decided to make a strategic retreat, giving way and not imposing the charges – of which more later. In the end, of course, the destruction of the World Trade Center overrode all other matters and Blair was allowed to escape unbothered by any criticism.

Employment Tribunals evolved from Industrial Tribunals, created by the Wilson government’s Industrial Training Act of 1964, which was greeted as a great step forward in the protection of workers’ rights. It was also seen as the dawn of an age of sanity in industrial relations when, instead of rushing into conflict in the form of a strike or a lock-out, both sides would thrash out their problems in civilised negotiation. This, we were told, was how they did it in other countries, where as a result productivity was higher and there was wider prosperity. It sounded suspiciously too good to be true and that was how it turned out.

The Tribunals’ scope was originally a lot less than it is today, restricted to cases relating to assessment to training levy, entitlement to redundancy pay (the Wilson government’s plans for a more “flexible” work force in an age of “technological expansion” envisaged a lot of “redundancies” in which workers would be uprooted from their jobs and their homes) and disputes over a failure to provide a written statement of conditions of employment. Since then the Tribunals have become more complex, expanding into disputes over “unfair” dismissal, equal pay, discrimination over gender, race and disability. In 1987 there were 29,000 claims referred to the Tribunals; ten years later there were 80,000 and in 2000 it topped 100,000.

Lawyers

Until the Blair government came up with their proposals there was no basic charge to any applicant but for the other side – the employers – it could be an expensive business. For them the average cost of defending a case demanding 27 hours of management time was £2,000. (The proposed charges were estimated to save the employers some £70 million). The employers also complained that the Tribunals’ set up they gave the applicants an advantage, a situation no self-respecting, profit hungry employer would tolerate without a struggle.

The informal style of the Tribunals encouraged applications; it also fostered the impression that applicants could put their case themselves, without a lawyer speaking for them – although this is something the growing complexity of employment laws may change. But employers – especially the larger companies and government agencies – are more likely to engage a lawyer, which for them could be cheaper than drawing up a case and presenting it themselves. Overall this puts a rather different perspective on the fantasy about irresponsible and disgruntled workers being allowed to obstruct the work of the Tribunals with frivolous applications which cost them nothing.

In hard reality the employment dice always have to be loaded against the workers. The employer/employee relationship cannot be between equals because it is the employer who controls a worker’s access to their only means of getting a living. If for any reason an employer does not wish to allow a worker the opportunity to be exploited they can simply deny it. This is what happens when trade falls off and goods cannot be sold or when there are more than the market can absorb so that it is not profitable to produce them. At such times the illusions of “fair” employment, of “unfair” dismissal, of workers’ “rights”, are exposed for what they are. If a sacked worker can persuade a Tribunal that they have been “unfairly” dismissed it is clearly in their immediate interests to make the experience as painless financially as they can. In that sense the Employment Tribunals have their uses. But in no way can they upset, or even affect, the basic reality of working class employment and all it means in terms of exploitation and poverty.

Retreat

This reality may also be asserted in the government’s response to the protests against imposing charges on applicants. The motivation for the charges was to save money for the employers by encouraging (or perhaps forcing) applicants to settle their dispute through ACAS arbitration. That motivation is still there, which probably means that the charges have been postponed rather than scrapped. This is a well-used tactic in such situations. To give a recent example, a few years ago the government provoked a huge outcry when they proposed to close down the coal mines. To widespread surprise protesters sprang out onto the streets from the unlikeliest places – like leafy Tory strongholds in the Home Counties. The response of the government, in the person of the minister Michael Heseltine, was to announce that the closures had been called off – and then, when the protests had died down and other crises were monopolising attention, to reinstate them. We all know what then happened to the coal mines – and to the miners who thought they had won their case.

That was an example of a strategic retreat and the government were able to plan it and execute it and in the process to deceive the protesters because as representatives of the employers they hold a superior position. That is a basic fact of life under capitalism with its class monopoly of the means of living. It is a reality unaffected by agencies like the Employment Tribunals which the ever-hopeful queue of applicants would do well to remember.

Ivan

Doubtful Benefits (2005)

From the November 2005 issue of the Socialist Standard

It’s another day with a ‘Y’ in its name, so the government must be attacking benefits scroungers again. The routine pieties of the modern political age are to talk about ‘helping people’ out of ‘the benefits trap’ and ‘back into work’ – joining the perennial political duties like cutting red tape and reducing government spending. The reason why these problems never go away is because they are problems caused by the very system which puts the politicians in power, and which they cannot resolve without destroying themselves and their own elevated statuses.

David Blunkett – now returned to the cabinet after resigning last year for abusing his office for personal gain in helping his lover’s nanny get a visa quicker – has been making loud noises about the ‘crackers’ Incapacity Benefit system. It is Blunkett’s role to sound like a bruiser, to talk tough and act tough, seen by many as appealing to Labour’s core constituency – former Tory voters on council estates. He bemoaned the continuing rise of people on incapacity benefits (many driven there by previous efforts to try and cut benefits claimants, helped by staff driven by targets to reduce certain types of benefits).

There are currently 2.7 million people on incapacity benefit in the UK, with something like 29 million people in employment (possibly the highest UK figure ever). According to the BBC, that is four times the number of IB recipients compared to 30 years ago. Of course, many things have changed since then, not least the structure of the benefits system as a whole.

Blunkett, however, still wants to drastically reduce the numbers on incapacity. Revealing his new status as a medical doctor, Blunkett pronounced that getting out to work is a better cure for depression than staying at home watching daytime telly.  This startling revelation must have shocked his fellow healthcare professionals who had been labouring under the impression that depression is a medical ailment of the brain as much as a break is a medical condition of the leg. Perhaps

Blunkett will now advise a brisk walk as a cure for that. Behind the tough rhetoric, though, as ever with the modern Machiavellian Labour Party, is some old-fashioned Old Labour style reforms: plans to make the benefits system ‘a ladder to self-reliance’ and to give assistance with training and finding jobs to people who are on IB. Simplification of the system may actually help people who are supposed to be too ill to work but have to be well enough to run from pillar to post to fill in their 2,000 page benefits claim form signed in triplicate in blood. Or something like that.

This is cut from the same cloth as the New Deal and all their previous schemes to ‘help’ the unemployed back to work by badgering them and managing them into being full-time professional job seekers. Of course, this runs counter to any notion that they can quickly cut costs. This month also saw the National Audit Office reveal that only 5% of people on IB were able to access back to work schemes. To assist more people through such structures will actually increase the cost of managing the benefits, not decrease it, as massive expansion would be required.

This is the central conundrum for governments: caught between a real problem beyond their control, trapped by their own eternal propaganda of cost cutting, they cannot pursue their eternal propaganda of getting people off benefits. Instead, all we have is a Groundhog Day of pronouncements and denouncements as the Ministers try to be seen doing something, usually by trying to portray the people who are dependent on benefits as somehow culpable and at fault for the whole of the costs of the benefits system.

Politicians are struggling to define the typical benefits recipient, to legitimise the idea of welfare so they can attack it and reduce costs and also increase downwards pressures on wages and the labour market. Most people in the UK are probably only two pay cheques away from needing to call on benefits, but rather than portray it as a system to help people and prevent catastrophe it is universally presented as a location of cheats, frauds and scroungers, riddled with layabouts and other undeserving poor types. Benefits and being on benefits is to be despised and feared.

Despite this, though, people are compelled to claim them because of the wages system, because they are too ill to work or because work is not available. The benefits system actually benefits employers who otherwise would face the costs and disruption of having to keep on people whose illness makes them turn up to work irregularly, who would lie in desperation to gets jobs about their illnesses, and push much of the cost currently borne generally through taxes directly onto capitalists who employ many workers.

Herein is the rub of the £3 billion lost from the system by fraud and ‘error’ – much of it will have been small sums given to people which will have made their lives easier. Some of it will have contributed to the real living needs of claimants. The real tragedy is not the fraud or the overspend, but that much of the £109 billion budget is wasted assessing people, categorising people and cheeseparing their entitlements.

There is enough food, clothing and housing to go round. The world today is not short of wealth. In order, though, to maintain labour discipline, to keep the labour market in existence, a massive welfare budget must be expended to deny access to the things people need.

The simple fact is that we live in a society overripe for socialism. The material possibility has been around the corner for years. When we remove the barriers to the access of wealth, we also remove the barriers that make some people unemployable, that make socialising and community a cost that has to be scraped out of local authority and social services budgets. We would remove the binds, the need to support a restrictive welfare system but simultaneously to attack it and try to reduce its budget, by the principle of producing freely together.

Socialists, unlike leftists, do not support the welfare state, do not see it as a way to socialism, but as an inevitable part of capitalism, of administering poverty. The abolition of poverty – not in far-flung imagined foreign fields where poverty is vividly drawn by the masters of propaganda, but on the very streets where we walk and it is painted out by those same illusionists – will mean an end to the welfare ideology. With luck, it will also mean seeing less of David Blunkett’s face revelling in his own ‘stern compassion’.

Pik Smeet

The Great Minimum Wage Swindle (1995)

From the October 1995 issue of the Socialist Standard

The Labour Party's support for the concept of a minimum 
wage is not based on its concern for low-paid workers, in fact, Labour's real aim is to cut the expenditure, in the form of 
benefits, of the capitalist state it hopes to inherit.

The Labour Party went into the 1992 general election committed to introducing a legally enforced national minimum wage which, they said, would eventually amount to two-thirds of the level below which half all wage and salary earners fall (or the “median wage”, as the statisticians call it):

“Labour will introduce a national legal minimum hourly wage, starting at a level of 50 per cent of the mid-point of men's earnings (the median) . . . Four million people will benefit form this minimum wage. Over time, Labour will increase the minimum wage as a proportion of earnings to a point where no-one is paid less than two-thirds of the median male hourly rate ” (Looking to the Future, 1990, p. 37).

In today’s money this would give an hourly rate of about £5.50, or a minimum wage for a 39-hour week of £214.50, or over £ 11,000 a year. Of course there was never any chance that this was going to happen. You can’t legislate into being wage increases of this order, amounting in some cases to over 50 percent. Capitalism just does not work that way. Its economic mechanism responds not to government decrees but the realities of profit-making in competitive markets. The government could indeed pass a law aimed at ordering employers to pay a minimum wage at this level but, as this would cut into profits, the result in an economy based on the economic law of “no profit, no production” would be an economic downturn and a growth in unemployment.

Shrinking figures

The Labour leaders—who are nothing these days if not economic “realists”— were well aware of this. Which was why they proposed to reach the goal of two-thirds of the median only gradually, starting by introducing a law to fix the minimum wage at half it. This is the £4.15 or so to which Bill Morris and the T & G and other unions are still committed. But even this is pie-in-the-sky which will never come about, and wouldn’t have come about even if Neil Kinnock had entered Number Ten in May 1992. The economic mechanism of capitalism just won't wear it.

Since Kinnock went, Labour, first under Smith and then under Blair, has backtracked even further. It is still committed to the concept of a national minimum wage but not to any specific amount. This, they now say, is to be fixed by a commission made up of employers, unions and others and, we predict, would amount to about the same as the old Wages Councils, abolished by the Tories in 1993, used to come up with: about £3 or so an hour (in today’s money).

In other words, the most Labour would do would be to restore the pre-1993 situation, extending it to all industries and services so as to be able to call it a “national” minimum. This latter will only be window-dressing since most industries pay their workers above this hourly rate, otherwise they would have been covered by a Wages Council.

But why does Labour—now under arch-realist Blair—want to keep to the idea of a minimum wage, especially as it is going to earn them a lot of stick from the Tories? Since they now take the support of active trade unionists for granted, it can’t be a sop for their benefit. The reason lies elsewhere: it is part of their plan to reduce spending on welfare benefits as their contribution to trying to solve the fiscal crisis of the capitalist state.

A bit of theory

The basis of capitalism is the wages system, under which the work of production is done by people selling their particular ability to work to an employer in return for a wage or salary. Wages for particular types of skill are fixed by market forces at the amount of money workers require to buy the things needed to maintain their particular skill, plus an element to cover the cost of raising a family to replenish the labour force when they retire.

In the long run workers must get paid this amount, otherwise they won’t be able to maintain their skill, and their employer will begin to suffer in terms of absenteeism, increasing labour turnover, shoddy work and lower productivity.

So, in a sense, market forces—aided by pressure from unions—already tend to ensure that wages don’t fall below a minimum level: that below which the workers wouldn’t have enough money to maintain their skill adequately. However, there have always been some kinds of work—those requiring little training or experience and performed for a mass of small employers—where, because supply permanently exceeds demand, and because trade union organisation is difficult, market forces bring about a wage that is below this level.

What this means is that, in the terminology of Marxian economics, these workers get paid less than the value of their labour-power. They don’t get paid a “fair” wage even by capitalism’s standard of fairness, i.e. the full value of what they are selling.

This creates problems both for their immediate employers and for the employing class as a whole which has to foot the bill for the increasing ill-health and destitution that result from paying workers over a long period less than the value of their labour-power.

The problem for their immediate employers is that, even if they wanted to be a “good” employer and pay their workers the value of their labour-power as a means of getting their money’s worth in terms of work done and profits made, they can’t because of competition from other employers. None of them dares make the first move for fear of losing business, indeed of going out of business.

The solution that has been adopted in Britain has been two-fold. First, to introduce minimum wages in the trades concerned and, second, to introduce Family Allowances.

It was the Liberal government in 1909 that took the initiative and set up trade boards, later called Wages Councils, in the “sweated trades”, such as the retail trade, hotels and catering, and the rag trade, where workers tended to be persistently paid a wage below subsistence level. Under this system the employers, the unions and government officials met to fix a minimum hourly rate for the particular trade. It was an offence for an employer to pay below this rate. There was no national minimum wage, only different minimum wages for the different trades.

Subsidising employers

Family Allowances (now called Child Benefit) were introduced by the wartime coalition government in 1945. But, as the pamphlets Beveridge Reorganises Poverty and Family Allowances: A Socialist Analysis which we in the Socialist Party brought out at the time explained, this was not at all what it appeared to be: a money payment by the capitalist state which would leave all those with two or more dependent children better off by that amount.

Under capitalism and its wages system any regular payment received by workers in employment is going to have an effect on wage levels. This is because, as explained, wages tend to be fixed at a level which provides workers with enough money to buy what they need to maintain their particular skill in working order and also to bring up a family to take their place in the labour force when they are too old to work. If the state makes a contribution towards these costs, this means the workers’ immediate employer doesn’t have to.

The effect of any generalised state payment to workers in employment will be to depress, not necessarily the standard of living, but the wages paid by employers. This was why, in fact, Family Allowances were for a long time opposed by the trade unions. As we pointed out at the time:

"The real issue is not that certain unscrupulous employers may seek to save out of wages amounts paid in Family Allowances, but that once it is established that the children (or some of the children) of the workers have been ‘provided for' by other means, the tendency will be for wage levels to sink to new standards which will not include the cost of maintaining such children ” (Family Allowances, pp. 11-12).

In 1971 the then Tory government of Edward Heath breached a hitherto sacrosanct principle of the welfare state that no means-tested benefits should be paid to any worker in employment. They introduced a new benefit called Family Income Supplement (now called Family Credit), in effect a means-tested Family Allowance, payable to workers in employment whose income was below the poverty line, i.e. more or less what they would have got had they been on what is now called Income Support.

The logic behind this was to provide an incentive for people to take a job, however miserably paid. The result has been unsatisfactory from the point-of-view of the capitalist class as a whole. The cost of all state benefits payable to workers in employment (housing benefit, council tax benefit as well as Family Credit) has spiralled to over £2 billion a year.

Some employers—those in the modern sweated trades—have benefited. Knowing that the state will bring workers with children up to the poverty line they have been enabled to pay these workers below-the-poverty-lines wages. As Labour's deputy leader John Prescott has put it:

“Family Credit is now part of wage negotiations, with employers offering £1 an hour and saying: ‘I know you can‘t live on that, but if you nip down to Social Security, they’ll make up the difference (Observer, 28 August 1994).

Family Credit and other in-work benefits have, in other words, acted as a subsidy to these employers. This has caused resentment amongst other sections of the employing class who have to pay this subsidy out of taxes that, in the end, fall on their profits. This is where the Labour Party has come in with a proposal to help.

Labour to the Rescue

In their July 1995 campaign pack Low Pay. A Tory Failure, the Labour Party repeats again and again that their minimum wage is designed to reduce state benefits paid to workers in employment: 

“A minimum wage will not only act as a floor for pay. It will also ensure that in-work benefits do not act as a subsidy for low-paying and poor employers. ”

"Taxpayers would benefit because a floor under wages would reduce the need for tax handouts to low paying employers. Today employers have an incentive to lower wages at the taxpayers' expense." 

"Every taxpayer is now paying £100 a year for in-work benefits for people in low-paid work. People who have no protection against exploitative pay rates are forced into dependency on the benefits system whether they like it or not. And employers have no incentives to raise wages because they know the benefits system will subsidise the poor wages that they pay by what is, in effect, a tax handout to employers. ”

What Labour is proposing (and are rumoured to want to do over maternity pay) is what the Tories did over Sickness Benefit: to cut back on state payments by shifting a part of the cost on to employers in the form of statutory sick pay. Labour’s aim is to shift some of the burden of maintaining workers on low pay at the subsistence level on to the employers who have been benefiting from the present system.

But what about the workers? The low-paid workers existing on the poverty line. It’s not going to make much difference to them since the argument is about who is going to pay their subsistence income and in what proportions not about its level.

As far as the low paid are concerned what will happen is that what the right hand gives away in the form of a slightly higher minimum wage for some the left hand will take away in the form of reduced Family Credit. People on Family Credit get their benefit reduced by 70p for each £1 by which their income increases. So if their hourly wage was increased from, say, £2.50 to £3 they would only be 15p an hour better off not 50p. And if the increase lifted their income above the qualifying level for Family Credit they would find themselves worse off through losing the accompanying entitlement to housing benefit and free prescriptions and dental treatment.

Labour’s national minimum wage is not a genuine reform in the sense of a measure to bring about some improvement in working class conditions. It’s an economy measure designed to save the capitalist state money. They don’t fool us. Let’s hope that they don’t succeed in deceiving too many of the low paid either. 

Adam Buick