Page 3, 21st March 1980

21st March 1980
Page 3
Page 3, 21st March 1980 — The author of this article, Nicholas Coote, is Secretary of

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The author of this article, Nicholas Coote, is Secretary of

the Social Welfare Commission of the RC Bishops of England and Wales. His opinions are not necessarily those of the Social Welfare Commission.

An opportune time to take stock of social spending

ON FEBRUARY 13 The Times published a letter on social policy signed by representatives of all the major Churches, including the Social Welfare Commissions of the Catholic Church, In it they voiced the anxiety that cuts in public expenditure might become a substitute for a coherent social policy.

In suggesting the joint initiative, the Social Welfare Commission wished to extend concern beyond the issue of increasing child benefit.

The whole question of the interaction of the services, benefits, (in cash and kind), taxes and tax allowances, constitutes a major part of the social policy which affects the social welfare of individuals, families and the whole community.

The eve of the 1980 Budget provides an opportunity of unparalleled importance for taking stock of social policy and is a last chance to put forward criteria of discernment before all parties become locked in a struggle to attack or defend particular figures or groups. The importance of March 26 is that for the first time the whole of the public expenditure side of social policy and the revenue side are presented on the same occasion.

The White Paper contains the expenditure not only of the social security programme, but also of health and social service, housing (capital and subsidies), education, environmental, probation, and fire services.

The Budget deals with the revenue side: direct tax levels, and structures; allowances, personal and life insurance; mortgage etc.; indirect taxation. In theory, not only can the state of national "housekeep ing" he seen, but also who pays for what, and who derives what benefits and how. The basis for a unified tax credit system is, if not laid, discernible, though nobody seriously expects that costs or administrative cornplexities will allow this to be more than a distant option.

Secondly, this is the first longer term spelling out of social policy plans (to 1983-4) which the present Government has undertaken.

Thus it should be able to be assessed as a social policy rather ahan as the hasty re-action in a new economic situation to the unreal plans of a previous Administration.

If this is not social policy, but primarily reaction to economic constraint. when are we going to see something more than the blanket "we must first earn it"? When is social policy going to start, given that. at least for the moment, economic depression is going to increase the number of the vulnerable?

Thirdly, the measures of March 26 will he based on economic forecasts providing an outlook still more goomy than that of the November 1979 White Paper on Public Spending, and far removed from the illusory assumptions of the January 1979 White Paper.

These forecasts will presumably be more realistic than assumed rates of national economic growth which "financed" the spending plans of past years.

Fourthly, the economic background given in the accompanying "Red Book" may include the medium term financial framework giving monetary objectives over several years. These, rather than the public sector borrowing requirement. provide a necessary and sufficient yardstick of the progrress of monetary control, and its success or failure in dealing with inflation.

Retention of monetary targets is not an obstacle to welfare spending but a limiting of the net increase of advantages to the populace overall at a time of economic contraction.

It does, therefore, mean that advantages for some, whoever they are, will not be financed on the never-never, but at the expense of others in a way that was not so clearly visible or true before. It raises the question of redistribution of resources within a closed system.

In spite of the opportunity for making clear the issues on March 25, there are still obscurities. Although income and expenditure appear together, they are still produced in different sorts of figures, income from revenue in "ordinary" money, expenditure in "volume" terms for the sake of planning consistency.

Also, the latter convention led to so much overspending that cash limits were introduced on the programmes other than social security. Whatever the original merits of cash limits, they have become a backdoor incomes policy, and because they are an ineffective incomes policy, they act as a further reduction of spending programmes.

The trouble about long terrm views on spending programmes used to be that they were the more optimistically unrealistic the further they reached into the future.

There is a new risk of the opposite sort of "optimism". The effects of saving by cutting out waste, inefficiency, and bureaucratic over-manning may well be exaggerated. The endeavour to produce large and immediate savings may merely shift the burden of the cost, wastefully, backwards and forwards between community and institutions, current and capital, this programme and that: the immediate savings are shown, the costs, being less easily quantifiable, are missed out of later years.

Again, fixing public expenditure at a certain percentage of GDP, or bringing it down over a period of years in aggregate. conceals cuts which vary enormously between programmes or within areas of the same programme.

From the forecasts made in the Press and from what we know already, the chief cuts in public expenditure will affect new building of general purpose housing, complete indexing of short term social security benefits and child benefit, and earnings related unemployment benefit (in 1981).

It looks as though the very poorest arc going to he protected and pensioners though not from cuts in services.

The question to Conservative supporters is: do you want this to count as a social policy? Parliamentary voices have been raised in anxiety but too late to affect the White Paper.

The question to the social spending lobbies is: do you oppose further tax reliefs to help industry? The question to all ol us is: what tax benefits and allowances would we be prepared to forego in favour of social spending?

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