The government reached the position in 2009 where it could spend no more. In many respects the position was similar to that in which Britain found itself during the late 1970s. Government spending reached unsustainable levels, with much of it funded by debt. We can argue that some groups of taxpayers should pay more and others a little less; however, the reality is that, with the top one per cent of taxpayers already paying more than a quarter of all income tax, any change in the distribution of the tax burden would just involve fiddling around at the edges.
As such, the coalition is cutting the rate of increase in government spending – that is all that is happening. But the profile of government spending has changed radically since the last time we were in this mess. There are no free lunches from privatising nationalised industries. The lion’s share of government spending is now spent on welfare: transfer payments to the less well-off, pensions, education and health.
The myth prevails that Britain follows the so-called ‘Anglo-Saxon model’ of spending and welfare. It does not. The government spends half of national income. Welfare spending is roughly at Nordic levels, and the degree to which welfare payments are used to reduce inequality is roughly the same as in Sweden. If you want to see the Nordic model at work you do not have to go to Scandinavia.
We are taxing families more and more. Indeed, we are often taxing families to finance benefits to the very same families. But this ever-increased spending has not produced good results. Anybody in a city parish will see for themselves the immense poverty that our welfare systems have failed to eradicate. As Pope Benedict put it so articulately: ‘The state which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person – every person – needs: namely, loving personal concern.’
There are signs that the Church in England and Wales understands that things have to change. But if the Church in general understands that things must change, is that the case within the Catholic agencies? Possibly not. An examination of the press releases of Caritas Social Action Network (CSAN), for example, illustrates the point. CSAN’s last four press releases and five of its last seven have been criticising the coalition government’s welfare policy.
In their day-to-day work, Catholic agencies are often exemplars of the core principles of Catholic social teaching: the dignity of the human person, the common good, solidarity and subsidiarity. Much good is done and, often, the focus is right. But there seems to be a default position that, when it comes to dealing with government policy towards poverty at home, we should always increase taxes and never decrease government spending. This is definitely not where the foundational principles of Catholic social teaching lead us.
A bit of imaginative thinking might help agencies analyse these issues differently. In a recent press release criticising reductions in government spending CSAN said: ‘Member charities of our Caritas Social Action Network support a growing number of people who struggle to cover such fundamental costs as heating their homes, paying their rent and putting meals on their table.’ Is it not strange that the government spends more than ever before and yet we still have huge numbers of people unable to afford the basics?
As recent research published by Kristian Niemietz shows, two characteristics of our poverty scene make Britain unique in the western world. The first is a high cost of living. Energy prices are around 15 per cent higher than they need to be directly because of Government green policies. Rents could probably be reduced by 40 per cent in many cities if our planning policies were as liberal as those in the Netherlands and Germany (which have similar population density). Food bills could be 25 per cent lower with less government regulation and abolition of the Common Agricultural Policy. Alcohol and tobacco duties take between five per cent and 10 per cent of the income of the poorest people in the country. In the 19th century, the anti-poverty lobby fought for the abolition of the Corn Laws. Today, the reflex action of charities is simply to call for more benefits and – implicitly – more taxes and borrowing. This is a model of poverty relief that has run its course, and failed.
The second characteristic is that this country also has a unique combination of high levels of single parenthood combined with the low levels of work among single parents. This is probably at least partly a result of the welfare and tax system. It is a startling fact that, among married couples with one adult in full-time and one in part-time work, only two per cent of households are in poverty – despite high living costs. It is very clear that the common good in the economic sphere is best promoted by work, family formation and saving. The benefits system – supported by Catholic agencies – strongly penalises these things.
In the past, charities might have had an excuse for its Left-leaning reflexes. With this new evidence on how government policy raises the cost of living for the least well off, they have no excuses. Maybe we will see a stream of press releases from Catholic charities criticising planning policy, incoherent green energy measures, tobacco and alcohol taxes, the Common Agricultural Policy, and so. But I doubt it. It would also be a blessing if we could see some thinking about how we can have a tax and welfare system that does not penalise work, family formation and human flourishing in the economic sector. But, again, I am not expecting this any time soon. Unprecedented levels of welfare spending have often undermined rather than promoted the common good. Catholic agencies should give this serious thought.
This article originally appeared in the Catholic Herald.