posted 17th March 2025
The welfare state means the provision by the government, paid for by taxes, of free education and healthcare, and of benefits for people who are unemployed or too sick to work or cannot afford anywhere to live. It costs a lot of money. This, in itself, is not an argument against the welfare state. The question is: do we get enough back from the money spent to make the welfare state worthwhile?
The welfare state makes us richer
If you never take your car to the garage, you will save money. If you never do any repairs on your house, you will save money. But in the long run, you will end up spending more money, because your car will break down and your house will fall apart, and you will have to buy a new car and a new house for much more than you would have spent on maintenance. Investing in maintenance – in looking after valuable assets – costs money in the short term, but saves money in the long term.
The same argument can be applied to the welfare state. By investing in maintaining a state’s most vital asset (its people), it makes the state more prosperous. State healthcare makes for a healthier workforce; state education makes for a better educated workforce; state housing improves the well-being and health of the workforce; and benefits for the unemployed and sick, and women on maternity leave, maintain the well-being of people temporarily out of the workforce, so that when they return to work they will be able to contribute more. The money spent on the welfare state is more than recouped by the increased productivity it brings. Moreover, as every well-run business knows, a workforce that is well looked after will be more motivated to work harder.
The welfare state also promotes prosperity by creating jobs, and jobs create wealth. All those millions of NHS workers have to be paid, not to mention teachers and support staff in state schools and civil servants who administer the welfare state, but once they’re paid they spend money on goods and services, providing more work for other people. And the better they’re paid, the more money they will have to spend. If doctors get a pay raise and spend it in fancy restaurants, well, that’s good news for the people who work in them (as well as motivating doctors to look after the wine waiter when he gets sick, ensuring he can return to his vital work sooner).
The welfare state also promotes risk-taking and creativity, both of which make for a more dynamic economy. Just as an acrobat on a tightrope in a circus will make more daring moves if they know there is a safety net below them, so people will take more risks when they know there is the metaphorical safety net of the welfare state waiting for them. They will be more willing to invest time and money in setting up a new business which one day might provide employment to thousands of people if they know that they and their families will not face ruin and starvation if the business fails.
The creative industries – music, theatre, film, publishing – generate huge amounts of wealth for the UK, but also depend on people entering them being willing to take on a considerable amount of risk early in their careers. Every musician, actor and writer, no matter how successful they may become later, has to start out with little or no income, often for many years. J.K. Rowling wrote the first Harry Potter book in a café in Edinburgh when she was a single parent with a young child, living on benefits. She would find that much harder to do now, when she would be expected to find work or have her benefits cut. The Harry Potter brand has brought hundreds of millions of pounds into the British economy, but Harry, Ron and Hermione might never have existed without the welfare state.
The welfare state also provides economy of scale. Go to your GP with a tricky health problem, and she can pick the right person to refer you to out of the entire medical profession of the UK. Go to a private hospital, and you will have a more limited range. Moreover, a private hospital has to divert part of its takings to provide dividends for shareholders.
The welfare state makes us poorer
The welfare state as originally conceived in the aftermath of the Second World War was meant only to cover the most basic needs. It was anticipated that people would return to work promptly after receiving medical care, and that they would only need unemployment benefit (which would be the bare minimum to live on) for a very short time. That’s not how it’s worked out. As healthcare becomes more sophisticated, and people’s expectations of it become higher, the cost increases. The more benefits you provide, the more people will want. The more people are employed by the welfare state, the more powerful will be the voices in favour of maintaining it. The welfare state has a natural tendency to grow larger and larger, making the costs go higher and higher. We simply can’t afford it.
Moreover, providing so much for so many people is bad for the economy, because it disincentivises hard work and enterprise. If people know all their needs are going to be met, they will have no motive to work harder or to create new businesses. Taking away or reducing welfare provision and making people responsible for looking after themselves will create a more dynamic and energetic culture, which will result in greater prosperity. The tax cuts which reducing welfare would allow will put more money in peoples’ pockets, giving them more money to spend, and making them more inclined to start businesses, as they know they will get to keep more of what they earn. Lower taxes and lower public spending will make the economy leaner and fitter.
The welfare state is a monopoly, and monopolies are inefficient. Because the NHS has no competition of any significance, it has no incentive to improve its provision. If it was privatised, the greater choice available would make hospitals raise their game to attract patients.
Motions that go with this topic
1. This house would privatise the NHS.
2. This house would increase funding for the NHS.
3. This house would refuse treatment for smoking-related illnesses on the NHS.
4. This house would restrict access to the NHS to people on low incomes.
5. This house would make the private provision of medicine illegal.
6. This house would cut benefits.
7. This house would increase benefits.
