Introduction

Once upon a time, there was a consensus in this country that the welfare state was the jewel in the crown of the post-war settlement. It was a national badge of moral worth. It was held to embody certain virtues that people told themselves were the hallmark of a civilised society: altruism, equity, dignity, fellowship. It defined Britain as a co-operative exercise which bound us together into a cohesive society. Or so we told ourselves.

Now, however, the mood is very different. We are told that we can no longer afford the welfare state we once took for granted. People are increasingly being told they will have to pay for themselves – student fees, second pensions. The reason we cannot afford it, we are told, is a combination of rising demand – people living longer, new medical interventions – and the fact that people will not pay higher taxes any more. The question, though, is surely not whether we can afford the welfare state, but whether we want to spend our money in this way.

Overall, there is no crisis. Welfare spending has remained pretty steady as a proportion of GDP. What has changed is that, within that, more is being spent on means-tested benefits. This helps explain the paradox that although the total is the same, more people are dissatisfied.

There are several separate problems: pockets of high unemployment; a steep increase in the number of lone parents dependent upon the state; and a shortfall in the value of pensions, with a growing minority of pensioners needing expensive long-term care for the last years of their lives.