Forget the rabble that’s the Lords. The real battle is to wean Britain off decades of welfare dependency

TAke your choice. Did the conduct of the House of Lords in voting down George Osborne’s tax credit reform represent wisdom and compassion by the legislature’s revising chamber?

Or was it instead a parade of self-indulgent protest politics by a rabble of superannuated placemen, left-behind Lefties and flatulent bishops?

The BBC’s account suggests opponents of the measure, led by veteran Labour peer Baroness Hollis, displayed rhetoric worthy of Cicero and the statesmanship of a bygone age.

The rest of us, though, are left to scratch our heads about how long the absurdities of the Lords can be allowed to continue.

How is this Government to pass the reforming legislation desperately needed by the British people if the Upper Chamber continues to behave in such a fashion?

Rumpus

Let us consider the parliamentary nonsense first, before getting on to the central issue of welfare reform.

The only convincing argument against replacing the Lords with a new, much smaller, either partly or wholly elected senate, is that the constitutional rumpus would paralyse the Government for years when it has much more important things to do.

The Lords has held its protest demo, which is what Monday’s vote amounted to. The Bishop of Portsmouth won the booby prize for his assertion that the Government’s plans are ‘morally indefensible’.

When Chancellor George Osborne has conducted his promised review of the plan, we should hope the Lords bow to constitutional propriety and approve it. Then we can mercifully forget about them again.

What matters most, though, is not the immediate political row, which has grabbed the headlines, rather the fundamental matter of welfare reform.

This Government has a newly secured electoral mandate and a relatively short political window of time to implement vital and radical measures. The Welfare State, in its present form, has become unaffordable. It threatens to swallow the fortunes not only of our generation of taxpayers, but of our children’s and grandchildren’s thereafter.

National net debt has soared from £311 billion in 2000 to £1.3 trillion last year. Government spending, which was £359 billion at the millennium, is £750 billion a year.

Because we are living longer and the cost of funding indexlinked public sector pensions has soared, the total pensions bill has risen by 25 per cent in the past five years alone, to £138 billion.

Together with £117 billion of other welfare spending, this amounts to one-third of annual state expenditure.

The outrage displayed by Baroness Hollis and other government foes in the Lords on Monday conveyed a sense that tax credits were a historic human right enshrined in Magna Carta.

Nothing of the sort. They were a political wheeze devised in 2001 by Gordon Brown as Chancellor, inspired by his then adviser ed Balls, to give a cash boost to lower-paid workers, locking them into Labour’s client base.

At that time, the cost of the measure was just 0.8 per cent of the gross domestic product (GDP). It has risen to 1.8 per cent, becoming, in the process, a taxpayers’ subsidy to employers who refuse to pay decent wages.

Here is just one among innumerable examples of the inflation of the welfare system, which has continued for 70 years, creating a balloon so large that it threatens to burst through the walls of the exchequer.

The Welfare State, let’s not forget, was launched by the Attlee Labour government in 1945, when this country was bankrupt. The U.S. provided Western europe with cash aid on generous terms for reconstruction after World War II.

Most of our neighbours used the money to rebuild shattered infrastructure and launch new industries. The British, instead, spent every penny of their American loan on the new health and welfare system they awarded themselves.

This helps to explain why, a decade later, the Continental powers were overtaking us industrially and economically.

After centuries of workingclass deprivation, history has judged that Attlee made the right decision.

Nonetheless, here was an early example of our national readiness to award ourselves social benefits way ahead of our ability to pay for them.

During the intervening seven decades, almost every successive government, Labour or Conservative, has extended the frontiers of welfarism, ostensibly in the name of social justice, though often, more cynically in desperate lunges for votes. The common factor has been that whenever a Chancellor increased entitlements, none of his successors dared to claw them back, even when times were hard.

Vital

The furthest that parsimonious governments dared retrench was to allow pensions and benefits to trail inflation.

Lady Thatcher learned a lesson as education Secretary when she cut the provision of free school milk. She was rewarded with years of public chants of ‘Thatcher, Thatcher, milk snatcher!’.

As prime minister, her vital reforms addressed the trades unions and privatisation of utilities and nationalised industries. She never seriously tackled public services, nor the expanding Welfare State. The best that can be said is that she strove mightily and, on the whole, successfully to prevent the system from getting any bigger.

In her latter years in office, public spending absorbed around 39 per cent of GDP, against more than 43 per cent today.

The Blair- Brown era saw successive surges of generosity with our money, beginning in 2001, as they succumbed to all manner of lobbies and interest groups campaigning for ‘ the less privileged’.

The two New Labour prime ministers did not invent the victim culture, in which every human misfortune must be remediable by dollops of public money, but they indulged and fostered it.

Collision

The apotheosis of this came when the Tokyo government refused to award compensation to former World War II prisoners who had suffered at Japan’s hand: Blair announced Britain would instead do so.

Our sympathy for victims of Japanese barbarism notwithstanding, it seemed crazy to pretend it made sense to give them our money, rather than the emperor’s. The gesture symbolised a new age of limitless largesse with taxpayers’ cash.

The 2008 crash changed everything, however. It signalled a collision between the welfare dependency culture and financial reality, with George Osborne inheriting the wreckage.

The costs of healthcare and welfarism continue to soar, yet government revenue stagnates. Indeed, average earnings today are no higher than in 2008.

The Corbyn Left, together with the mitred clowns at the head of the Church of england, urge that the answer to the intractable state cash crisis is to squeeze ‘the rich’ to sustain benefits for the less well-off.

By doing so, they close their ears to the warnings of every numerate economist that imposing punitive taxes on the fat cats would not merely stifle enterprise and ambition, it would provide nowhere near the sums needed to sustain the current system.

There are only two realistic

choices. The first, adopted by Gordon Brown, was to spend recklessly and leave future generations to pay the bills.

The second is that courageously adopted by George Osborne, with David Cameron’s support: to accept the huge risk to his own ambitions to become prime minister and set about curbing the Welfare State, rolling back decades of unaffordable government generosity with taxpayers’ money.

It would be foolish to pretend that Osborne has been right about everything — witness his disastrously clumsy so-called ‘Omnishambles’ Budget of 2012 (which included taxes on pasties and caravans, which were later reversed).

But he has shown himself the boldest and most statesmanlike member of this Cabinet. He is the first Chancellor since 1945 to attempt not merely to contain the relentless growth of social spending, but to reduce it.

There is a case to be made in favour of tax credits for the low-paid. Some economists say that doing away with them risks driving some workers out of employment altogether because bosses might claim that they cannot afford higher wages.

They argue that it is better for them to be subsidised by the state in poorly paid employment than to be out of work and become absolute state dependants.

But Osborne is willing to bet the ranch that his approach will work.

He has been proved right before in pursuing the creed of austerity in the face of doomsters, including the International Monetary Fund.

The yawning hole in his foes’ case, bishops included, is that they offer no credible counter-proposals about how to fund the huge welfare bill, save maybe by axeing replacement of the Trident nuclear deterrent.

In Britain today, the vital profit-making sector of the economy inspires the indifference or hostility of much of the media, including the BBC, while the Corbynist Labour Party refuses even to acknowledge its value to the country.

The Church of England, led by Justin Welby (an Eton-educated former oil company executive), treats capitalism as a communicable disease.

WE MUST remind all these people again and again that the Welfare State they profess to worship can ultimately be funded only by taxpayers and businesses labouring to generate profits, rather than merely spending public money.

It is not good enough to offer a version of politics rooted in protecting losers: we must also champion winners.

The economic recovery is precarious. Britain’s productivity remains poor, we depend on debt-fuelled consumer spending to keep the economy turning. One of these fine days, our huge balance of payments deficit is likely to cause huge pain.

In short, not only do we face a massive challenge in pushing back the frontiers of welfarism, but government revenues look dismayingly uncertain.

George Osborne has promised to review his tax credit proposals and is under pressure to restrict cuts to new claimants. But if he can’t save £4.4 billion here, where else will the money come from?

Never for a moment should we doubt the importance of what he is trying to do. The poorest people in our society will always deserve the state’s assistance to protect themselves and their children from real want.

But the Welfare State has for years extended far beyond this, subsidising the underclass in families bigger than the responsible middle class can afford, indulging the abuse of housing and disability benefits and even incentivising some to refuse what they may consider uncongenial work.

George Osborne and Work and Pensions Secretary Iain Duncan Smith, the architects of welfare reform, are seeking to reduce the role of the state in society and to lessen the huge cash burden that threatens future generations.

They deserve the admiration as well as the support of all those who care about the real interests of Britain, just as those unelected rebels in the Lords merit our scorn.