Taming the Corporations
My Welsh socialism
Globalise the left!
item0060B 902, 903
5 January 2004
the Welfare State
Last week, I spelt out my own New Year priorities, and put at the top of
my list “Improving the Welfare State”. That has prompted some quizzical
reactions from friendly Labour “modernisers” who think of the Beveridge Welfare
State as a 1950s phenomenon, now somewhat anomalous, which should simply
be allowed to fade away, as self-regulating market systems “take the
That view is misconceived.
I recognise that the principles of the 1950 Welfare State are in some respects now
inappropriate. They proceed, for example, from an outdated view of
the "employment system" and its role both in society and in
the economy. But the concept of a
State, which stands
ready to lend support its individual citizens where needed, particularly
in the most grave vicissitudes of life – that concept will not wither
away. It is of the essence of human civilisation, of all our
deepest collective values.
The 1950s Welfare State does need to be transformed into the
– but that is a matter of re-design, not an
abdication of basic principle.
Let me explain what I mean.
At bottom, we need a fundamental re-think of the “employment
relationship”, and the stance of Government towards the business, or
sector. Government is still stuck with the 1960s view of the “system of
employment” as one of the primary institutional pillars of society.
It is not.
is not, be it noted, solely a Labour problem: it was Margaret Thatcher who
grossly oversold and overloaded employers with obligations which they should never have had to bear. In her maniacal drive to reduce the
size of the State, she transferred to employers a whole raft of welfare
obligations which should never have been put upon their shoulders - they
belonged properly with the State, with public servants. I sympathise with
employers, who are forced to act as agents of the State in far too many
ways, reducing their capacity to trade effectively, move decisively, change
course quickly. Running a business, in ever-changing trading
circumstances, and with ever-changing staffing requirements, is not like
running the Church of England, or a university, or the Government. We have
endowed the institution of "business" with excessive significance as a
pillar of our society and a primary institution for the distribution (now
even the re-distribution) of wealth. The sector is not suited to, nor should it be
expected to perform, such functions. But because it was Maggie who
took the wrong turning, Labour is finding it difficult to get out of the
say that the first task is to de-politicise the State’s relationship with
the all employers - in the private, voluntary and State sectors . This is the offer I would make
to them, as part of a new
1. Abolish PAYE – while
this system of tax-collection is undoubtedly efficient, and more efficient
than if the alternative (“self-employed”) system applied to everybody, we
are wrong to put the convenience of the State above the effective pursuit
of trading success. Employers should pay out all wages in full, without the deduction, and the State should devise other ways of collecting its
accept that this change would weaken the Gordon Brown tax-credit systems;
but there are already systems in position for delivering the entitlements
of the low-paid self-employed (e.g. many farmers and farmworkers) and those systems would
have to be generalised.
Abolish all employer-based procedures
for the payment of sickness benefit, injury benefit, maternity benefit:
this work should all be done by main-stream employed civil servants, and
removed altogether from the employers' overheads.
Abolish Redundancy Payments,
which reflect an entirely outdated understanding of the employment system,
and of a "job as a quasi-property right"; it should be replaced by a new
form of Adjustment Pay, payable to all employees for up to six months, to
give them time to find alternative employment.
Abandon any pension expectation,
that employers will provide occupational pensions for their staff: it is
now quite clear that this “obligation” has proved far too burdensome for
the trading sector to carry, both in Europe and America; these expectations should be
systematically dismantled. Everyone should be entitled to look to the
State for the payment of an adequate basic Old Age Pension, supplemented
according to means in the private sector. But this whole societal
function should be removed from the shoulders of employers.
Abandon any childcare expectation,
that employers should be providers of crèche or childcare facilities for
their staff: that is altogether too burdensome a liability, and Government
should meet its policy objectives in other ways.
would (I think you will agree…) constitute a real charter of freedom
for our principal employers in the trading sector. And it would
generate a range of good quality, useful Civil Service jobs. It
would give the UK huge competitive advantage - but it
would come only at a price. Government should spell out its price for this
New Deal, as follows.
radical reform of company law,
with greater transparency throughout the conduct of the trading sector,
and the introduction of effective checks-and-balances in the corporate
That employers should accept, and support,
That employers should meet the costs of
Adjustment Pay: any
employee facing job-loss would be entitled to receive six months’ pay at
the full rate previously paid, paid at the same intervals and in the same way
as preceding employment pay, from the employer, although it might well be
necessary to build up a common-fund both to cover employer failures and
special circumstances where the State should bear the burden; some form of
compulsory levy (including an insurance component) could certainly be
devised. But an employer should ordinarily have an incentive to assist
the employee to find new employment: as soon as that job commenced, the
liability to pay Adjustment Pay would cease.
employers should be required to be more assiduous in the
collection of taxes, with a
drive to weaken the culture of tax avoidance which has become endemic in
Western societies, both in Europe and the States, and for which the legal
and accountancy professions are principally responsible.
That employers should be required to make
higher contributions to the National Insurance Fund,
or however the “Old Age Pensions Fund” were designated; they would no
longer have any requirement to administer employees’ tax or National
Insurance, and that concession requires a quid pro quo.
has all the makings of great New Business Deal. It would take several years
to put in place, but it would be a great project for Labour’s third term,
and if successful would certainly lead to a Fourth Term...
this transformation of the employment system would not exhaust my ambitions
Supportive State. I
have other ideas which should, I say, command political attention.
While I acknowledge that New Labour’s childcare policies have been popular
with those mothers keen to maintain continuity of employment (whether
for career or other reasons), I do not consider that these measures
are either sufficient or just. I think the State should in parallel offer to
parents wanting to stay at home with their children (up to age 12) the option of a Guardianship
Allowance. It is anomalous and wrong in principle that the principal
drive of the State should be to facilitate the decisions of mothers
wanting to leave childcare to others (paid or unpaid) and
re-enter the labour market. The State should also offer support to
mothers taking the other view. Gordon Brown has, in this respect,
misjudged the universality of the work ethic: for young parents there are
other priorities. The receipt of Guardianship Allowance
(I say, at £5,000 pa, but subject to tax) should be inconsistent with
the pursuit of employment, or of any substantive self-employed business,
although there could be a “disregard” procedure for minor self-employment
or other incidental income. Parents should not be forced be
lack-of-means to entrust the care of their own children to others.
Universal Capital Grants
We should not underestimate the importance of Gordon Brown’s “Baby Bonds”,
which are a significant
manifestation of Citizens’ Income reasoning.
Indeed, his Sixth Form “Allowances” seem to me to be sensible moves in the
same direction, although not yet universal. The principle is a sound one,
provided that the distribution is universal. Such distributions of public
funds will not in the long run prove politically acceptable if they are
means-tested: that is already a failing of Sixth Form Allowances. Baby
Bonds are universal, and rightly so. We are seeing, emerging in this sector, one
of the great future institutions
of the Supportive State.
Finally, pensions -
although in political terms the most urgent, there is the creation of a
Universal State Old Age Pension at not-less than one-third of the average
wage, payable to each individual regardless of marital status, and without
deduction for broken contribution-record – as an absolute entitlement of old age, and
an indication of the valued status of older citizens. This issue is
related also to changes in our view of “the employment system”, but
it needs to be spelt out as a principal commitment
of the Supportive
Welfare State, while well-established in education and health, is far too
weak in these other respects. That is why I remain committed to its
modification, and improvement.
you think the Welfare State will wither away? Drop me a line
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Get to know
your neighbours, the Abdroids
A short history of a revolutionary idea, by Mickelthwait and
Wooldridge, pub Weidenfeld & Nicholson -that was my Christmas
relaxation... And although the book is more of a history of
"forms of business generally", it is an excellent read, for aficionados of
this arcane subject. After all, we
"natural" persons share these UK islands with
artificial persons, shadowy abdroids structuring our lives, and
trading in our environment. And new abdroids are being formed, by
Companies House in Cardiff, at the rate of
5,000 every week...
My hope is that, together with my own recent essay
The Rise of the Abdroids
(Go to “What’s New" at Greenleaf Books, then follow the
"Something to Believe in" title) it
will stimulate wider political interest in the failure of the Left to
reform the basic legal "Constitution" of the the global corporate sector.
We are planning
a strategic conference
in London at Easter 2004, and we would welcome
Drop me a
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