If there’s one thing wrong with Britain today, it’s that life is just too damn easy. Our real problem is that we’ve just been too spoiled, too mollycoddled, and now won’t pull our weight. Or so, anyway, parts of the Conservative party would dearly like you to think.
A brief analysis by the rightwing thinktank Civitas, concluding that over half of Britons now live in households that receive more from the state in benefits and services than they contribute via taxes, was energetically hyped up by the Daily Mail today as proof of a “something for nothing” culture sweeping the nation, smothering entrepreneurship by some vaguely unexplained means and generally triggering moral decline. “Lockdown changed the psyche of the British people,” the former work and pensions secretary Iain Duncan Smith told the paper mournfully. “For all those years we told them you can’t get something for nothing, and all of a sudden they did.” So who could they be, these pampered freeloaders who aren’t contributing their fair share?
Surprisingly, the answer isn’t millionaires who make careless but not deliberate mistakes with their taxes which may or may not have needed resolving while they were chancellor. Lapses aside, Civitas points out that the top 10% of earners still contribute 53% of all income tax, a figure that seems to have prompted some outraged Tory MPs to demand tax cuts but is – spoiler alert – how a redistributive tax system works. (The idea that rich people pay more tax than poor people is a feature not a bug, possibly because the alternative – squeezing the poor until the pips squeak, while letting millionaires happily run free – has had an unfortunate tendency to end in revolutions where it has been tried.) But anyway, we must look elsewhere for these people who pay little tax yet consume tons of healthcare, cash benefits and assorted perks in kind.
The obvious answer is retired people, perfectly naturally, and that if an ageing country like Britain chooses wilfully to shrink its dwindling labour force further by restricting immigration, it can’t then be shocked to find it has fewer people of working age paying taxes just as it’s facing mounting bills for healthcare and retirement benefits. Pensions are the single biggest item of welfare spending, and typically we use the NHS most heavily in the first and last years of life. Why, it’s almost as if the welfare state was invented to smooth costs across the life cycle, so that people who have either paid their dues all their lives (or will be paying them once they’re no longer actually children) can be carried through the non-earning years with dignity and compassion.
But while that’s part of the story, it’s not the whole. Civitas finds that while the poorest working-age households have long been net beneficiaries of the system, now the middle quintile is too. Either they’ve somehow contrived even in the depths of austerity to be lavished with more generous public services than a generation that could still actually get a GP appointment, or else something has gone very wrong for middle earners.
The obvious explanation is the pandemic: some workers would have earned less during lockdown and therefore paid less tax, potentially tipping them over from net contributors into net recipients. Theoretically, now that the worst is over, they could just bounce back to becoming net contributors again. But given the OECD predicts Britain will grow more slowly than any other G20 country bar Russia next year, that’s not necessarily a given. The long-term trend, it notes, is a rising dependency ratio: less money coming in, more spending going out.
One answer to the perennial puzzle of how a rich country like Britain can sometimes feel broken is that actually we’re no longer that rich. Years of sluggish growth followed by the economic self-harm of Brexit has helped push Britain’s GDP per capita below that of neighbours we’ve always considered our peers, from France and Germany to Canada or Australia. Comparatively high inequality means that although high earners have broadly kept pace with their peers across Europe, on current trends the average British household’s standard of living will fall below that of average households in Slovenia by next year and perhaps below that of average Poles by the end of the decade. To look at those figures and conclude that life is just too cushy in Britain takes some chutzpah, to put it mildly. Our problem isn’t having it too good; it’s years of political infighting, economic sclerosis and perhaps also a stubborn clinging to an image of ourselves that’s now horribly out of date.
The only good thing about being so badly governed for so long, mad as that phrase sounds, is that we should still have the capacity to bounce back reasonably strongly under better management.
Britain isn’t in the kind of terminal decline that comes from having staked everything on some commodity the world no longer wants, like a goldrush town after the gold is exhausted. It isn’t existentially threatened by war or climate change or natural disasters. It’s a battered but still skilled and resourceful country whose position ought to be recoverable. But only, perhaps, if we can be honest about what that position actually is.
Gaby Hinsliff is a Guardian columnist
