Alphen, Netherlands. 3
April. Britain has created a
monster. One in every three pounds the
British state spends is on welfare. This
week London embarked on the greatest reform of the once great Welfare State
since its inception in 1947. The welfare
budget has doubled over the past decade.
In Brussels yesterday a senior economist told me that given the changing
demographics Britain will need to grow at least 5-6% per annum simply to sustain
the current Welfare State. This is compared
with a post-1945 mean average of between 2-5%.
Indeed, a leading think-tank recently suggested that if London continues
to protect spending on health, education and international aid then in the
absence of growth by 2018 other big departmental spenders could see their budgets
cut by up to 30%. Quite simply, funding
welfare has become the single biggest factor in Britain’s international decline
and if nothing is done Britain will be bankrupted by it.
The welfare divide has also
created a political class no longer able to conceive of Britain’s true national
interest. Indeed, be it on the Left or
Right the ‘national interest’ has become a metaphor for whatever policy can
afford Britain’s welfare dependency. As
such this very narrow view of the ‘national interest’ has fundamentally
undermined the making of national strategy and critically weakened London’s
ability to wield influence in either Europe or beyond.
The welfare divide has
also made bipartisan politics virtually impossible. The 2008 banking crash was by any stretch of
the political imagination a national disaster. It was the kind of disaster that a responsible
political class would have put aside their differences to come together in the
true national interest. Indeed, the
national debt (the year-on-year accumulation of the annual gap between state
spending and income) is due to peak at 85% of GDP by 2018. Therefore, the state
re-capitalising of failed banks will take a strategic economic cycle to fix not
the electoral cycle London’s political class obsess over.
Instead, both Labour
and Conservatives (temporarily allied with the rent-seeking Liberal Democrats) have
chosen to play politics with this crisis thus making it both worse and
longer. The Labour Party compounded the
banking crisis by gross and irresponsible over-spending when in office (Gordon
Brown called it ‘investment’). They also
placed all of Britain’s future economic eggs on relying on a sclerotic EU obsessed
with protecting failing industries and thus guaranteeing Europe’s relative
decline.
Once in sort-of-power the
Conservative Party decided the only way to get re-elected was to drive the debt
down through a programme of austerity at the bottom of the worst economic cycle
in over a century…and hope for growth. For
all the rhetoric an increasingly desperate government is making increasingly warped
policy decisions much of it to feed the welfare monster in the hope it can get
re-elected in 2015. The Government now admits all it can do is control the rise of welfare spending.
The effect of warped
policy is nowhere more apparent than the country’s defence. The 2010 Strategic Defence and Security
Review (SDSR) was meant to be the baseline for a radically-reformed force. Costs were to be driven down and a new force
created that would balance efficiency and effectiveness, capability and
value. However, the money-driven and
hastily-contrived SDSR really had to be THE bottom-line. Britain’s armed forces could be cut no
further without really putting the military itself in danger. Still, the mantra went if London held its
nerve and given a return to growth a new force would emerge over time that
could be afforded. To that end London
created a $200bn military equipment budget.
Sadly, the forthcoming
Comprehensive Spending Review will likely see further cuts to a
defence budget already stretched beyond breaking point. Critically, cuts could well be made to the vital
$200bn military equipment budget without which the British armed forces will
simply be unable to recover from over a decade of continuous operations.
The impact of further
cuts will go way beyond defence. With
Scotland about to decide its future one of the last unifying British
institutions - the British armed forces - will to all intents and purpose have been emasculated compounding
the sense of British decline that is fuelling separatism. Influence institutions vital to Britain such
as NATO will be weakened. Worst of all, politicians will simply transfer yet
further unacceptable risk onto Britain’s young men and women in uniform as they
try to mask decline on their watch with over-stretched action.
Unless the British state for once begins to
think creatively about the balance to be struck between welfare and influence then
another disaster beckons. That means a
truly radical re-organisation of state power with aid, diplomacy and force
combined into a new, tight and real national strategy (rather than the current
PR stunts). Why? Because national influence and national
wealth are two-sides of the same devalued British coin.
Britain is standing on
the edge of precipitous national decline.
Somehow Britain’s political class must be shaken out of their welfare-driven
Little Britain complacency. If nothing
else Little Britain will mean more Europe.
Perhaps that is the plan?
Julian Lindley-French
