Brexit, the welfare state and redistribution

My final academic publication is a contribution to a book coming out in June 2019 edited by Scott Greer and Heather Elliott, at the University of Michigan School of Public Health.  Federalism and Social Policy: Patterns of Redistribution in 11 Democracies is an attempt to explore how welfare states actually work in federal and decentralised states, what sorts of redistribution they do and how effectively, and whether and how much there are different welfare regimes at sub-state or regional level.  This comes from the chapter about the UK, which looks at how devolution is financed, and the working of policies relating to under-19 education, health services and pensions.  It should be a significant contribution to the academic literatures about both comparative federalism and comparative welfare states.  Details of the book can be found here

What appears below is an extract from the conclusion, about the impact of Brexit on the welfare state.  There has been much speculation about the sort of country that a post-Brexit UK may be, and some discussion, mostly short-term and very pragmatic, about the impact of Brexit on social policy, such as labour market problems affecting the NHS or social care.  It seems to me, though, that the divisions of the Brexit vote and its likely economic effects will have a grave effect on the future of a redistributive welfare state – generally, not just in territorial terms (though it has territorial dimensions too).  Due to space constraints and the fact this was a comparative project, not particularly concerned with Brexit or the UK, it’s rather brief and under-developed, but nonetheless is worth wider and earlier circulation than the published book permits.  This section was drafted early in 2018, but nothing that has happened since changes what I wrote then – indeed, the only change is that I would now probably put it more forcefully. 

Far more important are the effects of the UK’s vote to leave the European Union in June 2016, with departure to take effect in March 2019.  The significance of the Brexit vote can hardly be understated and is likely to reshape the UK in the years to come.  Its significance has three dimensions.

First, there is the deep social cleavage that the vote to leave the EU revealed, and which has deepened since the vote.  At least in England and Wales (which both voted by majorities to leave), ‘Leave’ voters were generally older (age 49 or older), less well-off and from less well-off parts of the UK, particularly smaller towns that were badly affected by de-industrialisation.  ‘Remain’ voters were younger, better off and lived mainly in larger cities.  (60 per cent of voters in London voted Remain; only slightly smaller a percentage in the West Midlands voted Leave.)   To a substantial degree, this was a vote by the losers from globalisation against the relative winners.  Since those ‘winners’ are also the most economically productive members of British society, who generate the income that is redistributed to those ‘losers’ in the form of public services and welfare benefits for which their taxes cannot pay, there has to be a question in the longer term of why they should continue to do so.  This goes to the heart of the social basis for redistribution through public services and taxation.  Add to this the difficulties younger people face, with very high housing costs, large levels of graduate debt, and limited occupational opportunities compared to their parents’ or grandparents’ generations in an economy that is growing more slowly than in the past.  If, as many expect, leaving the EU adversely affects the British economy for some time to come, these difficulties will be further compounded.  Younger people, faced with increasing difficulties, are likely to be more and more unwilling to see their stretched incomes taxed to pay for those who have made them worse not better off.

Second, there are the direct impacts of Brexit on public services.  While the form Brexit will take remains quite unclear (even in February 2018), it is clear these will be substantial.  In particular, UK economic growth is likely to be weaker, reducing tax revenues for spending on services and increasing costs in some areas.  Social care and the NHS are heavily dependent on staff from overseas and particularly within the EU.  Limiting migration is a key part of the Brexit proposal, and so it may be harder for the UK to recruit from other EU countries, and people from abroad may be more reluctant to work in the UK even if they can, as it has become more hostile to foreigners.  In such circumstances, public services will become more and more stretched.

Third, there is the impact on the UK’s territorial politics.  While the UK as a whole voted to leave the EU, neither Scotland nor Northern Ireland did.  (The Remain vote was 62 per cent in Scotland and 56 per cent in Northern Ireland.)  So far, attempts by the SNP to exploit the difference in the vote to bolster the case for independence or trigger another independence referendum have come to nothing, but that may change.  Such a difference certainly creates the basis for pushing for independence if Brexit works out badly.  In Northern Ireland, the concern of the Republic of Ireland’s government to protect the Good Friday Agreement and avoid a ‘hard border’ have been supported by other EU member states and both UK and the EU-27 have agreed they should form part of the parameters for Brexit, but how that will be translated into practice remains unclear.  Since July 2017, the reliance of the UK’s minority Conservative government on support in the UK Parliament from the only Northern Ireland party committed to leaving the EU (the hardline unionist Democratic Unionist Party) makes this more acute.

In the past twenty years, the UK has embarked on extensive devolution, with profound effects on public services.  It now faces leaving the EU with consequences that cannot be calculated or even roughly estimated, for large areas of public services and for the state as a whole.  Its tolerance of anomalies, public policies that are frequently altered against a backdrop that can only be explained historically, and large territorial variations has led to a backlash from voters, whose vote to leave the EU reflected much wider discontents.

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Filed under Devolution finance, English questions, EU issues, Publications and projects, Referendums, Westminster, Whitehall

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