I wrote A tale of of two industries in July and was reminded of it by a tweet the other day in response to the row about raising NI payments to pay for social care. I wish I’d saved it, but from memory it asked how come raising money for Social Care causes so much fuss but nobody asked where the money is coming from for Defence. Defence versus Social Care? Warfare versus Welfare? It should be no contest!

The Case for the Defence

Compare these two areas of government expenditure. One contributes over £42 billion to the economy and employs nearly 200,000 people. It also directly supports another 260,000 jobs in the UK, mostly in the private sector. The other has a spend of around £22 billion and directly supports the employment of 1.5 million people, most of whom are in the private sector. It also indirectly supports 1 million jobs adding another £22 billion to the economy. One of these areas is a source of national pride and regarded as an asset. The other is often portrayed as a drain on the economy and of being in crisis. How come? It all becomes clear when you learn that the first area is that of defence and the second is adult social care.

Defence is high tech, provides skilled jobs and produces shiny kit. The armed forces provide career opportunities for men (mainly) alongside increasing numbers of women. It supports capital intensive industries that export their goods abroad, make healthy profits and contribute to the government’s tax take. Adult social care is a labour intensive, poorly paid service industry that employs a lot of older women. It has lower productivity than defence and does not contribute to the balance of payments.

Comparing Defence versus Social Care

So two completely different animals. How are they even remotely comparable? Well both are examples of the government choosing to support significant sectors of the economy. They do this by directly employing people, by providing a ready market for goods, by underwriting research and development and stimulating demand for consumer spending. In both cases the value added to our economy is similar. And in both cases a government decision to cut back its support can be devastating.

A Tale of One Town

I live in Barrow-in-Furness, whose major employer is the shipyard, currently owned by BAE Systems, which is utterly dependent on the MoD for its survival. This was made obvious after the fall of the Berlin Wall. In 1991 we had a population of over 73,000. The shipyard employed 14,500 people. The end of the Cold War led to a collapse in government orders. By 1995 employment in the yard had slumped to 5,800. It has recovered somewhat to 9,500. But our population slumped with it to 67,000 and, despite increasing prosperity on the back of the renewal of the Trident programme, there are significant areas of deprivation with up to 25% of the town’s children living in poverty.

Those that can, escape to university and few return. Hence we have an ageing population. Then there are vulnerable adults of working age with mental health difficulties. Mental health links directly to the poverty that resulted from defence cuts in the 1990s. Add those disabled by a lifetime of toil in dirty, dangerous industries. They all place pressure on adult care services which have been devastated by a 50% cut in government support over the last ten years. So in the same town we have two major industries. Both are dependent on government funding. Defence is seen as an asset and its beneficiaries get knighthoods and peerages. Social care is seen as a drain and its beneficiaries are characterised as liabilities.

From Town to Country

Moving from the local to the national, according to The Health Foundation, it would take an extra £6.1 billion over the next 10 years to fund the expected increase in demand for social care due to our ageing population. That’s just to keep things going at today’s levels of provision. A truly ambitious programme to expand access and pay staff a decent wage would need an extra £14.4 billion over the next ten years. It is figures like these that are behind the alarmist headlines about the crisis in social care. Costs are apparently spiralling out of control. The elderly are a burden on society. Where’s the money going to come from?

An essential industry – but which one?

What would happen if the state did not meet the funding gap for social care? The need would not go away. Old and vulnerable people who lacked the means would end up in underfunded institutional care. They would be denied the dignity and comfort that we look for in our elder days. Those who could afford it would pay a tax on old age. Only, it would not be collected by the government. Instead, the insurance companies and private care providers who would take out a hefty whack for themselves and like as not squirrel it away in off shore tax havens.

Many families would decide that elder care came before holidays or new cars. Millions would be forced to join the army of unpaid home carers, giving up their jobs and having to claim benefits for themselves. There would be deflationary pressures on the property and retail markets. Instead of boosting GDP we could even see it fall. This, because a government that prioritises keeping people in work, allowing old people to keep their homes and providing employment to others all adds to wealth of society. The effective privatisation of adult social care funnels that wealth into untouchable overseas accounts and decreases the wealth of society. This makes no sense at all unless you accept that we are ruled by a kleptocracy that is asset stripping the country for their own benefit.

From Social Care to Socialism

Meanwhile, the government is claiming that is increasing spending on defence by £16.5 billion over the next four years. Actually it is “only” £7.5 billion in real terms according to this paper in the House of Commons Library. Still, the point remains. Where is the panic about unsustainable increases in defence expenditure? There is none. The arms trade is good for business. The banks, the hedge fund managers, the stock exchange and the currency traders are all happy for the government to run up debts that will benefit international corporations like BAE Systems This greatly increases asset values, even at the cost of stockpiling weapons of mass destruction whose use could presage the end of the world.

So, when it comes to Defence versus Social Care, if we spend more on keeping people well and living out their days in comfort and we put money into workers pockets by providing them with secure and well paid jobs, that would cause a run on the pound, destroy property values and threaten the end of capitalism. Or so I am told.

Well, if that’s what it takes, I’m game. How about you?

 

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