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Europe takes a cue from U.S. welfare reform
August 9, 1996
Web posted at: 1:00 a.m. EDT (0500 GMT)From Correspondent Margaret Lowrie
LONDON (CNN) -- Great Britain and many European countries are following in the footsteps of the United States as they consider welfare reform.
A historic welfare-reform bill just passed by Congress is expected to be signed into law soon. It turns control of welfare over to the states and limits benefits. It ends a six-decade guarantee of open-ended federal aid to the poor.
"I think the American welfare debate is affecting the debate in Europe. What you're seeing around the world is a sort of global revolution, a reassessment of welfare states, trying to make it affordable into the next century," according to Roderick Nye, Director of the Social Market Foundation.
Britain, long called the "Granny State," is known as a cradle-to-grave welfare state. But the growing expense of welfare has some thinking that reform may be necessary.
Welfare in Great Britain differs from welfare in the United States in that it includes entitlements to the middle class such as child care, medical benefits and pensions, along with low-income subsidies for the less-privileged.
While the middle class in the United States agrees there is a need for welfare reform, there has been popular resistance to welfare reform in France and Germany where middle class entitlements would be affected.
"What I think you are going to see over time is a rebalancing. A rebalancing away from the state, a rebalancing away from the employer and a rebalancing onto individuals and their families to provide for their own protection in some way through insurance, through increased savings -- things of that sort," Nye said.
In Britain, one-third of the government's yearly expenditures, or as much as $150 billion, is targeted for social security and welfare payments.
Much of the welfare budget is funded through taxation, with the average taxpayer putting $20 a day into the benefits pot.
"People in Europe are tired of paying what they see as too much tax. And if you're going to get tax rates down, you're going have to cut spending somewhere. And the most obvious place to cut spending, because it's such a large part of the budget, is in social security and welfare," Nye said.
Snitches cut costs
One way Britain is trying to cut spending is by tackling welfare fraud, which is estimated to cost the country $5 billion a year.
The "Beat a Cheat" campaign includes a telephone hotline -- some call it a "snitch line" -- to report people fraudulently benefiting from the system. The hotline received about 16,000 calls on its first day in operation.
"For 50 years in the United Kingdom, the welfare budget has been growing twice as rapidly as the national income," British Social Security Secretary Peter Lilley said.
"We've taken steps, which we believe in the future will mean it will probably grow half as rapidly as the national income. So it will be taking a declining share of national income for the first time for 50 years."
Welfare reform was propelled in the United States not only by fiscal concerns, but also by worries that the program that was designed to help people was actually creating inter-generational poverty and a dependency culture.
"I think if you want welfare reform in Europe, people are going to have to start taking some of that moral high ground and not simply just looking at the figures," Nye said.
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