Beveridge retreaded

October 27, 1994

Last week in Prague, at a meeting organised by the Parliamentary Assembly of the Council of Europe, experts from the World Bank and the London c states to policy makers from 15 central and eastern European countries. Their proposals*, amount to a modified -- and modernised -- Beveridge plan for the emerging democratic market economies of that region. They cover political economy, policy design and administration along with proposals for regulation of labour markets, for social insurance, for family support and poverty relief, for education and training, for health.

Meanwhile in London, cradle of the Beveridge welfare state, the Commission on Social Justice was preparing to present its own proposals for updating and adapting that extraordinarily generous and successful social settlement to the Labour Party's policy makers**.

The search for new ways of organising social support and services in developed countries with ageing populations is ubiquitous. An international consensus as to what is needed in education is now emerging: high quality basic education for all, with particular priority given to the very early years: vocational education which is flexible enough to allow mobility and lifelong upgrading with employers contributing to the cost; expansion of higher education with students contributing about a fifth of the cost through loan systems with income contingent repayment arrangements; the need for national accreditation systems to assure quality.

Certain groups of higher education students are the main potential financial losers in this scenario and their consequent hostility acts as a powerful brake on reform, but so urgent is the matter now becoming that even in Germany, where free tuition in higher education is still more of a totem than it is in this country, the rectors of some universities have felt impelled to open up discussion of charges.

Careful research and practical experience have gone into forging this consensus -- work on the impact of investment in early education mainly from the United States; work on income contingent loan repayment schemes at the London School of Economics combined with the experience of the Australians; work on the links between investment in further and higher education and economic success both for countries and individuals.

Such is the evidence that everyone who studies the issues tends to come to much the same conclusions. The Social Justice Commission is just the latest example. Appalled by the inequity of present arrangements and the danger of losing the benefits of expansion through inadequate funding, it became convinced of the necessity for change. Its aim, therefore, has been to push discussion on from principles, where it has long been stuck, to practicalities. It has floated some ideas and the Institute for Public Policy Research is now to work further on the detail.

The political difficulty of getting the principle widely enough accepted for it to cease to be an electoral liability should not, however, be under-estimated. There is in this country an almost wilful determination to believe that access will be denied, places distributed on the basis of money and the poor deterred -- as if this were not already the case -- and a resolute determination to ignore evidence from other countries to the contrary and to deny the possibility of devising equitable schemes.

The post-war Beveridge settlement has produced an enormously increased middle class which has grown adept at working the system to its benefit. It has, for example, enabled them to grow rich by ploughing their professional salaries (achieved thanks to their subsidised education) into tax subsidised property speculation while their children's health and education were taken care of for free.

So, ironically, the policies now proposed may more easily be put into practice in the former Communist states of central and eastern Europe. There the crisis is even more acute. Participation rates in further and higher education are far below the west. Vocational education has collapsed with the outdated industries that provided it. New arrangements have to be made and national economies are clearly too weak to bear the full cost. Furthermore the habit of middle-class defence of vested interest through the ballot box is not established and people are accustomed to command economies.

The situation is curiously reminiscent of the postwar period in Germany and Japan when victorious occupiers were able to put in place arrangements that they would have wished for themselves. Trade union laws in Germany, devised by the British, and school systems in Japan, devised by the Americans, have served those countries supremely well while their originators have struggled to reform entrenched systems.

The victory of the west over Communism was of a different kind, and nothing can or should be imposed on the countries emerging from its shadow. On the contrary there is much to be learned as Europe's divisions heal and older traditions, along with less consumerist habits and egalitarian philosophies inculcated more recently, exert their influence on evolving public policy. The most salutary lesson may come from seeing people, at present worse off than we are, accepting public policies which require them to forego material comfort in order to help pay for higher education and training so that access to its benefits may be widely available.

* Labor Markets and Social Policy in Central and Eastern Europe: the Transition and beyond. Edited by Nicholas Barr. OUP. Price Pounds 13.95.

** Social Justice: Strategies for National Renewal. Vintage. Price Pounds 6.99.

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