Extract from :
International Labour Conference
Provisional Record
Eightieth Session, Geneva, 1993
Twelfth sitting, 10 June 1993
Ms. WIDDECOMBE (Parliamentary Under-Sec- retary of State for Employment, United Kingdom) - I should first like to congratulate the President on his appointment to chair the proceedings of this 80th Session of the International Labour Conference, and indeed to pay tribute to the experience and commit- ment which qualifies him for this important role.
I warmly welcome the opportunity to address this Conference today on the topics of social insurance and social protection. I congratulate the Director- General for choosing these topics for consideration at the Conference this year: they are both of consid- erable concern to many countries at the present time. I propose to comment briefly on the Director-Gen- eral's Report and then to describe the approach of the United Kingdom Government.
The Director-General's Report paints a daunting picture of the current situation. On the one hand it chronicles the development since 1945 of an increas- ingly ambitious framework of ILO Recommen- dations and Conventions to lay down standards for · state provision of social security. On the other hand the Report indicates that it has taken several decades even for highly industrialized countries to achieve comprehensive social security systems and that the funding of these systems now threatens to impose an unsustainable burden of additional costs. In the meantime there seems little prospect of developing countries ever establishing comparable systems of
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social security without very substantial growth in em- ployment. The Report also concedes that few of the relevant ILO Conventions have been ratified even by a significant number of industrialized countries.
The United Kingdom Government believes that this very comprehensive analysis poses serious ques- tions about the best way forward both for industri- . alized and for developing countries and about the relevance for developing countries of ILO standards in this field.
In the United Kingdom we have one of the world's oldest and most developed social security systems, a comprehensive state-administered benefit scheme which covers the entire population. It is provided through a contributory social insurance scheme com- plemented by a range of non-contributory measures.
Under our national insurance scheme, benefits for sickness. unemployment and old age are provided entirely from contributions and currently account for almost exactly half of the total benefit expenditure in the United Kingdom.
The contributory principle is well established, but the United Kingdom Government sees no reason why people should be restricted to just one means of providing for themselves and their families. We be- lieve in increasing personal choice and have there- fore opened up the possibility of individuals receiv- ing part of their pension entitlement through a personal pension scheme of their own choice rather than entirely through the state system. This encour- ages self-reliance and, with other changes to the scheme. has also helped to reduce the likely burden on future contributors.
At the same time we recognize of course that the contributory principle cannot provide security for those who are not working or who have been unable to build up an entitlement to social insurance. We therefore also have a well-developed system of non-*** contributory social protection, which is funded from general taxation. This system offers greater flexibility in meeting needs than is possible with a purely insur- ance-based approach, which requires the prediction of future contingencies before they can be covered. But the cost of funding both our national insurance scheme and our non-contributory benefits has been rising at an alarming rate. In the past year spending on social security was more than twice what we spent on health, and more than ten times what we spent on education.
One cause of the rising trend in social security ex- penditure has been unemployment. Like many coun- tries we have had to spend more on unemployment benefits. But we are also spending more on families, more on the sick, more on disabled people and much more on the elderly. Quite simply there are more elderly people and they are living longer than in the past. In 1990 there were 3.4 people of working age in the United Kingdom for every one pensioner. But by 2030 that will have declined to only 2.2 people of working age in the United Kingdom for every pen- sioner. The burden on the working population of supporting expenditure on pensions will therefore continue to rise. all other things being equal.
The key question therefore is whether we can al- low social security to take a bigger and bigger share of government spending. If it continues to grow fas- ter than public expenditure and the economy, then it can only be funded by an increased burden of taxes · and contributions on individuals and business or by
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