The end of universal benefits?

“Services for the poor will always be poor services” – Richard Titmuss, quoted at Left Foot Forward.

The announcement that child benefit is to be scrapped for the families of higher-rate taxpayers (i.e. those earning over £44,000) has caused predictable anger. Heck, I’m pretty angry about it, on the purely selfish grounds that it’ll make a significant dent in our family finances.

Among the arguments being directed against the change are:

  • If you earn £44,000 a year, you lose your child benefit. However, if one parent earns £30,000 and the other earns £15,000, they keep their child benefit. Indeed, if both parents earn £43,000 – total household income £86,000 – then they keep their child benefit, too.  As such it penalises households where one partner is in paid employment and the other looks after the children full-time: a group the Tories were supposedly planning to encourage.
  • The disincentive effect to people earning just under £44,000. Why go for that promotion when you’ll be worse off after it if it takes you over the £44,000 threshold? Whatever happened to encouraging aspiration? (Or is “aspiration” only for those earning over £100,000 a year?)
  • The Tories and Lib Dems had both promised not to do this. Yeah, yeah, I know: that was before “Greece”, blah blah blah. Promises, schmomises.

However, let’s face it: this change only affects 15% of families, and better-off families at that. Cry us a river, white wine socialists. After all, plenty of people earning less than £44,000 are going to suffer far more from other changes planned by the government.

Which brings us to the most important argument against this change: what it presages for the rest of the benefit system. As someone observed recently, the NHS has survived the past 30 years because it is a universal service. By contrast, legal aid (originally seen as another cornerstone of the universal welfare state) has been whittled away progressively over recent years – because too few people, and in particular too few people with political clout and influence, benefit from it. Legal aid is widely portrayed as a racket in which “fat cat lawyers”* and their scrounging, criminal and/or immigrant clients profit at “our” expense.

(* The average salary of a legal aid solicitor is £25,000. So they at least will get to keep their child benefit. Spongers!)

Once child benefit is perceived as a “residual” benefit paid only to low earners, it’ll become a softer target for politicians looking to save a few quid: an extended freeze on payment levels here, a further tightening of eligibility there. Before we know it, child benefit will be just another welfare payment that only “scroungers” get. As Chris Williamson MP points out, it is the poorest who will suffer most once social security is marginalised and limited only to Britain’s poorest people.

So there is an opportunity for Ed Miliband and for Labour here. Here is a chance to show how universality in public provision benefits everyone: to draw the lines that connect families on Sunderland council estates (who may not be suffering from this cut, now – but there’s still another £9 billion of benefit cuts to be announced) with middle class families in the south east (for whom this may be the only direct consequence of the benefit reforms).

We need to do this, not only because of the immediate issue of child benefit, but because the same lines preserve a universal health service, universal access to education and so on. Ultimately the choice is between universal services to which everyone contributes and from which everyone benefits, and a “safety net” approach in which those who can pay for good services, and everyone else makes do with underfunded and marginalised state provision.

Update: Left Foot Forward has an excellent analysis here, including details of how the new 65p in the pound “taper” under the Universal Credit will hit low-income families currently in receipt of tax credits. I’ve added the Richard Titmuss quote from LFF’s post to the start of this.

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3 thoughts on “The end of universal benefits?”

  1. “Services for the poor will always be poor services”

    A thought experiment. What if the government, committed to cuts of some manner was also equally committed to preserving CB in principle as a universal benefit — a reduction in the benefit amount across the board rather than the income discrimination presently proposed.

    In this different scenario, then what sort of protests against the cuts would take shape? How would the government poll then? How might this scenario play out differently than the situation we have now?

    1. Well, that’s already happened, because George already announced he’s freezing child benefit for at least the next twelve months – a cut in real terms.

      Sunder Katwala observed this afternoon that when child benefit was frozen under Mrs Thatcher’s government, in the end it was the pressure from sharp-elbowed middle-class recipients that forced the government to resume indexation. Had child benefit not been universal then, the amount paid would be “nugatory” today. So the two aspects – universality and protecting levels of benefit – go hand in hand.

      But yes, cutting off payments to 1.2 million families is going to produce louder squawks – however self-interested – than incremental real-term reductions or even actual cuts. That’s just how people work.

      Again, Sunder Katwala hit the nail on the head when he said what this was about was the government needing to find £1bn from higher-rate taxpayers, and deciding that it would do so by just going after those with children, as a more politically palatable approach than (say) raising taxes for those earning more than £100,000. (Because that would harm “aspiration” – the aspirations of those earning £99,000 being more important than the aspirations of those earning £43,000.) It wasn’t about needing to get £1bn from families with children, and then deciding the fairest way to do so was by going after the best-off.

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