Over the last fortnight it has become clear: the govt. is planning a wholesale assault on universalism; should we defend the middle class welfare state or not?
Our guest writer is Ben Baumberg, researcher at the LSE and co-editor of the collaborative blog Inequalities
Over the last fortnight it has become clear: the coalition is planning a wholesale assault on the middle-class welfare state. The cuts in child benefit to higher-rate taxpayers have been followed by the Browne Review, and more of the same is going to come. In response, Ed Miliband has been defending the ‘squeezed middle’ and standing up for universalism.
Yet what he needs to develop – and quickly – is a coherent narrative on universalism vs. means-testing, in order to avoid both confusion on the left, and the prime minister’s accusations that this is naked political positioning.
From a traditional left-wing perspective, Mr Miliband is right to defend universal benefits – as previous posts on Left Foot Forward and Inequalities explain. Means-tested benefits create perverse incentives, where people get penalised for working harder and saving more. They are complex and often stigmatising, meaning that fewer poor people claim them.
And perhaps most damagingly of all, they change the very nature of the welfare state – from collective solidarity to poverty alleviation, which in the long-run leads to lower support and worse provision.
But it simply isn’t enough to defend universalism. Labour agrees that cuts need to made – and for any given level of cuts, if we take less from middle Britain then we have to take more from the poor. In fact the problem is worse than this: the welfare state has been trying to do ever-more – expanding higher education, new services for pre-school children, ever-increasing demands in health and social care. We simply cannot afford to make everything universal.
If both extremes are undesirable, it should be an obvious question to ask “which parts of the entire welfare state should be universal?” But somehow, neither academics nor wider thinkers on the left have engaged with this directly (Many academics have dealt with parts of this– for example, Theda Skocpol in the US and Richard Titmuss in the UK have thought carefully about the benefits of universalism – but they have not systematically dealt with where universalism is most important).
In the absence of anything definitive, it at least helps to start with a few possible principles.
Firstly, how likely are better-off people to use private welfare provision, and how damaging is this to inequality? Inequalities in old age are driven by the extent of private pensions provision – countries with earnings-related state provision have more equal outcomes because they have fewer private pensions. Conversely, certain aspects of private healthcare (e.g. paying for private rooms) may be less damaging, simply because they buy little beyond public provision.
Second, what are the wider consequences of means-testing particular parts of the welfare state? Some services have positive – or negative – side-effects beyond their primary goals, such as the role of children’s centres in creating social capital between mothers. Given the enormous popularity of Surestart from families across society, we can speculate that universal Surestart centres (aside from their positive impacts on child outcomes) create solidarity between parents in parts of society that otherwise rarely integrate.
The targeting of potentially solidarity-generating institutions such as schools, housing and Surestart may therefore be particularly damaging for a cohesive ‘Big’ society.
Third, which parts of the welfare state can be means-tested without damaging public support? We can think of the NHS as a beacon of public support sustained by universalism. Yet some parts of the NHS are not free – prescription charges are means-tested for very sensible reasons – and people who use private healthcare are still strong supporters of the NHS. Elsewhere, studying at university is self-evidently a ‘deserving cause’, which makes means-tested higher education unlikely to suffer catastrophically declining support – but again, evidence is lacking and the issues are complex.
Perhaps even giving benefits to the ultra-rich undercuts support for the benefits system because it seems like a waste of money, which would fit the initial public support for the principle of child benefit cuts.
The last Labour government partly responded to this through the principle of ‘progressive universalism’ – giving something to everyone, but more to the worst-off – which people like John Denham rightly say is close to most people’s view of a ‘fair’ system. Yet for all this rhetoric, the extension of means-testing – from 35 per cent to 41 per cent of benefit spending – does not seem to have been done in a consistently well-thought-out way that satisfies key principles. (This refers to benefits + tax credits, but not other public services, for which see here; figures calculated from source data on benefits, Working Families Tax Credit and current Tax credits.)
Mr Miliband somehow needs to avoid several temptations: not to give in to the siren call of means-testing everything, nor to universally defend universalism. To help him in this, we need to think through the welfare state systematically, rating the impact of targeting and means-testing against a complete set of principles – and come up with a plan for targeted universalism that is both affordable and which defends the key achievements of the middle-class welfare state.
36 Responses to “Should we defend the middle class welfare state?”
Ash
Anon –
“Yes I am going to be entirely consistent and say that if people can afford to pay for education for their children and private healthcare then they should. There should be a tax incentive for them to do so”
Ah, OK. Sorry – I thought you were arguing from a left-wing sort of perspective that Labour should back scrapping CB for high rate taxpayers. Obviously if you’re making a right-wing argument that better-off people should pay lower taxes and rely on private services, while the poor rely on a targeted, safety-net welfare state, we’re just coming at this from completely different directions. I think that sort of Thatcherite society, with excellent private services for the rich and second-rate public services for the poor, just sounds hideous.
(And I did try to answer the point on Alan Sugar’s bus pass – I don’t think it’s massively unfair that he gets one, since he pays for it out of his taxes anyway; but I accept that maybe the money could be better spent elsewhere, and I don’t think it would damage the universal welfare state to withdraw minor perks from a few very rich people.)
Anon E Mouse
Ash – (I’m not saying that richer people should not pay the taxes, just that for altruistic reasons they should choose to go private to free up the NHS – the taxes I mean is to give an incentive to donate to worthy causes and benefit for doing that)
I’m actually playing devil’s advocate but just looking ahead to the next election where the coalition will simply say “That’s not fair”.
You see the emotive nature of that line will resonate with the electorate. How many siblings will cry out “But that’s not fair” when they perceive an injustice in life and that’s just in a family.
It’s a universal thing this fairness stuff and regardless of the excuses Labour will use it just isn’t fair.
I know which side of the argument I’d rather be on…
Mr. Sensible
Mr Mouse it is a clear proposal that Cameron has outlined.
And on the point about bus passes for people like Alan Sugar, as Ash has said that’s not really what this is about. It is about taking Child Benefit from Middle-Britain.
I draw your attention to Nicola Smith’s article a couple of weeks ago on this, referred to in this article. What it says, and what this article says, is effectively that if you keep welfair for a certain section of society you can end up stigmatizing that section of society.
Ash
Anon –
Well, of course there’s a right-wing understanding of ‘fairness’: it’s ‘fair’ that people keep more of the money they earn, make their own choices about paying for healthcare etc for their own families, and aren’t made ‘dependent’ on state services and benefits; and it’s ‘fair’ that public services are provided only for those who really need them.
There’s also a left-wing understanding: it’s ‘fair’ that everybody pays into the system based on what they can afford, and that everybody then has access to the same decent standard of benefits and services at the appropriate times in their lives: school when they’re young, pensions when they’re old, Child Benefit when they start a family, and healthcare when they’re ill.
I know which side of the argument I’d rather be on, too!
Anon E Mouse
Mr.Sensible – The policy doesn’t currently exist – when it does I’ll let you know if I think it’s fair or not.
“And on the point about bus passes for people like Alan Sugar, as Ash has said that’s not really what this is about. It is about taking Child Benefit from Middle-Britain.”
No Mr.S. That’s EXACTLY what this is about. You see it as taking Child Benefit from middle class families and I see it as minimum wage workers paying the rich. What a surprise from Labour to be supporting the rich.
It’s still not fair and no matter how you word it I guarantee next election the right wing press will present it as I do. Poor people pay to give the Queen a free TV Licence. Do you really not see the irony in that?
Ash – Exactly right on the left wing fairness – not that I accept Labour was fair in government. And there isn’t a left wing government in power and it is highly unlikely they will be back before 2020.
The problem is that because of the mess the last government left us in we can’t afford those services in the same way and I do not think that people should be so dependant on the government. Especially when they stole our money for years and years and then tried to justify the money as “expenses” when it was straightforward theft.
If politicians from whatever party could be trusted then I’d agree with you.
They can’t and I don’t. At least you defend your position dude which seems to be a rarity on this blog. Nice one.