...a blog by Richard Flowers

Tuesday, October 05, 2010

Day 3564: Is this the End for Baby Elephant Benefit?


I'm afraid that my CYNICAL response to the news that Master Gideon is cutting Universal Child Benefit from Higher Rate taxpayers was to anticipate that Hard Labour would issue a press release about half an hour later decrying it as "an attack on the very poorest in society".

I was WRONG.

It took them a bit more than half an hour.

Yes, apparently it's "an attack on already hard pressed families" and yes apparently it's "an attack on women".


What happened to the OPTIMISM, Mr Potato Ed?

Is there ANY measure that you wouldn't attack as "an attack"?

How can we HOPE to balance the Budget without cutting anything for anyone ever?

Look, this is BAD. Really it is. I can think of HALF-A-DOZEN good reasons off the top of my fluffy head for having Universal Benefits.

1. Incentive. If people think that the reward for working hard and being thrifty is to LOSE out, then you don't give 'em any reason to work hard. It's the problem Mr Iain Drunken Swerve is wrestling with in the Benefit Reforms.

2. Involvement. The FLIP-SIDE of that is that the people who DO work hard are the ones you are asking to pay out for other people. We're a RICH country, and we all like to feel we do our bit to help each other. But the less that the people doing the paying feel that there is anything that they get back, the more they're going to think "what's in it for me?" You need an incentive for people to pay in too, or you get resentment, and eventually they won't pay, and then you have a problem.

3. Reach. We all know that means tested benefits do not reach all the people who need them, whether it's because people are too proud to ask, or intimidated by a system that they are not equipped (or educated) to cope with, or through simple ignorance or through error by the state. Universal benefits are easy to operate and much more likely to bypass all these hurdles and actually HELP the people who need help.

4. Protection. Lastly there is the TERRIBLE TRUTH that even in the better off families (oooh, paging Downton Abbey!) sometimes mummies can find themselves in POVERTY because their partner keeps tight control of the purse strings. Child Benefit bypasses THAT too by going straight to mummies, and can often be a LIFELINE. The way this works (the benefit is ONLY withdrawn from mummies who THEMSELVES earn more than forty-four "k") ought to mitigate against that being affected here.

5. Simplicity. Anything other than giving a simple payment to everyone is COMPLICATED and needs a BUREAUCRACY to operate it. THAT is clearly why Master Gideon has opted for this cack-handed method of picking only Higher Rate earners to lose the benefit which results in the seemingly PERVERSE outcome that better off HOUSEHOLDS might keep the benefit if two earners separately earn less than the Higher Rate threshold but together earn more.

6. Divisiveness. Treating RICH and POOR differently is only going to EXACERBATE the friction in our society. It helps LABOUR of course, in their DEEP DENIAL that THEY did anything wrong, to keep adding fuel to the fires of mutual resentment, pouring more blame on "the bankers" or "the top 10%".

(I am, incidentally, getting really BORED by the mendacious argument increasingly coming from left-of-centre commentators: "such-and-such an article/minister/newspaper spoke of something affecting the middle class; well, median income is actually twenty thousand pounds and they're talking about people earning forty or fifty grand – that's the top ten percentile". The MIDDLE CLASS is NOT measured by MEDIAN INCOME. These are two COMPLETELY DIFFERENT things. Traditionally, there have been VASTLY more working class people than either middle OR upper class. So OBVIOUSLY the median income would be bound to lie somewhere in the middle of the WORKING CLASS. Even today, with a LOT more people doing "white collar" work it would be REALLY SURPRISING it the ENTIRE upper half of the income distribution were "middle class", don't you think? "Class" is not a simple measure of how much you earn; it is INCREDIBLY complicated to define, depending on heritage, family, ownership and the relationship to land and income generating activates. You are NOT "upper class" if you earn in the top ten percent. You're not EVEN upper class if you earn in the top ONE percent. It just doesn't work that way, and it's simply WRONG to have a go at people for addressing "middle-class concerns" by saying they are focusing on "the rich".

And while I'm ON the subject of idiotic comparisons… saying the Mr Potato Ed won "more votes than either Captain Clegg or Mr Balloon" is as STUPID as saying "well Mr Jensen Button won his World Championship race by travelling a LOT further than Mr Sir Chris Hoy did in the Olympics."

Sorry, where was I. Oh yes…)

The ADMITTED PROBLEM with all Universal Benefits is that they are, by any measure, a bit WASTEFUL. If you hose money over the country to make sure that you cover all eventualities, you're bound to wash quite a lot of it over people who don't technically NEED it.

Not EVERY pensioner needs a winter fuel allowance to avoid fuel poverty, nor a bus pass to get out and about.

Targeted benefits are technically better because they can FOCUS the money onto the people who need it more. If the system works. If they apply for it.

So you have to work it out: does the COST of the bit that you are wasting by making a benefit Universal OUTWEIGH the BENEFIT of reaching people who really need it?

This is where I come down on the side of KEEPING the Universal Child Care. I think it's worth the money.

But then, I'D restore the personal tax allowance to people earning over a hundred thousand pounds too because taking that away is saying that rich people should be treated as different.

Well, actually, I'd go further than that and have a Citizen's Income and do away with benefits altogether, if only the numbers could be made to add up, because that way EVERYONE would get something and I can trust them to get on with their lives their own way without having to make them jump through hoops to satisfy ME that they are DESERVING.

You see, that's because LIBERALS are the REAL OPTIMISTS; not Hard Labour or Mr Potato Ed. Hard Labour are PESSIMISTIC about PEOPLE – they believe that people are BAD at making decisions, that people will get things WRONG if they are not TOLD what to do. I am an OPTIMIST. I trust people to get it RIGHT.

But here's the KICKER.

The numbers DON'T add up. Hard Labour – yes we have to keep saying it – spent all the money. In fact, they spent all THEIR money and rather a lot of OURS too, what with the hundred and twenty MILLION pounds a day we're spending on THEIR interest payments.

So it would cost a BILLION pounds (each year) to keep the Universal Child Benefit UNIVERSAL. And that would mean cutting a BILLION pounds from somewhere else. Housing benefit? Unemployment benefit? Invalidity benefit? The pension? Do YOU want to choose?

This is the real WICKEDNESS of Hard Labour's "attack" attacks.

Every cut that they say we mustn't do, they're ACTUALLY saying: "do it to someone else".

So it's not right. But everything else is worse. And if when we put this right we CAN do better.


My Daddies do not get Child Benefit because for some reason the Government does not pay out for boys with soft toys. I'm sure Hard Labour could spin this as an attack on something too.


Tom King said...

I agree with all your reasons for keeping universal benefits in a non-Hard Labour world.

But I have a question.

Just who IS middle class, my fluffy elephant friend? Was John Prescott right when he said that 'we're all middle class now'?

I agree that there is no easy way to measure class, but I think that income is about the best way as it ignores all the silly fripperies like whether you say 'what?' instead of 'pardon?' Income measures the 'haves' and the 'have nots', and this cut is aimed fairly and squarely at the 'haves'.

I really think it is about time we challenged the media myth that says anyone who has a desk job is in the same boat. You fall into this trap yourself when you build a little straw man:

"Even today, with a LOT more people doing "white collar" work it would be REALLY SURPRISING it the ENTIRE upper half of the income distribution were "middle class", don't you think?"

Well, yes, it would. But couldn't that be because the 'squeezed middle' really does exist, and ISN'T so much the top 10% of earners as the people who are earning, say, £20k and up - most of whom WOULD identify themselves as 'middle class', because they are largely in 'middle class' jobs? People like me, in fact.

Anyway this is all a little aimless, but I hope it makes some sense. My head is somewhat fuzzy at this time of the day...

Andrew Hickey said...

Tom, I earn almost *exactly* the median income (in fact slightly above since my last pay rise, I think), and I definitely *wouldn't* consider myself middle class. At that income, supporting just myself and my wife, it is impossible for me to pay off the relatively small debts I have (a few credit cards and an overdraft, got when I earned less), and all I can do to avoid those debts increasing (and we don't live lives that are in the least extravagant - no flat screen TVs (no TV at all) or iPads and no trips abroad except at Xmas to see my wife's parents, who help pay for the trip).

I'd consider 'middle class' to mean a sort of financial security that doesn't come until you've been earning that kind of income for at least a decade or so, or earning much more. So in purely financial terms, I'd say middle-class is "has earned over 25 grand for more than a decade or is on 35 grand or so now", as a rough rule of thumb.