Monday, 25 October 2010

The Case for Universal Benefits

This isn't specifically an attack on the government's decision to scrap child benefit for the most wealthy (with it's clear problems of allowing a family on £80,000 to keep it whilst a single mother on £45,000 would lose it), but more a general defence of the idea of keeping some benefits universal, and that means the rich keep them. Hopefully, it'll answer the questions about why the left is keen to keep money going to those with the most as much as it is those with the least.

It may seem a little out of the ordinary for me to defend money going to the rich, it would seem progressive to scrap it, but at the end I hope it'll be clear that you can help the poorest more by keeping it universal than you can by targeting it at them. I'll use Child Benefit as an example, but you could substitute any universal benefit and it'd be the same arguments.

We have had universal child benefit for more than 60 years, and it's been vital to countless family's over that time. One thing that CB has going for it is that it has an uptake of near 100%, as you might expect for a universal benefit, but it shouldn't be forgotten that it has a very high take up rate compared to other means tested benefits. That's for two reasons.

First, because it's available to everyone it's very easy to claim, there aren't pages and pages of forms assessing your income and circumstances which get in the way of many people trying to claim means tested benefits. Plus, there is no doubting whether or not you are able to claim. Many people don't receive all the money they're entitled to because they assume they aren't eligible for it. Universality gets round both these problems effortlessly, meaning that no poor family misses out on this vital money.

Second, a problem with many benefits is that people don't claim them because of the stigma attached to them. Regardless of what some rags will tell you about benefit scroungers, there are a great number of people who refuse to claim the benefits they're entitled to because they want to be self-sufficient. Whilst this is very noble indeed, it means they miss out on money that is rightly theirs, and that the benefit is failing in its plan. As was said near the time CB came into effect, 'services for the poor will always be poor services'. We shouldn't automatically simply target money at the poor, because in some circumstances it only serves to ghettoise people into class statuses.

As research from the Fabians has comprehensively shown:

“… both the coverage of welfare policy and the distributive principle underpinning it are crucial in shaping attitudes to welfare… policies with narrow coverage divide the population into groups, who may then think about their interests and identities in terms of ‘them’ and ‘us’, whereas policies with wide coverage align interests and identities so that we are ‘in this together’.”

They have shown that welfare initiatives which focus on the poor don't do as well in their job of reducing poverty as similar schemes which focus across the board and promote a sense of shared responsibility.

Which leads onto my final point. If you take away everything the state does from the rich then you will gain money in the short term, but lose something much more fundamental in the long term. If the rich see no gain from the state then their support for it will fail, and there will be less support for the state being as generous, indeed there will be calls for it to be scaled back. Once that happened, it would be the poor hit hardest. So, you would gain in the short term, but lose so much more in the long term. The rich already put more into the system through tax, so it isn't the poor paying for their benefits, more a recycling of money if you will. And for that small price you can keep confidence in the system from those who contribute the most.

The poor already get more in benefits, and arguably should get more help, but to take away all benefits from the rich would be counter-productive.

So, hopefully now you can see how giving money back to the richest can actually benefit the poorest, and how taking away universal benefits from the richest shouldn't automatically be considered 'progressive' as it could end up meaning the poor get less.

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