Wednesday, 6 October 2010
The End of the Universal Welfare State
The announcement by George Osborne at the Conservative party conference this week, of the ending of Child Benefit for those paying higher rate income tax (earning of just under £44K), signals a break with the post war consensus of universal benefits in the UK.
On the face of it, why are people earning £44K getting handouts from the taxpayer, when savings need to made in public spending? Well, even leaving aside the anomaly that two parents earning £43K will still be allowed to claim this benefit, but a single wage earner on £44K will be disallowed, which raises questions of fairness, we also need to look a little deeper into this policy.
It is no coincidence that Child Benefit is paid at the same the rate to all parents, regardless of their income. The fact one partner, almost always the man, is earning a good wage, is no guarantee that this money will find its way to the child(ren). It has long been the view that direct payments to mothers is the surest way to get money to children, as unfortunately, fathers are not always reliable in this department. The problem of middle class child poverty is not uncommon, and this has been recognised in the universality of Child Benefit, ever since its inception.
Of equal importance though, is the very concept of universal benefits. If welfare benefits are seen by the middle classes as something that they have to pay for in tax, but are never going to claim, it undermines the whole basis of our welfare state. Prior to the second world war, what benefits did exists, were means tested, and therefore stigmatised, as a hand out from the wealthy to the poor.
The founders of the British welfare state in the post war period understood that the middle classes had to feel that there is something in the welfare state for them to want to continue contributing to the costs, and so designed welfare around the universal principle.
This is not the first time that Conservative and Labour governments have chipped away at universality, since Margaret Thatcher became Prime Minister in 1979. It is hard to imagine, for example, that before this, unemployment benefit was paid at 55% related to earnings for the first twelve months of a claim, a situation which (although even better) still exists in France and other European countries. And, it will probably not be the last time, as the spotlight falls on free public transport and winter fuel payments for the retired, for example.
Considering the measly savings to be had by ending universal benefits like Child Benefit (around £1b savings), the price of tearing our society apart into haves and have nots, is too high a one to pay. Why not just tax the rich more, and make the banks pay their fair share of the costs to get us out of this borrowing crisis, that children in particular, had no part in causing.