Coalition cuts provide cover for attack on universalism

Original

equality, political ideas, reform, welfare

Author(s):  Tim Horton
Published date:  26 Aug 2011
Source:  IPPR

The Coalition’s assaults on universalism are, superficially at least, grounded in the imperative of deficit reduction. But if the diagnosis of an underlying ideological opposition to universalism is correct, then as we emerge from the shadow of deficit reduction in the years ahead we should also expect to see a shift to new justifications for retrenchment.

The Coalition government’s spending cuts have impacted on many areas, but universal benefits and services have proved to be a particular target. Plans include removing child benefit from higher-rate taxpayers, scrapping the Health in Pregnancy grant (leaving only means-tested support for mothers-to-be), ‘re-focusing’ Sure Start on low-income families, and removing those earning higher incomes from tax credits. This restriction of universalism also extends to the abandonment of plans to create a national care service and to extend the coverage of free school meals. The prospect of further cuts to universal programmes has been floated by figures in the Coalition in the form of restricting universal pensioner benefits such as the winter fuel payment and free bus passes.

A number of arguments have been used to justify these actions – but all can be challenged.

The main practical argument advanced has been the need to reduce the deficit. Justifying the removal of the Health in Pregnancy grant, for example, Treasury minister Mark Hoban told the Commons: ‘We have had to take decisions that are not ones that we would have wanted to take, but we have had to do so because of the financial problem that we inherited … What we need to do in the light of this financial crisis [is] to target measures on those who need them the most.’

However, it may be that deficit reduction provides cover for actions the Conservatives wanted to take anyway. First, many Conservatives voiced opposition to universal welfare programmes long before the financial crisis and recession that caused the deficit. Second, these spending cuts are happening at the same time as large, discretionary tax cuts (including cuts to the headline rate of corporation tax and an increase in the income tax allowance), suggesting the issue is more one of resource prioritisation than resource availability. Third, there are no plans to re-expand the coverage of the programmes being cut once the public finances return to the black – indeed, David Cameron has explicitly ruled this out: ‘Should we cut things now and go back later and try and restore them? I think we should be trying to avoid that approach’.

Perhaps most significantly, however, many of the arguments used by Coalition ministers over the last year to justify these measures have not been practical arguments about resource availability at all, but rather arguments against the very principle of universalism.

The first type of principled argument they have deployed is that universal benefits and services somehow represent a transfer of resources from poor to rich. For example, on child benefit George Osborne told the Conservative Party Conference in 2010: ‘It’s very difficult to justify taxing people on low incomes to pay for the child benefit of those earning so much more than them.’

The objection to this can be simply stated. Universal provision can still be redistributive provided the revenue for it is raised through progressive taxation. And this is precisely what happens in the UK. Analyses of contribution and receipt from the welfare state suggest that those on higher incomes are net contributors, while those on lower incomes are net recipients. So in the case of child benefit, for example, high-income households pay for their own child benefit – and, in the process, put in a bit more for everyone else. Thus, there is no reason to link the tax payments of low-income households with the receipt of benefits and services by high-income households; there is no sense in which the former is paying for the latter.

The second type of argument made by critics of universalism is that targeting resources on the poor is fairest because it is the best approach to help the poor.

But it is misleading to talk simply about the fair use of resources as if there were a fixed pot available and the question was simply deciding how to distribute it. Within any particular year, that will be true: the revenue allocated to one programme can be spent in other ways, including being targeted more narrowly. But the key point is that the size of this pot can vary from year to year. And, as we have seen with social housing, where under-spending has become chronic as provision has become more narrowly targeted, history suggests that targeted programmes are unlikely to command the same political priority over resources as universal ones. Indeed, evidence suggests that in the long run greater targeting could well mean less money redistributed to the poorest.

So ‘fairness’ in this context should be about more than how to distribute a fixed budget. It is profoundly unfair to those on low incomes to reconfigure welfare programmes in a way that pits their interests against those of middle-class taxpayers. This makes the position of the poorest far more vulnerable over the long term. As the Child Poverty Action Group has argued in defending universal child benefit, ‘removing the better-off from the welfare system … damages social solidarity just when it is needed most’.

Finally, hovering behind the argument that targeting resources on the poor is the fairest approach is often a much stronger claim: that it is the only legitimate approach. This is the ideological core of most Conservative opposition to universal welfare. It stems from both a general libertarian opposition to taxation – and thus a desire to minimise public spending by endorsing only need-based welfare – and also from a view that to receive collective welfare provision is to be ‘dependent’ on the state in a morally compromising way.

The majority of arguments made by Conservatives against universalism over the last year have been of just such an ideological nature, implying that middle-class welfare is illegitimate in principle. For example, on tax credits, work and pensions secretary Iain Duncan Smith has commented: ‘Under the last government … you had people on over £50,000 who were eligible for some form of benefit. I think that is completely bonkers’, while on Sure Start David Cameron has argued: ‘It can’t just be a service that everyone can jump into and get advantage out of.’

This is a fundamentally different vision of welfare to the traditional idea of risk- and resource-pooling – of buying your services and insurance through the state – on which the post-war welfare state was based. Rather, it is a strictly philanthropic vision of welfare, one that sees a legitimate role for social provision only to the extent that it is a transfer of resources from one individual to another, coupled with the view that this enterprise should only ever cover the neediest minority of the population.

Perhaps the strongest ideological objection to universalism here, however, is the notion that middle-class receipt of benefits or services creates a harmful ‘dependency’. This reflects a libertarian view that being a ‘good citizen’ necessitates detachment from schemes of collective provision. Thus, Nick Clegg has justified welfare cuts by arguing that ‘dependency of any kind offends against this unwavering liberal commitment to self-reliance: and welfare dependency is no exception”.

This is ultimately an ideological position, and whether you agree or disagree with it will depend on your concept of ‘dependency’. As Stuart White has recently observed on Next Left, this libertarian argument conflates the idea of ‘independence’ with ‘self-reliance’; the reality is that, for many people, benefits and services are essential to ensure real independence. And, given that most polls show high public support for universal benefits and services, most voters clearly don’t think that drawing on public support makes them ‘dependent’ in a morally compromising way.

These principled arguments against universalism are arguments against universalism in all areas. If you think it’s true, for example, that child benefit is unfair because it means someone on a low income paying for someone on a high income, then presumably you think the NHS must be unfair too. So in making these arguments, the Conservatives have left themselves open to the charge that they would secretly like to target all aspects of the welfare state.

But – for now, at least – the Coalition has been keen in some areas to back universalism and support provision for middle-class households. One is the NHS, where Cameron has stressed ‘we will not endanger universal coverage – we will make sure it remains a National Health Service’; another is pensions. How much these statements will reassure remains to be seen, given that prior to the 2010 election Cameron had also rejected the targeting of child benefit.

So, the Coalition’s approach seems best described as a principled opposition to universalism, constrained in practice by public support for universal programmes. This suggests we will see continued moves to dismantle or target universal programmes, though at each stage focussing on the least popular programmes and, where possible, trying to offset the loss for households via discretionary tax cuts. Where programmes are popular, such as child benefit or tax credits, evidence so far suggests that retrenchment will proceed by ‘salami-slicing’ coverage away in a series of stages, ensuring that no single cut applies to a large enough group to generate insurmountable public opposition.

Opposing these moves has been an important theme for Labour over the last year, with Ed Miliband vowing to stand up for the ‘squeezed middle’ by protecting universal programmes. Here, the defence of universalism can simultaneously be motivated by wanting to protect the long-term interests of the poorest as well as to reach out to middle-class voters. It will be interesting to see how this approach informs Labour’s policy programme in the coming years, and whether this goes beyond simply defending existing universalism to building a truly majoritarian welfare state that can serve as a vehicle of middle-class aspiration as well as a vehicle of poverty prevention. Recent welfare reform proposals from James Purnell and the IPPR have added an important impetus to this debate, including advocacy for universal services, if not universal benefits.

Currently, the Coalition’s assaults on universalism are, superficially at least, grounded in the imperative of deficit reduction. But if the diagnosis here of an underlying ideological opposition to universalism is correct, then as we emerge from the shadow of deficit reduction in the years ahead we should also expect to see a shift to new justifications for retrenchment. These are likely to be assertions about the fundamental unsustainability of the welfare state, drawing on concerns about the impact of demographic change over coming decades (and it is unlikely that paying more to maintain our services will be countenanced as a solution to this ‘sustainability crisis’).

But as we emerge from deficit reduction we might also expect to see a return to more explicitly ideological arguments against universalism: both the idea that middle-class welfare and services are ‘unnecessary’ and the idea that receipt of welfare and services creates ‘dependency’. Indeed, this might not be a wholly unwelcome political development if it ushers in a broader ‘battle of ideas’ about the role of government – a debate that political parties have been wary of joining in recent years.

During the current spending cuts, campaigners for social justice know they will need to fight hard to defend much welfare provision for the poorest. But their real test will be whether they can make these battles part of a longer-term strategy to defend the majoritarian basis of our welfare state. Without that, historical and international evidence suggests, the outlook for the poorest in society will be so much bleaker.

Tim Horton is Research Director at the Fabian Society.

This article is an edited extract from The fight for universalism: Cuts, targeting and the future of welfare which will appear in the latest edition of PPR, IPPR’s quarterly journal. For more details on how to subscribe or download articles click here.