POLITICS
Universal benefits are fine, so long as most people don't get them
NOEL MALCOLM
Joel went into one of the now fashionable diatribes against universal benefits. Here we were with our backs to the wall and I was proposing an across-the-board increase in family support which would give help to families who did not need it. He waxed eloquent about the need for greater selecti- vity . . . he was talking exactly like Roy Jenkins — or, worse still, like Margaret Thatcher. 'I really don't know why you don't join the Tory Party,' I told Joel coldly. 'Because the policy of our party is to extend the payment of benefits as of right on the basis of functional need and then to take back from those who don't need them the value of those benefts in taxation.' Joel merely said testily that I was talking sentimental non- sense.
To anyone following today's arguments about Child Benefit, and about the new- look benefits system which will come into force next year, this passage will give a strong feeling of dip vu. On the one hand we have universal benefits given to people purely on the basis of their 'functional need' — whatever that is. On the other hand we have 'selectivity' (which sounds scientific), or 'targeting' (which sounds energetic), or means-testing (which sounds mean). And somewhere in the middle both hands join together, when universal be- nefits are first of all doled out and then means-tested through the tax system. Perhaps Lord Barnett's testy reply meant that it was sentimental to believe in univer- sal benefits, and nonsensical to give them out with one hand and take them back with the dther.
At any rate, it is hard to see why Mrs Castle should have thought that she was defending an immutable principle of Labour Party policy. The 'clawback' of universal family allowance from rich fami- lies was introduced in 1968, by her hated Roy Jenkins, simply as a way of cutting the social security budget. Universalism (in some areas) had been accepted up till then by both parties merely because it was part of the inheritance from Beveridge — and Beveridge's whole plan, as I have argued before, was anti-socialist, being modelled on a commercial insurance scheme in which people received equal benefits for the simple reason that they had paid equal contributions.
There is no obvious reason why a socialist should wish to dole out Child Benefit, or any other benefit, to rich and poor alike. `To each according to his need' is the motto, and since it is money which is being doled out, the need in question must be financial. `Functional need' is a fine phrase, but what does it mean? When the Duchess of Westminster has a child her ,functional needs may be increased, but this does not imply that she needs money from the Government.
If there is no reason why socialists should favour universal benefits, there are also several reasons why Conservatives should be distrustful of them. Making benefits universal helps to propagate the idea that money just drips down from `the state' like the gentle rain from heaven. 'Why shouldn't I get some benefits too, when all these poor people are getting them?' ask the higher taxpayers, forgetting for the moment that the money comes from their own pockets. Their question would have some force if Beveridge's insurance principle really operated; but unfortunately it stopped operating, except in the imaginations of officials at the DHSS, a long time ago. What the tax- payers should really be wondering is whether it isn't in principle oppressive for the Government to tax people in order to give their money to those who don't need it. As it is, the incomes of a great many families are at a level where they both pay taxes and receive benefits: Nanny State takes those crumpled fivers from their pockets, irons them till they are nice and crisp, and then hands them back in little envelopes.
When the state takes money from one pocket and puts in back in the other, this seems like a very footling enterprise. When it takes it out of a wallet and puts in back in a purse, the enterprise is far from footling: countless tragedies of domestic misery may be alleviated by this process, and the works of Ibsen and Henry James would no doubt make much lighter reading if their heroines had been in direct receipt of Child Benefit. But it must still be asked whether it is the business of government to intervene in this way. Husbands are constantly being un- pleasant or uncaring to their wives; this is morally wrong of them, but that does not mean that government interference is therefore right. One does not have to be a market-mad Thatcherite to think this though a marketeer might put it rather neatly by saying that a marriage should be a free market in marital discord, without governmental interventions which in effect subsidise the meanness of the husband. Some husbands suffer, conversely, from sluttish wives; but the Government has•not yet introduced any 'Husbands' Household Assistance' schemes, nor made any special provisions to protect husbands from wives who are spendthrifts.
In the end, the strongest argument in favour of universal benefits comes not from politicians but from statisticians, who have spent the last decade at their drawing- boards trying to eliminate the poverty trap. The trap occurs when two things happen: means-tested benefits are withdrawn as income rises, and at the same time income tax and National Insurance begin to bite, Because both the means-testing and the tax-assessing have in the past been based on gross income, their simultaneous squeeze on earnings has sometimes led to the absurd result of a fall in net income in return for working longer hours. The new system which comes into force next year solves this problem (for most, but not all, cases) by basing the means-testing of be- nefits on the income which is left after tax has been paid.
This is a major improvement, but it still leaves the low earner on a steep path of effective taxation, as his benefits drop away. The ideal solution would be to unify the tax and benefit system, so that the benefits are retained on paper but gradual- ly cancelled out by tax. Such a 'tax credit' system is a distant gleam in the Govern- ment's eye. If they ever adopt it, they will at least have a 'radical change' to boast about; and Mrs Castle will have the plea- sure of seeing her own scheme embodied at last in a form which is neither sentimental nor nonsensical.
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