Two articles and a letter today in the Sunday Telegraph about whether or not universal benefits should be retained. Apparently Iain Duncan Smith wants to be rid of them in order to save some of the money he is required to by the Treasury.
Janet Daley supports his view with a refrain that is similar to anyone who has followed these matters over the decades. Her argument is basically:
a. Rich people like me, Janet Daley, should not receive benefits that are much better given to the poor. It is ridiculous and wasteful.
b. We need to save some of the huge amount of money spent on these benefits. (Sadly she does specify what the amount is.)
But on the opposite page (a little way down under ‘benefits for pensioners’) is a letter signed by senior people in three organisations concerned with the elderly who oppose the end of the universal benefits. They argue:
First, many of those entitled to means-tested benefits do not claim them. Paying the benefits to everyone ensures that all those who need them will receive them. Any move towards more means testing or targeted support would risk many of those in need missing out.
Secondly, in a means-tested system, exceeding a cap by a few pounds could leave someone worse off by many hundreds of pounds a year.
Thirdly, any increase in means testing of pensioners could act as a disincentive to save.
Fourthly, means-tested systems are often complicated and expensive to administer.
So who is right?
It is not an easy question because it is undoubtedly true that money needs to be saved but at the same time all the objections raised by the letter-writers are valid. One of the greatest welfare scandals of the post-war years was the way in which Gordon Brown posed as the great helper of the old a very large portion of whom were not getting the credits he boasted about, presumably because they were too old, badly educated or frail to do so. A really elderly, frail person is in no condition to go finding and filling in forms to claim ‘credits’.
So who is right? I am tempted to say ‘neither’. Universal benefits are good for all the reasons given in the letter. Those columnists who feel guilty about getting them are well above the level of income at which disincentives to save and sudden cliff-falls in amounts of money received because of non-entitlement are important. They should not try to frame policy based on their own narrow experience. Most people are not like that. They face these issues. That is one reason why good welfare policy should never be framed by middle class guilt (a euphemism in this case for upper or rich-class guilt).
The flat-rate universal benefits are cheap to administer. I suspect that they are not, in fact, hugely expensive although I have not checked figures. The numbers for income support and disability benefits are surely a great deal higher.
So if you were in the position of IDS and were told money must be saved, what would you do? I won’t try a complete answer off the cuff but here are a couple of ideas:
1. Raise the age at which some of the universal benefits kick in. At 60 one can get a rail card for lower cost rail travel. That is too young. It could be raised to 70.
2. Make it easy for people to opt out of the benefits and perhaps to arrange for the money to go to charities selected by them (all done online) as an alternative to the money staying with the Treasury.
And after my visit to Wisconsin and discussion with Lawrence Mead, I am inclined to say that demanding municipal work and work-preparation from welfare benefit claimants at earliest stage is probably more important than anything.
I am glad to see Jonathan Portes taking a not dissimilar view in a blog for the Independent.