Labour’s proposal to cut winter fuel allowances for higher-rate taxpayers suggests we may be joining the Tories and Liberal Democrats in dismantling the inheritance of Clement Attlee, Nye Bevan and William Beveridge – at the top of a slippery slope towards a US-style system of public services only for the poor.
If winter fuel allowances are to be means-tested, then does it stop with pensioners taxed at higher rates, or will the pressure be downward and then onto free TV licences and bus passes for pensioners and senior rail cards?
For lower earners these benefits are comforts guaranteed in old age; for middle-to-higher earners they are one of the few rewards received for contributions to the welfare pot throughout their working lives. If middle Britain ceases to benefit from the welfare budget through the few universal benefits now remaining, how can we convince them to fund the great bulk of that budget through their taxes? There is plenty of talk about a ‘something for nothing’ society, but there is a danger now of a ‘nothing for something’ society. Indeed, it is argued that millionaire pensioners like Paul McCartney should not be entitled to free bus passes. I rather doubt he uses one but if he did he would have paid for it over and over again through his taxes. Beveridge’s 1942 report, which became the cornerstone of the welfare system built by Labour, advocated universal contributions for universal benefits in the hope of cementing social solidarity.
Labour’s new winter fuel policy only saves an estimated £100m – tiny compared with the total social security and pensions budget of over £200bn. Yet, as I have already found in my low-income constituency, many now think Labour is after their pension allowances, too: hardly clever politics.
The total cost of the winter fuel allowance is between £2bn and £3bn a year which is less than two per cent of the total budget. Means-testing is administratively costly, time-consuming and inefficient because of the many varied combinations of assets, capital and earnings among pensioners.
If means-testing went further than Labour’s proposal it would also create real unfairness at the cliff edge for pensioners on modest or low incomes. With the stigmatisation of benefit claimants already in overdrive, cutting back on universalism will marginalise and demonise.
The coalition’s erosion of universal child benefit has created real anomalies and unfairness. A family where one parent is earning more than £50,000 loses out while a family where each parent earns £45,000 (a total of £90,000) keeps it. The horrendous spending and economic predicament an incoming Labour government would face means restoring child benefit to top-rate taxpayers at a cost of £2.3bn cannot be a priority. But it would be nice to retain it as an aim.
Finally there is the troubling question as to whether the party is being dragooned into accepting Tory-Liberal Democrat spending plans after the next election. In which case why would voters choose a half-hearted Labour surrogate when the Tories promise the real thing?
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Peter Hain MP is a former secretary of state for Wales
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The politicians have got into a terrible mess with this one. Giving people tax-free sums for specific purposes can be demeaning and patronising, however well meant. People don’t like receiving charity unless they’re desperate.
If you really want to sort it out, you don’t means-test, which is daft, you gross-up for the basic rate of income tax and then you make everybody put it in their tax return.
It really is time somebody put some brainpower into revamping the tax and benefits system and, also, how the public finances are organised. Philip Stephens, in the Financial Times recently suggested that the Treasury should be shut down and I cannot but agree.
Attlee, Bevan and Beveridge [and all the backroom LABOUR PARTY staff] deserved an unqualified round of applause in 1945 – their Universal ‘App’s’ were long overdue and welcomed here in Britain with wonderment by the proletariat and most Citizens.
Labour Party was triumphant in 1945 because they hit a resonant/symathetic chord within the Nation – Peter Hain is 100%pc correct – Universalism isn’t just for the less well off it covers all members of the social stratas. A LANDSLIDE VICTORY FOR LABOUR IN 2015 IS POSSIBLE. LABOUR’s 2015 G.E.Battleplans’ main thrusts for a winning Manifesto ? I wonder what LABOUR’s Triumphant-Triumvirate of 1945 would have as their 5 main ‘planks’ today ?
Probably along the lines of (1) Allow electorate more choice viz when they retire (not forced to at 65) if they want to work on till 95 let them do it DV[cfNZ];(2) Allow citizens to do their own ‘self-audits'(where feasible) and allow them to check on their accumulative Benefits contributions/allowances over the full period of their working lives to be accessible online to themselves only – ‘naming & shaming’ belongs in a different era when they burnt a witch for having a mole on her nose;(3) I.T. /computers should be available to all, as was the NHS in 1945 (I.T. is here to stay. Tinker with the NHS at your peril); (4) Families should be made more aware of their responsibilities to their own ‘flock’, especially where children are concerned – more self-help programmes for teenagers and the elderly.;(5) The State & the Church should read up on Dale Carnegie ” How to win friends..” i.e., and more Secularism and less Sectarian views should be the order of the day. The Proletariat are now demanding this. Any politician /civil servant/council employee who wishes to keep his or her position of Dignity&Trust in the Commonplaces should look at some hard facts with regards to their take-home-pay-packets & benefits/Pension schemes pay-offs, in relation to the other 95% of Society. And don’t be cherry-picking Bevan et al. The message was and still is quite simply one of Social Upliftment, not a Grandiose wish for a never-never land of milk & money.
Universal benefits work with progressive taxation, so giving up a saving in govt expenditure means taxing someone more, and that option has been turned into a trap for Labour over a period of decades by the tory press. All parties are likely to approach the next election trying to convince those who are likely to actually vote that they will not be unfairly penalised in the ongoing austerity. Labour’s big opportunity and challenge is to embed in people a sense of how unfair the tory approach to austerity has been, and point out how it is the ‘hard working families’ which David Cameron bangs on about who are in fact being done down by the Conservatives.
How brave mon brave. The ‘bottom-line’ is to help others in their travel down the wind-ey road. An investment in people trumps any other considerations.
Let’s all remember, we are here to help eachother.
God is not Cruel. (Thanks to the devil-tories we can now see that clearly)