Are universal benefits good policy, or just good politics?by Gavin Kelly / April 16, 2012 / Leave a comment
Published in April 2012 issue of Prospect Magazine
A poster protesting welfare cuts. Image: Byzantine_K
Universal welfare benefits, available to all regardless of income, have long animated the politics of the welfare state. Prime Ministers from Atlee to Cameron have grappled with the universal principle, whereby certain benefits are given to all citizens, even the rich. Universalism goes against the notion that benefits should always target the poor. Defended by some, lambasted by others, the idea of benefits for all has divided opinion within and between parties.
At times, universalism has served the cause of good policy. It underpins the notion that risks are shared by all in society, and lessens the grip of means testing. The high take up means administration costs are low. But it has also generated bad policy in pursuit of good politics—eye-catching ways of shifting resources to key electoral groups, but with little intellectual rationale. As cuts bite deeper, the risk is that bad universalism sticks, while the better version falters.
Universal child benefit, first created by the Labour government of Jim Callaghan, has long been viewed by some as the jewel in the crown of the social security system. Others see it as the pinnacle of unnecessary state largesse. It was finally, if clumsily, laid to rest in the March Budget. Come next January, these cash payments to parents (overwhelmingly mothers) with dependent children will be phased out for families in which anyone has an income over £50,000. One of the untold stories of the Budget was that, just as the 50p tax rate on the super-rich is being abolished, this withdrawal of Child Benefit for the relatively affluent will effectively be a new 50p tax rate hitting incomes between £50,000-£60,000.