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The one thing worse than universal benefits? Means-testing them.

25 September 2012

3:00 PM

25 September 2012

3:00 PM

There’s nothing, but nothing, easier than for politicians to sound off about universal benefits, and sure enough, Nick Clegg was complaining on the World at One today about the iniquity of, as he says, paying for Alan Sugar’s bus pass. He was being asked about the sustainability of universal benefits and perks following Don Foster, one of his MPs, grumbling about it being absurd that someone like him is entitled to a winter fuel allowance. Mr Clegg went on to make clear that as part of the coalition deal for this parliament there wouldn’t actually be any fiddling with things like the fuel payment for oldies, but after that, these universal perks would be up for grabs.

George Osborne of course got there first when he removed child benefit from higher-rate taxpayers, and much good it did him. I can think of one thing worse than paying Alan Sugar’s bus pass myself, or even Don Foster’s fuel allowance, and that’s paying an entire stratum of Whitehall bureaucrats to administer mean-tested benefits. A Treasury civil servant once told me that the expense of administering a means tested benefit like child tax credit amounted to about 11 per cent of the overall cost. I once received child tax credit myself and I tried, briefly, to keep all the paperwork I was sent, just for interest, but I lost heart after it took up more than a box file in a few months. There was any amount of literature, some of it telling me I needed to do nothing, and all of it in duplicate for my husband, despite it being obvious that we were a married couple at a single address. Child benefit, by comparison, creates next to no paperwork for recipients that I’m aware of.

Let’s get something clear. The reason it isn’t a problem that duchesses get an old age pension like their cleaners is that they, I hope, are paying top levels of tax; they are, in short, paying for their pensions many times over. Universal benefits – formerly child benefit, and old age pensions still – have the unsurpassed merits of being clear, comprehensible, devoid of stigma, with near universal takeup rates and relatively cheap to administer. And if Alan Sugar doesn’t want his bus pass and Don Foster is affronted by his fuel allowance, there is, you know, an easy remedy. Don’t take them up.

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Show comments
  • mary

    i do have lack of sleep as excuse but the typos must be you having some fun . oh what a glorious person love sick school girl coming on

  • mary

    its the cost /time/effort max profit oh wasting time on peopl who dont wanna work vs the handind out willy nilly cetre stage whenwhen someone suggests a possible way to tacklebreed dependend scrongin bla bla and a tighter more faifer system to not give out willy nilly but to look at the varring needs which differ hugelyand a respect to all walks of live in need are not all scroung scum bla yes system needs bringing under control . the obvious screaming its head off but compromise how dare you stupid grrrrr just pulls me closer to you .i quess i took it as a fact that anyone who has a goal will cheat not care /lie and bully belittle i know best needs a plan of action. i saw how little you said about the reform and your willing to signas a painfull neccessity to humor the daddy and his wifey housekeeping to gain thev access to plan a. and understood how bloody frustrating andagonising being the pointless lapdog which clearly body language alone . i also picked up on nick cleggs is a geek someone said somewhere one littly tip that sealed it on a gutt instinct you were my where art thou churchill i muttered to myself.the stupid toryb/labour crap seem to be a way to cause a stink by challenging both tossed in bit sarcy smartarrrrssss to piss em off and gey some people to question why they couldn’t see or prove any of it histoyband not leaving the argument with budging off my point plus i was pissed by then and growled at the lapdog nasty spite by people who didnt have damb clue . the debates about climate and tory deficit reference studies / bunch numbers rather than some proper figures to compaire with and stuff gets on my tits . so threw some real time argumentswith the justifying argument you got me

  • Matt

    Alan Sugar deserves his bus pass just as much as anyone else should he want it. He not only pays a vast amount of tax but so does all his employees. This is true of all hardworking people rich or not.

    I do not care about Nick Cleggs opinions as his party were not voted in and should have no say how this country is run.

    Ido not care much for being taxed on everything whilst the goverment what ever party they be continue to waste our money whilst still scratching each others backs. Will the system ever be fair of course not.

    The country needs to be run by people with a business brain not a bunch of bandits who truly get away with multiple mistakes and answer to no one

    • SB

      Does that mean that the tories don’t get a say in how the country is ran? They too wasn’t voted in?

      • 2trueblue

        If you look at how many votes it takes to vote in a tory MP as opposed to a Labour MP then the picture would be different again. So who has the right to rule us?

  • David Lindsay

    So, farewell, then, to the Lib Dems. The only party to appeal exclusively to well-off older people now proposes to abolish the entitlements of well-off older people.

    In the present state of affairs, extremely few are those who could do without their Child Benefit, or their tax credits, or their state pensions, or their winter fuel payments, or their free bus travel, or their free prescriptions, or their free eye and dental treatment, or their free television licenses. Taking away consumer spending power is hardly the way to aid economic recovery. On the bus travel, on the prescriptions, and on the eye and dental treatment, the question is of why anyone should have to pay for them upfront. As it is of why anyone should have to pay upfront for hospital parking, or for undergraduate tuition, or for long term care in old age, when this does not apply in certain parts of the United Kingdom.

    Paid for by what? Not by any private sector, as that term is ordinarily used. Thus defined, there is no private sector. Not in any advanced country, and not since the War at the latest. Take out bailouts or the permanent promise of them, take out central and local government contracts, take out planning deals and other sweeteners, and take out the guarantee of customer bases by means of public sector pay and the benefits system, and what is there left? They are all as dependent on public money as any teacher, nurse or road sweeper. Everyone is. With public money come public responsibilities, including public accountability for how those responsibilities are or are not being met.

    If you believe that there ought to be a middle class for social and cultural reasons, then you have to believe in the political action necessary in order to secure that class’s economic basis. Look at Britain today, and you will see the “free” market’s overclass and underclass, with less and less of a middle except in the public sector. Public sector haters and the enemies of middle-class benefits are no more in favour of a thriving middle class than they are in favour of family life, or British agriculture, or a British manufacturing base, or small business, all of which are likewise dependent on government action in order to protect them from the ravages of capitalism.

    Middle-class French people refuse to believe the stories of the underclass (or the overclass) in the “Anglo-Saxon” countries. But they are still horrified at the activities of their own, which would be too minor to attract comment here or in the United States. And they are still in a position to take a stand against those activities, because France continues to will, not only the end that is the existence of a large and thriving middle class, but also the means to that end in terms of government action. If you do not will those means, then you cannot will that end. The failure to will both that end and those means is just another point to add to the long, long list of reasons why Tory Britain now does and will vote instead for the party that does will them.

    Ed Miliband, over to you.

  • brossen99
  • JoeThorpe1963

    Does that idiot think pensioners chose to use their bus pass? If petrol was cheaper they’d still have their own cars, if heating & lighting was cheaper & not subject to the greens taxes they would be able to afford to keep their heating on during the winter. OAP’s don’t want hand outs they want dignity & choice. The better off pensioners dont actually use their bus passes anyway, they use their cars, wouldn’t you? Means testing to establish that better off pensioners don’t actually use their allowances of free travel will cost a fortune & save nothing & lets face it buses are rarely full anyway. Far from restricting pensioners travelling they should be encouraged to get out & spend their money in the local economy keeping the entertainment industry alive.

    • TomTom

      The Private Bus Companies receive >£1 billion in diesel duty subsidy each year. Pensioners are the bulk of the passengers on the buses during hours permitted….what does Clegg want to do, cut the diesel subsidy ? Close down bus routes ? Will he make sure every pensioner has access to a Bank and a Post Office instead of closing them ?

  • Daniel Maris

    For once, you talk sense – we need to restore universal benefits, ideally a single universal credit. Ally that to a simplified tax system, with a single rate, and a progressive property tax, plus a wealth tax for the super-rich.

    Put all that together and you will have a straightforward tax and benefits system.

  • R2-D2

    Finally a sensible post on universal benefits. The only people who benefit from means testing are the bureaucrats hired to administer them, and they’ll vote for Labour anyway.

    • Noa

      Self evidently yours is not a sensible post.

      Don’t you believe that the people who receive the benefits also benefit from them?

  • Fergus Pickering

    I seem to have missed Alan Sugar on my bus. Of course you are right. But that won’t stop a lot of people And hands off my bus pass or I’ll vote BNP. What is their policy on bus passes?

  • TomTom

    Nick Clegg is hilarious when his wife makes a fortune at DLA Piper and he wants the taxpayer to subsidise his children’s education at the Oratory School. How about redressing the regressive Council Tax rather than cutting Council Tax Benefit forb the unemployed ?

    • telemachus

      I fully support the efforts of immigrants to make fortunes

      • Noa

        Why not try making your own, preferably in Somalia.

        • telemachus

          Now Noah is that not near Ararat

          • Noa

            If you think so come up and see me some time.

            • telemachus

              I am not worthy

  • Nigel

    Ask Nick Clegg about his rich missus and the enormous EU pension he will get.

  • Glenlivetguy

    Bought a 4×4 in 2006 , within months vehicle duty without prior notice increased by £200 thus negating the fuel allowance .OAP £5k per annum became payable a year ago after 40 years of NIC, tax increased by £2k. Vat on increased petrol costs , the odd pint and on vastly more expensive oil for central heating, goes a long way to take up whats left of OAP. If this government with a TORY PM keeps spending my hard earned cash like Labour Brown resulting in loss of universal benefits,they will have lost a life long conservative, for I simply regard these credit payments as mitigating the massive and ever increasing amounts of tax and council tax, taken off the hard working and industrious, who still contribute generously and charitably to local and national good causes.

    • Radford_NG

      25Sept.c.5.00pm.BST….And emphasis the concept ‘Charity’ here.Recent survey shows the elderly give more to Charity then the young.I’m sure I give more % wise then Bill Gates.

      • Belephron

        you’d be surprised actually, Bill Gates is very charitable, more so than alot of his contemporaries.

        but i see the point your trying to make.

      • Rob Rich

        Not sure, Gates has given away $28billion and his current net worth is $68billion according to this years Forbes Rich List. So as a percentage, he gives away significantly more than pretty much everyone. He has also pledged to give away his entire fortune before he dies and encourages other billionaires to do the same. We might hate his software but as a philanthropist, he’s hard to beat
        …I should change my user name to The Great Gates Apologist

        • TomTom

          Bill Gates must get so much tax offset that he could buy Microsoft with the savings. He is only pledging Stock to get this tax relief

          • TomTom

            Y+UNder the US Tax Code a large portion of this philanthropy is paid by the US Treasury. The donations are grossed up by the tax, and relief is obtained on CGT on appreciated stock, it is a way to retain funds for private philanthropic use which would otherwise be taken by the IRS. When Carnegie donated money it was not taxable money, but today it is all part of the very generous US Tax Code which would scandalise Britons if it were replicated here….in contrast HMRC is mean on Charitable Giving but less mean than the German Tax Code which only permits Charitable Giving for Scientific or Educational purposes.

    • Radford_NG

      25Sept.c.5.00pm.BST….And emphasis the concept ‘Charity’ here.Recent survey shows the elderly give more to Charity then the young.I’m sure I give more % wise then Bill Gates.

    • telemachus

      You could drive an Aygo

  • Freethinker

    The answer is simple! Tax all benefits. George Osborne wouldn’t have had to remove child benefit as recipients would have borne tax at their highest rate. The maligned Means Test would be replaced by Self Assessment. No Self Assessment; no benefit. Personal allowances would need to be adjusted so that the lower paid did not suffer..

    • ButcombeMan

      The Winter Fuel Allowance was a Brown inspired con, to buy votes, if there is any justification for it, it should be paid with national old age pension, in two tranches, end of November and end of February. It would then automatically become subject to tax. There is some justification, fuel poverty is a reality, especially in country areas, off mains gas.

      The current system of paying it is enormously expensive to administer.

      Means testing is even more expensive, typically LibDem, typically silly.

  • HFC

    Bus pass? Buses? I haven’t used a bus since I was at school. I am now entitled to a pass but have not troubled to apply as I continue to use my gas guzzling car and thus make a substantial contribution to the treasury every time I fill it up. ; -)

  • AnotherDaveB

    I believe Australia means test their welfare benefits. They also have a much lower tax burden than the UK. I suspect the two are connected.

    • Daniel Maris

      I don’t think the tax burden is the key thing here. It is a factor of course, but more important are (a) the net burden (tax minus benefits) (b) whether there are strong incentives to work, and (c) whether there is available work.

  • Hugh

    Surely it’s not that hard to administer a system that simply excludes higher rate tax payers from receiving a particular benefit. There’s no reason it has to be anything like as complicated as tax credits.

    Getting a free bus pass already requires some sort of application process and the winter fuel allowance also already varies depending on certain circumstances. Why would asking people if they are higher rate tax payers massively add to the complication?

    • Coffeehousewall

      Its not higher rate taxpayers that the LibDems want to target, but those who have saved all their lives, worked hard, and have accumulated various assets that the socialists set their greedy eyes on.

      Should my father, now a pensioner, not be able to take up universal benefits simply because he has a house which is worth more than an arbitrary value?

      • Radford_NG

        25Sept.c.4.45pmBST….While I do not absolutely need a bus pass or fuel ‘what’sit’ still they send me these things;on the other hand If I filled in the forms I get I could probably get extra money per month;but I do not, as I don’t want Them knowing my business.I think many others have this attitude.Beware messing with things,or we may start claiming.

      • 2trueblue

        Absolutely, it is not the rich that suffer it is the middle class that always takes the hit. Does the new university fees hit the rich? Think on…..

    • HJ777

      Very simple – because an increase in salary which moves people into higher rate tax can then result in the loss of benefits worth more than the salary increase.

      It also discriminates against families with one higher rate taxpayer (and one income) as opposed to families with a higher overall income but with two earners both earning just short of the higher rate threshold.

    • Dan Grover

      Additionally, a lot of the people this affects may well not have a tax bracket to be compared against. If Sugar retired tomorrow, his income tax would go down to 0. He may well still pay tax on capital gains, dividend etc, but neither of those are taxed as income, they have their own separate tax brackets. A more practical example might be a pensioner who owns his or her own house, pay little in the way of monthly outgoings as a result and so whose small (compared to a working salary) is plenty for them to live comfortably on – yet they could well be in the 20% bracket or even lower.

      • Fergus Pickering

        If Sugar retires tomorrow his income would go down to zero. So he has no investments eh? Why not?

        • TomTom

          He is a major property owner/developer and a Labour supporter which is why Clegg mentioned him

    • TomTom

      Higher rate taxpayers get NO tax allowances

  • alexsandr

    just make all universal benefits taxable. then they have less value to the higher paid.

  • Jennywren

    Encouraging people not to take up benefits for the good of all, if they feel they dont need them, could work. I suspect that quite a few would waive the winter fuel allowance. Or am I being naive?

    • Dan Grover

      I’m unfamiliar with the system, but is the WFA opt-in or opt-out? I imagine that’d make a big difference to the up-take amongst those that don’t find their finances pressured without it.

      • Publius

        I believe people received it automatically after a certain age.

        What a nation of wet grasping welfare junkies we have become.

        There is something hopelessly twisted (though understandable) about the argument that is being put about that people who do not need state handouts should get them neverthless on the grounds that tax is so high.

        • Mudplugger

          But we only became a ‘nation of wet grasping welfare junkies’ because one party calculated that by increasing dependency amongst the previously non-claiming classes, that would eventually translate into votes in order to preserve those very benefits. Winter Fuel Allowance, TV Licenses, Bus Passes, Child Tax Credts all fit that bill.
          Trouble is, it worked.

          • TomTom

            Free TV licences are NOT paid by the Government but by other TV LIcence payers

        • Daniel Maris

          You want to go back to the days when we had thousands of old people dying of hypothermia every year? WFA is not the most subtle of instruments but it has, as I understand it, done the job.

          • TomTom

            We still do. the highest rate in Europe

          • Publius

            In view of your incoherent green energy fantasy Daniel Maris, you are the last person worthy to comment.

            We are forced to pay these high energy costs because of comfortable middle-class advocates like you who do not have to live with the consequences of their advocacy.

      • Radford_NG

        25Sept.c.8.30pmBST…At the age of 65 you get a letter each autumn saying your nominated bank account will be credited with so much.Don’t absolutely need it the way the weather is in recent years:but,what the hell ;it’ll go to the RNLI eventually.

    • Dimoto

      You underestimate the seething resentment of the elderly middle class at being blamed for everything, and having their frugal savings looted by the state.

  • BenM_Kent

    Yes we as a society should ensure children and pensioners are looked after.

    Well said.

    • telemachus

      All society
      If we tinker with the Universal Benefits you can bet your life that the already disadvantaged will in some proportion lose out