Coffee House

It’s time Labour talked about universal benefits

31 March 2014

10:54 AM

31 March 2014

10:54 AM

For years the Nordic model has stood out as a beacon of universal welfare provision. But if you want evidence of how the global financial crisis has ripped up the political rulebook then look no further than Denmark, the country with the highest tax burden in the world and one that’s long prided itself on a highly developed system of welfare for all.

Its current Social Democrat-led Government has cut welfare payments, raised the retirement age and started to means test college and university students for study grants. And, as of this year, they’ve cut access to child support for richer households.

According to Danish Finance Minister Bjarne Corydon, this reflects ‘a continuing debate of priorities’. And it’s not just taking place in Denmark. The same debate is being echoed all around Europe as the challenge of balancing welfare largesse with political gravity becomes ever harder.

This debate, like many others, has yet to be had publicly in Britain because of the way our politics is haunted by the future. This may seem an odd thing to say, especially given the amount of time currently devoted to chewing over the record of the last Labour government, but it’s true. We talk about the past because the future scares us.

In the UK you only have to look at the sobering facts. At the start of the next Parliament the budget deficit will be somewhere north of £75 billion. We’re running the worst budget deficit of any major country in Europe and very little is being done by the Coalition Government to get it under control.

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Last week’s budget drove this home once again. George Osborne insisted he’s taken the tough decisions and that British people can now enjoy the rewards. The truth is that most of the tough decisions are still ahead of us and very few are feeling any sense of recovery.

With both main parties pledging to eliminate the deficit entirely by the end of the next Parliament it is clear there are going to have to be some pretty extreme cuts, maybe as much as £25 billion, whoever is in power.

The Labour Party must be psychologically prepared for this challenge, and that means having awkward debates about our priorities and principles. Universal benefits must be part of this conversation. With such huge savings to make, and very little fat left to cut, it’s hard to see how we can continue to defend spending large amounts of money on some universal benefits simply to maintain our ideological purity.

There are some who will not take kindly to this suggestion. They will argue that the principle of universalism was enshrined in the DNA of the welfare state created by previous Labour governments.

To some extent this is true. Universalism was a founding principle of the original welfare state, but it was a welfare state unrecognizable to what the current system has ballooned to. When the founders of the welfare state talked about universalism they meant healthcare, education, state pensions – not bus passes and TV licences.

Take free Television Licences for the over-75s as an example. This is a policy with laudable aims and there is certainly a good reason for maintaining it in some form. However, with an aging population, the cost of this measure has rocketed to about £600 million per year. Whilst there are undoubtedly many pensioners who need a free licence, there are many more that are relatively comfortable and could reasonably be expected to pay.

Figures obtained from the House of Commons Library show that if this benefit were limited to those pensioners in receipt of some form of pensioner credit the total saving could be as much as £413 million. Almost half a billion pounds is not an insignificant amount and gives an indication of the potential savings to be made by going down this route.

It is only by making savings such as this that the next Labour government will be able to protect other universal services such as the NHS and education as well as pursuing some of the policies that could make a bigger difference, such as tax breaks for Living Wage employers.

Universalism is a nice idea, but in the current economic climate it’s a luxury Labour simply can’t afford. In order to rise to the challenges the next parliament will bring, we’re going to have to bring some sacred cows in from the meadows. Labour has already hinted this option is on the table by abandoning universalism for the Winter Fuel Allowance. Now’s the time to go further and show we have the resolve to make the tough choices that the country needs.

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Show comments
  • AndrewMelville

    What an odd term: benefits!

    Let’s call a spade a spade.

    There are pensions, paid by the member.

    There are insurance policies, paid by the member.

    And there is welfare, which should is provided by the state to the indigent and incapable. It should have two forms: temporary, a helping hand to get someone back on their feet, and permanent, long term assistance to those who are truly incapable of helping themselves.

    For no one, should luxuries such as television be provided at no charge. Read book if one is stuck for amusement. As for bus passes and the like, what a ludicrous idea. Have you seen how people behave at a free or all you can eat buffet? Everything should have a modest charge to stop piggy behaviour and encourage self restraint.

  • saffrin

    Brian and Joan Caswell won’t be using their bus passes with £24.9 million in the back so that question is redundant, even if they did they’d still be entitled to them.
    The question should be, why isn’t free travel for OAP’s included in the bus operating licence agreement?

    • HookesLaw

      Well you are right and bus passes generally only operate after 9.00AM and finish at 11.00PM so all us drunken pensioners have to pay if we want to catch the late bus home. So the morning rush hour issue certainly does not apply.
      I would have thought its not unreasonabke tko pay a one off fee for the card like the age limit is gradually riosing anyway.
      The numbers who be affected are likely to be very low and the really well off will probably not use them anyway.
      Plus there are other effects on the economy to be taken into account by encouraging OAPs to get out and spend.

  • realfish

    Labour have already said that the state pension will be included in the benefit cap. Time for them to come clean on the implications, not just for wealthy pensioners but for those who have saved for a modest occupational pension.

    • saffrin

      The state pension isn’t a benefit, it is a right bought and paid for by national insurance they should be reminded.
      Labour’s founding fathers would be horrified to see what their party has become.
      Infested with self serving property developers, habitual liars and fraudsters.

    • HookesLaw

      Hmmm… Labour have said in the past that they would include pensions, but have they said it more recently? You have to wonder why they have taken this line and how it would work in practice. The vote in parliament was based on excluding pensions and job seekers allowance.
      Since pensions are such a big sum then the cap figure would inevitably be affected. The cap was set at 119.5 billion I think

      • realfish

        Yes they have – the back end of December on the final week of BBC DP before the House rose for Xmas.
        Brillo asked Rachel Reevezz if Labour would include the State Pension in the cap. She confirmed that they would.

  • kle4

    It is inevitable that the largest proportion of cuts has to come from the largest areas of expenditure – cutting things like international aid will not get the job done – and Welfare is one of those areas. It is indeed hard to see how the deficit can be eliminated without taking a hard look at it, even with Labour reluctant to do so.

  • Alex

    “Take free Television Licences for the over-75s as an example. This is a policy with laudable aims and there is certainly a good reason for maintaining it in some form.”
    I note that you don’t come up with the ‘good reason’ or tell us what the ‘laudable aims’ are. IMHO that’s because they don’t exist.
    Even if we ignore the problem of having a state-funded media behemoth (which we shouldn’t) the policy is idiotic. Just roll any universal pensioner benefits into the state pension; that way you get some back from the better off, because it’s taxable, and we can shut down a couple of departments of taxpayer-funded administrators.
    Best of all, we are letting pensioners spend the money we give them on what they want to, not what the state thinks they should be spending it on.

    • Alexsandr

      Quite
      WFA and the £10 Christmas bonus should be rolled into the pension and taxed too. And attendance allowance should be a pension add on and taxed also. For there are many wealthy pensioners doing quite nicely thank-you.

    • HJ777

      What you propose is just too sensible, and too simple, for any government to do it.

      Which says a lot about politics in this country.

  • David B

    For purely political ends Brown bounced Cameron into protecting benefits he knew were unsustainable. Milliband and Balls will try and do the same thing at the next election.

    Labour consider benefits to be their home ground and they will play politics rather than look to the future

    • telemachus

      Wrong son
      Ed Balls is already contemplaing axing universal benefits
      Why should my taxes give winter fuel allowance to Osborne’s “us and ours”

      • Alexsandr

        or the millionaire millipedes, Dromeys et al.

        • telemachus

          Exactly
          So the change of heart

          • Alexsandr

            what are you chuntering on about? I have always thought universal benefits are stupid.

            • telemachus

              Change of heart of the charismatic one
              Dumbo

      • David B

        I see your resorting to sarcasm by calling everyone son. You know that is the lowest form of whit, but then you only had half a whit anyway.

        Balls will talk about axing universal benefits, but he will not carry it out as it will scare the unions and others on the left who he will need to keep on side during the GE. Balls, like Brown before him, will pay politics and ignore the future

        • telemachus

          Ed Balls is not hidebound by the Unions
          He and Ed will usher in the one member one vote era

          • David B

            Working in another reality again! No wonder I have given up reading the comments

      • Harold Angryperson

        “Never wrestle with a pig. You both get dirty and besides, the pig likes it.” – George Bernard Shaw

        • telemachus

          Just remember Ed M is Napoleon and the charismatic one Snowball
          I am a humble Squealer

          • Colonel Mustard

            Nothing remotely humble about you.

            • saffrin

              He sees himself as a socialist. For charity purposes you understand?

              • telemachus

                I only aspire
                I look to the Greats
                Keir Hardie
                Clem Attlee
                Neil Kinnock
                Gordon Brown

                • saffrin

                  Exactly.
                  I don’t know who Keir Hardie is but there is fk-all poor or working class about the other three self-serving idiots.

                • telemachus

                  Keir Hardie is Labour’s greatest pioneer and its greatest hero. Without him, the party would never have existed. Without him, Attlee, Bevan and Castle would never have become cabinet ministers. This extraordinary man rose from the pits of Ayrshire to change the world. He became the first Labour MP, the founder of the ILP, first leader of the Labour party, pioneer editor of the Labour Leader, and a giant in the socialist movement worldwide. Miraculously, he created a new party, as “an uprising of the working class”.

                  Hardie saw that a mass party needed a mass working-class base, the unions from which he himself had sprung. But his ILP also brought in middle-class socialists. Labour should “blend the classes into one human family”, but always, independently, “work out its own emancipation”.

                  Hardie insisted that socialism “made war upon a system not a class”. Labour should “capture power, not destroy it”.

                  He crusaded passionately against poverty: his proud description was “member for the unemployed”, campaigning for the minimum wage and eliminating child poverty. He pioneered social welfare, advocating a national health service financed from redistributive taxation, not a poll tax.

                  His simple heroism made our party and our world.

                • saffrin

                  Now you understand why traditional voters are turning away from Labour in their millions.
                  Keir Hardie’s Labour have NOTHING in common with today’s.
                  Only the name survives. A name that will become synonymous with treason, incompetence, habitual lies and the support and promotion of sick twisted perverts. Homo’s and pedo’s

                • HookesLaw

                  I suggest you apply for ‘Live at the Apollo’ – just remember to shout.

                • Colonel Mustard

                  You missed out Stalin and Mao.

                • telemachus

                  Not Mao

      • saffrin

        Why should our taxes pay the £10 million plus annual personal protection costs of a known war criminal?

        • telemachus

          ??

          • saffrin

            Osborne’s us and ours have contributed.
            Bliar on the other hand should have been executed at least a decade ago; instead he is protected by the self-interest that is Westminster village.

    • Mynydd

      Brown bouncing Cameron into protecting benefits he knew were unsustainable just goes to show how a weak man Cameron is, and raises the question, ‘is he fit to be Prime Minister?, I think not.

  • Mynydd

    Why should free education be available to families with an income of say £75,000. Why should families with an income of £300,000 have free child care.

    • HookesLaw

      Pathetic. First of all its not free its paid for out of tax and the more you earn the more you pay oin tax (unless you are Jimmy Carr of course – or part of some BBC tax avoidance scam).
      Second it may well be that rich people do send their children to private school and child care.
      Its labour nutjobs who actually go round demanding that these private things be abolished. No doubt if labour were successful their next task would be to demand the right to withdraw free air from the rich.

      • Mynydd

        Education is a universal benefit, so if my Winter Fuel Allowance and my other pensioner universal benefits are done away with, why not scrap education as a universal benefit. By the way I have paid income tax since 1959 and continue to do so in my old age, and object to the child care hand outs to families earning £300,000 a year.

  • Pitkapoika

    How to save £600 million pounds each year. Scrap the BBC’s Television Tax.

    • saffrin

      How to save £12 billion each year, stop throwing it a foreign aid.

      • Dunsable Tron

        How to save £20.5 billion each year, cut the Rutland & Leicestershire subsidy.

        • saffrin

          How to save £55 million every single day.
          Get TF out of the European Union.

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