With means tested child benefit, and older people’s bus passes under threat we’re told that subsiding the affluent is no longer affordable. New rules this week for parents where one earns over £50k mean filling in complicated tax forms, or opting out of child benefit (where one earns over £60k they will not be entitled to any benefit). These reforms are an assault on one of the original ‘three pillars’ of Beveridge’s welfare state. It reneges on previous promises to protect universal child benefit. It generates massive transaction costs, and administrative headaches (for parents and HMRC). It also has the potential for introducing ‘a marriage penalty’ for couples where one earns over £60K. More fundamentally, though, it undermines the principle of universalism. This will create real, lasting damage, through the costs to health, wellbeing and social cohesion.
Since the beginning of the welfare state, child benefit, because it has been neither means tested nor contributory, has been a powerful statement that we value all children equally. Raising the next generation is an expensive job, and child benefit has (symbolically, if not actually) recompensed all parents for the costs they bear in bringing up children for the benefit of all of us. Although falling in value in real terms, the weekly fixed sum, earmarked for children, represents a valuable and reliable contribution, and a proportionally greater contribution to the budgets of those on lower incomes.
Replacing universal entitlement with means tested benefits inevitably generates perverse incentives. It can put people off working (more), or stigmatise claimants, or dissuade them completely. Unlike claimant rates for means-tested or contributory benefits, which are typically under claimed, the take-up of child benefit in 2010-11 was estimated to be near universal, at around 97%.
Economic arguments that we can no longer afford this ‘luxury’ will not convince, unless they also cost in the losses to wellbeing from undercutting universalism. Our recent study on free bus passes for older citizens shows how the bus pass had wide ranging positive impacts on the health and wellbeing of older citizens. Providing not just access to vital goods and services, but also an indispensible ‘lifeline’ to social participation, bus passes were a way to get out and about and defend against loneliness, a real risk for health. A bus pass means you can take as many trips as you like, shopping around, visiting friends, getting exercise, meeting people, exchanging news and views, and benefiting psychologically from being part of the everyday spectacle of public life.
However, these benefits did not accrue from an individual having a subsided fare, but largely from the fact that ALL older citizens could use the buses. It was vital was that the bus pass was for everyone, and understood as an entitlement that had been earned as a right, not a charitable subsidy based on need. Using buses then becomes not just a mode of transport for the poor, or those unable to drive, or with no other options. It becomes the mode of choice, because you are likely to meet other people – and other people from a range of communities. This has tangible benefits for those using the bus pass, and importantly, because it is universal there is no stigma attached to its use. It has benefits for other bus users, keeping otherwise poorly used routes viable. Just as importantly, it has benefits for the whole population, in helping decouple ‘public transport’ from ‘low status’ transport, an absolutely essential precondition of weaning people off cars to develop more sustainable transport environments.
The economic costs of means testing benefits go beyond those borne by the no-longer entitled, and are far more burdensome than those of administering the means testing. They are likely to include those difficult to calculate costs of the damage to the wellbeing of recipients of stigmatising benefit uptake. And, far into the future, they will include the incalculable costs to the public health of stepping back from our commitments to such public goods as the health of future generations, or the mobility and social life of older citizens.