While David Cameron and Owen Jones unite in favour of universal benefits, I want us to get explicit about why redistribution matters to society

owen jones david cameronIt’s an odd coalition: left-wing commentator Owen Jones and Tory leader David Cameron united as one. Yet that unlikely alliance was formed yesterday, as both defended universal benefits for wealthy pensioners and both fought shy of asserting the importance of redistribution.

David Cameron’s defence was in response to Iain Duncan Smith’s rather odd suggestion that the answer to millionaires getting a fuel allowance is that they should voluntarily hand it back to the government. Those trusty ‘sources close to the Prime Minister’ briefed journalists that IDS was on his own:

Downing Street today distanced itself from Iain Duncan Smith’s suggestion that wealthy pensioners should give up some of their benefits, including cold weather payments, free bus passes and television licences. The Work and Pensions Secretary revealed a helpline was available so wealthy OAPs can return their winter fuel allowance. He said those who could afford to should forego free state handouts. But David Cameron has insisted he will stick to his promise not to cut them. Number 10 insisted the Prime Minister remained committed to protecting the universal benefits for all pensioners.

What David Cameron is essentially doing is invoking the old Thatcherite argument: that the Conservatives’ job is to stick up for ‘our kind of people’. It’s the same reason Margaret Thatcher defended taxpayer-funded assistance for those with mortgages (MIRAS as it was known) — it’s only justification was that it was popular with those ‘aspirational voters’ she saw as her constituency.

Owen Jones’ reason for defending universalism is different, of course. It’s not that he wants low-paid workers to subsidise wealthy pensioners (though that is the effect). He just sees it as a price well worth paying for the principle of universal welfare. Here he is in the Independent yesterday:

The universal basis of social security is this: “Everyone pays in, everyone gets something back.” It should be seen as inextricably linked with citizenship: that all of us have access to certain rights, whoever we are.

There’s a superficial integrity about Owen’s defence of the collectivist welfare state: we’re all in it together (to coin a phrase). However, it’s a defence rooted in fear: the fear of making an explicit defence of redistribution from the wealthy to the less well-off. If Owen were being entirely honest he would probably admit that the reason he’s happy to see the likes of Alan Sugar get a free TV licence is that it buys the beneficiary’s support. Those perks for the rich are our only hope, apparently, of persuading them to help out their less fortunate fellow citizens.

I don’t buy that depressing argument. I don’t buy it for two reasons.

First, I don’t believe in a ‘boondoggle’ welfare state which collects taxes from everyone — including from the least well-off — and then arbitrarily hands back some of that cash to those who don’t need it.

And secondly, I don’t think we should be coy about arguing for the principle that the wealthiest do need to contribute back to society with no expectation of receiving a bribe to do so. There are entirely rational reasons for recognising that taxes pay for public goods (health, education, transport etc) which benefit all private citizens (even if they don’t use those services themselves) which in turn creates the conditions for a prosperous society.

Instead of hiding behind the cloak of universal benefits, we should be crystal clear about why redistribution matters for social justice: the welfare state is paid for by those of us who can afford it and there to help those who need it because we all benefit from a society where we look out for each other.

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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  • Thanks Stephen. I must confess that I have long had some sympathy with what you identify as the Owen Jones position on this, but I do see sense in your argument here. Hmm, food for thought.

  • The benefit of universality is that it is part of a solution to inequality. The desert only safety net that you prefer is a solution only to destitution with the caveat that it must distinguish the truly deserving.

    You say that we should be brave and argue that there are good reasons for the wealthy to contribute to the social good in health, education, transport etc. but ignore the fact that they are distributed on exactly the same universal principles (Health though has been reconstituted on the same incentive structure as dentistry with the coalitions reforms so that will no longer stay in the same category, I would replace it with policing in your list). If it is considered to be wrong to distribute the ability to access public transport for the elderly on an equal basis why then is it right to distribute policing without a means test?

    The welfare state is not paid for by those of us who can afford it for those of us who need but by all of us when we have an income for all of us when we need it.

    If it is equality that you seek then the principle of the welfare state should be that it is a universal insurance system against the ups and downs of living. The kind of insurance system that the wealthy buy for themselves. The only way to afford this for the majority is that we all contribute to a system that we all benefit from. This is an honourable relationship between each of us and the rest of us. Your system is that those in need are not equals in the system of social insurance but the recipients of handouts from the wealthy. Yours is not an argument for redistribution at all but an argument for enforced charity.

    Your suspicion about Owen Jones motives should not go unremarked. It does you a disservice to make such a sneering personal comment in a piece that is purporting to deal with ideas and principles. What would you say if you were being ‘entirely honest’?

  • “It’s not that he wants low-paid workers to subsidise wealthy pensioners (though that is the effect).”

    I would like to see the logic behind this statement.
    To the very wealth, the TV license, cold weather/winter fuel benefit, bus pass are probably in the same league as supermarket points. Hence it is like saying that the low paid et al subsidise the points supermarkets award me for shopping there; whereas together we help ensure that there is a supermarket with a wide range of goods at (generally) reasonable prices.

    Universal benefits play straight to the human condition! A while back there was a Radio2 phone-in about how Premium Bonds were a very poor investment, whilst Martin Lewis could articulate the numbers and facts and yes Premium Bonds were a poor investment, people were still ringing in and saying how great they were because they had received a £50 win, even though they often held several thousands of pounds of Bonds.

  • There is a certain value in universal benefit:-
    When a high taxpayer sees a little bit of what he puts in returned, then he sees the benefit of his payments.
    When he sees nothing ever come back, then there is a greater incentive to avoid paying.
    It is worth that little bit just to encourage the greater payment.

  • The idea that there is a dichotomy between a handful of small universal benefits and redistribution is, frankly, tosh and piffle. Not to mention the simple fact that universal benefits have greater reach among the poorest. Let us not forget than under-claimed benefits outweigh fraudulent or mistaken claims by a huge margin.

  • Simon McGrath 30th Apr '13 - 12:18pm

    Its really quite simple. Benefits should go to poor people. Not to well of people.
    Labour wants to tax as much as posisble and then hand some of it back as gifts from the state, so people will put up with a large state and high taxes.

    Liberals should want to tax better off people so that those who need help from the rest of us recieve it.

  • Geoffrey Payne 30th Apr '13 - 12:29pm

    Why not keep universal benefits which are cheap to administer, and tax the higher levels of income instead? It is still possible to keep universal benefits and redistribute weath. Having a bureaucracy to manage means testing is an inefficient way of doing it.

  • Of all the universal benefits cited only the Bus Pass really gives a problem as it’s true cost is highly dependent upon usage.

    Rather than speculating on how bus companies get re-imbursed, I would be interested in someone who actually knows, posting on here how the scheme’s funding actually works, since press reports indicate that the treasury, regional transport executives and local authorities all make some form of contribution to the costs.

    It would also be of benefit to see some research based evidence about bus pass take up and usage, as I suspect the biggest take up and users will be those less well off, hence this group will generate most of the costs of the scheme. I therefore suspect the savings are more about politic’s than substantially reducing expenditure.

    Also it should be remembered that age related benefits such as the bus pass are linked to the ‘State Pension Age’ which is currently heading towards 70. Hence what IDS et al are actually talking about is the here-and-now funding rather than future funding, even though changes made now will have a long-term impact…

  • Matthew Huntbach 30th Apr '13 - 2:04pm

    Keeping the fuel allowance, free bus passes, free television licenses for the elderly, but cutting the extra tax allowance elderly people still get would have the same effect in real terms. Why is it considered so objectionable as an accountancy device to take and give instead of having some elaborate bureaucracy means-testing the giving so we do less taking?

    The reason I’m happy to see Alan Sugar get a free TV license is that we have to calculate his wealth and take taxation from him anyway, it seems to me to be much easier just to do that and factor in the cost of his TV license rather than have a bureaucrat who has the job of going through applications for free TV licenses deciding who should have one and who shouldn’t. I find it rather offensive when Stephen Tall suggests I have some secret conspiracy theory reason for wanting this simpler sort of administration.

  • Joe Otten,

    Not scaremongering, just observing and using my brain. Theoretically there is still universal access to dental care.
    If you are not going to let something pass I suggest you actually deal with the point rather than hurling insults about.

    On this notion that universality is an attempt to bribe the wealthy into giving their support; do people really believe that Alan Sugar will give his support to the principle of universality because he might benefit from the winter fuel allowance and a free bus pass. Is it really the Liberal Democrat view that principles are so cheap?

  • Joe Otten,

    Nice try but how about you demonstrate where I’m wrong, this I suggest, would represent ‘not letting it pass’. However, with all due respect, this is not a debate about the NHS reforms it is about the principle of universal benefits.

  • In the 2010 election campaign David Cameron defended universalism as a means of locking middle-class taxpayers into the welfare state,.

    The 1911 National Insurance Act embraced compulsory tripartite contributions from employee, employer and the state for the first time, but targeted the poorest for unemployment and (means-tested) pensions through a patchwork of voluntary and state agencies. The hated 1834 Poor Law survived as a safety net.

    Beveridge’s principle of universality was what distinguished the post-1945 “Butskellite consensus” from the proto-welfare system created by Lloyd George . This principle has been threatened by the ending of child benefit for families in which at least one earner pays 40% tax (the better-off 15%) after 2013.

    Supplementary Pensioner benefits may be best rolled into the state pension as was the 11p-a-week tobacco concession paid to smoking pensioners up to 1957, but the principle of universality should be maintained, lest welfare become once again the pre-war poor service for poor people.

    In the 21st century, it should not be beyond our wit to integrate a progressive tax and welfare sysytems (as was proposed by Anthony Barber in the early seventies) with a view to consigning means testing to the dustbin of history once and for all.

  • Martin Lowe 30th Apr '13 - 9:25pm

    If it’s cheaper for the State to give (for example) free bus passes to all OAPs than it is to have a special department to administer rules regulating which OAPs get free bus passes, then universality has a legitimate place.

  • @Martin Lowe
    From the changes to Child Benefit we know that means testing increases administration costs, hence in order to achieve sufficient savings to make the cost of change viable the cut back on entitlement had to be that much greater.
    I would hope that the transition of this service is being monitored so as to permit reliable and more informed comparisons between the overheads of universal and means tested benefits.

    To my mind we should always strive for the simplest and universal approach since this is much easier to implement, communicate and police; we only need to look at tax credits and company taxation to see what can happen when the system and associated rules are complicated. This naturally means that attitudes will have to change because a simple system will encourage more people to claim their entitlement, whereas means testing, annual re-application rules etc. are deliberately used to discourage people from claiming their rightful entitlements.

    I suspect that currently the State has no real idea about how many ‘wealthy’ OAPs are receiving universal benefits and their total cost. From what I’ve seen the much talked about projected savings are based on “finger in the air” data.

  • It is ok dishing out benefits left, right and centre, but they have to be paid for, and that is the problem. I just do not see the logic of all these universal benefits – and I would throw Child Benefit into the debate too even if it is now slightly restricted – which are paid to people on very good incomes. It is a mad idea. The State is borrowing over £120 billion a year. There is an old adage: you cut your coat according to your cloth. There aint enough cloth.

  • I see plenty of calls to increase means-testing for pensioners but none of them have the guts to say whether they are going to achieve this by increasing the number of people means-tested, or increasing the rate at which people currently means-tested lose benefits.

    In my view both of these are too high already because they destroy incentives to save, as well as being intrusive, complex and disliked.

    I’m comforted by the fact that Steve Webb has led the calls to reduce means testing for more than a decade, so is unlikely to be swayed by a few noises off.

  • Andrew Tennant 1st May '13 - 10:07am

    I think we need to question whether some of these things should be funded by the state at all.

    We only give out state funded TV licences for instance because the state decides to impose a universal tax on television ownership.

  • Stay to the principle of universal benefits.
    Everyone can see what a mess the council tax system is.
    The council tax benefit (rebate) only applies to exact conditions; there are many people like myself trying to exist on a low weekly income, reduced because of the recession and bank crisis, but have to pay full council tax because this income does not come from the state system but private investment.
    The current means testing benefit system only pulls people into state dependency and discourages thrift.
    The few methods of redistribution of wealth from the 1% to the 99% is through income taxation.
    Lets apply this income taxation method to local taxation and erase the current council tax administration.

  • Why the argument? Soon we will be 66 before we receive the bus pass and winter fuel allowance and that age is rising to 68+. I never hear of the savings because of this, why not?

  • tony dawson 1st May '13 - 10:37pm

    ” I don’t believe in a ‘boondoggle’ welfare state which collects taxes from everyone — including from the least well-off — and then arbitrarily hands back some of that cash to those who don’t need it.”


    If you set the basic taxation levels of the richest up a miniscule amount, they receive a net nothing from this process of universal benefits. Separate means tests are expensive, inefficient and often exclude some of the most needy from receiving the benefit. They do NOT redistribute in comparison with a system of universal benefits combined with appropriate wealth and income taxation. Which costs less to run as well.

  • Somebody once said if you read only one newspaper, read one written by the opposition. So I did

    Terry Pearce, Thames Valley National Pensioners Convention (personal capacity)
    The proposal by Tory Work and Pensions Secretary, Iain Duncan Smith (IDS), that “wealthier pensioners” should pay back universal benefits such as free TV licences, winter fuel allowances and free bus passes, is merely a cover to launch a full blooded attack on pensions and benefits after the next general election. It is also an attempt to drive a wedge between pensioners and young people.
    There are only 250,000 pensioners in the higher tax bracket. If the government wants to make these contribute more, it could raise income tax on the rich.
    A pensioner told me recently that she paid £66.67 tax from a monthly pension of £526.27, while many high earners have just received a tax cut. In reality there are six million pensioners who are so poor that they pay no tax. Many are living in poverty.
    Young and old, unite
    The National Pensioners Convention (NPC) reckons that every year pensioners contribute £40 billion to society in the form of taxes, voluntary work and unpaid care. In fact, without the work of pensioners, many areas of the voluntary sector would collapse.

    The first key issue that no one appears to want to put his hands around is who is a “rich pensioner”. A lack of clarity in this area will cost the party dear.
    The second key issue is where is the impact assessment justifying such changes in particular the cost benefit tipping point between universal benefits and means tested systems.
    The third issue is the West Wing issue – Josiah Bartlett said “Democracy belongs to those who turn up.” Old people turn up to vote in greater numbers than other sections of the population – so fix issues one and two.

  • We shouldn’t think of redistribution simply in terms of the benefit system – our tax system is integral. The increase in the personal allowance has benefited me, a higher rate taxpayer, for example, but this is probably not the worst example of features of the tax system that may have surprising results.

    There are administrative benefits from universalism – the winter fuel payment is far cheaper to administer (it’s all automated) than a complex means-tested benefit like Pension Credit – as well the policy benefits. But that’s not to defend badly thought through universalism – the winter fuel payment was a political reaction to the 75p pension increase, rather than a targeted response to fuel poverty, and for legal reasons is payable to people in sunny climes (12k UK pensioners in Cyprus?) who are hardly in the same boat as the pensioner in a poorly insulated council flat in Glasgow.

    I would be interested in an overall evaluation of the costs and benefits of free bus passes. I know that it was a lot easier to persuade my elderly mother to give up her car because she had got used to making good use of her bus pass – and that was certainly one decision that improved road safety!

    I am disappointed, however, that Lib Dems in Government have not tackled the inherent ageism of the tax and benefit system; it makes some sense that Jobseeker’s Allowance and tax credits (and in future Universal Credit) should be structured to make work pay, while Pension Credit is seeking to relieve poverty without managing a work incentive – but I see no reason why the tax treatment of income should differ by age, or why measures to restrict Housing Benefit should only apply to people of working age, rather than pensioners occupying family homes long after their children have moved on.

  • Fundamentally we pay the government for two things: to do stuff that benefit us all and secondly redistribute wealth. The problem is that these come out of a single undifferentiated revenue stream – taxation. Hence why we see successive governments looking greedily at the wealth redistribution revenues and expenditure to try and increase their take from it.

    Yes there is a long term problem about the affordability of our welfare system, but whilst there has been debates on LDV and elsewhere about what is the ‘natural’ level of tax expressed as a percentage of GDP, there has been no similar debate about what should be the level of wealth redistribution as a percentage of GDP. With this we can more easily draw a line between taxation revenues that the government can spend on its projects and revenue that is to be redistributed.

  • A Social Liberal 3rd May '13 - 3:14pm

    I am of the opinion that those people with wealth helped to support the country equally with those who are not well off. They should therefore have the same access to help in their latter years. Do we propose to stop those who are wealthy from claiming state pension? Using the NHS? Of course not

    The second point I make is that the savings from clawing back these minor benefits are miniscule.

    The third point is to ask when the withdrawal of benefits would take place. Would it be if the recipient has £6000, as with income support? Would it be at the £10,000 mark as with pensioner credits? It would not be fair to not choose one or the other.

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