Among Nick Clegg’s various pronouncements yesterday was his repeated claim that benefits for the elderly should not be universal, and should not be available to the better-off. It’s not a new theme, of course – Clegg was making the same arguments at this year’s Liberal Democrat conference, with Vince Cable weighing in to claim, in effect, that rich old buffers like him should not be a burden on the state.
It’s an argument that has its attractions at a time when austerity politics is biting hard and when real living standards are falling faster and further than at any time in the last century. Why should those who are well off continue to receive what Clegg and other coalition Ministers would no doubt describe as the largesse of the state?
There are some very good arguments, actually. One of them is that universal benefits are cheap to administer and eliminate the risk of fraud; as soon as you means-test benefits you have to set up complex bureaucracies to administer the tests, to monitor and manage changes in circumstances, and to deal with fraud. You end up adding to the nightmare complexity that already haunts the UK’s benefits system, for very little savings.
And what do you measure – wealth or income? And how do you do it? There are many older people who have very low incomes, but who own their own homes and therefore, in the crazy world of house price inflation, are sitting on a pile of unrealisable wealth. It’s all very well for Vince Cable – he’s an MP and Cabinet Minister, drawing a substantial salary on which he pays significant amounts of tax. It’s disingenuous to use himself as an example. And of course old age brings with it the risk of additional expense. However you means-test these benefits you will create a back-wash of hard cases, in which a minority – normally those who can affford a good accountant – play the system and a larger minority lose out: amplifying, in other words, the failings of the tax and benefit system elsewhere. And you will create a bureaucratic monster that cannot adapt to changing circumstances, and you will turn entitlement as of right into something that looks like largesse, when the people concerned have paid their taxes and National Insurance over decades in the expectation of a decent sufficiency in old age.
Moreover, the current generation of older people have already been let down by politicians – people who in the 1980s were sold the idea that private provision would secure them a prosperous old age, but are now facing the reality of a pension pot diminished by the swingeing fees of pension managers, the destruction wrought on their capital in 2007-8 by bankers speculating against their pension funds, and by quantitative easing decimating the returns on their investments.
Beveridge’s arguments in favour of universal benefits – ease of access, fairness, and the sense that a decent sufficiency is a matter of right, with state support as an expression of people’s membership of an inclusive civil society – have not changed. We just appear to live in a society that no longer values those things; and appear no longer to be repelled by the use of cuts in living standards for the most vulnerable as an economic strategy.
I recently happened across this blog piece which, in the US context of medicare, argues that means testing plays to the prejudices of well-meaning liberals:
Means testing as a cut strategy exploits liberals’ good intentions. This works at two levels. First is the belief (correct in my view) that the rich already are getting way too many of the rewards in our society, that inequality is a serious problem, and therefore it would be better to place a slightly greater burden on the rich, rather than people at the bottom if pain is going to be dished out. (It’s also standard for liberal thinking to not ask if pain needs to be dished out at all, but that is a separate matter.)
The second level is more personal. The good liberal says ‘I’m privileged, I can pay more, better that then cutting benefits for others’. It’s an understandable sentiment. But disastrous.
Aside from what I’ve already said, it is based on the notion that the problem is actually about the deficit and that the politicians who are pushing schemes like means testing or raising the retirement age or whatever are seriously concerned about it. But they aren’t. If they were, we’d be talking about raising the cap on the Social Security payroll tax, or adding a Tobin tax that would contribute to the trust funds. There are plenty of ways to save money in Medicare that don’t involve benefit cuts. And of course, if we had full employment and less inequality, it would mean more money going into these programs.
It’s an important argument – means testing not as a way of saving money, or making the benefits system more equable, but as a way of assuaging the conscience of a certain type of affluent liberal. It’s a mindset that owes everything to privilege, and very little to real concern for the vulnerable.