Tuesday, 22 June 2010

Benefits and means testing

James Bartholomew writes:
Whatever else Labour did, they certainly made benefits more complicated.

The Child Poverty Action Group annually publishes the Welfare benefits and tax credits handbook.

How many pages do you need to read to get the picture? Well, I just bought the out-of-date 2009/10 edition because I could buy it much cheaper, second-hand, than its cover price of £37.

The total number of page is 1,601. The benefits system has become ludicrously complex.
I have no trouble believing that Labour made things worse, but I would wager that the system was already far too complicated.

As long as we are committed to a system of benefits, I think the correct approach is a single, unconditional, universal stipend, which recipients would be free to spend as they see fit.

Gerald Warner is wary of universal benefits:
The philosophical argument of the Left approves of social programmes, which apply to the whole of society, but condemns poverty programmes, which apply only to the poor. They point out that the Beveridge Report was opposed to means testing. All this sounds respectable, if wrong-headed; but the reality is that it is camouflage for an agenda of all-embracing state control. The British Left is no longer a primarily socialist movement: it is a totalitarian statist impulse. Improving the lot of the poor does not rate as high a priority as extending the reach of the state.

That is why so-called socialists are perfectly happy to see taxpayers’ money doled out in child benefit to mothers in the same financial bracket as Victoria Beckham. In fact, that gives them much more satisfaction than directing a handout to Tower-block Tracy, the single mother on a sink estate. When a duchess is paid child benefit it signals that no stratum of society is outside the client state: the dependency culture has captured even the super-rich. They are not in any way dependent on it, of course; but the simple fact of the receipt of this state subsidy brings them within the bureaucracy of government philanthropy. It is inclusive.

Labour MPs are quite open about this, about the need to maximise the number of people on the state payroll, even if, in the case of well-off beneficiaries, any benefit will be bled back from them many times over in punitive taxation.
I'd be interested to see examples of Labour MPs being open about this, but the contention that they endorse universal benefits is plausible, as is Warners suggestion that they endorse them for perverse reasons.

I watched Channel 4's How to save £100 billion last night, and I was struck by the sense of entitlement that some audience members had — as if they had a genuine right to other people's money. Child benefit, Winter Fuel Allowance, Free Bus Passes, Higher Education Subsidies — there are a bewildering array of benefits, to which some people are extremely attached. This is exactly the spirit of dependence that the statists wish to promote, and Warner is right to be wary.

However, I don't think means testing is the answer. Wherever it exists, there is a poverty trap — people are discouraged from working more and earning more, for fear of losing their benefits. Even those who recognise that work is in their long term interest can find it difficult to overcome the short term obstacle.

The current swarm of benefits is divisive, pitting young against old, rich against poor, sick against healthy, and parents against those who are disinclined or unable to reproduce. The population is split into so many competing interest groups, each clamouring for handouts, and unwilling to give up those they already enjoy.

A small universal stipend, on the other hand, would apply equally to all. It would guarantee the poorest in society a certain basic standard of living, while ensuring that work always pays. The poor would never have to choose between starvation and criminality, while for the rich the stipend would be equivalent to a tax break.

There will be some who say that even this basic level of redistribution is immoral, and that any handout, however small, is damaging to moral fibre. There are others who argue that poverty relief is a public good, akin to national defence. But anyone who favours small government and personal responsibility should recognise that a single, small, universal benefit would be an improvement on the status quo.

It seems to me that a better ultimate solution would be the direct provision of basic necessities — soup kitchens and hostels available to all, but only used by those who need them (and only for as long as they need them). Ideally these would be supported by private charity, but I would be willing to sacrifice my principles, and countenance a small amount of compulsory redistribution.

Coupled with an abolition of income tax, this system of benefits would mean that the state need know very little about us. I am among those who consider this a Good Thing.

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