We’ve heard a constant refrain from the apologists of the Coalition’s decision to end universal child benefit: that “fairness” trumps “universality”, and thus “it is only right” that “the broadest backs take their fair share” of deficit-reduction pain. This mantra is so powerful that it can even ride rough-shod over the admitted unfairness of a system that will see some families with income of £80,000 potentially better off than some with income of £45,000. At one level it sounds so plausible, and even self-obviously true. How can it be right that a hard-pressed family struggling on £20,000 should pay some part of their taxes to provide a benefit to a millionaire’s child? But appearances can be deceptive. As Paul Waugh has shown clearly and graphically, the highest earners are the ones who are doing the subsidising, not families on £20,000. This is entirely as it should be, of course, but it’s nonsense to talk of one person’s taxes paying for another’s benefits. It’s the familiar individualism of Tory ideology. Followed to its logical conclusion, this model would show everyone paying a tiny part of their taxes for everything that the government spends. One might as well ask if it’s right for someone on the minimum wage to pay a little bit towards a rich person’s share of national defence, which they surely do. “Outrage of pensioners who pay for the rich to enjoy the safety of Britain’s nuclear deterrent.” The argument is simply a fallacy.
The universal system is nothing to do with who pays for what. We all pay for everything: the only question is whether we pay in proportion to our means. Rich people pay most into the total system, and they have as much right as anyone else to benefit from it. I personally do not believe that they pay enough relative to poorer people, but that is an argument that falls on deaf ears in the Coalition, whose talk of fairness is total obfuscation. If they were remotely interested in real fairness, they would ask not who pays for what, but rather what proportion of a person’s means they pay into the system. This would expose the disgraceful inequity (and iniquity) of measures such as the VAT rise which proportionately hits poorer people much more harshly. It would also require a much more sanguine look at the very rich rather than the simply better-off. Why doesn’t the government address these real issues instead of setting out plausible but fatally flawed logic such as we’ve heard this week?
It’s quite a difficult question to answer, since the child benefit announcement is politically as well as economically illiterate. Those most affected by it will be Tory voters rather than Labour ones. Universal benefits include a whole lot more than payments for children. The NHS, refuse collections, education – aren’t these universal too? Would the Coalition like to suggest, say, higher prescription charges for higher-rate taxpayers? A bin-levy for the better off? Why, after all, should a family struggling on £20,000 subsidise the removal of Waitrose’s posh food from the bins of those earning £44,000? Nonsense, of course. So why go down this foolish road at all?
The cynical answer is perhaps that suggested by David Hughes. David Cameron and George Osborne have never had to worry about money at any time in their privileged lives. They know no more about what it’s like to live on £100,000 a year than they know about living on benefits or the minimum wage. What they do know about is steeply progressive taxation, and the doleful consequences for them of a system that would take “from each according to their ability”. Perhaps that’s why they’d rather lecture the middle classes about broader backs: it leaves their mile-wide backs miles away from the danger zone.