Broader shoulders

In his speech to the Tory party conference yesterday David Cameron used the argument that “it’s fair those with broader shoulders should bear a greater load” as justification for the removal of child benefit from higher earners.

The appeal to “broader shoulders” is one of those statements that everyone, apart from the most ardent libertarian, would no doubt find themselves in sympathy with.

But how does that principle lead logically to the removal of child benefit as the solution? This proposal doesn’t actually raise vast sums of money. But it represents an assault on the principle of universalism upon which the welfare state is founded.

There are other mechanisms that could be used to raise the same amount of money from those with broad shoulders but which do not challenge any fundamental principles. If progressive taxation is too much to stomach then fiddling with tax relief or tax allowances could have raised the same amount of money while attracting less political flak.

This approach would also have avoided some of the anomalies thrown up by the child benefit proposal – such as dual earner households with higher combined income, but who individually stay below the threshold, getting to keep their child benefit.

Such an alternative couldn’t be construed as so obviously penalising women. And it asks single childless households, who typically have fewer calls on their income, and hence the broadest shoulders of all, to pay their share.

One can only conclude that the point of the exercise is neither raising money nor the drive for fairness suggested by the references to broad shoulders. The point must be that it is a Trojan Horse for the further dismantling of the welfare state.

All the more reason to resist whenever and however possible.

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4 replies »

  1. Thought I would enter into your blogosphere…
    I understand the point that the move neither raises much money nor improves fairness, but (and recognising this is not my field) does not the universalism of the welfare state rest in it being there for everyone (universally) but only when they are in need of it? Why do you feel child benefit be available to all, regardless of income? And does it really follow that single, childless people have the broadest shoulders…?

  2. @Neil S – good points. (and good to hear from you!)

    The point about single people was simply (perhaps not well expressed!) that for two individuals with the same income the one without children will have fewer *necessary* out of pocket expenses than the one with children. I wasn’t suggesting that therefore single people should pay more, but simply that removing child benefit from those earning $40k reduces the income of those with children, who have expenses in excess of what the child benefit will cover, while leaving the single person – who arguably could more easily absorb an income reduction – untouched. Changing tax allowances or thresholds for higher rate tax could be engineered to affect both equally. Really if we were doing the analysis properly to see who could most easily absorb the loss of income then we’d need to work in equivalised income.

    On the universalism point, I agree and disagree. Universalism can be interpreted as being available to all, but only when in need (which results in means tested benefits like housing benefit and council tax benefit) but it can equally mean available to everyone in a particular category – their membership of the category being sufficient to indicate that they are in need (that would cover all non-means tested categorical benefits including child benefit, winter fuel allowance, free bus pass for the over 60s, non-contributory pensions).

    There are also instrumental arguments about whether the universalism of benefits like child benefit is a price worth paying to ensure that the rich and the middle classes are willing to continue contributing to the funding of the welfare state. If they perceive that they receive nothing in return then the pressure for further reductions in redistributive taxation will increase as they ‘opt out’. That can set of a downward spiral in funding. These are social cohesion arguments. I refer to a similar type of argument in the previous post.

    • OK, I want a go! Why let a lack of any knowledge of welfare policy deter me?

      I am slightly mystified by the holy-cow status given to the principle of universality. As you explain, the original architecture of the welfare state incorporated means-tested benefits, which have worked successfully ever since in directing certain funds where they are most needed. GIven that the universality principle is not, errrr, universal, why not cut poor old IDS some slack? I’ve had a soft spot since he bravely made an utter arse of himself trying to lead the part that put the N into cuts. (Am I allowed to say that? Sandi Toksvig started it.)

      Anyway, I have not read the full justification for the government’s plans for child benefit, and they might not have admitted to the following as part of it, but I rather assumed that that good old tory value of responsibiliity was behind it. If you want kids (and you earn more than £43k) you’d better pay for them. And why tinker with tax allowances so that single people who have chosen not to have kids have to pay for them instead? Call me a bitter twisted old singleton, but I merely throw the stone into the blogosphere to see if it bites. No, I don’t understand that metaphor myself, so I shall bid you good evening!

      • We know that if we use categorical benefits then the take up will be high. Almost everyone in the category will claim. But at the cost of a lack of targeting: some people who claim won’t ‘need’ the money because they have enough already. So it can be expensive. Those who don’t ‘need’ the money always have the option of not claiming. But funnily enough they tend to want to claim what they’re entitled to.

        Alternatively if we use means-tested benefits then we know (and there is plenty of research to demonstrate it) that a substantial minority of people who are fully entitled to claim do not – because they want to avoid stigma, because they don’t realise they are eligible, because the process is too complicated. So you target the assistance more closely but you miss some of the people that society deems to be worthy of help.

        People differ on which is the greater of the two evils. The conventional answer in relation to the welfare of children has been that it is better to make sure that assistance is available to those who really need it, even at the cost that some who don’t need it also receive assistance.

        The Tories have applied the ‘responsibility’ argument not so much in relation to child benefit but in relation to the capping of total benefit entitlement. Jeremy Hunt being the most egregious offender.

        But constructive debate here is rather hampered by arguments being based upon the stereotype of the feckless lifetime benefit-dependant household spawning lots of children that the State has to subsidize. No one would deny that such households exist, but the evidence suggests that for most people poverty and benefit-dependence is a transitional phase (between jobs). They may well be working when they have children and then fall on hard times. To suggest that they are irresponsible would represent a very radical argument indeed (only those who can support children without needing paid employment should breed – landed gentry and others of independent means only need apply). Of course the number of households who are likely to find themselves benefit-dependent is likely to increase sharply in the near future because of a systemic problem with the economy/as a product of government policy. It is hardly fair to vilify them as being personally irresponsible (but I don’t expect it will stop George Osborne trying).

        I think my point about single people was not so much that single people *should* pay but that if we applied the “broader shoulders” rhetoric rigorously then it wouldn’t result in the distribution of cuts being proposed.