• Text size      
  • Send this article to a friend
  • Print this article

Follow the Money: the real cost of benefits in the indyref war

WHEN Johann Lamont first went on the warpath over universal benefits in autumn 2012, many licked their lips at the prospect of a decent debate between Scotland's two main parties about something other than the union.

The Labour leader accused Alex Salmond of "not living in the real world" over his commitment to spending government money on treats for rich people. She tasked Professor Arthur Midwinter, the former advisor to the parliament's finance committee, to do a stock-take report on the various freebies on offer and what should be done about them. Favourites for the firing line include free bus passes for over 60s, free prescriptions and free personal care for the elderly.

Labour insists its agenda remains the same, though it was not much in evidence when the Scottish Government unveiled its new £114m benefits package for children the other day. Labour's objections were more about what the policy was targeting than the principal of universal hand-outs.

The Midwinter report is not yet written and no one in the party has been able to provide an ETA, except to say that it will be for internal ammunition rather than public consumption when it finally lands. Time will tell if Lamont has pulled back following ample criticism that attacking universality was too far from Labour territory, perhaps echoed, for all we know, by her leader in London.

Either way, the Scottish Government is evidently not holding out any olive branches in this direction. To recap on the latest announcement, there is to be 600 hours of free childcare for the poorest 15% of two-year-olds from August (just over 11 hours a week), rising to 27% the following year. Free school meals are being extended from 22% of the poorest primary ones, twos and threes in state schools to the rest of their classmates from January.

In 2015/16, once the two policies are in full swing, they will cost £44m and £42m respectively. Obviously there is nothing universal about the childcare policy, since it will only apply to poorer children. That will change if Scotland votes 'yes' and sticks with the SNP, however, since the government proposes 10 years from now to have 1140 hours free childcare for all infants aged between one and four.

But for now, free school meals will become the one new universal benefit on the statute book - at least for those who deem state schools worthy places to educate their children.

Spending £42m a year is no small beer in these straitened times, although it still a relatively low entry in the hit parade of Scottish universal benefits. It falls in just behind free prescriptions, which costs £58m a year (2012/13 figures).

In ascending order then come the council tax freeze (£70m a year), eye examinations (£93m), concessionary travel (£187m) and university tuition fees (£220m). Way out in front is free personal care for the elderly, which costs £451m a year.

That's a total of £1.1bn already, not including UK-level benefits that fall into the same category such as winter fuel payments for over-62s (£187m in Scotland) and free TV licences for over-75s (£49m), or the hundreds of millions already spent on free childcare for the threes and fours.

There are of course endless debates about who counts as poor and who doesn't. But if you take for the sake of argument the Breadline Britain figures, which go by the proportion of people that can't afford three or more of 22 common necessities, it suggests that 29% of people are in poverty (much higher than in previous decades, by the way). This suggests that well over a billion pounds is being spent through these policies each year on people who could probably afford to pay for them.

No wonder Lamont thought she was on to something. At a time when the welfare budget is being picked apart either through necessity or ideology, depending on your politics, it points to a big slug of money that could theoretically be redistributed and/or used to improve the national fiscal position.

Talk to the experts and it may not be that simple, of course. To take the free school meals example, arguments in favour include the fact that giving free meals to only the poorest stigmatises them next to their peers, potentially causing all manner of adjustment difficulties throughout their lives. It is also arguably the reason why only 84% of the poor kids take advantage of the current offering.

There are also arguments about the rest of the class, for example that attendance would generally improve if kids were getting a free meal, or that sometimes even those in better-off families don't get fed properly and would therefore benefit from state feeding. Underpinning these arguments is the fact that the same policy has already been adopted in England, where universal benefits usually get shorter shrift than here.

Many of these arguments seem relatively easy to challenge, it must be said. Stigma is a grim thing, but the state would have to go a long way beyond universal school meals to really mask the effects of poverty. One suspects the hard-up parents could do a better job of this themselves if they had an extra £42m to play with. In any case, in schools in areas of high deprivation the proportions of kids on free school meals will generally be far higher, which presumably does much to remove stigma in the playground anyway.

As for the wealthier children, what will the state deem a nutritious free meal? Surely not all the soft drinks, processed meat and chocolate bars on sale in many schools at present? It is possible that the pupils might eat marginally better in the canteen than at the local snack van, but don't bet the (battery) farm on it.

Fortunately some arguments in favour of universal benefits are a bit more compelling. Some point out that older people have contributed to the state all their lives and deserve to get something back, not to mention that those with the most have generally contributed the most along the way.

Then there is the fact that people's opposition to universal benefits varies from policy to policy. At one of end of the spectrum is probably the thought of rich 63-year-olds doing wild-eyed bus runs at the taxpayer's expense. Somewhere in the middle is probably the Hooray Henrys studying history of art gratis at red brick universities. Firmly over on the other side is the idea of free comprehensive school education for all that want it. When a benefit fulfils some other public good, such as bringing people from different backgrounds together, most would accept that it is worth making it universal.

Finally there is the debate around means testing, with some saying it is too complicated or expensive or too open to fraud to justify the effort - particularly in the case of the self-employed, for example.

Here there are a few awkward questions for proponents too, though. Surely competitive tendering and up-to-date IT make it cheaper and easier than in previous decades? Surely it is the case that if you did the same means testing for a few different benefits, you would reduce the cost for each one?

Why is it that means testing has always been possible for some benefits, such as free school meals, but not for others? How are we able to say confidently how many people are in poverty but can't means test?

Suffice to say that whichever route you choose is likely to present arguments in both directions. The trouble for politicians is that any universal benefit policy automatically comes with the whiff of ballot-box-rigging.

For this reason, there should always be a heavy onus on any government to justify such policies, such as wider public goods or particularly negative consequences from means testing or whatever. So prominent should the 'handle with care' warning be that there is maybe even an argument for giving Audit Scotland, say, the power to reject them if the justifications didn't stack up.

As for what such verifiers would make of free school meals for all young pupils, you would like to think they would send the government off with their tails between their legs.

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

206375