Why is anyone ever entitled to anything?

The question has sat beneath the skin of political argument ever since beggars were being whipped through the streets of mediaeval towns. The key word, of course, is entitlement. Politicians struggle with it still. Or rather their understanding of the difference between a moral right and a financial arrangement alters as and when it suits.

Do the elderly have a right to a meaningful pension because that is the mark of a decent society? Or are they, ideally, simply recouping money "saved" after a lifetime spent paying taxes?

Just lately, there has been some confusion even over such simple points. It is a mark, first, of recession. The British people have paid for the mendacity of bankers and now must pay still more, so it is decreed, to repair the economy. Money is tight: where can it be squeezed?

We are in the hands, meanwhile, of a coalition government that believes in a good squeeze as a matter of principle. Both the Tories and their LibDem chums want a squeezed and shrunken state, recession or no recession. So where does that leave those benefits to which people might feel themselves to be entitled? Where does it leave the notion that there are some things to which we are all "universally" entitled?

The crudest, strangest and most depressing answers are coming not from David Cameron or Nick Clegg, but from Labour. It is, in its way, a historic moment, the triumph of Blairism in a party that no longer seems sure what it means by a welfare state.

Ed Balls, the shadow chancellor, wants us to forget that he once coddled bankers. Balls wants to be tough, and "credible on the deficit". He promises to review every single government spending decision within a year of taking office. Does he mean to cancel the Trident replacement, perhaps, or raise the Jobseeker's Allowance to a level that would make life feasible for the unemployed? That would be silly, or irresponsible: you decide.

Scotland got a taste of this new realism on Tuesday – let's call the timing a coincidence – when Johann Lamont announced that she was investigating what the country can afford. One simple fact is no secret: the SNP government is enduring a 3% real terms cut in its budget, year upon miserable year, as London hacks – to no avail – at debt and deficit. So what would Labour propose?

Nothing at all, in point of fact. As yet, Lamont has no specific ideas to which she is prepared to lay claim. She has plenty of questions, though, in a tabloid vein, about what she calls the "something for nothing country". In other words, why should well-off folk get a share of universal benefits when times are tough?

It sounds like common sense. If you can afford to pay for prescriptions, why should you get them for free? If you have the wherewithal for tuition fees, or personal care in old age, or – come to that – a bus pass, why shouldn't you stump up, not least when your goodies come at the expense of local services crippled amid a council tax freeze?

But Lamont is risking the anomalies and injustices that spring up each time universal provisions are attacked. Clearly she has forgotten the hellish child benefit mess created by the coalition.

She should certainly know that prescription charges produced grotesque effects. Sick people on modest incomes were penalised routinely and the politicians called it fairness. That's what happens, like it or not, when your only principle is the vague, populist belief that toffs should pay.

Lamont has a point about the council tax freeze she once supported. It can't go on forever. It is truly unjust to load the entire burden of deficit mania on a public sector in which jobs, services and real wages are being cut. But as Labour's leader might have put it, you don't rob the lekky to pay the gas bill. Care services against prescription charges? Council funding against the founding idea of the welfare state? These are false oppositions. The idea is dishonest.

In my memory, Labour people in Scotland would sing songs about the means test man. Perhaps my memory is better than Lamont's, but I doubt it. She would not be party to the return of that inhumane farce, I'm sure. Her words give encouragement and opportunity, nevertheless, to those who despise – what would they call it? – "the outmoded social democratic consensus". They too would tell tales about what can and cannot be afforded. That's why they love a good recession.

The principle of universality is a bastion. Once it is breached, everything is up for grabs. Then the ideologues of the right swarm in, with their stern views on who is and is not deserving, who can and cannot afford to "pay their share". Their safety net is made, aptly enough, of holes.

Last week, Lamont asked, "What is progressive about judges and lawyers earning more than £100,000 a year, not paying tuition fees for their child to follow in their footsteps at university, while one in four unemployed young people in Scotland can't get a job or a place at college?" Sounds irrefutable, doesn't it? But what follows is some hard-pressed government announcing that, actually, the bar should be set at £50,000, or £30,000. Better still, why not just have everyone pay?

We are already a long way down that road. Nick Clegg's latest wheeze is to "help" parents to pillage their pensions and rescue the housing market for the next generation. The British pensions industry is the worst-performing in the developed world, a joke and a rip-off. In England, thousands of those parents have already raided those "pots" to fund tuition fees. Will they, therefore, rely on the state in old age? It's not much of a return for decades spent paying tax. Brick by brick, the bastion crumbles.

In Lamont's version of Scotland, "the poorest are paying for the tax breaks for the rich". So would she divert the funds to a national living wage, perhaps? Will she be telling Ed Balls that a truly progressive tax system has to be Labour's priority? She is in no mood to upset those apple-carts. Instead, we are supposed to squabble over the scraps in the ruins of a fair society while wealth and power – of which Britain still has plenty – go unchallenged.

Once upon a time, Labour was the embodiment of that challenge. Now they want granny's bus pass. If that's radical, I'm Milton Friedman.