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There is no longer a case for universal benefits

No doubt William Beveridge, author of the report which laid the foundations for the welfare state, would disapprove of the Coalition Government's changes to the child benefit allowance, which come into force today.

We can be fairly sure of that because Lord Beveridge (as he was to become) believed firmly in the importance of universal benefits, but also because he wanted to do exactly the opposite of what George Osborne is doing. On the very evening his report was being debated in the Commons in 1943, he addressed a meeting of the Eugenics Society, at which he argued that middle-class parents should get higher payments, to encourage the "responsible" classes to have more children and to discourage the poor from having too many offspring.

Fortunately, few people now espouse in so many words the repulsive doctrines that were so popular with the Fabians with whom Lord Beveridge hung about (though those who have elevated Darwinism into a secular religion may, albeit unwittingly, be providing fertile ground for such noxious notions). Besides, a lot of people of Lord Beveridge's generation believed similarly silly and wicked things, which doesn't automatically invalidate everything else he, or they, did.

The case for universality, however, is a view still taken as Gospel by many on the Left, even if few are queuing up to argue that higher-rate taxpayers have the same urgent need for child allowances as the poorest in society. And it must be admitted that there are two reasons, one good and one partly good, for having adopted that principle for the administration of welfare.

The good reason is that it's much cheaper than means testing because you don't need an enormous bureaucracy, or create benefit traps by having thresholds which provide a disincentive to work. Indeed, it's mostly forgotten that Lord Beveridge went to great pains to stress unemployment benefit should be provided only at subsistence levels and last no longer than six months.

Mr Osborne has modified his plans (originally, it was intended to axe child benefit if either parent was a higher-rate taxpayer) to avoid a huge cliff, but as a result they are now hugely complicated – as Labour has not been slow, or wrong, to point out – and it remains fundamentally unfair that a couple each earning £49,999 keep the full entitlement, while a single parent on £2 more starts losing it, losing all of it on £60,000.

The other reason for universal benefits is to ensure everyone contributing has a stake in the system; it is a way of manufacturing consent for state appropriation of your money. This was also the reasoning behind the poll tax – that people would associate local services with their costs – so it self-evidently doesn't always work. But it can. It's the model which has made the National Health Service so popular with the British public – to the point where sentimentality has blinded most people to any suggestion that what is, when all's said and done, an accounting system to pay for healthcare, could ever be improved except by spending more.

Healthcare, however, is different from child benefit or, say, the basic state pension or the cold weather allowance for pensioners, in that the costs of treatment can vary wildly depending on the ailment. If anything in the welfare system is to be means tested (as, of course, a great many other elements of it already are) flat financial payments designed to support individuals in need, but also given to the better-off, ought surely to be the first in line.

Gordon Brown's eagerness to draw as many people as possible into the welfare state, and thereby into the maw of the public sector, led to the grotesque position where some households with an income of £60,000 could be eligible for working tax credits to top up their income. A vast bureaucracy was created to pay back to people a proportion of money which had been previously taken away from them in tax.

Now we are seeing the catastrophic results of that policy which, to make matters worse, was financed by borrowing so recklessly as to be criminally incompetent, if not downright unhinged. When, as the former Treasury Secretary Liam Byrne so amusingly put it, "there's no money left", two things follow. The first is that, even if you can still borrow a bit more for a while to stave off the day of reckoning (the lunatic policy of both Ed Balls and the current Chancellor) you know the bill is on the way and the spending will have to stop, and the cuts have to start.

The second, related, consequence is that the interests of everyone taking money from the state – which includes not only everyone in receipt of benefits, universal or not, but everyone in receipt of tax relief, subsidies or services of any kind, as well as everyone working in the public sector in any capacity – are in direct opposition to the interests of everyone else. And while public services are not devoid of value – are, in fact, to some degree the mark of a civilised society – they are overwhelmingly outgoings at a time when what is desperately needed is income.

To ensure those in most need are protected, many basic assumptions about the welfare state must be ditched. Lord Beveridge's intention was to combat five "great evils": squalor, ignorance, indolence, want and disease. It's apparent that, for some of the dependent underclass, though they are a minority of benefit recipients, the welfare state has compounded those evils.

Absolute want has, of course, declined; the poorest UK citizen is very much richer than 95% of the rest of the world's population. But what people want, and the collusion of the welfare industry in that by measuring "relative poverty", has soared. We can't afford that approach now, thanks to Mr Brown.

Universal cold weather payments, housing benefits which enrich no-one but private buy-to-let landlords, disability payments to those who, though they may have conditions which are real enough, are nonetheless perfectly capable of taking on some work - all that will have to go. So will much more, and it will include hardship for the genuinely needy.

But since that's unavoidable, there can be no possible case for universal benefits any more. If we haven't the money to pay for the benefits system – and be in no doubt, we haven't – my preference is to cut the child benefit payments which provide middle-class children's piano lessons, rather than the ones which put food on the table in the poorest households.

Contextual targeting label: 
Families

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