Nick Clegg forfeited my trust when he took his party into a coalition on an agreement to accept a deficit reduction programme that was both harsh and fast, and to shred most of his party’s election policies, including the pledge on university tuition fees. He has now won my contempt. His absurd attack on the Institute for Fiscal Studies’ analysis of Osborne’s savage package as “distorted”, “a complete nonsense” and “shrill” is wrong and distorted.
Clegg says that the Treasury presentation of the cuts package gives a “richer picture” of the interaction between taxes and benefit cuts, and public service cuts and gains than the IFS’s finding that the tax and benefits package is regressive. Yet the IFS's carefully non-partisan finding is in fact kind (as Nick Pearce shows). Once the cuts in services and job losses work their way through there will indeed be a “richer picture” – of uncountable misery and distress for thousands of households, and not necessarily only the poorest.
I was already musing on the inadequacy of the coalition’s political calculus of “fairness” when the IFS report and Clegg’s response surfaced. Money and class matter. In arguing that the IFS are talking nonsense by focussing only on tax and benefits in their modelling, Clegg seems to be saying that the IFS are wrong to base their figures on how much money people actually have rather than adding in some hugely over-optimistic assumption that the “pupil premium” is going to succeed where the child trust fund failed in reducing grotesque income inequality.
The middle class has ample financial fat to cushion Osborne’s blows, the poor do not. The middle class has greater protection against losing their jobs and better terms thereafter if they do. The middle class will not be driven out of their basically secure homes in affluent areas of the country, and even into homelessness, by draconian housing benefit changes, many of the poorest will.
Study after study shows that the middle class get the most from services delivered “free” at the point of use like education and health. (Why else did the New Labour project focus on these services and neglect social housing where need enters the equation?) The middle class live in areas where the schools are better and where there are actually NHS dentists. They can go private for diagnosis if necessary, thereby “leap-frogging” NHS waiting lists and so on. The key source of the inequality in use of services is class or more specifically cash. So any serious attempt to factor in everything else would make it very clear that the poor still stand to lose most.
When I wrote on OurKingdom about the contrast between the media coverage of housing benefit caps and the child benefit cut for richer households, Stuart Wilks-Heeg wrote to say that the complaint from the middle classes about the change was important. This was the political dynamic which has kept the Scandinavian welfare state intact - almost all their benefits are universal. Everyone pays, everyone benefits - even if unequally in the UK. I hope that the Labour opposition will take this on board as they prepare their longer-term response to Osborne and will argue across the board for a universal welfare state and the security that it should bring.
Once you start to restrict entitlement to any benefit two things happen. First, government will over time lower the income threshold for people eligible to get that benefit. For those on £44,000 today, read those on £35,000 by the end of the Parliament, down to £20 by the end of the next if the Tories stay in power. The process has already begun with child benefit, now “frozen” by the coalition in spite of the Conservatives promise to retain it.
Second, as entitlement becomes more and more restricted, the benefit becomes more and more stigmatised - especially if it involves children. One Conservative minister has already said that the poor are under a duty to have fewer children. Nobody currently says that anyone has children just to get child benefit - though they already say that about access to social housing and may say it about income support. But as the change goes through, they will and their claims will become even more powerful in light of the other benefit cuts. In the USA, the political controversy over what used to be TANF (Temporary Assistance for Needy Families) grew and grew as entitlement was restricted. It ended up with Clinton imposing a two-year maximum on it, even though it was only ever 1% of American public expenditure.
Social housing has already been utterly undermined by council house sales that in effect removed better-off families and reduced the remaining, usually poorer, housing stock to catering largely for people in the more desperate need. The neglect of new building closed off the chances of many working class families of obtaining homes in their local areas. The new changes the government has announced will not only drive poor families out of affluent areas, they will also over time drive more better-off families out of social housing as rents rise. Thus what Aneurin Bevin envisaged as a universal service is now more and more a residual provision that has already become unhealthily stigmatised.
And what of the coalition’s aim to create a “big society”? I take this to mean in part that they wish to create a more cohesive society. The Danish political scientist, Gosta Esping-Andersen, has demonstrated in his book, The Three Worlds of Welfare Capitalism , that universal benefits in the Nordic welfare states were crucial in explaining cross-class solidarity in support of the welfare state. Aggressive means-testing of benefits in the USA, especially those paid to families, has had the opposite effect – each successive reform which reduces eligibility to focus resources on the “poorest” only serves to accentuate general resentment of “welfare”. Tellingly, the one aspect of the US welfare system from which high-income earners also benefit – pensions – has been virtually impossible for US politicians to take the axe to.
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