I have been struck quite forcibly by how many people don't understand why universal benefits have existed or why they are not means-tested.

Back in the day, if you needed a helping-hand, you had to go cap-in-hand and ask "the Parish" for a hand-out and would most likely receive a lecture, delivered by some no-nothing daughter of a well-to-do local captain of industry, on your profligacy and fecklessness instead.
Families would routinely be split-up and have to go live in a workhouse to avoid starvation.

Fast-forward to the 1940's and universal benefits come into the picture.
You don't apply for them, everyone gets them and no-one has to be demeaningly means-tested to get it.
Instead, everyone pays into the system according to thier mean (we used to call this income tax).
Whilst it may seem counter-intuitive to give someone something and then take it back in tax, it's actually a cheaper method than putting some arcane process in place and a lot more civilised than making the recipients jump through multiple hoops to get it.

So, I now open this topic for debate.
n.b. It's not about the level of benefits but about the relative merits of universal versus means-tested.

Not only that, but better off people in receipt of non-means tested benefits pay some back in tax. This idea of cutting back on payments to "rich" pensioners is bonkers. The cost of administering the system will outweigh the benefits, not least because the really well off pensioners will be paying 40% or 50% tax on them anyhow. I suspect its all more about disadvantaging the better off in the hope they will rebel against the welfare system and so the government can let it all crumble to everyones detriment except the ultra-wealthy.

Whatever it is, it ain't that, even given the caveat you added

Means-testing supposedly targets the help at those who need it most, although given the Child Benefit Charge rules I suspect the current government don't actually understad what that statement means.

However, it is often more complex, more costly and more open to fraud and error than a universal benefit system.

There's a balance to be struck somewhere in the middle with a mix of the two IMO.

if everyone gets something, then surely there is no net benefit to the recipients, therefore no point in giving it to people.

Eh?

As I said on the Cameron thread that eventually was locked, "....there is another reason why the benefit was universal. It is to do with, ironically enough, being "all in it together". If you pay into the welfare state via taxes and NI and you also benefit from it (in this case via child benefit) then you have a stake in the system. If it is all one way traffic in that some people only ever pay in and are never eligible for any form of pay out, then sooner or later the system breaks down as those people begrudge paying anything in at all and start to support parties from the right to who promise them just that. We are well down that road and it is quite deliberate policy from the right which is very divisive."

So essentially non-means tested benefits are a way to give everyone a stake in the system. You pay National INSURANCE then when you need it the insurance policy pays out, no questions asked so to speak.

It's pretty obvious you can't have every benefit non-means tested but certain benefits such as child benefit lend themselves to being non means tested and the fact it now isn't despite the obvious flaws of the new system is all down to politics and the governments attempt to show "we are all in it together". What they failed to grasp is we were [ialready[/i all in it together with that particular benefit because anyone who had children qualified for the benefit.

Another thing in favour of universal benefits is means testing is a disincentive to work. There is in effect a high marginal tax rate applied to anyone who crosses the means testing boundary that would see them lose a benefit or a chunk of it. We also saw this with the way child benefit has been dealt with as with the original proposal (subsequently watered down) cross the boundary by a £1 and you lost over £1500 a year in a family with two kids.

So rather than take a promotion that would give someone a small pay-rise but make them worse off because they lose out on a means tested benefit people have a disincentive to take the promotion or a slightly better paid job.

I have a vague recollection from my childhood about my parents going on about "The Means Test" as something nasty that was introduced generally and I think they must have been referring to what happened in 1931 when the government introduced a household means test for any household where someone had been receiving insurance payments for 26 weeks. It was one of the things that led to the Jarrow March (proper name Jarrow Crusade) in 1936 but aport from that I think this household means test is where a lot of the stigma associated with means testing comes from which often leads to people not claiming what they are entitled.

Whatever the original motives were behind universal benefits, that doesn't mean that the principle is still relevant.

I really doubt that wealthy people feel that they're getting something back because they receive child benefit, winter fuel payments, free bus passes etc. They just do not place much value on those types of benefits. They'll accept them, treating them as a bit of a joke, but still feel aggrieved by what they perceive to be high tax rates.

In this day and age it shouldn't be necessary to subject people to having to apply for these benefits. The tax system should be quite capable of excluding high earners from receiving them without any great cost. The idea that we might as well give them to everyone because its too expensive not to shouldn't be acceptable in 2013.

Indeed, though until quite recently family allowance was such a low amount that the costs of means testing would outweigh the saving, I'm yet to be convinced that still isn't the case. There aren't that many universal benefits now, means testing would be a hammer to crack a nut.



You are probably right but as bus passes and free TV licences have to be applied for rather than come automatically you'd find those that don't need them don't apply for them.

Mind that doesn't mean the winter fuel payment is perfect, did you know it is paid to thousands of pensioners living abroad? That should be stopped as a priority.



That way means everyone filling is self assessment forms, HMRC can't cope with its current workload without have it increased massively, even this needs some admin and would more than likely mean stuff like family allowance remains largely non-means tested. The current shambles implemented by this current government shows what happens when you do things halfd.

High earners are already subject to self assessment.

Not all of them, if you are earning £60k on a PAYE contract there is a damn good chance you won't need to be.

There will be investment bankers earning alot more than that on PAYE too.

Depends how you define "wealthy". Sure the ultra-wealthy would find them irrelevant (but they are very few in number). The comfortably off do value them from what I have seen - especially state pension, NHS and bus passes.

Depends how you define a high earner I suppose.

I used £60k as that is the level family allowance is reduced to zero under the current scheme.

There is no supposing at all. HMRC define a "high earner" for the purposes of self assessment as someone earning in excess of £100k

Yes, but that isn't sacrosanct.

My point was simply that the tax system should be capable of establishing a cut off point for "universal" benefits without incurring huge cost. Its a different matter as to where, morally, that cut off point should be.

Dally is right on this and Chuka Umunna has made the same argument for Labour.

However harsh the Tories want to be, if they started really attacking the poor now there would be some disquiet from paternalistic middle England that would say 'thats not on chaps'.

But by removing entitlement to 'universal' benefits from better off sections of society now and ignoring their grumbles, they can be sure that when they do start on the poorest, middle England will just look on in grudging acceptance saying "we lost our child benefit spending money so the poor can suffer their bit too"

But I agree with the posters on here that say it is simplest to just allow universal entitlement and use the tax system to neutralise the benefit for the better off. I would however be a bit more creative with the tax system and not just focus on taxing income, but look to put lump sum taxes on things like property, which are harder to avoid and also non distortionary in terms of work incentives.

But then you get the farce we have at the moment where a couple earning £49k each keep the benefit when a single earner household on £50k loses it.

You'd need to have both single self assessment and household self assessment, or even better have a transferable tax allowance between couples, it all adds to the bureaucracy and that costs money.

No government has the balls (or the brains) for a full root and branch reform of taxation that we really need.

Whilst I have expressed support for universal benefits earlier in the thread, I have to say I've enjoyed a wry chuckle at some of the indignation that has come out of the people on £50k a year losing their child benefit. There was even an article in the London Evening Standard yesterday saying "why should those with children be punished whilst their childless counterparts get off scot free?"

Their childless counterparts have not been getting this benefit for the past few years either!

And for people that earn over £50k a year the benefit is essentially one of extra spending money. The problem is a lot of the time Middle England is keen to moralise about people 'living within their means' and say that people on council estates shouldn't be paid just to produce children if they can't afford them. But they furiously deny that the child benefit for those over £50k is just extra spending money and will tell you that just because they are on over £50k they are NOT rich, and they have 2 cars and a mortgage to run and private school fees to pay and once you take that out there is nothing left, so they need to have the child benefit or their 'children will suffer'.

Maybe they should have thought of this before they opened their legs and popped kids out? Have they not heard of contraception? The state should not pay people to have kids if they can't afford to bring them up. But also if they really need that income what is wrong with taking a second job? Being an entrepreneur on the side? You can create your own jobs. Middle England gives this advice to the poor so surely they could be able to do these things to provide for their hungry children, rather than rely on taxing wealth creators out of the country in order to subsidise them for getting pregnant.

I remember after the last election Ken Clarke causing a bit of rumpus for saying in the middle of all the Tory populist claims about "we're on the side of the workers not the shirkers" that Middle England has not understood how much it is subsidised and how much it will stand to lose with the cuts. He was right and this is the start of the complaining.

What has any of that got to do with the debate of whether Universality or means testing is the way to go?

Also if you are really serious when you say "The state should not pay people to have kids if they can't afford to bring them up." then you represent a victory for the governments deliberately divisive policies. If you ask that question surely you must be also asking "Why do I pay toward the NHS when I am not ill?" or perhaps you should advocating people don't "pop" kids out unless they themselves are prepared to pay for their education in its entirety?

I would also suggest the indignation of those losing the benefit isn't because they are losing it but because other households earning twice as much are keeping it.

Says who? It is a philosophical stance pretty much in the same way someone of a right wing persuasion might argue for the scrapping of all but the bare minimum of benefits and the implementation of a very low taxation because they believe that is an incentive to people to work. It is far from irrelevant in the wider context.



That is a complete generalisation and an opinion whereas what I have said about this is in fact one of the accepted cornerstones behind the concept of universal benefits. It is not what they get but the fact they have to pay in so others get it that becomes the problem. You often see on here statements along the lines of "Why should I pay for....." when it comes to paying taxes toward something they do not directly benefit from.



Well its not capable as the current farce over child benefits shows. The benefit is paid to the mother so that immediately makes it a more complicated system to administer as they have to find out the fathers tax position assuming they are still together that is.

Even if they sort this out using taxation is far from flawless anyway. For example if you do a salary sacrifice for anything such as pension payments then HMRC sees you have a lower tax bill and if that takes you below the threshold you won't lose the benefit. (Eligibility for University subsistence loans is similarly affected).

So if you can reduce your personal taxation liability this way or if you are not on PAYE as many self employed are not you can arrange things so you are missed from the net.

There are so many anomalies in the removal of child benefit through the tax system it is a complete joke.

Also regarding self assessment, many high earners are not self assessed. You will only be self assessed if your tax situation demands it such as if you receive a benefit on kind from your employer which they notify HMRC of. If you just take a salary then your tax affairs are simple from their point of view and HMRC leave you alone. This is what happened to me when I gave up the company car for a car allowance. They were only too pleased to have one less self assessment to deal with.

Is this 2013 or 1973?

These ba[is[/itards are looking to send us back to 1873