Why Labour must defend universal benefits for pensioners

The party should remember that benefits for the poor end up being poor benefits.

One of the suggestions that Tony Blair makes in his piece for the centenary edition of the New Statesman (180 pages, out today) is that Labour should look again at "the right balance between universal and means-tested help for pensioners". It's an argument that's made with increasing frequency as the coalition's welfare cuts bite. While dramatically reducing support for working-age claimants, Cameron has "triple-locked" the state pension (so that it increases each year by average earnings, the rate of inflation or 2.5%, whichever is highest) and protected universal benefits for the elderly such as the Winter Fuel Allowance, free TV licences and free bus passes.

With pensioners accounting for 42.3% of all welfare spending (a total that will continue to rise with an ageing population), an ever greater number of politicians and commentators argue that this settlement is unsustainable. Nick Clegg has called for pensioners' benefits to be means-tested, while Iain Duncan Smith has hinted that he believes David Cameron should not repeat his 2010 election pledge to protect them. As Labour seeks to win credibility on welfare and deficit reduction, Ed Miliband is being urged to abandon his long-standing support for universalism and announce that he would restricit benefits if he becomes prime minister. 

It is right to highlight Cameron's cynicism in protecting pensioner benefits. As the decision to means-test child benefit shows, the Prime Minister has little regard for the principle of universalism. The move was motivated by raw political calculation: pensioners are more likely to vote than any other group (76 per cent did in 2010, compared to 65 per cent of the population at large) and are notoriously vigorous in defending their interests. But there are strong principled and practical reasons why Labour should be wary of joining the coming war against universal benefits.

A new system of means-testing would be complex and expensive to administer, while affecting only a fraction of pensioners. Of the UK's 11 million over-65s, two million live in poverty and another six and half a million have an income below £10,500. Just 200,000 earn enough to pay the 40p rate of tax, meaning that any savings would be largely symbolic. Clegg complains that "we are giving free bus passes and TV licences and winter fuel payments to Alan Sugar", while forgetting how rare the likes of Sur Alan are.

The government currently spends £2.2bn a year on winter fuel payments, £1bn on free bus passes and £600m on free TV licences. Compare that to the £23.8bn annually spent on housing benefit (owing to extortionate rents and substandard wages) and the £27.2bn spent on tax credits (owing to inadequate pay) and it becomes clear where the real savings are to be made. It makes little sense to target benefits for cuts when £70bn a year is still lost to tax evasion, £25bn to tax avoidance and the highest earners (including some of those dreaded "millionaire pensioners") have just received a £1bn income tax cut. By insisting that the welfare state (or at least part of it) should bear the brunt of austerity, the left is playing Osborne's game. 

The great practical advantage of universal benefits is that they ensures support goes to those who need it. At present, 1.8 million elderly people eligible for the means-tested pension credit do not claim it due to the complexity and invasiveness of the application process. In the case of the winter fuel payment, restricting the benefit would risk an increase in the 25,000 pensioners who die every year as a result of cold-related illnesses. 

The left most of all, should be wary of abandoning the principle of universalism. History shows that a narrower welfare state soon becomes a shallower one as the politically powerful middle classes lose any stake in the system and the poor are stigmatised as "dependent". The "paradox of redistribution", as social scientists call it, is that provision for some depends on provision for all. A Fabian Society study of 11 OECD countries found that greater means-testing led to increased levels of poverty as the value of benefits progressively withered. In the UK, we are already witnessing this phenomenon at work. While removing child benefit from higher-earners (a measure defended by Beveridge’s ostensible heirs, the Liberal Democrats), the coalition has simultaneously frozen it in cash terms for three years, a real-terms reduction of £1,080 for a family with two children. As Richard Titmuss observed more than forty years ago, "services for the poor end up being poor services". 

The logic of means-testing is remorseless. Remove winter fuel payments and free bus passes from well-off pensioners and the right will next ask why they should not be charged to use the NHS. Fortunately, as a principled social democrat, Ed Miliband has long recognised such arguments. Challenged over his support for universal pensioner benefits on The Andrew Marr Show in January, he replied: 

Look, if you’re saying to me we should make everything in our society means tested - in other words it shouldn’t be universal - that would include child benefit, the health service, the old age pension. Well that isn’t the road I want to go down. Why is that? Because I think everybody as part of the foundation of being a citizen of the country is entitled to some basic things, including on the basis of having children, needing free healthcare.
But as Labour's policy review continues, pressure will grow on Miliband to reverse his stance in order to prove that the party is "tough" on the deficit and welfare spending. He should resist such short-term maneouvres. The principle of universalism is too valuable to be traded in a foolhardy (and likely doomed) attempt to appease the austerity lobby. 
Tony Blair with Ed Miliband during a service to mark the Queen's Diamond Jubilee at Westminster Hall on March 20, 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
Show Hide image

Jeremy Corbyn faces a dilemma as Brexit solidifies: which half of his voters should he disappoint?

He comes from a tradition on the left that sees the EU as a capitalist club.

Imagine a man who voted to leave the European Economic Community in 1975. A man who spoke out against the Maastricht Treaty in 1993, saying that it “takes away from national parliaments the power to set economic policy and hands it over to an unelected set of bankers”. A man who voted against the Lisbon Treaty in 2008.

You don’t have to imagine very hard, because that man is Jeremy Corbyn. When campaigning for the Labour leadership in 2015, he told a GMB hustings, “I would ­advocate a No vote if we are going to get an imposition of free-market policies across Europe.”

When Labour’s Brexiteers gathered to launch their campaign in 2016, several seemed hurt that Corbyn and his shadow chancellor, John McDonnell, were not there with them. “It is surprising, when we voted against the advice of the chief whip on a number of European issues over the last decades, that Jeremy and John, who have always been in that lobby with us, that they would want to lead a campaign that isn’t even asking for a renegotiated position,” said the MP Graham Stringer.

I mention this because since the election campaign started in April, I keep having an odd experience – people insisting that Corbyn is not a Eurosceptic, and that he will use Labour’s new-found strength to argue for a softer Brexit. Others claim that Labour’s current position on freedom of movement (ending it) is the obvious, common-sense – even progressive – choice.

This matters. Look, if the evidence above doesn’t convince you that the Labour leader is intensely relaxed about exiting the European Union, I don’t know what else would. Yet it’s clear that some Labour activists strongly identify personally with Corbyn: they find it hard to believe that he holds different opinions from them.

The second factor is the remaking of Brexit as a culture war, where to say that someone is a Eurosceptic is seen as a kind of slur. Perhaps without realising it, some on the left do associate Euroscepticism with Little Englanderism or even flat-out racism, and see it as a moral failing rather than a political position.

But I’m not impugning Jeremy Corbyn’s character or morals by saying that he is an instinctive Brexiteer. He comes from a tradition on the left that sees the EU as a capitalist club. You can disagree with that premise but it’s a respectable line of reasoning.

Also, the Euroscepticism of Corbyn and his allies will undoubtedly give them an advantage in the months ahead; they are not consumed by fatalism, and the members of McDonnell’s shadow Treasury team feel that the removal of European state aid restrictions can help revive ailing bits of the British economy. They have a vision of what an ideal “Labour Brexit” would be – and it’s not just sobbing and begging Emmanuel Macron and Angela Merkel to take us back.

We do, however, need a reality check. Now that the necessary humble pie has been eaten, Labour’s unexpected revival at the ballot box means we can begin to treat Corbyn as a normal politician – with the emphasis on the second word. He’s not the Messiah, but he’s not a joke either. He is a charismatic campaigner who is willing to compromise on second-tier issues to achieve his main objectives.

From the general election, we can see just how good a campaigner Corbyn is: he can fire up a crowd, give disciplined answers to interviewers and chat amiably on a sofa. That throws into sharp relief just how limp his performances were last year.

He might have little else in common with Theresa May, but they both looked at the EU referendum and thought: yeah, I’m going to sit this one out. He called on activists to accept the EU “warts and all”; and said he was “seven, or seven and a half” out of ten in favour of staying in it.

For both leaders, this was a pragmatic decision. May did not want to be overtly disloyal to David Cameron, but neither did she wish to risk her career if the result went the other way.

Anyone in Labour would have been equally sane to look north of the border and back to 2014, and remember just how much credibility the party immolated by sharing stages with the Conservatives and allowing itself to be seen as the establishment. By limiting his involvement in the Remain campaign and whipping his MPs to trigger Article 50, Corbyn ended up with a fudge that gave Labour some cover in heavily pro-Brexit regions of the country.

That’s the politics, but what about the principle? I can’t shake the feeling that if Corbyn campaigned as hard for Remain in 2016 as he did for Labour in 2017, we would still be members of the European Union. And that matters to me, as much as left-wing policies or a change in the rhetoric around migrants and welfare claimants, because I think leaving the EU is going to make us poorer and meaner.

That’s why I worry that many of my friends, and the activists I talk to, are about to be disappointed, after waiting and waiting for Labour to start making the case for a softer Brexit and for the single market being more important than border controls. As Michael Chessum, a long-standing Momentum organiser, wrote on the New Statesman website, “Recognising the fact that immigration enriches society is all very well, but that narrative is inevitably undermined if you then choose to abolish the best policy for allowing immigration to happen.”

Labour’s success on 8 June was driven by its ambiguous stance on Brexit. To Leavers, it could wink at ending freedom of movement when they worried about immigration; to Remainers, it offered a critique of the immigrant-bashing rhetoric of recent times. But can that coalition hold as the true shape of Brexit solidifies? Over the next few months, Jeremy Corbyn’s biggest decision will be this: which half of my voters should I disappoint?

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

0800 7318496