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 Images
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The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.