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29 October 2010

The crafty political logic of the coalition’s war on universality

Labour has to find a credible counterargument to defend this key progressive principle.

By Matthew Partridge

Since the Second World War, one of the hallmarks of the British welfare state has been its universality. However, both David Cameron and Nick Clegg have attempted to defend their decision to increase the cap on university tuition fees and means-test child benefit by arguing that they are making sure that the impact of the cuts is borne mainly by high-income earners.

They point out that support for university students from poor families will be increased while the coalition will give a “pupil premium” to those primary and secondary schools that deal with disadvantaged children. However, although these measures will have a progressive impact in the short term, they are part of a longer-term strategy to destroy middle-class support for good-quality public services.

The current system has two main benefits. From a political perspective, enabling those on average, and above-average, incomes to gain access to public services creates a sense of shared civic space. This is important, because psychological experiments have shown that people tend to be more altruistic towards those they feel that they have a connection with.

Similarly, those on middle and upper-middle incomes are more likely to support those services for which they can see tangible benefits, even if they are less than the taxes that they end up paying. And conversely, deliberately excluding sections of the population from public services makes it easier for the remaining users of those services to be demonised as “scroungers”.

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That means-testing may push middle-class voters rightwards is particularly significant, given that lower turnout in recent elections has increased the power of wealthier voters.

Although estimates for the 2010 election are not yet available, the Electoral Commission estimated that while nearly three-quarters of the top two social groups voted in 2005, just over half of those on in groups D and E did so.

Throw in the well-known tendency for voters to overestimate their relative income, and it becomes clear that Stanley Greenberg, a political consultant who worked for both Bill Clinton and Tony Blair, is correct in claiming that middle-class voters are the key swing group in modern elections.

Ending universality is also bad economics. Means-testing services for all but the very poorest risks creating a middle-class version of the “poverty trap”. In extreme cases, this could lead to families close to the average income facing punitive marginal tax rates, with any extra money that they make – for instance, from working extra hours – being eaten up by increased co-payments and fees.

However, under a means-testing regime, the rich would be able to use the threat of bypassing public services and going private to put a de facto cap on the amount that they are required to contribute – something that many fear may happen with higher education.

The coalition’s plans are therefore both a challenge and opportunity for Ed Miliband’s leadership. He clearly needs to set out a credible alternative economic programme, which will involve accepting the need to reduce the Budget deficit, albeit to a slightly longer timetable. The Conservatives have also cleverly co-opted several left-of-centre thinkers, such as Will Hutton, making it harder for Labour to challenge them.

There is a great need to make sure that those most affected by the recession are not hit by the cuts. However, if Miliband is able to mount a credible and convincing defence of universality, he will not only have defended a key progressive principle, but improved Labour’s standing in the key, south-eastern marginal seats that the party needs to win to regain power in five years’ time.

Matthew Partridge is a freelance journalist and a PhD student at the London School of Economics.