|August 2007 | 137 » Opinions » Something for everyone Buy Issue|
|Gordon Brown's "progressive
universalism" is a nice idea but it may come unstuck
When I was at university in the 1970s, students felt financially on a more or less level playing field. The state gave a standard grant that was just enough to live on; those with better-off parents got less than the full grant; all but the meanest parents topped this up to the state-ordained level.
Today, only undergraduate students with a family income of less than £17,500 receive a full maintenance grant of £2,700 a year, and those with a family income of up to £37,425 receive a partial grant. But the student loan, at an average of £3,400, only pays for about half the cost of living at university, with the grant nowhere near enough to make up the shortfall for all but the very poorest students. The rest must come from parents, from working at Tesco or by running up more debts. No wonder so many young people from families of modest means stay away.
Recently, however, the government has announced it is raising the maximum grant marginally, by £125, but more importantly, it is raising the maximum family income eligible for the full grant to £25,000, and raising the maximum for getting some grant to £60,000. This means that more students from low-income families can get their livingcosts more or less covered by grant plus student loan. It also means that a full or partial grant once again goes to most students (about two thirds), and that a student might expect a top-up from parents to the full rate according to family means. With these reforms, while the playing field remains uneven, it is more level than for many years.
It is no coincidence that this
change was announced within days of Gordon Brown taking power. Brown has introduced a concept called “progressive
universalism”, which translated out of wonkspeak means quite simple
the state paying “something for everyone, but more for the poor”.
This is being applied across the lifespan. Benefits and tax credits for
children have both universal and targeted elements; the income
thresholds for the Child Tax Credit are very similar to the proposed
student grant. And from about 2012, the “universal” element of state
pensions will be strengthened (by uprating it in line with earnings),
alongside a continuing means-tested component. The idea is that measures
to help the worst-off are most effective if they form part of a system
in which everybody has a stake, and which therefore commands sustained
support from taxpayers.
In practice, there have been
huge tensions between the “progressive” (pro-poor) and
“universal” features of Brown’s handouts. The priority of ending
child poverty has caused the means-tested part of Child Tax Credit to be
generously uprated and the part going to middle-income families to be
frozen. For pensioners, the past decade have seen ever sharper means
testing as the minimum income for pensioners (paid through pension
credit) has risen with living standards while the universal state
pension stays constant in real terms. Gordon Brown has prioritised
scarce resources on combating pensioner poverty, and had to be bounced
into greater universalism by the Turner Commission.
These tensions demonstrate that the double-act of progressive universalism can only really work in the long term if it unlocks extra public resources by creating a wider acceptance of the state’s role in funding. This seems highly unlikely at a general level with a public that feels (as ever) over-taxed, but may be more feasible where specific “bargains” become well understood, with extra taxes earmarked to pay for specified things in which most people have a stake. Gordon Brown made a first foray in this direction in 2002 by putting an extra penny on national insurance contributions (a penny on income tax by another name) and associating it with necessary increases in health spending. Media and public accepted it with barely a murmur.
A future test of this kind will be the funding of the long-term pension settlement after 2012. This requires at least some extra taxation, and any future government will have to decide on where there this tax rise comes from and how it sells it. Its trump card will be this. The main long-term effect of the reforms will be to pay more into a universal pension rather than into means-tested guarantees for poor pensioners. Financing this through progressive taxation will amount to the middle classes being taxed to benefit the middle classes. A penny or two on national insurance to fund a more adequate, secure basic pension as a foundation of retirement income may seem a good deal relative to putting the same penny into uncertain private schemes.
A more immediate test for progressive universalism will come this year with the search for a new settlement on paying for long-term care for the elderly. At present, most help goes to the least well-off and some people on modest means (but not necessarily rich) get now help at all. This is highly unpopular and goes against a widespread belief that social care like healthcare should be free at point of use. The Treasury could not afford the large extra expense of making it completely free, but in the comprehensive spending review is considering whether, in the long term, there should be some help for everyone, even if only to pay for a relatively small portion of care costs. Here again, firm commitments will be highly constrained by Britain’s overstretched public finances. Some other countries have solved this problem by extending social insurance, with extra contributions earmarked for this purpose, but so far UK governments have had little appetite for such schemes.
Brown’s quest for progressive universalism reflects his desire to run a government that unites rather than divides Britain, persuading middle class voters that “we are all in this together” rather than just having residual public services for the poor. His selection of housing as his new cause célébre reflects this. Improved overall housing supply would benefit thosse at the bottom of the pile, at the same time as addressing the concerns of middle class parents in the southeast who have no idea how their children will ever get a foot on the ownership ladder. But in many policy areas, there will be a continuing tension between catering for people on middle incomes and the worst off. Only by transforming people’s faith in the public sector to come up with attractive solutions will it be possible to raise the extra resources to do both at once.