Tuesday, 5 October 2010

The cost of fairness

I’m not entirely sure what to make of the Government decision to cut child benefits for any household where one adult earns enough to pay tax at the higher rate.

From one perspective, it looks like a clever move – if I was going to pick a fight with the government over one of their “savage, slash and burn” cuts in public services, it wouldn’t be over giving cash benefits to the most well-off. On the other hand, it is directly hitting people who are likely to be Conservative supporters, and doing so in a way which many of them will see as being unfair since a household with a higher income split between two earners will continue to receive the benefit. That doesn’t look so clever at all.

It’s an attack on ‘universality’, of course; but a well-aimed one. And I wonder if the inherent unfairness (on the grounds, apparently, of administrative convenience and cost) of what the government have themselves referred to as ‘rough justice’ isn’t setting a precedent which they will apply elsewhere.

The high level sound bites about reforming and simplifying the tax and welfare system have obvious attractions. None of us want more bureaucracy and paperwork than is necessary. But fairness can involve complexity – to what extent do we really want to sacrifice fairness for cost reductions?

4 comments:

The Druid of Anglesey said...

I suspect it will be rather difficult to accuse the Tories of only looking after the rich in future. (Before you say people earning £44K aren't rich, let me remind you that they are in the top 20%.)

John Dixon said...

There is a difference between income and wealth; people on high incomes are not necessarily 'rich' in the sense of having possessions or assets.

I don't think I've ever accused the Tories of 'only looking after the rich' as such. My criticism would be more that they have an ideological commitment to things like:

competition rather than co-operation as a means of allocating resources; and

protecting the existing unequal distribution of wealth and income.

Presenting the child benefit change as being somehow 'redistributive' does not look entirely honest to me. If I wanted to attack the principle of 'universal' benefits (and I don't!), then this is probably where I'd start as well, since it gives the impression that opponents are supporting giving benefits to the already well-off.

But if they wanted to be truly redistributive, an increase in the level of income tax for all those on higher salaries would be fairer and more effective.

Spirit of BME said...

Let me just comment on your last para in your reply to DoA.
Redistributing wealth to the poor does not initself create new wealth but has been looked as handing out a life jacket to keep them flooting.The life choices that most of the poor make contribute to their condition - its no coincedence that there are more betting shops opening in deprived areas than in affluent areas- and the business case to open a new shop is not based on one or two popping in on the off chance.These shops know that through media pressure the kwic win is far more appealing to them than thrift and a life plan to get them out of this dependancy.The result that the spiral continues and the money wasted.

John Dixon said...

Spirit,

Redistributing wealth to the rich through speculation and paper shuffling does not in itself create new wealth either, but it does help to create poverty, both relative and absolute.