I don't really listen to the radio. My wife, who owns two radios for the kitchen and her office, regularly has music on while she is working, and will often gently mock me for my lack of musical knowledge as I don't really listen to the radio.
I have listened to the radio at times in the past. For a while when I was at university I had a radio alarm clock and was woken to the irritating jingles of BBC Radio 1. When I bought my first car I considered it the height of refinement to listen to BBC Radio 4 on my commute. Both of these forays were over a decade ago now, and in the intervening years I have preferred to drive in silence (much to my wife's amusement), listened to my audiobook CDs or, more recently in my "modern" car without a CD player, podcasts.
My new car does still have a radio. Apparently it is one of those newfangled digital radios which seems to sound exactly the same as an AM/FM radio but is definitely better because it is new…! Occasionally, when I am wanting silence or to listen to a podcast, my car decides otherwise and pops on a random radio station (typically at full volume to add to the fun). Today was one such day. As I started my car the radio came on before I had chance to switch to a podcast.
On this occasion, instead of music I heard a few seconds of a woman (presumably a member of the public calling into the show given the quality of the audio) talking about the winter fuel allowance. As someone in their thirties I have not followed the planned changes to the winter fuel allowance in any detail, but I am vaguely aware the plan from the government is to change the eligibility criteria from a universal benefit to one which is means tested. I am sure for a lot of older folks this is worrying and/or frustrating.
I turned off the radio after only a couple of seconds of what she was saying, and it was one of those moments where you do not fully register what had been said until after the fact, leaving me wishing I had listened to a bit more. Essentially, from the snippet I heard, the point she had been making boiled down to her appreciating eligibility for the allowance needed to be brought in to save money, and also hoping with the new assessments coming in the right people (and presumably not the wrong people) get the benefits. Unfortunately I did not hear the rest of her argument, or any potential rebuttal from the host or other guests, but essentially she seemed happy to save money by taking the benefit away from rich people via means testing.
On the face of it, this seems perfectly reasonable. After all, why should someone on a high income need a benefit designed to help those who are struggling to even pay for heating through the winter months? Someone on six figures or more (a bit of an arbitrary figure I have chosen for the sake of argument) should have sufficient income to pay for their energy bill, and if they are struggling then maybe they need to cut down on the holidays and fancy cars to balance the books.
The winter fuel allowance is not the first benefit to be limited to certain income groups. Most benefits are means tested, and there has been a trend to remove universality from those benefits (such as child benefit becoming means tested in 2013) which have previously been available to all. Essentially the arguments in favour are along the lines of the ones made by the woman on the radio; stop the benefit being given to people on high incomes who do not need it, means test the need for the benefit on low income people, and save money as a result. Simple
Not so simple
There is a really good clip of the former Greek finance minister and my secret man-crush Yanis Varoufakis taking part in a Question Time panel from 2015 (I think). In the clip, a member of the audience attempts to compare the budget of the country to his personal finances, and Varoufakis explains rather deftly why this is not a good analogy. I have linked to the clip here rather than trying to bungle my own explanation, I would strongly advise taking a watch.
The clip is rather satisfying, and the overall point applies just the same to the issue raised by the woman on the radio; economics is not always simple.
(Quick disclaimer before I go on, I'm not an economist. Don't make investment decisions based on what I have to say below…!)
Spend less, cost more
It might seem an easy way to cut costs by only offering a benefit to the most needy, but how do you decide who is the most needy? Take my cutoff of six figure salaries for people not needing the winter fuel allowance, how do we work out who is eligible and who is not?
The answer of course is an application. People apply for the benefit if they think they are eligible, and as part of the application declare how much they earn. Much of this can be automated, but there still needs to be checks, either every application or a sample at random, to make sure only eligible people are getting the benefit. By stopping the benefit being universal, we introduce costs in the process of administering the benefit. It might be these costs are less than the saving from high earners getting the money, but this is not guaranteed. By taking away the benefit from some, we might be perversely spending more to achieve the aim.
Right people, wrong people
When we are talking about benefits, often the economic picture can predominate, and this risks forgetting benefits are there to help people in need. Whenever an application process is introduced, it risks people not eligible applying and needing to be weeded out as above, but it also risks those eligible missing out on needed benefits either because they do not apply (because they do not know about it or cannot understand the process for example) or they are falsely excluded because the application and/or vetting process is flawed. To bastardise Blackstone's Ratio, surely it is better ten people not eligible for a benefit receive the money than one eligible person misses out?
Ultimately, that is what universal benefits are doing (though hopefully not quite at that ratio). They are giving money to those who probably do not need it, to make sure that every person who does need it benefits. As hard as it might be to accept, giving a few hundred quid to a millionaire is barely going to register in their bank account, but wrongly taking it away from someone using as food bank is likely to be devastating.
Long live universalism
When public finances are stretched, it can be tempting to baulk against the idea of universal benefits. Give only to those who need it and save the public a penny or two.
I think this is (pretty much always) the wrong approach to things. In general I am all for simplifying things like benefits and tax as far as possible, and universality is one way to do that. Complex tax and benefit systems typically only benefit those able to navigate and massage the system, while often harming those with genuine need. While reiterating the disclaimer I am not an economist, I tend to consider myself a Georgist when it comes to tax policy, and a fan of the (often) related universal basic income when it comes to benefits. Are they going to solve every single ill in the world? No, of course not. But might they make a start in reining in the rampant inequality we see in places like the UK today?
When money is tight it might be an unpopular position to take, but I say give the rich their winter fuel, providing every person in need gets it too. Long live universalism!
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