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The heart and soul of the nation
As with the massive cuts programme itself, the reason for the early announcement of these benefit changes was largely political and ideological. Margaret Thatcher pointed out, in an interview conducted two years after her election victory in 1979, that one of the main aims of radical 'free market' Conservatism is to alter the way people think and feel. Its policy changes are made not merely for economic reasons, but are tools for banishing collectivism and replacing it with an individualistic 'me-first' outlook:
"What's irritated me about the whole direction of politics in the last 30 years is that it's always been towards the collectivist society. People have forgotten about the personal society. And they say: do I count, do I matter? To which the short answer is, yes. And therefore, it isn't that I set out on economic policies; it's that I set out really to change the approach, and changing the economics is the means of changing that approach. If you change the approach you really are after the heart and soul of the nation. Economics are the method; the object is to change the heart and soul."
It had taken a world war in which we- or our recent ancestors- really were 'all in it together', along with the rising power of the Labour Movement and the influence of communism, aided by the threat (to some) and appeal (to others) of the Soviet Union, to make that move towards "the collectivist society". Under Mrs Thatcher many aspects of that change- including the nationalisation of much of industry, the availability of well-paid jobs for working class people, and the straightforward provision of council houses or flats for millions of people- came to an end.
Margaret Thatcher had notable successes in bringing to reality her view that 'there is no such thing as society', and under New Labour some of the key economic changes made under her government were continued. But she did not complete her mission; important aspects of social solidarity have survived to this day, both in economic practice and in the heart and soul of the country.
Take, for example, the tax and benefits system, which since 1945 has had 'universal' components, including the recognition of children as family members and, to an extent, as social and economic citizens. At all levels of society, when determining the financial obligations of the nation to the adult individual and those of the individual person to the nation, account has been taken of the need to house, feed, clothe and otherwise meet the economic needs of the children for which the adult is responsible.
But not any more. Children, it has now been established, are merely a 'lifestyle choice' on the part of their parents, and therefore the community- via the state- need take no particular account of the costs of bringing them up.
Showcasing their changes in state benefits for children has the advantage, for the Tories and their Lib-Dem hangers on, that 90% of the population will not lose out on the immediate implementation of these cuts; and, even better in terms of winning public support, that those who will directly lose out can be presented as undeserving cases.
One group who will suffer, the jobless families with several children who happen to live in high-rent housing areas, are already represented as work-shy scroungers; against whom the resentments of all and sundry can traditionally be mobilised. Now another undeserving group has also been unearthed: those who have jobs- good jobs, which earn them twice the median average wage- yet, because they have one or more child, have up to now been entitled to universal child benefit.
The removal of child benefit for families which include a higher-rate taxpayer is being justified as a 'progressive' change, supposedly hitting the better off rather than the worse off. But a progressive tax and benefits system is one which raises revenue from those who can most afford to pay. Those on higher incomes are, in general, able to pay more; with the result that although higher rate taxpayers constitute less than 15% of the working population, they provide over half of all the income tax received by the government.
But who, in general, has the highest actual disposable income- somebody on £43,000 per annum who has a household of children, or someone on the same salary, or perhaps a much higher salary, who has no young children to support? Given that it is proper to seek additional revenue from the higher-rate tax payers, why- except for ideological reasons- hit specifically the families with children, who have the least disposable income per person, rather than the entire group of higher-rate tax payers?
An increase of a mere 1% on the higher income tax rate, taking it to a marginal 41% of earnings, would raise almost exactly the same amount of cash for the government as the abolition of universal child benefit will raise, according to the government's estimate- one billion pounds annually. A moderate rise of a few more percentage points on that higher tax rate, combined with a somewhat less moderate rise in taxes on those earning over £100,000 per year- especially if accompanied by a serious effort to counter the tax avoidance and evasion practiced by the rich and the corporations they own- would raise enough to close the public deficit (currently running at £13.3 billion). That really would be a progressive change, and therefore not only will it not be considered even as a possibility by the Con-Dem government, but the Labour Party under Ed Miliband- despite that he is more progressive than his brother- will not dare to propose it.
Give them an inch...
Once the principle of the non-recognition of children's economic needs is enacted, for large families without a wage earner and for families where the wage earner (or one of the wage earners) is paid £43,000 per annum, we can expect the thin ends of the wedge to be driven in from both sides; with the eventual drastic reduction or even termination of social supports, provided via the state, for those on average incomes; and the coalition government will strive to apply that rule to all benefits, not just those for children.
The Daily Telegraph and the Daily Mail- which irrespective of their pro-Conservative editorial and journalistic agendas have a mass readership of middle-class parents and grandparents- carried articles complaining about the abolition of universal child benefit; but the hard core intellectual magazines of the ultra-capitalist right-wing, the Economist and the Spectator, rejoiced and pressed the government to go much further. James Forsyth, who was until recently the assistant editor of the US-based international strategy journal Foreign Policy, and is now the political editor of the Spectator, was moved to write a blog article entitled 'The beginning of the end of universal benefits'. He enthused on his view that the death-knell for state benefits for all has now been sounded:
The most important line in George Osborne’s speech [at the Conservative Party conference] was this one:
“It’s very difficult to justify taxing people on low income to pay for the child benefit of those earning so much more than them.”
Logically, this argument applies equally to all other universal benefits. Why should someone on £12,000 a year be paying tax to help cover the cost of Ken Clarke’s pension?
Indeed, following that logic does take us to the abolition of all other universal benefits, and not only the financial ones like child benefit and the old age pension. Free National Health Service care is also a universal benefit, as is the availability of free school education for all children. Could these also be abolished, partly under this government and more completely under a second or third term Con-Dem or purely Conservative government, creating ghettoised and mainly privatised services, with the state and charities providing some inadequate funding for a second or third class 'safety net', a rump provision for the destitute or semi-destitute, while those who are presumed able to fend for themselves are left to fend for themselves?
This is increasingly conceivable. And that, after all, is the way things used to be- before Britain made a turn, at the end of World War Two, towards 'the collectivist society'. The degree to which the clock will be turned back towards pure capitalism depends largely on the extent to which people can find the means to fight back against the Conservative / Liberal Democrat government.
Margaret Thatcher posed the question: "Do I count, do I matter?" In her vision, and that of David Cameron, the less you have, the less you matter; and the corporate accountants are the ones who will do the counting.