Give and Take

Here's a thought provoking article by Hugo Rifkind which appeared in The Times the other day.

I have to say that I like newspaper commentators who hold strong and challenging views - combined with a good sense of humour, preferably - unafraid to knock over a few applecarts and prepared to tackle vested interests.

But the problem the UK faces in tackling our creaking welfare system is that the party politicians charged with doing the reforming - are often far too inward looking, tribal and partisan.

So what they say in opposition is often completely different to what they do when in power - with principles and common sense going out the window - as politicians of all parties try to 'monster' the best laid plans of their opponents.

And as Hugo Rifkind correctly points out it's a crazy system that taxes people with one hand - only to give something back with the other through a convoluted scheme of tax credits. 

What we could do with is a tax system which is transparent and easily understood - with clear principles that remain progressive and consistent across all income groups.

Because such a system would command widespread public support - and would help target welfare benefits on people in genuine need.   
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Don’t tax me just to give me my money back

By Hugo Rifkind

Universal benefits are supposed to compensate those of us who pay into the system. Who are they kidding?

My family is a hardworking family. I mean, sure, 50 per cent of us are frankly coasting and don’t even tidy up the Lego box, but the other two of us are in the office five days a week. So I’m pretty sure we qualify. According to the Resolution Foundation, 60 per cent of coalition benefit cuts hit households like mine. And, according to many people, including Ed Miliband and most of the Labour Party, this is bad.

I can’t figure out why. It’s not that I’m saying that they’re wrong. It’s just that I can’t grasp why they think they’re right. Surely you can only be properly annoyed about something if you would be less annoyed about the opposite. Yes? So if “60 per cent of cuts hit working families” is bad, then surely, to Ed Miliband, “60 per cent of cuts hit non-working families” would be better.

Only, I’m not sure it would. In fact, I think it would be worse. Does Labour want the brunt of cuts to fall on people without any other income? Is that what socialism means these days? No. So who should it fall upon? Working people or non-working people? Because it’s got to be one of the two. Because — and I’m sorry to have to point this out, because I fear my tone might be veering towards the patronising — I’m afraid that those are the only sorts of people there are.

Of course, you could say “neither”. You could say that, if the State hasn’t got enough money, rather than cutting any benefits we should simply raise taxes. But in the case of, say, me I don’t really get the point. The particular benefit my own hardworking family is losing is child benefit, which until now has come in at £1,752 a year. Should the State tax me more so that it can keep paying me more? Would that really be sensible? To take a cheque from me every month so that it can afford to give me one back?

Some would say “yes”. Many on the left reckon that it’s vital for me to get money from the State, even if the State has to take it from me first to ensure that I feel an affinity with others who actually need it. The winter fuel allowance, an annual payment of between £200 and £300 that goes to pensioners whether they need it or not, is defended on the same basis. Essentially it’s a bribe, designed to make old folk not mind that they’ve spent their entire working lives paying tax. And it could work, too, but only if we were all faffing morons.

I mean, come on. Who is fooled by this? You want me to feel I’m getting something back for all I put in? Then don’t buy me a handful of discount logs at whatever miserable age it is that you finally let me retire. Buy me a conservatory. Every year. Hell, skip a year and buy me a Porsche.

The pretence that what we get back from the State has any connection to our contribution towards it was threadbare a generation ago and is simply nonsensical now.

If your tax bill came with an itemised statement, it would tell you, roughly, that you work for a fifth of the year paying for other people’s pensions and another fifth paying for their healthcare. And all of this in a country where a future in which other people ultimately pay for your pension and healthcare seems pretty damn tenuous. For another couple of months, more or less, your tax pays for miscellaneous benefits — jobseekers, disability and all the rest.

This is not a whinge. I’m not really complaining about my tax bill, because I’m well aware of how deeply fortunate I am to be earning enough to have one that makes me quite so miserable.

But I would like some consensus, philosophically speaking, about what is going on here. Am I supposed to feel proud about paying tax? Are those who currently need all those pensions, benefits and healthcare supposed to spend their days feeling grateful towards me that I do? The former seems to be a yes, the latter a big no. But doesn’t one entail the other? Why does nobody talk about the fundamentals? How can we hope to have a sensible conversation about tax and benefits if we can’t even talk about that?

The trouble is, different people see the fundamentals in fundamentally different ways. Rigorous left-wing thought would hold that the State has a claim on all my money, is doing me a favour to the extent that it doesn’t take it and has to reallocate some of my own money back to me as child benefit, otherwise I might forget that it basically owned my children, too.

Rigorous right-wing thought, meanwhile, would hold that the State is doing the hungry an enormous favour when it pays for their food and that they ought to exist in a state of extreme gratitude that it does so. Bailing out the poor in this respect is regarded as a bit like bailing out the banks — neither have a right to expect it, but both would cause no end of problems if they truly went to the wall.

Most of our views on tax and benefits squat incoherently and inconsistently somewhere on the spectrum between the two. Mine certainly do. But nobody ever starts there when they have an argument. Mr Miliband thinks that benefits should rise with inflation, but doesn’t say why. George Osborne thinks that they shouldn’t, but he doesn’t quite say why, either.

Never mind the nuts and bolts of thresholds and who should face more or fewer cuts. We’ll get to that. First, I want to know what life Mr Osborne believes the State should provide for those unable or unwilling to provide one for themselves. Then I want to know what Mr Miliband believes. Should every day on benefits hurt or not? Should jobs be a goal or a necessity? Do you, bluntly, think that a non-working family should have a quality of life that matches that of a working family?

Personally, I don’t really think they should. But I don’t imagine they often have that currently anyway. Probably it’s good to support working families but I don’t think the State should worry too much about supporting mine, because frankly we’re lucky enough to be supporting ourselves. But there’s Labour arguing that I should have money when I don’t need it, so that I don’t mind it also going to people who do need it, which is something that I don’t for a moment mind anyway.

I’m lost in tricks and point-scoring. I want to know what these people really think. George, park your shirkers or strivers. Ed, don’t tell me a story about your Dad, or where you went to school. Just come clean, because I simply don’t believe you’re as confused about this as I am. Show me your first principles. And after that all the other things you say about benefits will start to sound like more than partisan shouting. Because right now, they really don’t.