Against Means-Testing; OR, I Agree with Tony Benn (on this issue)

Against Means-Testing; OR, I Agree with Tony Benn (on this issue)

Means testing(1) is everywhere these days. It’s in maintenance grants and child benefit, job-seeker’s allowance and housing benefit and much more. Sometimes it seems that almost every new policy proposal involves means-testing. So how did it get to this stage, when means-testing should be anathema to both left and right wing?

For those on the left, opposition to means testing has its very roots in the Labour party. Attlee’s government swept to power in 1945 after campaigning to abolish what seems to be generally referred to as ‘the hated means test’: Tony Benn writes that, “The welfare state, then still in its early days, was based on the total rejection of the hated means test…”.

It is easy to see why. Means-testing, despite being nominally progressive, creates division and resentment within society, ranging from the simple example of the bullying of a child on free school meals to the more complex development of narratives about ‘strivers’ and ‘scroungers’. Furthermore, it fundamentally undermines support for government services and welfare provision. What are the public services in the UK that enjoy the most popular support, the ones that politicians underfund at their political peril? They are, almost without exception, universal ones: the NHS, the state pension and school education. Contrast this with the public attitude towards most means-tested or conditional benefits. Means-testing something significantly increases its chance of being cut or abolished.

Recognising that people may reasonably be suspicious of me when I say the left should oppose something, allow me to quote some left-wingers of impeccable credentials. You’ve had Tony Benn; let’s add Nye Bevan, who said that the means-test is “a principle that eats like an acid into the homes of the poor. In the small rooms and around the meagre tables of the poor, hells of personal acrimony and wounded vanity arise.” More recently, Frank Fields, the veteran Labour MP for Birkenhead who nominated Jeremy Corbyn for the leadership, has written that “Means tests paralyse self-help, discourage self improvement and tax honesty. Means tests attack the basis of independent citizenship and community cohesion and at the same time incentivise bad behaviour.”

This may be one of the few times you hear me say this, but I agree with them all.

From the perspective of the right , the argument against means-testing is simpler but no less cogent. Means-testing is a stealth-tax on the rich, a disincentive for hard work and striving and an unfair penalisation for the fortunate. It encourages profligacy and discourages thrift, rewarding the feckless and punishing the prudent saver. It unfairly hits the ‘stretched middle’ and ‘ordinary working families’, those who are not the super-rich but who are nevertheless denied government support. It creates moral hazard, increasing the burden on the state.

I agree with all of this, too.

Perhaps the most damning indictment of means-testing; however, is that it does nothing that could not be done better by straight-forward progressive taxation and redistribution. By all means let’s have an honest debate about the level of taxation we want on income and wealth, and the right and the left can disagree here and make their arguments for and against. But surely we can agree that, if we’re interested in reducing wealth inequality, then to quote Benn again, we tax people for being rich, not for being educated – or for having children, or for being homeless, or for anything else. We might legitimately disagree on how much we want to tax someone earning £20,000, £50,000 or £250,000 a year, but there’s surely no good reason why anyone would want to tax someone on a given salary more simply because they have children or are disabled.

Why is it so popular?
The easy answer would be just to blame Tony Blair, but that would be unfair. Whilst its undoubtedly true that he and Brown presided over a great increase in means-testing, it was being used before and has been used afterwards. So why?

A major factor, I suspect, is due to compromise. Sometimes people want to introduce a particular policy, but don’t have enough money – maybe they know they can’t get a tax rise through – to make it universal, so they bring it in with means testing. Maybe other people want to abolish a policy, so they can cut taxes (or reduce borrowing) but know that they’ll be outcry if they abolish it for everyone, so they means test it. Then there are other people who, with a limited amount of money (genuinely) want to help those most in need and means-testing is a way of making it go further. And finally there are people who focus on the trees rather than the forest – or maybe only have responsibility for a particular policy – and so take the view that they’re going to make their particular policy ‘progressive’, because that’s a way of helping the poor, ignoring the negative impact it causes on the system as a whole. In other words, a lot of well-meaning aspirations, rather than malice.

And so we end up with means-testing everywhere. And the trouble is, it then becomes so widespread that other policy makers, think tanks, and so on start suggesting it because its the done thing – and even start actively criticising those who oppose it, whether from the right to the left. The whole-sale adoption of means-testing by the establishment is a good example of the way technocratic managerialism masquerades as ‘centrism’, when in reality it’s abandoned the the principles of both right or left.

What can be done?
When a policy has become so intertwined in the apparatus of the state, it’s hard to reverse it. And it’s often doesn’t seem the most pressing: as set out above, there are often tempting reasons to accept any individual proposal of means-testing.

But at the least, we could remember the severely negative systemic impacts of means-testing – that’s true whether you care more about the arguments from the right or the left, or both. We could stop automatically assuming each new policy proposal should be means-tested, or reaching for means-testing as an easy way to save money, instead seeing it as a last resort to be used only when the benefits really do outweigh the costs. And we could look to slowly restoring universal provision, one service or benefit at a time, until we have once again ‘abolished the hated means test’.

(1) A definitional point. By means testing I mean testing eligibility for a certain benefit or government provided service by the wealth or income of the recipient.

5 thoughts on “Against Means-Testing; OR, I Agree with Tony Benn (on this issue)

  1. On this I agree with you, Iain!

    [Here endeth my shortest comment to date, by quite some way…]

  2. I wonder if part of the problem has been economic right wing views on low tax disconnected from social conservatism that cares about community cohesion. And both New Labour and the Cameroon conservatives shared this trait. While rightly recognising that high taxes have negative consequences, they have ignored the social costs of perverse incentives, particularly for those at the lower end of working income.

    1. That’s a very good point: it makes sense to me that social conservatism (in a broad sense) is a key component of ensuring the right maintains humanity and compassion.

  3. Agree in principle though I think people are instinctively more comfortable with free services for all than cash giveaways for all. Though at least if the latter are taxable you get some bonus progressivism.

    I think in practice the best reason for in kind benefits might be that achieving the same through higher taxes on the rich and then universal benefits opens you up to tax dodging etc. But in practice it’s probably more as you say about short term compromise or easy targets.

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