Nick Boles is right to put universal benefits on notice

By Peter Hoskin
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Universal benefits never did make much sense to me. Even allowing for Ed Miliband’s argument that hand-outs for the middle classes (and richer) keep everyone on board with the welfare state, they do seem a bit superfluous. Why should the state borrow and tax money only to give some of it back to those who don’t strictly need it? Wouldn’t it be better to just borrow and tax less in the first place? Or at least focus the money on those who do actually need it, such as the 18.5 per cent of Winter Fuel Allowance recipients who are actually in ‘fuel poverty’? And so on and so on.

And yet — thanks in part to David Cameron’s “read my lips” moment ahead of the last election — universal benefits have persisted, even as other items of state spending have been cut back. For both Mr Cameron and Mr Miliband, it has always been a risk too far to start talking about taking fuel allowances and bus passes away from free-voting older people. And so they have slumped into a cosy and easy consensus: keep ‘em, don’t cut ‘em.

But now, thankfully, there are signs that this consensus might be hastening towards its use-by date — and not just at the bequest of IDS and Lib Dem ministers, either. Today the moderniser-of-all-modernisers, Nick Boles, has given a speech in which he calls for certain pension-age benefits (namely, the Winter Fuel Allowance, free bus passes, free prescriptions and free TV licenses for the over 75s) to be terminated for better-off pensioners. He says that this should wait until 2015 — which means, of course, that Mr Cameron wouldn’t actually break his 2010 promise — but it’s a striking proposal nevertheless. Mr Boles may not, I’m told, be speaking for Downing St here, but surely his words aren’t entirely divorced from political possibility.

In which case, some of Mr Boles’s other proposals are also worth noting. The cuts to universal benefits, he says, should form part of a wider recommitment to deficit reduction in next year’s Spending Review — including an additional £10.5 billion of welfare cuts by 2017. And he also suggests a few principles for identifying further cuts, generally by concentrating on those spending programmes that do not contribute to the productivity and competitiveness of the nation.

All of this is another example of Westminster’s increasing focus on the years after the next election. You see, necessity has dragged our politicians away from the here and now. It’s not just the forthcoming Spending Review, which will establish the fiscal framework for the three years after 2014. But it’s also George Osborne’s sliding timetable for deficit reduction in this Parliament. Now that elimination of the structural deficit is going to take until 2017 — rather than 2015, as originally foreseen — the coalition is obliged to cast its gaze further forward, and keep its cutting implements whetted and ready. Indeed, Mr Osborne has himself floated that same £10.5 billion figure for further welfare cuts. And the Institute for Fiscal Studies is working on the assumption that this is what will happen, as suggested by their report for the Nuffield Trust last week.

Of course, however necessary it is, identifying further cuts could be politically bothersome for Number 10. There’s a chance that it might strain the bonds of coalition as the election approaches, if the Lib Dems decide that they wouldn’t actually enjoy campaigning on some of the cuts written into the Spending Review. And then there’s Ed Miliband and Labour, who would no doubt be tempted to run a Jam For All campaign, arguing for ‘universality’ all the way. Or, as someone once put it, ‘Let sunshine win the day’.

So how are the Tories to go about it? Again, Mr Boles’s remarks contain some clues. He urges Labour to identify what they would cut and what taxes they would raise, implying that they don’t have the mettle to make the same ‘unpopular decisions’ as the current government has. And he situates his universal benefit cuts within a wider debate about intergenerational fairness, saying that ‘cuts cannot only fall on students, adults of working age and families with young children’. These are familiar points, but expect to hear them made more vigorously from now on. The arguments for the next election are being rehearsed today.