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Old or young, a similar set of political problems

By Peter Hoskin
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The past week has been neatly bookended by two policy stories. One is about the very young: last Sunday’s Observer reported on the Commission on Living Standards’ finding that it now barely makes sense for some “second earners” to work full-time, thanks to the rising cost of childcare. And the other is about the old: today’s Telegraph covers a government report which suggests that, thanks largely to an ageing population, the state will find it increasingly difficult to fund social care — with the result that more pensioners will have to stump up for it themselves.

The reason I mention both of these policy stories now is because they’re similar in a several respects. To list them briefly:

i) They’re both about affordability. In terms of the government’s fiscal measures, pensioners have got off relatively lightly from this period of austerity — but the combination of quantitative easing, low interest rates and persistent inflation will have had a shuddering effect on retirement incomes nevertheless, and now there’s the prospect of savings being excavated even further to cover the cost of care. As for the parents of young children, we already know about the controversies surrounding child benefit and all that.

ii) They both threaten to provoke Coalition tension. As I’ve pointed out before, the Liberal Democrats aren’t particularly enthusiastic about all of Liz Truss’s ideas for reducing the cost of childcare, and are outright concerned at her emphasis on deregulation in the child-minding trade. And when it comes to social care, there is an increasing amount of blame being spread about between the yellow and blue halves of the Coalition. The Lib Dem former minister Paul Burstow recently claimed that the Treasury — aka, George Osborne — would prefer to leave the matter of social care, and the funding of it, “stuck in the long grass”.

iii) They could both be defining issues at the next election. One of the most insightful columns of the past week’s was Mary Riddell’s on Ed Miliband. The Labour leader, she wrote, is eager to make the next election the “living standards election”. The Milithinking is that, even if the economy has improved by then, people will still be feeling the pinch after years of meagre wage rises, high prices and fiscal frugality — and it’s an analysis that’s more than supported by the full report that the Commission on Living Standards released this week. And so, for instance, “it now seems likely, if not certain that cheap universal daycare will be a central plank of Labour’s bid for power.”

But the final way in which these two age-related crises are similar is probably the most important: if they’re to be solved, then it’s likely that the Government will have to find to a lot of cash to do it with. Where — particularly with the deficit lingering well into the next Parliament — will the money come from?

As it happens, many of the answers we’ve heard to that question have involved cutting back some of the universality written into the welfare state. As the Commission on Living Standards report puts it, “the clear prevailing view of the Commission is that the government should means-test universal non-pension benefits, as part of a mix of revenues to fund new support for living standards.” While, in the case of social care, Andrew Lansley once devised a plan to means-test people who receive care in their own homes.

But, of course, these answers have not yet been welcomed by the relevant party leaderships. Mary Riddell writes that “Mr Miliband has already privately rejected derailing the grey gravy train by means-testing perks such as winter fuel allowance and television licences.” And it’s said that Mr Osborne slapped down Mr Lansley’s proposal by asking him “Why are you robbing Peter to pay Paul?”

You do feel, though, that, given the scale of these problems — not to mention, the deficit — someone will have to break from that convention soon. I hope you don’t mind me reusing a tweet I wrote earlier, but: the race is now on for politicians to abandon universal benefits and use the savings wisely.

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