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Thursday, 25 April 2019

Bus Passes & Benefits


April 25 2019 and a House of Lords committee chaired by Lord True has published a report arguing for the downsizing and discontinuation of what are known in the UK as "pensioner perks" - freebies available to those over a certain age: free bus travel, free TV licences, pension top-ups labelled as "Winter Fuel Payment",  and so on. These benefits are not means tested and not taxed - so they are regressive benefits, worth more to higher rate taxpayers than basic rate taxpayers. I re-publish below my 2016 case against them all, as published in my book The Best I Can Do.

I’ve never claimed my Free Bus Pass. I would be ashamed to wave it while paying passengers watch. Imagine that it was Coloreds who paid and Whites who didn’t . Where I live, looking at workers boarding the bus and paying their fares on the way to low-paid jobs, that’s not far from the reality. Nor is it far from the reality, that poor people pay and better-off Over Sixties don’t. Yet the Over Sixties, quite solidly and sometimes fiercely, now seem to believe that they have a Human Right to bus travel paid for by others – even though Bus Passes are a very recent invention. How did this come about? The fault lies with our political parties, always looking for cheap ways to gain the favour of those most likely to vote. Any party now proposing to withdraw the passes would face a backlash of unreasoned wrath. My Benefits, right or wrong!

Bus Passes are not Pensioner Passes. You qualify by virtue of reaching your 60th birthday, well below the ages at which most people qualify for state pensions. At sixty, many people are still working, their children are gone and they have paid off mortgages. They are better off than at any time before. Many of those waving Bus Passes – of course, not all – are better dressed than they have ever been. They can afford to be. Eventually, they will become old and even frail. It’s always stressful to watch a frail elderly person board a bus, struggling with shopping bags and sticks. They don’t need a Bus Pass any more. They need a once-a-week Taxi Pass.

Or, rather, they need adequate pensions. Free bus passes are not only electoral bribes; they are also one of the cosmetic means by which feckless governments have sought to disguise the inadequacy of State Pension provision in the UK. In relation to former earnings, that Pension is much lower than the European average: about one third against an average of a half across twenty-seven other European nations. Our governments have been too fearful to force people to pay enough into retirement income schemes to fund adequate pensions and reluctant - until absolutely forced by a huge rise in life expectancy- to raise the pensionable age. Until very recently in the UK, the State Pension age for women was set at sixty. Men at sixty-five.

No one challenged that extraordinary bit of entrenched sex discrimination. It had its origins in discriminatory thinking: women filled up the workforce during two world wars and thus qualified for pensions. But allowing them to take their pensions at sixty was also meant to ease them out of the workforce, leaving more room for men who had fought. Over time, the discrimination transformed from discrimination against women to discrimination in their favour. But for decades no one challenged it.

Self-respect is very much connected to the ability to make your own choices. Older people generally benefit from walking or even cycling but politicians want you to take the bus. The bus companies are happy enough; they get paid. The Bus Pass is a clunking decision by politicians to make choices for you: Here, my good woman, take this Pass and use that bus over there! And show some gratitude! In a better world, older people would dispose of enough income to make their own choices and thus maintain an important aspect of personal dignity. It would be acceptable to withdraw the Bus Passes and add to the State Pension the equivalent of the money saved. All that you lose is the self-satisfied smile of the politician who wants you to doff your cap and thank him (Gordon Brown, Ken Livingstone).

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The Bus Pass is a symptom of a deeper problem which resides at the core of the British Treasury and the way it relates to British governments. The Treasury hates two things above all: ring fenced money and entitlements. It is committed to the ideas that all revenues should go into a single big undifferentiated Pot under its own control and that all outgoings, whether to government departments or citizens, are a matter of discretion.

That is, of course, an understandable way for a Treasury to think. It gives you the maximum of flexibility in what is often – thanks to politicians – a struggle to make the books balance. But it is also completely symbiotic with the interest of party politicians. They too want maximum discretion. Let me give one example.

British prime ministers normally want to pick at least one war to fight during their time in office. These wars of choice can be vote-winners. They allow the prime minister to walk tall. Mr Cameron was deeply disappointed in 2013 when he was not able to get his war in Syria, supporting Syrian jihadis. He had better luck in 2015 when Parliament agreed to his new plan to attack jihadis in Syria. It put him up there with the Big Boys.

But equally a government going to war does not want voters to think about the financial costs. The last thing it wants is being forced to impose a War Tax. That would make voters think twice about their gung-ho enthusiasms for bombing far away countries. Fortunately, the Treasury pot is usually big enough to absorb the costs of a small war, one which sticks to the cheap route to failure, that of bombing civilians. Money can be shifted between notional budgets and, if not, borrowing can be discreetly increased. But when monies are ring-fenced and there are entitlements, it becomes more difficult. As a result of this way of thinking, both Treasury and politicians are committed to the ideas (though they would never admit it) that All Benefits are Voluntary Hand Outs and No Benefits are Entitlements. In other words, citizens have no rights.

The obvious way to create entitlement to benefits is through insurance schemes. People pay into the scheme and, at the same time, they are informed of their entitlements under the scheme. That is what Britain’s National Insurance system was once supposed to be about. But now it isn’t. No one pays in anywhere near enough to accumulate entitlement to the benefits they can claim. Nowadays, it is merely a concession to the idea that there can be benefits to which you are entitled because you have insured for them. If the Treasury had its way, even that concession would be abolished. The Treasury loathes the idea of insurance. It gets in the way of tax and spend.

The Treasury has almost a winning hand in one simple fact about our psychology. We hate it when we see money removed from our pay packet before we even get it: Pay as You Earn taxes, National Insurance. If National Insurance was for realistic sums of money we would hate it even more. But when it comes to paying 20% Value Added Tax on virtually everything we buy – well, we don’t even notice it (often we don’t see it separately itemised). This is the Treasury’s winning hand – taxes we don’t notice. Not only that: such invisible taxes are not linked to any specific government expenditures. The Treasury gets just the kind of money it wants, money it can use as it (or its political masters) please.

The symbiotic Treasury - Politician commitment to avoiding entitlements and favouring handouts immediately opens the door to the parlour game known as Benefits Scroungingin which the winners are those who work out every handout for which they can make themselves eligible and promptly claim them all. Those who celebrate their 60th birthday by claiming their Free Bus Pass are benefits scroungers. They have no entitlement to the pass, they have done nothing to deserve it, they often don’t need it – but it’s there, a handout, yours for the asking.

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We have an increasingly shaky idea of what it means to be a citizen. The benefits culture, created by politicians and sustained until very recently by an all-party consensus, has been disempowering. It encourages childishness at election times as voters shop around looking for the party which offers three for the price of two. No more than that. No expectation that you think about the future, about your children and grandchildren; certainly no expectation that you think about right and wrong, justice and fairness.

An obvious route towards re-building ideas of citizenship involves, among much else, dismantling the Handouts culture and re-instating the idea of a contributory system: you pay in for health care, unemployment benefit, and pensions. That must be the expectation for nearly everyone, with a non-contributory social safety net principally for those who are born disabled or become so. It also involves challenging the Treasury - Politician collusion. There is no reason why money should not be ring-fenced, why taxes on X should not go towards paying for Y and only for Y. If politicians want a war, then they must use a War Tax to pay for it. If voters want a war, then they should be obliged to put their money where their flags wave.

Probably the only interesting alternative to this approach is the idea of a universal Citizen Entitlement to a flat monthly income just about big enough to live on. Everyone would get it, regardless of income or age. For those in work, for example, it would simply lower their tax bill. For those not earning, for whatever reason, it would be a handout but without the disfiguring features of the electoral bribes currently on offer to selected groups, most obviously and repeatedly in the UK, the voting over 60s.

The idea has the merit of threatening the destruction of a thousand benefits bureaucracies, most of which end up in the newspapers for incompetence of one kind or another. So it is a sleek proposal. It has the de-merits that it hands money to people who don’t need it and, in practice, will still have to include small print provisions for special cases like those whose disabilities oblige them to make use of expensive equipment or carers. From where I am coming from, it has the demerit that it puts all citizens in the position of state dependents. I have yet to read an argument that persuades me that is not the case.



© Trevor Pateman 2016. First published in this form in Trevor Pateman, The Best I Can Do (degree zero 2016)

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