This week, as free school meals for all attending infants are rolled out across the country, it’s important to question who benefits from large universal spending and who bears the brunt of the costs. Political parties like universal giveaways as it gives everyone a reason to vote for them, but there are important questions to be asked about whether these actually decrease inequality.
On Tuesday in the Guardian, Zoe Williams questioned whether universal free school meals were such a good idea if it meant that someone like her, who could afford to pay for their children’s meals, would be better off as a result of the changes, whilst poorer families would gain nothing. The same can be said of tax breaks for married couples or increasing contributions based Job Seekers Allowance. Those with the lowest incomes get nothing which they didn’t already have, whilst those higher up the income spectrum get something they didn’t have before.
One concern therefore with such policies is that they further widen the gap between those at the top and bottom. However they may not necessarily increase inequality, the important question to ask is where the funding for these policies comes from.
If the funding for the policy comes from increasing taxes on the top half of the income spectrum, then the net effect of the change could be a decrease in inequality, as all of those on average incomes and below gain from the change and not just those at the very bottom. On the other hand if the change is financed by cuts to services which primarily help those at the bottom, then this is less likely to reduce inequality.
It used to be argued that universal benefits were better for fighting poverty, as means testing was divisive and would lead to the state shrinking. Universal benefits on the other hand are thought to help foster a state with stronger public support. But a new review by Donald Hirsch and Dimitri Gugushvili has cast doubt on these claims by suggesting that the link between universal benefits and states that are better at fighting poverty no longer holds up. There is an increased demand for value for money from the state in all areas which has made public spending more of a zero-sum game. If the public is less happy to pay higher taxes then perhaps it makes sense to focus the money on those who need it most rather than paying out more to richer families.
This concern should be at the front of everyone’s minds in the upcoming party conference season as policies are announced by various political parties. If a policy isn’t means tested and directly aimed at making the poorest better off (and not everyone else) then it may be increasing inequality.
If a party promises to replace a lunch that was subsidised only for the poorest, with a free lunch for all, just remember…’there’s no such thing as a free lunch’.
For anyone interested in these issues, and others related to inequality, make sure you sign up to our Inequality Today event on the 25th October, with the makers of the Spirit Level Documentary and Adair Turner…even if we don’t include a free lunch.