Zoe Williams' belief that it is daft to give the same benefits to rich and poor (The means to an end, September 12) is misguided. She complains that the newly announced pregnancy grant for women (potentially worth up to £200) won't be means-tested.
"This is the modern way with initiatives," she says. "Especially in the realm of babies, and other sentimentalised demographic groups." She acknowledges that the alternative is complicated, but she adds: "The answer is not to shrug and say, 'too complex, can't be bothered, let's just give the cash to everyone'."
In doing so she shows a lack of understanding of the impact of universal, non-means-tested benefits on reducing child poverty, and the failure of the means-tested approach. The gap between the richest and poorest has grown alongside the increased use of means-testing in the welfare system.
Child Poverty Action Group has long argued that universal benefits are more effective at reaching the poorest families. Targeting financial support inevitably brings more complexity, and is accompanied by stigma, which can lead to reluctance to claim. Overall take-up of the means-tested child tax credit is around 82%, for working tax credit it is around 61%; but take-up of child benefit is around 98%. Universal child benefit has reached more low-income families than any of the means-tested payments specifically designed for them.
The work and pensions select committee's report Benefits Simplification, published in July, slammed the current system as "stunningly complicated". The Department for Work and Pensions alone administers around 40 benefits, each with different rules. As Williams acknowledges, the Treasury-managed tax credits system adds a new layer of complexity, which is far from seamless in its relation to the benefits system. Such is the overall complexity that the taxpayer now loses more money to official and claimant error than to fraud.
We once had less means-testing for benefits (not more, as Williams suggests) alongside more for taxation. This has been reversed, with substantial means-testing of benefits and tax credits, and the value of the remaining universal benefits falling well behind earnings. Meanwhile, taxation has shifted to indirect taxes, which hit the poorest harder.
The consequences for poor children are dire. Yes, means-tested tax credits have helped lift 600,000 children out of poverty. But the most recent figures show child poverty rising again, with 3.8 million children living in poverty. The Joseph Rowntree Foundation has predicted that if we continue to rely primarily on means-tested tax credits to end child poverty, it will cost us around £30bn more a year by 2020. So means-testing will continue to nibble at the edges, whereas universal benefits in tandem with progressive taxation can address the underlying inequalities.
Williams should really be calling for more means-testing in the tax system. With a return to progressive taxation, universal benefits could reduce inequality, without the problems brought by means-testing.
· Kate Green is chief executive of Child Poverty Action Group