When I was at university in the 1970s, students felt financially on a more or less level playing field. The state gave a standard grant that was just enough to live on; those with better-off parents got less than the full grant; all but the meanest parents topped this up to the state-ordained level.
Today, only undergraduate students with a family income of less than £17,500 receive a full maintenance grant of £2,700 a year, and those with a family income of up to £37,425 receive a partial grant. But the student loan, at an average of £3,400, only pays for about half the cost of living at university, with the grant nowhere near enough to make up the shortfall for all but the very poorest students. The rest must come from parents, from working at Tesco or by running up more debts. No wonder so many young people from families of modest means stay away.
Recently, however, the government has announced it is raising the maximum grant marginally, by £125, but more importantly, it is raising the maximum family income eligible for the full grant to £25,000, and raising the maximum for getting some grant to £60,000. This means that more students from low-income families can get their living costs more or less covered by grant plus student loan. It also means that a full or partial grant once again goes to most students (about two thirds), and that a student might expect a top-up from parents to the full rate according to family means.
It is no coincidence that this change was announced within days of Gordon Brown taking power. The Brownites have long talked about "progressive universalism," which means "something for everyone, but more for the poor." This is being applied across the lifespan. Benefits and tax credits for children have both universal and targeted elements; the income thresholds for the child tax credit are very similar to the proposed student grant. And from about 2012, the "universal" element of state pensions will be strengthened (by uprating it in line with earnings), alongside a continuing means-tested component. The idea is that measures to help the worst-off are most effective if they form part of a system in which everybody has a stake, and which therefore commands sustained support from taxpayers.
In practice, there have been huge tensions between the "progressive" (pro-poor) and "universal" features of Brown's handouts. The priority of ending child poverty has caused the means-tested part of child tax credit to be generously uprated and the part going to middle-income families to be frozen. For pensioners, the past decade has seen ever sharper means testing, as the minimum income for pensioners (paid through pension credit) has risen with living standards while the universal state pension has stayed constant in real terms. Brown has prioritised combating pensioner poverty with scarce resources, and had to be bounced into greater universalism by the Turner commission.
These tensions demonstrate that the double-act of progressive universalism can only really work in the long term if it unlocks extra public resources by creating a wider acceptance of the state's role in funding. This seems unlikely at a general level with a public that feels (as ever) over-taxed, but may be more feasible where specific "bargains" become well understood, with extra taxes earmarked to pay for specified things in which most people have a stake. Gordon Brown made a first foray in this direction in 2002 by putting an extra penny on national insurance contributions (a penny on income tax by another name) and associating it with necessary increases in health spending. The media and public accepted it with barely a murmur.
A future test of this kind will be the funding of the long-term pension settlement after 2012. This requires at least some extra taxation, and any future government will have to decide where this tax rise comes from and how to sell it. It will be helped by the fact that the main long-term effect of the reforms will be to increase the universal pension rather than the means-tested guarantees for poor pensioners. A penny or two on national insurance to fund a more adequate, secure basic pension as a foundation of retirement income may seem a good deal, relative to putting the same penny into uncertain private schemes.
A more immediate test for progressive universalism will come this year with the search for a new settlement on paying for long-term care for the elderly. At present, most help goes to the least well-off and some people on quite modest means get no help at all. This is highly unpopular and goes against a widespread belief that social care like healthcare should be free at the point of use. The treasury could not afford the large extra expense of making it completely free, but in the comprehensive spending review it is considering whether, in the long term, there should be some help for everyone, even if only to pay for a relatively small portion of care costs. Here again, firm commitments will be highly constrained by Britain's overstretched public finances. Some other countries have solved this problem by extending social insurance, with extra contributions earmarked for this purpose, but so far British governments have had little appetite for such schemes.
Brown's quest for progressive universalism reflects his desire to run a government that persuades middle-class voters that "we are all in this together" rather than just having residual public services for the poor. His selection of housing as his new cause celebre reflects this. Improved overall housing supply would benefit those at the bottom of the pile, at the same time as addressing the concerns of middle-class parents in the southeast who have no idea how their children will ever get a foot on the ownership ladder. But in many policy areas, there will be a continuing tension between catering for people on middle incomes and the worst-off. Only by transforming people's faith in the public sector to come up with attractive solutions will it be possible to raise the extra resources to do both at once.
