Tory thinking: A nudge for the rich and a kick in the gut for the poor

By Josh Fenton-Glynn

Another day and more punitive talk from Cameron, this time beating up on benefit recipients. This is coupled with last weeks announcement that council house leases will change to be more regularly renewed so that people will have to justify their receipt of a council tenancy. Reading about both of these I couldn’t help but notice that the Conservative’s have abandoned one of their big ideas that they used to make them seem friendly and electable. This was a theory that people should be ‘nudged’ into making the right decision rather than being punished by the state for making the wrong one.

Back in 2008 when the big society wasn’t even a glint in a focus groups eye and the Conservatives under the Cameron, Osborne leadership were still trying to define themselves, all the talk was of the theory of an economic “Nudge” set out in a book by Richard Thaler and Cass Sunstein hailed by Osborne as:

“enriching our understanding of human behaviour and changing the way policymakers think.”

As I worked in policy at the time I dutifully read the only economics book I have ever come across that references the Simpsons. The theory amounted to an acceptance people are irrational, often lazy, subject to social pressure and how policies can be formulated using this understanding to make it easier for people to take desirable decisions, using a nudge rather than the state forcing people to do so. Nothing in the book is particularly contentious, much of it is intuitive and it’s difficult to disagree with the central thesis.

The problem of people occupying council houses that are bigger than their need, whilst others live in over crowded housing with no prospect of finding appropriate accommodation would seem a perfect chance to put this theory into action. Sadly, rather than making it easier for people to move between council houses, making the process advantageous and less stressful thus making the decision easier, the new policy will simply make it more difficult to stay in council housing.

Of course, it is perfectly clear why they have chosen to take this course of action. The nudge theory in so far as they ever believed in it wasn’t meant for the kind of people who live in council housing but a gentle nudge to the middle class asking them if they wouldn’t mind terribly filing their tax returns or doing recycling.

The attitude to those on low incomes remains one of contempt. This is the same attitude that leads to untenably low benefits based on the assumption that while businessmen work harder if you pay them more, people on low incomes harder if you pay them less. Thus incentives are offered to some while existing entitlements are taken away from others.