Welfare is the big one when it comes to public spending
All parties look to means-testing to achieve spending cuts, but reforming pensions could save some serious cash
- Tom Clark
- The Guardian, Wednesday 30 September 2009
When it comes to public expenditure, welfare is the big one. Add the Department for Work and Pensions budget to the family tax credits and cash paid out by the revenue, and the combined total is £170bn – rather more than a quarter of public expenditure. So you might have expected that, amid the talk of retrenchment, all eyes would be trained on the bill for benefits.
Tom Clark is the Guardian's social affairs leader writer
- guardian.co.uk © Guardian News and Media Limited 2009
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Our welfare policy paper sets out a radical programme of reform that will provide ladders of opportunity for millions of British people. It will be the biggest shake-up of the welfare state for 60 years:
- Every claimant potentially able to work will be engaged in welfare to work activities aimed at helping them back into work as quickly as possible
- For those unable to find work there'll be long-term community projects to help them get back into a working environment
- Those not willing to take part will face tough sanctions
Our welfare programme will be delivered by private and voluntary providers, who will only be paid when someone gets and keeps a job.
Combined with our commitment to end the couple penalty in the tax credits system, our radical welfare plans will help lift almost half a million children out of poverty.
Download our welfare policy paper to find out more
PENSIONS
We need to reinvigorate a culture of savings in Britain. We will raise the basic state pension in line with earnings to help stop the spread of the means test. At the same time, we will look at how we can simplify the rules and regulations around pensions to encourage companies to offer high quality pension provision to all employees.
We have called for emergency pension protection in the light of the troubles in the financial markets, but Labour have so far refused to act. We want the rules which force people to lock themselves into long-term pension arrangements, either on their retirement date or their 75th birthday, to be suspended until the current turmoil has receded.
SUPPORTING OLDER PEOPLE
As well as recognising the contributions older people make to society, we also need to help those elderly people who are amongst the most vulnerable in our society.
So a Conservative Government will look at ways of creating more personalisation in health and social care, and more patient power.
In addition, we want to see much greater use of direct payments and individual budgets, which give people real control over their care.
http://www.conservatives.com/Policy/Where_we_stand/Welfare_and_Pensions....
If it is a marketing ploy, it is one that has involved an awful lot of work. Iain Duncan Smith – the deposed former Conservative leader once regarded as a figure of the cold-hearted right – today produces a 370-page report about rekindling the hopes of the poor through welfare reform. It increasingly seems as if IDS really does care. The pertinent questions are whether his remedies are the right ones, and whether they stand any chance of being acted on.
"The most radical reforms since Beveridge" are promised, a claim made for every passing bright idea in the world of welfare. In one respect, however, the report strikes a truly bold note – lumping the plethora of existing benefits into just two payments. This would have controversial effects – for instance, cash now paid as of right to the most severely disabled would be subjected to a means test. The two new mega-benefits would be concerned with everything from rent to the mobility of a claimant, so they would not necessarily be simple to claim. The plan for making them so involves asking employers to claw back benefits when earnings rise, in the same way that they now deduct tax. The principle is sound, but would involve firms keeping in continual touch with the benefits office, something they have previously proved deeply reluctant to do.
The rhetoric on rewarding work sounds almost revolutionary, although the underlying substance here shows more continuity than change from the thrust of policy under New Labour. The withdrawal of benefits as earnings rise can create a poverty trap which renders it pointless to work the extra hour. Gordon Brown attempted to solve this problem by slowing the rate at which tax credits are withdrawn. That worked for the poorest, but the corollary was that those on slightly higher pay were caught by the system for the first time – blunting the rewards of working for them. Mr Duncan Smith's proposals extend the same basic approach (albeit with a useful new stress on part-time jobs) and so run into the same dilemma. He promises to create Breakthrough Britain, but this hardly resolves the inescapable tension between the twin objectives of welfare policy – rewarding work and compensating those made poor through lack of earnings.
The biggest quibbles, however, are about how to fund it all. With competitive axe-wielding becoming the preferred sport of the political class, the £3.6bn upfront cost is daunting – particularly since the savings it is claimed will eventually make it self-financing, for instance lower crime, are speculative. Mr Duncan Smith may have proved he has a conscience, but he will struggle to persuade the Tory Treasury team that it is a conscience they must act on.
http://www.guardian.co.uk/commentisfree/2009/sep/16/welfare-reform-iain-...
Many people are forced to work too hard or too long, leaving little or no time for children, home and family. Too much work is meaningless and unsatisfying, while some work is unsafe, therefore damaging workers health. Other work is insecure, making people vulnerable to redundancy often brought about by intense competition and globalisation within companies and workplaces.
Despite the fact that many people have too much work, there are others who cannot gain employment because it is said they are too old, lack skills or live in the wrong location.
Everyone would receive a basic Citizen's Income to allow everybody to make meaningful choices between paid employment, part-time work, self employment, volunteering and encourage a better balance between work and everyday life.
We would also create a green economy with local jobs less vulnerable to changes in the global economy. We would extend workers rights to part time, casual workers and the self employed. Democracy in cooperatives and workplaces would be encouraged and the Green Party would value and protect carers and volunteers.
It is not just paid employment that benefits the economy. The economy is not able to function without workers, all of whom depend upon their homes for food, rest and recreation. The value of those who care voluntarily for the elderly is appreciated when we see the high price the market demands for such services.
Pensions are in crisis. The full state pension for a single pensioner is only £95.25, a massive decline since the link with earnings was broken by the Tory government in 1979. Many pensioners, especially women, don't even get a full state pension.
Private pensions are in crisis too. Some occupational schemes have failed, leaving pensioners who've contributed all their lives with nothing. Many firms are abandoning or weakening occupational schemes. Millions of people have been mis-sold under-performing personal pensions. Even apparently reputable providers have failed to deliver a reliable return.
The Green Party would introduce a Citizen's Pension that would pay pensioners a liveable amount, without means testing and would be linked to the rise in average earnings. Independent studies by the National Association of Pension Funds have shown that a citizen's Pension could be afforded today within current net expenditure on state pensions.
By abolishing tax relief on private pension contributions we can save enough money to provide much of the extra funds needed. It is the present system of means-tested top-ups that discourage saving, with the current tax-relief on contributions it is mainly the wealthy who benefit.
With a decent state pension it is unnecessary to make additional contributions compulsory. People should be free to decide how to provide additional security for themselves in old age. Voluntary private and occupational schemes organised for and by the workers and pensioners concerned should be implemented, rather than the current system which is used primarily to make money for banks and insurance companies.
We would encourage Local Community Pension Schemes that would invest in the local community and in public services, not the stock market. This would offer stable returns, not dependent on speculation or vulnerable to mis-management.
Pension Credits do not solve the problem. The Government admit that take-up is inadequate, and many poor pensioners will not get them. Pensioners should not have to leap through the hoops of complicated and demeaning means tests in order to get a decent pension.
Just as Greens believe that we should leave the planet in a fit state for our children, we believe that we all owe older people a decent standard of living without demeaning means tests. The foundation of doing so is a proper state pension for all.
http://www.greenparty.org.uk/policies/work-welfare-pensions.html
The underlying principle is to reward work, reward honesty and encourage a partnership between individual, family and government.
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We would advocate smaller taxes and smaller amounts spent on the bureaucracy of collecting taxes and paying benefits.
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Payments would be designed to protect those in genuine need only.
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The welfare system would be set up so it could not become a life choice.
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Work would be made to be worthwhile rather than claiming benefits.
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Fraud would be massively reduced by minimising tax evasion and bogus benefit claims.
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By saving on bureaucracy and fraud we would then pay a decent pension.
Problems:
Currently in Britain we have the scenario where we collect large amounts of tax revenue (£154 billion of Income Tax alone) and spend a large amount of money in doing so. We then spend another large amount of money re-distributing it. Both the collecting and the distributing are widely open to abuse. This cannot represent good value for money for the hard working British taxpayer.
The welfare state was designed to protect the vulnerable not provide an opt out for those who want to take rather than give. It should be a safety net but has become more of a fishing net, ensnaring more and more people.
It is important to remember that we cannot go on increasing taxes on hard working Britain because this is unsustainable. The demands on the Health Service and Pensions due to both the age and size of the population will be huge.
Therefore we must ensure that work pays and that benefits are carefully targeted.
There are a number of failing policies that highlight the governments flawed approach to welfare, such as:
Tax Credits and Child Poverty:
The Government will miss its key target of halving child poverty in 2010-11 unless it falls at a rate eight times greater than the fall in each of the past five years. This is despite spending the equivalent of 4p on the standard rate of tax each year on its tax credit and benefit strategy. In those five years tax credit spending has gone up from £5.7 billion a year in 2002-2003 to £14.9 billion in 2007-2008. (An increase of almost 160% in 5 years)
The tax credit strategy is also massively biased against married couples.
A single mother working 16 hours a week, after tax credits, gains a total income of £487 a week. A two parent family earning the minimum wage has to work 116 hours to gain the same income. This discrimination helps to explain why children in working two parent families now make up the single most important group of poor children. A single woman without a child would have to earn over £35,000 to take home the same amount. ( N.B There are 200,000 more single parents claiming tax credit than the Office of National Statistics believe are in existence.)
Disability Benefits:
We currently spend £9.1 billion on 2.3 million people claiming Incapacity Benefit. How many of these people truly cannot work. How many choose not to work or work in the black economy avoiding taxes and claiming benefits.
PA Solutions
The underlying principle is to reward work, reward honesty and encourage a partnership between individual, family and government.
We would advocate smaller taxes (see tax policy), smaller amounts spent on bureaucracy and a system of benefits payments designed to protect those in genuine need only.
We would also want to massively reduce the tax burden on the lower paid, maintain it or slightly reduce for the middle wage earners and increase it for those earning over £125,000 a year. This would be done by raising the tax thresholds for employees to start at £15,000. There would then be a graduated scale of tax which would make sure that those earning under £100,000 per year would be no worse off than now. For those who earn over £125,000 a higher tax rate band would be introduced of 48%.
Less tax revenue would be received but we would not need to spend as much on benefits for the lower paid as their take home income would be higher.
The combined effect of these two measures would be to reduce the incentive of working in the black economy and reduce the amount of potential money lost to fraudulent benefit claims. A win for the government , the country and the hard working honest person.
Disability Benefits only to be paid to those incapable of work as verified by two doctors. We would wish those truly in need to receive a level of benefit that reflects their condition.
Fraudulent disability benefit claimants would be barred from making further claims for a period of 12 months.
Put a time limit on benefits. This was a reform that Bill Clinton introduced in America and it has transformed welfare rolls there – down by 60 per cent. Claimants who knew that their time on benefit was limited have moved into work or, because they are already living with a partner, ceased claiming benefit. Such a programme should be enacted in Britain.
Provide a real incentive for employers to employ people out of work. Allow employers 80% government funding arrangement for the first three months then a 50/50 split for the next nine months.
We would favour a part-time job share arrangement for those on Incapacity benefits who are incapable of working full time. They would not lose their ability to claim benefits by working part-time, only the proportion for the day that they worked, when they would be paid by the employer. This helps those who cannot work full-time to contribute and not become completely reliant on benefits.
Anti-fraud measures/ resources to be increased to severely curtail the current levels of abuse.
Our tax policy would support married couples through an increased tax allowance thus reducing reliance on benefits.
Enforce maintenance payments through their workplace from fathers of children living with single mothers.
SUMMARY
The vision is to abolish welfare as we know it by getting millions of claimants into work, reduce fraud and represent value for taxpayers.
We must ensure that we can afford to pay a decent living pension and support those in genuine need. If we continue to waste and misdirect money as we do currently then the government will have to raise taxes forcing more people to decide they are better off on benefits or alternatively reduce the benefits from those who are genuine and deserve them.
The Popular Alliance aims for a system that rewards work, honesty and encourages a responsible partnership between individual, family and government.
http://www.popularalliance.org/content/view/101/58/
Social Policy
Social Policy is the study of social services and the welfare state. In general terms, it looks at the idea of social welfare, and its relationship to politics and society. More specifically, it also considers detailed issues in
These pages outline the main issues.
http://www2.rgu.ac.uk/publicpolicy/introduction/index.htm?CFID=30259954&...