Policy Exchange ‘Welfare Manifesto’

In February 2015, Policy Exchange launched its Welfare Manifesto which sets out how the welfare system could be made fairer, more affordable and altogether fit for the 21st Century.

As part of the plans, the report proposes that pensioners should be asked to actively ‘opt-in’ to receive their Winter Fuel Payment which can amount to as much as £300 each winter. This would make it easier for many wealthy retirees to decline the payment. Current eligibility criteria would still apply and, to protect those most in need, recipients of Pension Credit would continue to receive the Winter Fuel Payment automatically. The report estimates that this could save as much as £400m a year.

Other recommendations made in the report include:

  • Limiting Child Benefit to four children per household, with progressively reduced weekly payments for each child after the first. This could save as much as £1bn over the course of the next Parliament, and evidence suggests that the marginal costs of an extra child reduce as family size increases.
  • Including the State Pension in the Welfare Cap. An ageing population will see the State Pension – which accounts for 40% of welfare spending – grow as a share of GDP. Including it in the Welfare Cap will create a much more accurate picture of welfare expenditure.
  • Replacing contributory Jobseeker’s Allowance with a new national unemployment scheme and system of personal welfare accounts. Every worker would make weekly contributions into the scheme – offset by a cut to their National Insurance – and build up a “pot” representing their contribution to the system. The funds would be used in times of unemployment, with people who have been in work all their lives set to gain £10,000 upon retirement.