Universal versus targeted benefits?

One idea to resolve the universal benefits versus targeted benefits issue, at least for the elderly, comes from an old friend Anne Bradford who has, to put it mildly, quite a lot financial experience in banking and as an adviser to people in hardship:

“The answer on Winter fuel Allowance seems blindingly obvious to me. Don’t means test it. Roll it up into the State OAP – which is taxed as earned income. Too many pensioners already don’t claim all their means tested rights. Plus it would cut out people who are still earning – sometimes big money.

Also roll up the £10 christmas bonus, the enhanced Winter fuel for older pensioners and (for over 75s) the money for a free TV licence. Much better than an extra 25p a week at 80.

It would save a lot of Admin costs, IT costs etc. The qualifying age would gradually rise. Yes, jobs would be lost in Civil service and TV licencing office – but a lot of jobs are going anyway. It would be a much more socialist move than the current system, so a positive. It also would consolidate it into the State Pension – so not be able to be removed.

I know the winter fuel and TV licence are per household while the OAP is per person. But the cost savings, taxation and streamlining might even allow for the OAP increase to be more than winter fuel.

I’m not being a partisan pensioner, as I would have to pay more tax at 20% on the inceased OAP – but would be comforted by the fact it is fairer and that some people would be paying 40%

Cuts seem inevitable. This cost saving would at least have a positive side.”

I’m not sure about this, it’s not my field of expertise and benefits are fiendishly complex, but it certainly appears on the face of it an idea worth examining. Any comments would be very welcome.

3 thoughts on “Universal versus targeted benefits?

  1. An interesting idea and has the advantage of simplicity which given the complexity of social security is something we should welcome. One potential problem might be that it may actually leave the poorest pensioners who lack the contributions record necessary for a full basic state pension worse off. For them any addition to the state pension would reduce the value of the Pension Credit. Now one way around this would be to introduce a Citizen’s Pension at a reasonable level that everyone recieves irrespective of contributions as mooted a few years ago. Given the Treasury’s position and the views of both political parties on rights and ‘responsibilities’ this however seems unlikley.

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