After 13 years of Labour rule we still have unacceptable levels of poverty. It is particularly offensive that 25% of pensioners and 20% of children still live in poverty. Our creaking welfare system gets ever more complex as it attempts to fill the gaps, yet it often fails to reach those entitled to benefits but who do not claim them.
In the longer run a fundamental reform is needed, where most of the complicated benefits, means tests and qualifying contributions are swept away, and all citizens receive as of right a basic income – a Citizen’s Income. The cost of this would be recovered through a more progressive income tax system.
We recognise that with the public finances in their present state this is not the time to introduce such a scheme. However, we can make a start by helping the two vulnerable groups above, with a decent Citizen’s Pension scheme and a major increase in Child Benefit.
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Free insulation We would also introduce a free home insulation programme for all homes that need it, with priority for pensioners and those living in fuel poverty, aiming to insulate 4 million homes every year. Such a programme would cost £2bn in 2010 rising to £4bn a year and create 80,000 jobs. |
Our present pension system is a disgrace. We pay an inadequate state pension (only £97.65 per week for a full state pension for a single person), the level of which is still not linked to average earnings (and which is not up-rated at all for UK pensioners living abroad in certain countries).
It depends on an individual’s contribution record, discriminating in particular against women,but also against others with poor contribution records such as those with poor health or a broken work record, or who have been carers.
This is in theory topped up by means-tested Pension Credits, which discriminate against anyone with very modest savings, creating a massive disincentive to save to provide for yourself.
As many as one in four pensioners live in poverty.
We need a new system of Citizen’s Pensions.
The Citizen’s Pension would be paid unconditionally to all pensioners in the UK (independent of contribution record) at the rate of the official poverty line (currently £170pw for someone living alone, and the rate would be £300pw for couples), and would be linked to average earnings.
It would also be paid to, and up-rated for, the one million pensioners living abroad.
Housing Benefit and disability benefits would continue to be paid. The demeaning Pension Credits would be abolished.
There are about 12 million pensioners living in the UK and a further 1 million living abroad. Paying a single rate of £170 per week and a couples rate of £300 per week will cost £110 billion a year.
But the basic state pension already costs £56 billion, and when certain other specific pensioner benefits like the Pensions Credits paid to those of pension age are abolished the total saving will be almost £70 billion. That leaves £40 billion to find.
Abolishing tax relief on pension contributions raises £20 billion, and a further £19 billion would come from abolishing employer national insurance contributions and employee National Insurance rebates associated with pension schemes.
The final £1 billion will come from increased income tax receipts from pensioners.
Because the number of pensioners is gradually rising, and we would link the pension level to average earnings, Citizen’s Pension will cost a further £0.8 billion by 2013–14. This figure is included in our figures for general taxation.
There will also be savings (not quantified here) on Council Tax Benefits and Housing Benefits.