THE Coalition Government aims to save £18bn a year from the welfare budget by 2015 and has indicated £10bn of further cuts from 2016.
A reduction of that scale cannot be achieved without real hardship. Yet Iain Duncan Smith, the Secretary of State for Work and Pensions, insists fairness is still the principle at the heart of the welfare system.
The Government's benefit cuts have been made against a backdrop of criticism of long-term unemployed claimants who sleep in while their neighbours go out to earn a living, reducing the debate to sloganeering about shirkers versus strivers. According to opinion polls, this chimes with many people. Most believe the disabled should be entitled to additional support, yet they will lose around £1.02bn over three years because of the change from disability living allowance to a personal independence payment. Having cut benefits for the disabled, Mr Duncan Smith appears to be contemplating means-testing the universal payments made to the group that has so far been sacrosanct: pensioners. Prime Minister David Cameron has pledged that benefits in addition to the state pension (winter fuel allowance of between £100 and £300, free bus passes and TV licences for the over-75s) would be protected until after the next General Election. It now seems that these will be means-tested, should the Conservatives be in government after 2015. This would take account of the fact that most of today's younger pensioners are likely to enjoy a long and healthy retirement. A cheering example of their health and spending power was provided at the weekend when the renaissance in British motorcycle manufacturing was attributed to the demand for models that suit the older rider. Pensioners are no longer the generation by and large that fought in the Second World War or endured hardship at home and are owed a debt by the country. So is there a case for means-testing the sacrosanct? People of working age, whose financial burdens include repaying student loans, difficulties in obtaining mortgages and managing negative equity, must also bear the growing cost burden of state pensions and pensioner benefits. The problem with means-testing is that it can cost more to carry out than the amount it saves. That was disregarded in relation to child benefit, a universal benefit which helped make work pay, when some families with one earner lost their entitlement.
Other benefits, such as tax credits and housing benefit, are means-tested but are being cut. As a result, Beveridge's founding principle of state protection from want, disease, ignorance, squalor and idleness from cradle to grave has morphed into an argument about whether a separated parent should receive housing benefit to cover the cost of an extra bedroom for visiting children.
Increased longevity means the cost of universal pensioner benefits will continue to grow. A review is required that recognises that the goal of a fair welfare model cannot be achieved with a benefits system that increases divisiveness.
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