Yesterday’s speech by the Chancellor rightly identified the need for more spending reductions compared to current plans, to eliminate the structural deficit during the next Parliament, following some reductions in this Parliament.
The prelude to the speech was the Prime Minister’s statement that the triple lock will continue for another five years if a Conservative government is elected in 2015. This provides for an uprating of the State pension by prices rises or wage rises or 2.5%, whichever is the higher. As a result Ministers were naturally asked if the Pensioner benefits like free tv licences and heating allowances were also safe, and effectively confirmed they would stay.
This leaves the Treasury with its aim of getting more of the reductions from welfare benefits having to do so by tackling non pensioner benefits. The Chancellor points out that the big savings on pensions come from raising the retirement age, which needs to be done as people live longer.
So today I want to ask for your opinions on what more could and should be done to curb the ever rising welfare bill? It has been going up by more than wages this Parliament, despite the fall in unemployment, as a result of upratings that have exceeded wage growth by a considerable margin, and by the continuing eligibility of a large number of people for various kinds of benefits.
There are two big issues to consider. The first is eligibility. I would still like to see a longer time period that a new migrant has to complete before qualifying for UK benefits. I think more of the benefits should be contributory, where people have to demonstrate they have a contribution record to UK NI for a sufficient period, or have been in full time education in the UK as British citizens in the past to cover individuals who have been unable to get a job or who are incapacitated and unable to work.
The government can also consider what range of benefits should be available to young people. At what age or point in their lives should young people qualify for state financial and housing assistance to have a home of their own?
The second issue is the rate of increase in benefits in payment. This government has upgraded benefits by inflation at a time when real wages were falling. Was this the correct approach? Should benefits in future continue to be protected against inflation? I am not myself in favour of cutting the real value of benefits, but should there be any upper ceiling? Is a £26,000 cap fair, or is that too high?