70% of Lib Dem members back Clegg’s call to means-test some benefits of wealthy pensioners

Lib Dem Voice has polled our members-only forum to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 560 party members responded, and we’ve been publishing the full results.

70% back end to free bus pass and TV licences for wealthier pensioners

LDV asked: Nick Clegg has suggested introducing means-testing so that better-off pensioners would no longer be entitled to receive benefits such as free bus passes and television licences. Supporters argue that at a time of financial austerity such benefits for the wealthiest paid by general taxation are unfair. Opponents argue that the principle of universal benefits is important and that means-testing is administratively complex. Which of the following statements comes closest to your own view:

  • 70% — I support means-testing for some benefits
  • 26% — I oppose means-testing of benefits
  • 4% — Don’t know / No opinion

There is substantial support among our sample of party members, it appears, for Nick Clegg’s proposal — aired in December — for wealthier pensioners to lose their entitlement to some universal benefits such as free bus travel and TV licences. Here are a handful of the comments we received from members backing Nick:

There are plenty of pensioners that do not need free bus passes, or winter fuel allowances, but claim them anyway. Means-testing and redistributing the saved money to those who truly need it makes perfect sense.

The older generation holds most of the country’s wealth, while the youngest generation is struggling with student debt and high housing costs. It is plainly wrong that poorer young people should subsidise wealthy older people. We should focus support for pensioners on the one-third of who aren’t wealthy.

Some benefits should be universal as a principle, others should be means-tested but only if that does not cost more than if they remained/were made universal.

It’s absurd that affluent pensioners should get free bus passes and TV licences when they can well afford to pay for them.

A number argued that such benefits should remain universal but be taxed so the most affluent would receive a reduced benefit with little additional administrative complexity.

However, a significant minority, just over one-quarter of respondents, opposed any dilution of universal benefits:

Oppose but for practical reasons rather then on principle. Too complex, bureaucratic and controversial to be worth attempting. Equalise in other ways.

I oppose a) because it would be hugely expensive to means test b) because it would be better to increase people’s pension income to the point where such benefits are unnecessary c) some of the benefits were political bribes in the first place so means testing them is political suicide

Means-testing is always riddled with anomalies. The anomalies usually can’t be accomodated, as they result from the application of means-testing which is to broad a brush to apply to specific issues. What is needed is a properly integrated tax and benefits system. That won’t necessarily be anomaly-free but it will ensure that benefits can be appropriately targeted without paying them to those who don’t need them.

Wealthy pensioners will,almost certainly, have paid more ‘into’ their state pension pot through NI during their working lives. It seems fundamentally unfair to then limit their benefits during retirement. Of course, if the Government were to reform the whole National Insurance system and remove the myth that it’s somehow an investment in the future then it might be another matter.

  • Over 1,200 Lib Dem paid-up party members are registered with LibDemVoice.org. Some 560 responded to the latest survey, which was conducted between 9th and 13th December.
  • Please note: we make no claims that the survey is fully representative of the Lib Dem membership as a whole. However, LibDemVoice.org’s surveys are the largest independent samples of the views of Lib Dem members across the country, and have in the past accurately predicted the winners of the contest for Party President, and the result of the conference decision to approve the Coalition agreement.
  • The full archive of our members’ surveys can be viewed at www.libdemvoice.org/category/ldv-members-poll
  • * Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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    21 Comments

    • Your analysis is not quite right – 70% back end to free bus pass and TV licences for wealthier pensioners

      No – 70% support means-testing for SOME benefits

      I for instance would not mind means testing free TV licenses but would be against means testing free bus passes.

      The free bus passes has been a huge success – for the first time instead of having to defend bus services against people saying “they are always empty” – I have the same people telling me they want a better bus service – they want them less crowded and more frequent. A complete switch.

      In any case on a specific vote winning point – is it really a good idea for Nick Clegg to be talking about taking away benefits to some of our core voters. Why can’t we let the Tories champion this?
      rivate

    • Alex Sabine 6th Jan '12 - 1:06pm

      Thereis a strong argument that affluent pensioners have been shielded from austerity and that a potentially unfair share of the burden is therefore set to fall on the working population.

      Indeed, the increase in spending on pensioners is one of the two main reasons (the other being the increased debt interest bill due to the rising stock of debt) why the coalition is having such difficulty delivering some quite small overall cuts in government spending without cutting services.

      Libby asks, “Why can’t we let the Tories champion this?” Because the Tories are the main obstacle on this issue.

      Patently one of the reasons why these universal pensioner benefits have been treated as “off limits” by the coalition is that David Cameron made a direct personal pledge to protect them all when under fire from Gordon Brown during the TV debates – an unwise commitment but one which he knows would be toxic for him to dump.

      But given that this was a problem of Cameron’s making, I don’t see why the Lib Dems shouldn’t press for a fairer settlement that is more balanced across age groups. That would then leave the Tories with a choice of resisting those demands (and perhaps losing the opportunity for one of their other fiscal priorities to go ahead) or finding some way of justifying a U-turn.

      And although I don’t like the rather childish idea of a ‘score sheet’ being kept by each side of the coalition, this would be one instance where the Lib Dems could undoubtedly claim responsibility for a policy improvement for which there does seem to be a fair amount of public support.

      If coalition sensitivities make it impossible to make any progress on this issue during this parliament, then – having seized the initiative by arguing publicly for these reforms – the Lib Dems would at least have made a start in identifying the additional spending cuts that will be required in the next parliament.

      And if the coalition judges it necessary for reasons of market credibility to set out not only spending totals for 2015-16 and 2016-17 but also (as Danny Alexander suggested in his Newsnight interview) details of the further cuts, then the Lib Dems should insist that these pensioner benefits are not preserved in their current form in the next parliament.

    • I don’t think that people who receive these benefits will see this as a “policy improvement”

      And if you look at the makeup of our voters I am sure that a good section of them are middle class, educated people who receive these benefits.

      So agree with the theory – but as I have said before – the Lib Dems need to survive the next General Election.

      Are you really suggesting going in to the election saying to our voters – we pledge to take away your free bus passes?

    • There’s definitely scope for reform here. For example:
      – Couldn’t we just make all these benefits – including winter fuel payments – taxable?
      – What’s so liberal about earmarking people’s money for a TV license (or bus pass) rather than letting them decide what to spend it on?

    • Alex Sabine 6th Jan '12 - 3:18pm

      Libby says: “So agree with the theory – but as I have said before – the Lib Dems need to survive the next General Election. Are you really suggesting going in to the election saying to our voters – we pledge to take away your free bus passes?”

      This assumes that the ticket to success in the next general election will be (a) bribing voters with their own money, and (b) pretending that all the manifestations of Gordon Brown’s client state are desirable and affordable. I don’t accept either of those propositions, and I think the electorate as a whole now sees through them.

      It seems likely that the debate at the next election will be about completing the repair work on the economy and public finances, and in that context pledging to defend ill-targeted and wasteful universal entitlements will not help a party’s credibility.

      I also find it strange that many Lib Dems are happy, indeed proud, to ask their own voters to pay higher taxes, but recoil from the idea of asking them to give up their free TV licences, bus passes or their winter fuel allowance.

      A more difficult question is how to reform these pensioner benefits, and which, if any, should remain. One idea is to claw back some of the money spent by making them taxable: this would be the most administratively simple option, although it would still mean paying benefits to people who don’t need them and I’d be interested to see how much revenue this would be likely to yield. If we are going to make a change for the sake of generational equity then we need to make sure it is actually worth the candle in terms of the money saved.

      The more fundamental question is Adam’s second point: Why not let people decide how to spend the money themselves? In other words, roll all these benefits into an increase in the basic state pension (which, of course, is taxable income)?

    • Excellent – we could do a pledge card at the next General Election that can really bring home to the electorate what we will do
      1 Take away free bus passes from some pensioners
      2 Take the country deeper into Europe
      3 Allow Universities to further increase Fees

      Alternatively we could shut up about those pledges and put some forward that may win some votes.

    • ooh thought of another pledge
      4 Support the privatization of the NHS

    • David Allen 6th Jan '12 - 4:43pm

      An alternative pledge card:

      1 Keep on mouthing off about the progressive changes we are about to persuade Cameron to implement
      2 Occasionally persuade Cameron to join in with the worthy declarations of intent (e.g. tax avoidance)
      3 Er, hope nobody will worry too much whether or not anything actually gets done….

    • Alex Sabine 6th Jan '12 - 4:59pm

      I’m certainly not advocating that we should pledge to “take the country deeper into Europe”…

      But yes, I think the economic and fiscal context will make things like the tuition fees pledge we signed at the last election (and therefore the prospect of a reversal during the next parliament) even less credible than it was at the time.

      The permanent loss of GDP during the recession, and the huge debt overhang that we will be left with for a generation to come, means that as a country we have to recalibrate our expectations with regard to public spending and the purposes for which it is, and is not, suited.

      The public may not like some specific cuts that affect them (although equally they don’t like the fact that the coalition is increasing overseas aid), but the polls consistently show that they accept the need for them.

      The Lib Dems will for the first time have hard-won credibility on this central issue and this – if it can be married to a distinctive liberal agenda in terms of spending priorities and non-fiscal issues, and if this is properly articulated and packaged as a coherent message – gives the party its best chances of recovering support by the time of the next election. This support may come from former voters returning to the fold or (more likely in my view) it may come from a new constituency of support in the aspirational centre ground of floating voters of the type who backed Thatcher in the 1980s and Blair in 1997 and 2001.

      It won’t come from frittering away hard-won economic credibility, trashing the coalition’s record, blaming all the tough decisions on the Tories and looking for comfortable territory to the left of Ed Miliband (who finally seems to be nudging Labour slowly towards a saner economic platform). And, quite frankly, after the fiasco of tuition fees I would think the Lib Dems should be very wary of signing pledge cards…

    • David Allen 6th Jan '12 - 5:38pm

      Yes, the public have generally accepted that since the crash happened under Labour, it must have been the fault of policies that were specific to the Labour party. The public has not stopped to think about the fact that most of the mistakes were equally supported by the Tories and (in the main) the Lib Dems, or that right-wing leaders like Bush and Berlusconi made comparable mistakes and suffered from the crash, or that the main cause of the crash was the collapse of a private sector bubble rather than excessive state spending. The public has a simpler view, one that is not without merit. The guy in charge has to get it right, or take the rap if it does not.

      In 2015, the public will take an equally simple view. By that time, protestations that Labour’s legacy will take “a generation” to put right will be scorned, and quite rightly so. If “expansionary fiscal contraction” has not worked, and deflation has led only to further deflation, the public will blame the guys in charge. The satirists will be running rings around the wonderful phrase “expansionary contraction”, and will no doubt invent some parallel “policies”, such as going thieving to raise money for the police benevolent fund. If the rich have got richer while the poor have got poorer, then the equally wonderful “we’re all in this together” will also be ripped to shreds.

      Nick and Dave in 2015, just like Gordon in 2010, will no doubt protest that it’s all so unfair to put all the blame on them. Like Gordon, they will have something of a point. Like Gordon, they will find that nobody recognises it.

    • If I can afford to lose child benefit, wealthy pensioners can cough up for their tv licences and winter fuel allowance. They can keep bus passes tho. We’re all in this together…

    • Tony Dawson 6th Jan '12 - 9:59pm

      Means testing of small universal benefits is basically inefficient. It makes far more sense, if you want to withhold a bit more money from a certain group to increase general taxation fractionally so that the people due to receive the benefit continue to receive slightly more than those of similar wealth/income who do not have the entitlement. Means testing costs, it gets things wrong, creates a whole bureaucracy, an need for appeals etc. I suppose you could argue for it as a form of job creation.

    • Malcolm Todd 6th Jan '12 - 10:37pm

      What Tony Dawson said.
      And indeed, what Oranjepan said.

      When I tried to explain the point of universal Child Benefit to a friend recently, he said “so why don’t we all get Unemployment Benefit?” Of course, I tried to explain the idea of Citizen’s Income to him… But it’s a serious question: which benefits does it make more sense to pay as universal entitlement? (To which my answer is, frankly, most of them. But there’s no point expecting people to put up with across-the-board 50% tax in order to pay for it.) I can see the point of free bus passes, to be honest: in effect, it’s also (rather crudely) targeted, in that wealthier pensioners are more likely to have cars, or at least access to cars, and very few people prefer to travel everywhere by bus. I don’t see much point in free tv licences for the over-75s (I’m not a fan of the tv licence at all, in fact); but I shouldn’t think there’s any serious financial benefit to be had from getting rid of them.

    • Should any benefit be universal? If something is universal then it’s a right not a benefit.

      Pensioners having the right to free bus travel sounds odd to me, but dissuading the elderly from driving by giving them a free alternative is quite sensible. To that effect perhaps free bus passes should start at 70 when driving licenses run out.

      Making the winter fuel payment part of the taxable state pension also makes sense, but pensioners should just have to buy a TV license like the rest of us.

    • Dave Simpson 7th Jan '12 - 9:23am

      I don’t know what is meant by ‘wealthy pensioners.’ Pensioners with a significant income, over and above the State Pension (e.g. a private pension) pay income tax on it, like everyone else. A Wealth Tax would deal with other forms of ‘wealth.’

      Re, Bus Passes. Do these actually cost the State anything? Do the bus companies keep a record of everyone who uses a bus pass, and of how far they have travelled, and then submit a bill to the government? Or do they just let such persons travel free on an existing bus service that would have been run anyway – with no paperwork and no cost to anyone other than the marginal cost to themselves of the additional fuel used in carrying a few extra passengers? (Bus Passes are only usable outside rush hours, so the bus services inovlved are rarely full.)

    • Alex Sabine 7th Jan '12 - 3:29pm

      I’m inclined to agree that means-testing the age-related benefits might not be the right solution. Clearly it wouldn’t be if the administrative costs of doing so were likely to outweigh the savings – although if this really is the case then the deadweight costs of our labyrinthine benefits system are even worse than I thought!

      Personally – off the top of my head rather than after detailed study – I would probably keep the free bus travel, scrap the free TV licence and roll the winter fuel payment into a higher basic state pension (thereby automatically raising the eligibility to the same age as the BSP, and clawing back some of the money through the income tax system as the BSP is taxable whereas the winter fuel payment isn’t).

      In addition I would phase out the higher age-related income tax personal allowance, so that by the time the Coalition reaches its goal of a £10,000 allowance that would be uniform across the population. (In fact it is already £10,090 for the over-75s in 2011-12, so it would need to be frozen at this level for the rest of the Parliament.) This would also be a small step towards a simpler and more rational tax system, which should be an overarching policy goal given the horrendous UK tax code.

      The combined savings/yield from these three measures would admittedly be modest – perhaps £1bn per year – but it would ensure a slightly fairer distribution of the burden of austerity. Thanks to the (much more expensive) triple lock guarantee on the basic state pension, pensioners would still be getting a relatively good deal, but trimming these ‘perks’ would strike a small blow for inter-generational equity.

      If we want to tackle that issue more fundamentally, though, we need to look at the way the combined effects of the planning and tax systems have allowed the baby boomers to make large tax-free capital gains while bidding up land and property prices and making them increasingly unaffordable for the younger generation. The bias towards debt rather than equity finance in the tax system is another harmful distortion that needs addressing.

      This would need to addressed as part of a radical, wide-ranging overhaul of the tax system, however, not via piecemeal legislation or arbitrary, badly designed raids by the Treasury. The IFS’s Mirrlees review is a good place to start. (And no, a ‘wealth tax’ or generic capital levy is not the solution…)

    • If only ‘millionaire’ pensioners were to lose their entitlement to their free bus passes very little money would be saved. To save any significant proportion the definition of a ‘wealthy’ pensioner will need to be set at quite a low income.
      Would somebody please advise present thinking on what the income threshold would be?

    • @ PeterH, the tax credit system seems to think that households are in need of some extra support up to around £40,000 annual income before tax, so this, or say £25,000 for an individual seems a decent enough threshold. Again, the administrative problems and expense, as you get with tax credits, make this quite a low return exercise, so I’m not sure why the party isn’t just looking at getting rid of these voter friendly but ultimately patronisingly ridiculous tidbits and improving basic incomes.

      @ Dave Simpson, It certainly costs the state something, over £1billion a year and more problematically is spent by local authorities after receiving a grant from central government so if your council has ineptly negotiated its rates with local bus firms or gets unusual massive influxes of British pensioners on their holidays, this has quite a bad impact on local authority budgets.

    • @Tom Smith, You remind us of a significant point, that bus passes are administered by the Local Authority. So, in order to get a bus pass one would need to divulge one’s financial details to the Local Authority? Oh well, I can kiss goodby to mine then.

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