Clegg: Welfare for wealthy must be cut first

The BBC is reporting that Nick Clegg is insisting that any further welfare reform must start with high earners.

The fact that we’re asking people on low incomes to pay through their taxes to basically pay the fuel bills of people who don’t need to heat their homes because they live in sunny parts of Europe and maybe didn’t even work here before they retired, I think that lifts the lid on a wider problem in our welfare system.

I don’t think you can have a debate about welfare that is provided to people at the bottom, if you’re not prepared to have a debate on the welfare that is provided to people at the top.

That isn’t fair, that is why I will only proceed with further welfare reform if it is done fairly.

This is all in the context of the expected announcement on spending plans for 2015-6 following the widely reported battles between the Treasury and departments, and in stark contrast to the early coalition strategy of holding all these debates in private – of ensuring that the boat isn’t sinking before you start to rock it.

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  • I do feel a bit uncomfortable with the emphasis on ‘welfare’ (so called) cuts for the better off. In some ways it seems obvious and in general I agree with Nick Clegg’s general sentiments, however when it comes down to specifics, we must be concerned with a kind of disenfranchisement that could prove counter productive in the long run.

    For example: the NHS works because it is free at the point of use to all, if we insisted that millionaires pay the full cost, it would break the principle and could lead to genuine privatisation of health. Some benefits (child benefit?) would be better given to all, but funded at the top end by increased taxation.

    The simplest solution is to make benefits taxable. However I do understand the objection that his involves the seemingly nonsensical consequence of giving with one hand and taking with the other.

  • The main forms of “welfare for the wealthy” are bank bailouts and quantitative easing.

    I agree these should be looked at, with a view to making the benefits taxable as Martin suggests.

    Pensions are only just enough to meet a basic minimum standard of living at the moment. Means testing piddly benefits is a tiresome pestilence and should be abolished.

  • “Clegg: Welfare for wealthy must be cut first”

    Does that mean they will lose their army of SPAds who help them take life’s little strains?

  • Universality of benefits is at the core of the welfare state. Whether there should be a winter fuel allowance, or older people’s bus pass, or free prescriptions for the over 60s, is another question, but if the government has decided that there should be these benefits then everyone should get them. Pointing the finger at millionaires receiving winter fuel allowance is cheap politics and undermines the principle, to coin a phrase, that we are all in it together. Hypothecation of taxes or benefits is destructive of the general consent that is necessary to operate a reasonably generous welfare system, and it is shameful that we are following the Labour Party’s lead on this.

  • It’s a shame he never bothered to think about fairness with previous welfare cuts. There was an interesting blog link from a Cornwall Councillor stating 40% of those affected by the bedroom tax have fallen into rent arrears..

    It was always unfair as it was never linked to suitable availability but it has been defended to the hilt by Lib Dem Ministers.

  • Clegg still doesn’t get it: effectively only those who pay higher rate tax pay more in than they get back, so it is a little disingenuous to suggest that the low paid are directly subsidising the wealthy.

    Martin & CP are right, make welfare taxable, so that the entire welfare system is part of the tax system. But then that would in itself have the effect of simplifying many of the rules and make the system more comprehensible, which is something successive governments haven’t really wanted…

    Building on Martin’s point concerning the NHS, is Clegg also suggesting that ‘wealthy’ people who send their children to schools that receive monies from the state should also pay for this benefit?

    The sad thing is that the coalition could save a little under £1bn per annum now and Circa £2bn pa after 2015 by cancelling HS2. Just goes to show that the coalition has, like Labour, not really been serious about cutting government extravagance.

  • Jeremy Davis 18th Jun '13 - 12:46am

    All benefits should be taxed, some are and some aren’t. Unless all means tested benefits are restricted to one level, with the inevitable cliff-edge, the complexity and cost would be huge. The tax system can already provide sufficient control over excessive benefits.
    Of course it does involve taking money back (despite the lower overall cost), and the nominal tax paid by some would increase, but there must be a limit to providing vacuous crowd pleasing platitudes appealing to the lowest common denominator to avoid challenging people with alternatives,

  • Universality of benefits is a political strategy, not an economic one and certainly not one about moral principal. The idea is that if you can get rich people — who can be assumed to be by far the most politically influential — to buy into a program and personally benefit from it, then you draw the teeth of what might otherwise be a devastating political opposition by those who have the most power to make their opposition count. Thus you provide benefits for a large number of people who need them at the cost of also paying for those people who really have no need of the benefits. It is, in essence, a form of bribery. It also accepts the notion that the outsized influence of the wealthier classes is acceptable in a democratic society, and that buying them off is just the price of “doing business.”

  • I do not agree that benefits should be cut for higher earners. If they have paid their National Insurance, they are entitled to the benefits of it!

    Considering the increasing inequality and larger gap between the high paid and low paid, however, there is a strong case that the wealthy should pay the same rate of National Insurance as everyone else, not a dodgy special-person discounted rate.

  • I’m more concerned with 10’000s of public staff earning over 100k, than a few rich people who pay tax getting some of it back as a winter fuel allowance.

  • Other comments deal well with the practical and political aspects of this astonishingly divisive and hate-ridden statement.

    However, someone should say that this quote is Euro-bashing of the most ignorant and chauvinistic kind: ‘…people who don’t need to heat their homes because they live in sunny parts of Europe and maybe didn’t even work here before they retired’

    In Europe, you go, live, work and retire where and when you like. The country you last worked in decides if you qualify for a pension. Since pensions are deferred salaries (and deferred benefits if ever you were in need), your state pension is paid pro-rata by each country you worked or were registered ill, disabled or unemployed in. State benefits are decided by the states and are not the fault of the recipients.

    Have the Lib Dems joint the eurohate lobby, and if so for what reason? Perhaps it’s because the whole of the UK (or whatever it calls itself) has gone ding-dong.

  • @Peter Chivall. WFA may have been for everyone over 60 but no more ever since the rise in women’s state retirement age to which, along with free bus passes it is linked. Soon everyone will be 66 and that is rising again. However I never hear what the savings on not paying the WFA or state pension until these ages are. I constantly hear the age of 60 mentioned yet nobody gets these benefits at that age now.

  • @Anne & C.Lee

    “The Government paid nearly £13m in winter fuel payments to UK pensioners living abroad last winter, figures show. … after a recent ruling from the European Court of Justice … as many as 444,000 British expats who currently claim a state pension could be eligible for the payment, a potential cost to the British government of £100m.”

    Source: January 2013.

  • @ Roland. What are the savings for not paying WFA until 66? More than the figure you quote probably. Again, the savings made from delaying the payment of WFA and the state pension are never mentioned only the cost of something which is probably far less than the savings?

  • @Anne. I’m as much in the dark as you and everyone else. Given the LibDems are in government their MP’s should have access to such data and Nick et al should be using it to qualify and quantify why this is such an important issue.

    Interestingly, I know of one low income couple that moved to France several years back because it enabled them to make their pensions and associated benefits go much further than they would of, if they had stayed in the UK…

    Perhap’s Nick is also getting excited because I remember some forecasts a few years back that suggested that significant numbers of immigrants would retire to their original communities rather than stay on in the UK and hence the amount of UK pensions going abroad (and hence monies flowing out of the country) would significantly increase.

  • I would like to clarify the assumption that expats living in sunny parts of Europe don’t need to heat their homes. During the Winter months from November to May houses in Spain, for example, are extremely cold owing in part to poor insulation. Pensioners on fixed income State Pensions are very dependent on the WFA to cover the cost of heating their homes which is not cheap.

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