BRITAIN: Overhaul of Social Security Planned : Britain to Trim Social Security : Cost-Saving Overhaul Announced by Tories
The British government Monday announced plans for a major cost-saving overhaul of the social security system, the first in the 40-year history of the welfare state.
Social Services Minister Norman Fowler said in a report to Parliament that welfare spending, which does not include state health care, will exceed $50 billion in the current year. The report gave no estimates of the savings involved in the Conservative plan, but newspapers said it will amount to $1.3 billion annually.
The report, known as a “green paper,” a consultative document to be followed by specific proposals for legislation, said:
“To be blunt, the British social security system has lost its way. Since World War II, it has grown five times faster than prices, twice as fast as the economy as a whole, and is set to rise steeply over the next 40 years.”
The report added that 120,000 central and local government officials are currently employed to administer the system.
Prime Minister Margaret Thatcher has warned that a combination of Britain’s aging population and declining North Sea oil revenues will make the cost of the program horrendous by the end of the century.
Fowler said the proposals are aimed ar reducing the costs by concentrating resources on the poorest segment of the population, but opposition politicians condemned them as an an attempt to dismantle the welfare state that was brought into being in 1945 by a Labor Party-controlled government.
The major plank of Fowler’s proposed reforms involves a shift in the financing of occupational pensions away from the state and toward the private sector. The current system provides pensions of about half of average earnings to 12 million of Britain’s 56 million people.
An existing state earnings-related pension plan is to be phased out with employees required to make provision for their retirement through private pension arrangements.
Fowler said in his report that the government wants to make individuals more responsible for their own welfare. “In building for the future, we should follow the basic principle that social security is not a function of the state alone,” the report said.
Aim to Simplify System
He also sought to simplify the complex social security system that had grown up since 1945.
Fowler proposed to scrap the present supplementary benefit system, which assists the lowest paid. It would be replaced by a new income support system that would encourage people to earn more without losing out through higher tax payments.
The Conservatives propose to end the program for women under 45 years old and men under 50, meaning current pensioners and people due to retire before the year 2000 would not be affected.
The proposals also included a series of measures aimed at trying to ensure that out-of-work families on welfare, which includes rent-free housing, are not better off than the lowest-paid workers.
No changes were proposed in basic welfare payments, now averaging $84.50 a week for a family with two children, or in a range of benefits paid to the sick and disabled.
A controversial tax-free child allowance of $9 a week, paid to rich and poor alike and costing the state $5.6 billion a year, was also left unchanged.
In line with the aim not to be make welfare more attractive than work, the government paper proposed an equal system of state rent payments or subsidies for the low-paid and the unemployed, with everyone having to contribute toward property taxes. Unemployed state tenants are currently exempt from property taxes.
The paper also proposed to scrap a $32.50 maternity grant and a $39 grant for funeral expenses.