Entitlement reform For the Entitled

Responsibility has drained away from the British welfare state,leaving a poisonous blend of entitlement and apathy. Middle and high earners,who could and should be independent of public welfare,instead use their political weight to extract "their fair share" from government,through universal benefits and near-free higher education. The underprivileged engage with agencies that do not deal with the basic causes of unemployment. Even if people wanted to find new ways to save on their behalf,the insurance industry offers products that are too inflexible for the way we live now. The landscape is dominated by government's central grip on benefit rates and savings rules and regulations,based on a faith in bureaucracy and uniformity undimmed by the 67 years that have passed since the Beveridge report.

The cost of middle class welfare amounts to around £31 billion per year. The most generous benefits to the entitled classes include the Child Benefit,Child and Working Tax Credits,Retirement Pension and Winter Fuel Allowance and Statutory Maternity Pay. Faced with the alternative of even more significant tax rises,middle class welfare must be cut back to help restore the public finances and put welfare on a more sustainable footing.

Welfare reform is stuck in a rut. Social enterprises and for-profit companies are improving services for unemployed people. But their impact is limited because they do not have control of the full range of benefits and programmes for the unemployed. Savings products are bedevilled with complexity and regulation.

There is a political consensus for some limited aspects of welfare reform. Yet to deliver real benefits the UK needs a radical reform plan that immediately constrains public spending and then,through reform,moves towards a smaller,more effective welfare system. The only alternative is to continue to increase the burden on current taxpayers,which will harm prospects for economic growth and postpone difficult decisions on expenditure. Key recommendations include:

Abolish middle class welfare and benefit gimmicks,with immediate cuts that would save £14 billion. Further savings,including from migrating individuals from the state pension onto personal protection accounts,should be made as part of a medium term plan to restore the public finances.

Hand benefit rules and operation to social enterprises and companies,funded through employee national insurance contributions.

Develop flexible Personal Protection Accounts,building on the success of ISAs and the introduction of auto enrolment and personal accounts for retirement savings in 2015.

Where possible,replace social security benefits with private provision,with private insurance being a potentially useful but largely underutilised tool,particularly for disability but also in other areas.

The end of entitlement
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The big idea behind the 1996 federal welfare-reform law was this: If you want the government to support you, you have to do something in return. You must make some effort to become self-sufficient - whether through working or learning job skills or looking for work.
In most of the country, that bargain holds. Not in New York. The dirty little secret of New York's version of welfare reform is this: You don't have to do a thing to collect your government check, just like in the bad old days of the entitlement culture.
A welfare mother here can thumb her nose at every demand the government makes of her - she can skip appointments with her welfare worker, refuse to take jobs offered her, and sit home all day watching Jerry Springer - and still pull down three-quarters of her welfare check, as well as her full allotment of food sta…

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