Pre-Autumn Statement 2024: Key Questions on Pensioner and other Benefits

This blog will be updated regularly in the run up to the Autumn Statement at the end of October. 

I'm planning to ask a series of key questions on 'X' (Twitter in old money), then attempt to answer them myself in this blog, in more detail than X will allow. 

Why ? It's important that we all keep this Government's 'feet to the fire' to reduce the risk of losing any more of our precious and hard-won benefits..... 

See also my recent blogs for more details on this topic:

https://vivweb01.blogspot.com/2024/07/labours-war-against-pensioners-where.html

https://vivweb01.blogspot.com/2024/09/update-on-pensioner-benefit-changes.html

Here's the first offering for the pot:

1)  DWP have identified 880,000 pensioners who they 'believe are entitled to Pension Credit'.  Why don’t they do the decent thing and simply award these folks the benefit, without forcing them to fill out a 230-question form ?

Comments: The answer is almost certainly money....and to an extent lack of resource. It’s clear that DWP must have the data to establish eligibility for all of these would-be claimants within their database – they effectively gave the game away when they started quoting specific figures.

The real problem Reeve’s treasury faces is Starmer’s obsession with balancing the books and filling his virtual ‘black hole’ in the shortest possible time, in an attempt to justify his claim that Labour is now more ‘financially competent’ than the Tories. I won’t labour the point on the causes of this new celestial phenomenon, but suffice it to say that the super-inflationary pay increases already awarded, and yet to come, to the more powerful trade unions in return for temporary industrial ‘peace’ won’t have diminished its size. 

The calculations supporting the £22Bn 'black hole' in the finances supposedly left by the Tories have already been shown to be questionable, and the 'currency' of this supposed deficit as an excuse for sweeping cuts and tax hikes is already wearing thin with the electorate. Starmer has also already hamstrung his treasury's room for maneuvre by making sweeping manifesto promises not to increase the rates of income tax, NI or VAT (notice that thresholds weren’t mentioned, though – abrupt changes to these may yet produce a nasty surprise for many of us on October 30th).

The financial imperative this has generated at the treasury has resulted in a raft of ‘emergency’ measures being thrown up by 'the advisors' as fund-raisers in a desperate attempt to wring as much extra money out of the benefits and tax systems as possible. The haste this has produced, and its after-effects are there for all to see. A less naïve government would have considered the possible effects of these measures carefully before rushing into sweeping changes. As it was, within a few weeks of taking office, they managed to alienate around 15% of the electorate at a stroke by cutting them off from a winter fuel payment which many of them had come to rely on. Whatever the fate of Winter Fuel now, the element of trust has been lost, and may never be regained.

The actual financial gain from restricting the benefit is also likely to be well short of the £2Bn originally quoted. The stark financial reality for the treasury is that for every new successful Pension Credit claimant, it will be up to £4k worse off (including their WF payment of up to £300). A simple calculation will confirm that it would only require half of the potential claimants to apply successfully to completely obliterate the saving on WF payments.  If the current legal action in the Scottish courts to restore the payment succeeds, and Starmer is forced to relent, the treasury will have made a significant net loss on the deal, and far from proving their own financial competence, will have gone a long way towards refuting it, and confirming Starmer's judgment is flawed.

No surprise, then, that DWP will have been instructed to minimise the number and success of any new claims, while appearing to solicit them….

A splendid example of the importance of the old maxim ‘look before you leap’.

Another benefits question for you in due course....

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1)       2) The UK DWP Benefits Cap has caused considerable hardship for some of the worst-off  families by effectively restricting child benefit payments to the first 2 children. Should the restriction be scrapped to help eliminate child poverty ?

As far as I see it, the main problem here is that the current 2-child limit on the child Universal Credit element and Child Tax credits is causing hardship to many of our poorest families, resulting in an increase in child poverty.  The overall benefit cap also serves to exacerbate the difficulties, particularly for large families in areas where accommodation is particularly expensive. This 'induced poverty' cannot be acceptable in an economy still ranked as the 6^th largest in the world. It is also deterring couples from raising more than 1 or 2 children; this has demographic implications, as I’ll discuss below.

We must of course retain some sort of control over the mushrooming welfare budget to remain fiscally prudent, and we must also find ways to make paid work more lucrative than benefits-only income if we are to achieve the return to work the country needs to become more productive. 

Limiting benefit payments to 2 children might therefore seem reasonable as one way of providing an incentive for an already overcrowded nation in an over-populated world, but we need to consider the wider demographic problem the UK faces, rather than just ‘the bottom line’.

Like the state pension, the UK’s current Universal Credit welfare system is not the most generous provision in Europe, and as discussed, includes an overall benefits cap which can be easily exceeded for some larger families, especially when it comes to housing benefit. It is also complex, and difficult to negotiate for even the most ‘tech savvy’ claimants. Given the sky-high cost of private rentals in some areas nowadays, a major part of the weekly benefit for those who do manage to claim successfully is often swallowed up by housing costs. Child-related benefits include a relatively small allowance for each child (Child Benefit), in addition to two other larger maintenance-related  payments (Child element of Universal Credit and Child Credit), and these are all included in assessingbenefit income against the overall cap. Although there is no restriction on the number of children you can claim Child Benefit for, there is a taper, such that the first child gets £25.60 p.w. and the 2^nd and subsequent ones only get £16.95. As discussed, there is a 2-child limit on the child maintenance-related payments, Universal Credit and Child Credit.…

My question is: Are these restrictions fair in the current circumstances ?

In a word, no, and the status quo certainly doesn’t comply with what I would call ‘Good Socialist Practice (GSP)’*.

Raising kids is an increasingly expensive business nowadays (quotes from various sources for the total cost of raising a child just to age 18 start at around £250k!). This in itself is a powerful deterrent to reproduction,  and were it not for the excessive level of inward immigration successive governments have allowed over recent years (both legal and illegal), our population would already be declining, since our birth rate has fallen below the replacement level of 2.1 births per female, and is still going down. Arguably, then, we shouldn’t therefore be actively discouraging child-rearing, particularly if we are eventually successful in stemming the flow of net inward migration to more acceptable levels.

Perhaps a fairer way of doing things would be to ‘decouple’ the benefit cap from child-related benefits and allow a slightly less abruptly-tapered payment for up to 4 children whether or not this breached the overall cap. (e.g. Child 1=£23, Child 2=£20, Child 3=£16, Child 4=£12). We could also do the same for the child-related Universal Credit elements i.e. allow tapered reduced payments for 3^rd and 4^th children along the same lines. This should do much to reduce the incidence of child poverty, and remove the current disincentive to have more than one child. Perhaps more to the point, it might also go some way to restoring trust in this government’s intentions towards the poor and needy…..

*As an aside, we have all noted with varying degrees of annoyance and disappointment the abundance of sleaze and bad behaviour amongst UK politicians of all hues recently. This has markedly reduced public trust in our political institutions, and resulted in calls for a more tightly controlled parliamentary environment. This type of regulatory oversight is not a new concept - many of our UK ‘private’ industries work to strict regulatory codes with which their operations must comply. These standards are legally enforcible and were introduced in the ‘70s and ‘80s to counteract bad behaviour. The Pharmaceutical Industry for example, one of the most highly regulated of the lot, operates to at least 3 of these: Good Clinical Practice (GCP), Good Manufacturing Practice (GMP), Good Laboratory Practice (GLP) are all involved in the process of producing new pharmaceuticals for our health services. Would it not therefore be an opportune time to consider similar independent regulatory scrutiny for Parliament and politicians ? 

We badly need more accountability from day to day in our government’s operations – the current system produces wildly unrepresentative electoral results and then effectively excludes the electorate from having any say in policy for up to 5 years following an election, other than via their MPs, who are of course perfectly entitled to ignore any recommendations they might make. This is especially relevant where, as in this case, the elected government has an unassailable majority. 

We therefore need a new Good Parliamentary Practice (GPP) code to be applied to all parliamentary procedures, to include regular independent regulatory auditing of processes and individual performance. Given Labour’s claim to be ‘good socialists’, they should also consider working to a new standard of Good Socialist Practice (GSP).  Introducing these new standards might help eliminate some of the sleaze that has mired our politics in recent years, encourage a more caring approach to the most vulnerable in society….and prevent any tendencies towards unwanted autocratic behaviour….