Pensioners should opt-in to winter fuel allowance and jobseekers should get personal welfare accounts, says think tank

Guy Bentley
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Should pensioners be made to opt-in to winter fuel payment (Source: Getty)

A think-tank with close links to the Conservative Party has outlined a series of changes to welfare that would affect pensioner benefits and Job Seekers Allowance and child benefit payments.

Under Policy Exchange's Welfare Manifesto pensioners would be asked to opt-in to receive the Winter Fuel Allowance. Currently, the Winter Fuel Allowance is given to all pensioners regardless of how wealthy they are. The proposals are said to be being actively considered by the Treasury.

Policy Exchange hopes that if pensioners had to opt-in to receive the benefit, the wealthy would decide to forego the payments, which come to between £200 and £300 a year. Poorer pensioners who receive Pension Credit however could keep the automatic payments. The report suggests the changes could save £400m.

While public support for limiting this kind of benefit is overwhelming at 74 per cent, it remains a political danger zone for many politicians who fear a backlash from the segment of the population most likely to vote.

The author of the report, Steve Hughes, said:

Presenting pensioners with a choice to receive their Winter Fuel Payment could lead to hundreds of millions of pounds worth of savings, and is just one way to root out perceived unfairness.

To keep a lid on welfare spending as the population ages, the report says the government should include the State Pension in the welfare cap. The reasoning being that pensions, unlike Jobseekers Allowance are not as vulnerable to swings in the economic cycle. Policy Exchange points out that State Pensions already account for 40 per cent of welfare spending.

Moving from the old to the young, Jobseekers Allowance could be replaced with a "national unemployment scheme" and a system personal welfare accounts. Workers would have their National Insurance cut but would have to chip in weekly to the new scheme. The fund would be used "in times of unemployment, with people who have been in work all their lives set to benefit from £10,000 upon retirement".

The move would add to what Policy Exchange call the "personalisation" of the welfare system and would be combined with new diagnostic tool to divide recipients by their barriers to work. Not be left out, equal child benefit payments regardless of family size would also be scrapped. The number of children eligible for the benefit would end at four and be tapered from the first child onwards.

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