Link unemployment benefit to personal contributions, urges think-tank
One of two articles about future financial plans – I actually find this thinking quite innovative and refreshing. Although I suspect the requirement to opt into the winter fuel allowance would disadvantage many elderly rural dwellers, particularly if it had to be done online.
An unemployment insurance scheme reflecting personal contributions is being examined by the Treasury as it seeks £12.5bn in welfare savings for if the Conservatives are re-elected in May.
The radical proposal is one of several set out by the right-of-centre thinktank Policy Exchange, including cuts in child benefit for those with more than four children. The thinktank, which has close ties to the chancellor, George Osborne, also proposes that pensioners should be asked to opt in to receive their winter fuel payment rather than receive it automatically.
The package comes ahead of speeches on Wednesday about how to make welfare savings by the work and pensions secretary, Iain Duncan Smith, his opposition Labour counterpart, Rachel Reeves, and the former Labour cabinet minister David Blunkett.
Policy Exchange believes its proposals on child benefit and the winter fuel allowance would save up to £1.5bn by 2020.
The winter fuel allowance is not means tested and goes automatically to all those receiving the basic state pension, regardless of their financial situation.
The Treasury is known to be studying plans for the contributory jobseeker’s allowance to be replaced with a new national unemployment scheme and system of personal welfare accounts, funded by a 1% cut in the National Insurance rate. Every worker in Britain would contribute a small proportion of their weekly earnings into both a new nationwide unemployment insurance scheme and a personal pot called MyFund. The funds would be used in times of unemployment, with people who have been in work all their lives set to benefit from £10,000 on retirement.