Every newborn child should have a 'personal welfare' fund opened, in to which the government should pay, say, £5,000 each year until the child reaches 18. The fund should be private, like a pension fund, and thus invested, not a state operated fund financed from present tax receipts. The fund would accumulate £90k in static terms and should provide well over £100k (rough calcs anybody?) after investment returns on maturity.
This fund should be the only handout from the state, ever, to citizens. No more child benefit, no more unemployment benefit, housing benefit, tax credits, etc etc. The fund can be used the the individual as they see fit. They could spend it all on booze and fags, but then they would receive no more help from the state and would rely on any private charity. People could spend it on buying a house, financing their University degree, buying a car, wedding, paying for kids etc. People could top up the fund through their working life, and the fund would act like a buffer against the volatile nature of life. If you found yourself unemployed you draw on the fund, if you get sick or disabled you draw on the fund etc.
The advantages of such a system are many. Easy to administer, no perverse incentives/disincentives caused by benefits, promote personal responsibility, equal start for every individual, eliminate poverty trap, and it's fair and reasonable. Even though at 18 you are effectively being handed £100k of 'free' money, it is now yours to spend as you wish. If you are ill or unemployed would you spend it so freely compared to current benefits when you know you will receive them month after month? When it becomes your own money you become more careful how you spend it. The fund would give people a lift up, whether to buy a house, start a business, go to University, afford to start a family, etc.
The key to the concept is that beyond the initial payment there is no other help from the state. It would help pay for the expense of children, but not distort decisions by paying benefits per child, for example. It would totally remove distortions inherent in a 'real time' benefit system (week to week, month to month, year to year).
Any smart arses out there please feel free to crunch the numbers.
Whilst I would not call myself a smartarse (although I'm sure others might), I thought that I would have a go at crunching said numbers.
I couldn't find an exact breakdown of population to 18, but the nearest that I could find was at the immensely useful Nationmaster.
NM gives the total population as 60,609,153 and the percentage of those aged 0–14 as 17.5%. This gives us 10,606,602 (to the nearest whole person). Next, the total number of those aged from 15–19 is 3,992,998. This gives us a rough total of 14,599,600 (to the nearest whole person).
Therefore, 14,599,600 x 5,000 = £72,998,000,000 or £72.998 billion.
So, how does that compare to current Welfare spending? Well, I worked this out some time ago, from the government's own statistics [PDF].
The most massive single item is, indeed, Social Security Benefits at £134,463,000,000 for 2006/07 and £140,900,000,000 projected for 2007/08.
When you add up all of the different sections, however, the total figure for benefits is somewhere just north of £200 billion.
So, Vindico's idea does actually compare pretty favourably, in terms of government spending. Plus, of course, it has all of the other benefits that he listed.