Saturday, February 09, 2008

A Welfare Proposal

Vindico has an interesting Welfare proposal.
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.



Tomrat said...

Vindicos idea is indeed very good but enforcing personal responsibility will not stop some idiot 18-year olds spending the money frivolously and not thinking about the consequences later (and believe me, I work with kids who would think nothing of eating gold plated findus crispy pancakes today, whilst begging to but lint-burgers tomorrow).
I have a problem with the phrase "eliminating the poverty trap" in that it automatically assumes that that curative measures can be achieved outright with money; some of the richest and most famous people in our society are caught in this same trap, it just isn't manifesting itself in the same way; money to the poorest will only salve the libertarian conscience by allowing us to say "well, we did something, but they wouldn't help themselves", there is little difference in this attitude than there would be giving a beggar a fiver in the street to get a warm meal, just the size of the gift that is different.
I would (and have) suggest(ed) the following as an alternative idea to this one; it's tougher, does involve some planning, but does not require a statist level of control:
A recognition that if a person is unable to provide for themselves (either by mental illness, unemployment or ill-fortune) they become "wards of the state"; it is then the responsibility of the state to manage their property rights for their own benefit.
This is - horror of horrors - outright socialism, but before you slam me as a fascist/communist/idiot hear my idea out - it would go thus:
1. A person is rendered unable to work and provide for themselves, either by mental illness, unemployment or other possibilities; they are seen by a community officer (a psuedo social worker/welfare officer).
2. The community officer assesses the requirements of the person, their needs (family, housing etc.) and authorises 3 months benefits, paid at the relative poverty bracket (60% of the mean value?). All efforts to get the person back to work are offered.
3. After 3 months the person is reviewed again; if they have been unable to find work their benefits are altered to non-monetary resources; their interest rate on property is paid in lui of repayment to the state who is supporting the person if necessary, money is stopped outright and the person is placed on a food voucher system tailored to the most up to date dietary advice available (5-a-day fruit/veg vouchers, interchangeable meat/substitute and simple perishables etc)-
This is NOT handled by the state; only funded via supermarket trade agreements with the state fitting the bill; all major chains would be more than willing to support a steady supply of income with logistical support framework.
This method has a number of advantages over just giving them money:
-it wont have the idiotic ones littering our streets with taxpayer funded booze and fags.
-it'll obliterate obesity related benefit claimants; hard to stay fat when your food is supplied within the narrow bracket of healthy living.
-it will make people healthier; booze and fags will not be covered after the 3 month benefit window; people will be forced to go cold turkey, or go out and get a job to support THEIR habit.

I'll try to blog on the costs of this scheme tomorrow if I can find the time; believe me I want people to be responsible for themselves and off welfare, but they cant know they are only "existing" until you show them that is all they are doing.

Roger Thornhill said...

The issue with Vindico's idea is not just what happens when we are there, but how do we get to there from here.

The cost will need to begin while all the other welfare elements are in progress. Only 18 years later, you will begin to reduce very gradually the welfare bill.

Anonymous said...

Vindico's idea has appeal - particularly the pesonal responsibility element. However, perhaps someone with a better grounding in economics than me could comment on the inflationary risks of £100k being available to people more or less at the point when they choose to / would most like to move out. E.g. would property prices in university towns be distorted? Would the majority of people spend the majority of the £100k on a deposit and thus simply increasing the price of property? Presumably the market would adjust prices accordingly but supply and demand haven't changed if everybody has the money...

Anonymous said...

In the meantime, I don't see why we can't put a cap on the benefits people receive. If the maximum level of benefits for an individual was set at a fixed level, referenced to the minimum wage for instance, that would remove the incentive for people to e.g. breed like flies in the knowledge that the state will pick up the tab. I don't see that there could be any reasonable objections to this; if the minimum wage is deemed enough for a working individual to live on, then it is certainly enough for a temporary safety net for people who are out of work.

Nick said...

Good, interesting, point 'eck. I think you're onto something there.

people will be forced to go cold turkey, or go out and get a job to support THEIR habit.

I think you're being naive. A black market will develop. Afterall, are you actually saying that you couldn't get a drink in Chicago during prohibition?

Mark Wadsworth said...

DK, I have a link to a population pyramid in my "stat's and stuff" section.

Sacerdoteuk said...

Curiously I already do a similar thing for my offspring. Essentially, I have invested all her child benefit into the stock exchange, along with any cash presents from grandparents or friends. At the stock market average of 7% p.a. She will end up with around £45,000 at age 18. Not too shabby. However, more interesting is what happens if it remains invested at that rate, without adding any more money, until she's 65. Then the miracle of compound interest comes into play . In today's money she would have over £1M in her pension pot.

Pension Crisis Solved!

Anonymous said...

It won't happen for all sorts of reasons, with the greatest being the fact that guvmint would suddenly not need their army of civil servants who currently toil to find a way through many benefit mazes...

Casting the bureaucrats aside in favour of a simplified system means that the guvmint are immediately losing millions of votes. mind you all these people can then start breeding to get kids and qualify.

In fact, older women who cannot have children may be increasingly divorced for those who can. After all, they can earn good money here...

Anonymous said...

I suppose the obvious objection some would make is that if anyone breaks their neck in a car accident say and has to spend the rest of their life on a ventilator, that £100k would not cover costs for even a year. Ok, so you have to take out extra insurance for yourself and for any child from conception. Given the statistics, probably pretty cheap, take it out of the 100k.

Anonymous said...

double it and then include pensions

Anonymous said...

Sorry Guys - you're all missing the obvious.

So the prodigal sons among us squander their fund and are found to be "disadvantaged"

Can't you envisage the industry that will grow up clamouring that they be given a second (and third, and fourth) chance, and anyway they weren't properly trained how to handle it and nasty global capitalists (who are btw destroying the planet)robbed them of it. In fact it's everyone's f**ck*ng fault except their own that they're back to square one. And what about the psychological damage you hard hearted society are perpetrating on them because you allowed them to live well without working and now they're used to that and you're insisting that they accept a lower standard of well being and have to to demeaning occupations just to survive Christ-on-a-bike it's worse than anything that Thatcher or Tebbit inflicted on us at their most sadistic!!!!

And which politician is going to allow his party to be put in the position of muderer when the Indie has one of its Beano-style front pages featuring the prodigals starving in the gutter?

Wake up and smell the (heavily subsidised state) coffee people!

Anonymous said...

Nick, yes, you could get a drink in Chicago, or anywhere else in the United States, during Prohibition, but the trick was, you had to pay for it. And because it was illegal, you paid a bonus for the risk all that chain of supply had taken to get that drink into your glass. People on unemployment should not have that kind of money to treat themselves.

Tomrat 247 - I like your thinking but it's a bit complicated. (On the other hand, the more complexity, the fewer public sector employees you have to lay off).

When I lived in Texas, the company by which I was employed closed down an entire, 7-person, department. The next morning, we were all down to file for unemployment. As we were all middle class, this was our first experience of the system and we were shocked to learn that our unemployment pay would last for 13 weeks only.

I asked the employee, "But what if we can't find a job in 13 weeks?" and he said, "Oh, people manage. You may not find the job that you want, but you'll find a job to keep you going." He was right, of course. I had been second highest in the department, and when my 13 weeks were up, I went out and did temping. It was bloody awful, but it was money to live, and it motivated me to keep looking. The seven of us all eventually got jobs at our former level. But this taught me that no one owed me a damn' thing.

Texas is tough, but Wisconsin is tougher. They accord you a lifetime limit and that is spread over certain intervals. If you become unemployed again too soon, gosh, that's too bad. Repeat after me: "Do you want fries with that?"

People are amazingly resilient once they are forced to be.

I would like to see Britain go totally onto food stamps for the unemployed (meaning the entire catchment of people - save the genuinely disabled - who don't work). Giving them money that taxpayers have earned to treat themselves to cigarettes, booze and lottery tickets is daft. If they need something to drink, there's water in the tap. There is absolutely no obligation on society to make the lives of the non-contributors comfortable.

You want cigarettes, alcohol, shampoo, toothpaste, household cleaning liquids? Find work.

Anonymous said...

And so we have highlighted here a few items that are now missing from the education of our children. Responsibility, self discipline, thrift, acknowledgment of duty, etc. All thrown out because they weren't "modern" enough, and now we pay the price!

Tomrat said...


"I think you're being naive. A black market will develop. Afterall, are you actually saying that you couldn't get a drink in Chicago during prohibition?"

No merely, that personal responsibility is placed to one side when the cost of living is being met by someone else; a parent is thus responsible for children as the state is responsible for adults who cannot support themselves - good parents attempt to teach children by balance of punitive and rewarding measures; bad parents tend to be stuck in either way. I would surmise that the present Labour administration has behaved very much like the parent who rewards only; giving to their wards irrespective of behaviour. Vindico's idea involves a bad parenting model; cutting your losses and running. I'd prefer a mixture that makes people understand precisely what control they are relinquishing.
As for the prospect of a black market this relates to a much broader point I feel DK has been trying to make for many, many moons; that all these measures are merely putting a finger in a leaky damn only for another to appear; better to tear the whole thing down and start again. If this wasn't an option then trade in food vouchers is tantamount to benefit fraud and should be prosecuted as Wat Tyler outlined recently; 1 year for every £1000 fraudulently obtained, with no early release (banning early release in general). I doubt very much that people would stay in the poverty/benefit cycle for long though, removing the value of this trade.

Tomrat said...


Almost exactly my point entirely (never did get a chance to look at how feasible it would actually be this morning...some fag packet calculations coming very soon...)
As a people the british are in a position to support a massive "flexible" workforce (including those on permanent sick/unemployment); this stifles growth overall as Wat Tyler pointed out very recently because the workforce is slowly being replaced by immigrants - I have no problems with immigration and would prefer a widespread imigration based on a much looser form of the Australian system - but rather than have fairly conservative preclusions to their entry it would merely be economically controlled ones; the jobs they are filling are replaced by the indigenous unemployed. Immigrants could then be placed on the exact same special measures that long term unemployed undergo - it would more or less be a pseudo refugee status which is exactly what we would want at a minimum for someone fleeing countries with poor human rights records.
As for your point on complexity yes it is complex, but as I explained this complexity doesn't have to be handled by the UK civil service in alls its wiffy inefficiency; the could merely act as a conduit for funds to reach the big chain supermarkets who would operate the logists of such a system, having one already in place; the cost would be minimum and the prospect of repeat business would be welcome. Heck the civil service work force for the entire DWP could be reduced to local benefit offices who deal out funding locally. You could combine it with the LEA's, instituting locally controlled education vouchers - the savings could be enormous.

Anonymous said...

This thread demonstrates immediately why this quite good idea would be unworkable, from the idle rat-boy asbo class who'd still spunk it all on scratch cards and cider to some of you above whose instinct straight away is to turn it into a bureaucratic abortion.

And what of those at the other end of the spectrum who are prudent, invest their nest egg wisely and continue to work hard? Some future Gordy Brown would tax their fucking arse off, that's what.

Anonymous said...

An utter nonsense of an idea. From every angle. As previously pointed out, your average eighteen year old will create a stream of alcohol induced piss larger than the runwater of a northern glacier melting in the wet-dream of an enviro-fascist (you know they love it). Failing that, there is no government on Earth who would somehow 'ring-fence' this money for our deserving eighteen year olds. Once the taxes were raised, they would hand it to their most-deserving (i.e. whichever bunch of cunts would be most likely to vote them in next time) or raise further taxes (if they could get away with it) or borrow it if they couldn't. Whatever. The 'choices', all result in us paying for kids to have a fucking fantastic time!


You all seem to be doing the new world orders job for them,freedom seems to have disappeared from your lexicon,which you will gladly sacrifice just to keep a little money in your own pockets,like rats we are already turning upon one another,why not simply introduce a death culture,the best of everything until you are thirty ,then anihilation,because life under the regieme you propose would be worth less than it is already,you shy away from the real problem which is population,there are too many people for this country to support,and instead of victimising our own people ,let us shed the burden of these invading parasites,by your own admission if people can not make it on thier own ,then tough,if the third world can not make it on thier own, also tough,it is in no way my or your responsibility to feed these masses that will not work to improve thier own economic situations in thier own countries,it is no solution to dump them on the backs of the British taxpayer,our own people first.For the past fifty years ,we have tried to educate the third world,by various means,first trying to equip them by educating them in our universities,so that they could take the expertise back to thier countries,secondly by massive aid,in the first case they eventually said bollock to my own people i am staying here,and in the second the aid mysteriously finds its way to secret bank accounts in switzerland,we have done our bit,the rest is up to them,sink or swim,if you say that sink or swim is good enough for our people, then it is good enough for these parasites,cos we is all equal now bro.

Tomrat said...


Why, when it is imports to this country that make us rich, does this not apply to people as much as product? The answer has nothing to do with the quality of people being any different from us, it has a little more to do with the quantity, granted, but perhaps it is more to do with the fact that we have both a massively inappropriate benefits system running alongside free immigration: we would have no need to impose ANY immigration curbs (i.e. we could allow anyone and everyone in) if we had a more robust welfare state that didn't reward the laziness of our own people - we could economically price the majority out of searching for work, leaving it open to the most enterprising, the bravest and the most eager to make britain greater still.

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