Adam Afriyie

It’s time to be realistic about benefits. Wealthy pensioners need to be able to decline theirs

It's time to be realistic about benefits. Wealthy pensioners need to be able to decline theirs
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Universal pensioner benefits like the Winter Fuel Allowance (WFA) cost the Exchequer over £8 billion a year. This is not a massive sum compared to overall government expenditure but it is absurd that every pensioner gets WFA, even cash millionaires. We must face the fact that this is totally wrong. It is morally and economically wrong that lower-paid people are paying for the benefits of millionaires who are more than capable of paying their own fuel bills.

In an ideal world we would stop handing out WFA to people who didn’t need it. But that’s not easy or cost-effective. So we need to look carefully at the WFA and other pensioner benefits currently paid to the very wealthy, like the free bus pass and TV license, and come up with innovative ways to manage the payments.

Sometimes it takes innovative policies and political determination to change lifelong policies like universal benefits. That’s why I’m delighted to be opening the Conservative Renewal conference next month at which these kinds of policies will be discussed including BBC funding, UKIP and the nature of immigration.

But there are problems with withdrawing WFA from millionaires. In June, Ed Balls announced that Labour intended to means-test the WFA. This is also some senior Liberal Democrats’ solution. But means-testing is an awful idea. It could well cost more in administration, fraud and overpayment than it would save. It is also unclear what would be means-tested. Is it earnings or assets? If earnings, then over what period? If assets, then which assets? It also wouldn’t make a dent in the pensioner benefits bill – Ed Balls’ suggestion is estimated to raise only £100 million.

Worst yet, if pensioners had to apply for WFA, many less well-off, but proud, pensioners would choose to go without. Only two thirds of pensioners eligible for Pension Credit are actually in receipt of the benefit. There is also a real risk of the application process putting off pensioners who are intimidated by form filling. Forms are genuinely frightening to many people – Citizens Advice dealt with 1.2 million cases related to means-tested benefits in 2009 to 2010, 17 per cent of their total case load.

The most sensible and workable solution is to use WFA to pilot test a scheme that encourages, and makes it easy, for the very wealthy to opt out of individual benefits. If this was successful, we could look to extend this opt-out to other benefits, including expensive non-pensioner benefits like, yes, child benefit. High-net-worth individuals and high earners – millionaires – do not need state assistance and I believe many would be delighted to be given the choice to opt-out.

But for it to be successful, this scheme would need to be straightforward and clean. Otherwise, we would risk facing the same problems as means-testing. We don’t want to see any government set up the Department for the Redistribution of Benefits.

Instead, I imagine a simple, secure website – or a single tick box on a tax form – where people can indicate that they do not want to receive this-or-that benefit. That’s it. Next time round these people wouldn’t receive the cash from the government. This could save a chunk of money without any administrative overhead.

Obviously, this is not going to save the entire benefits system from becoming potentially unmanageable in the future, but I do believe we need to do what’s possible, particularly with online technology, to make it easy for the very wealthy to make their own choices about the benefits they receive and where this money actually goes.

The beauty of this proposal is that it is all about choice. Most wealthy people don’t need the money and want to give it back; they understand that other people need it more. That’s human nature. People naturally do things to help other people – and don’t need the government stepping in to tell them whether or not they need some benefit.

A blanket and total removal of benefits, or anything else which is a well-established fixture, from any given group of people by an entity they perceive to hold the power, is never going to be a good idea. But, giving a person a choice as to whether they receive some benefit leverages a different set of behaviours.

In addition, peer-pressure could play a big part in this kind of decision-making. Once an easy way to donate or give back the WFA is found, it would quickly become praiseworthy for a wealthy individual to give back the cash. Giving back your benefits could, conceivably, become a status symbol – literally something to aspire to and to boast about!

If we want to tackle the problem of welfare dependency at the bottom of the income scale we also need to tackle it at the top. We need to stop dependency culture from top to bottom. The state does not owe millionaires a bus pass, WFA or a TV licence. I don’t care how much some very rich pensioners think they deserve it, they just don’t. Britain has been good to them throughout their lifetimes. In this age of austerity we must be practical, sensible and bold. We must give millionaires the chance to give back.  I am optimistic about human nature. This will be a win for the taxpayer and for human nature.

The pensioner benefit system is the kind of vital issue I and others will be debating at the Conservative Renewal Conference on 14 September. I believe it’s important that conservatives from across the party come together and discuss ways to kick-start a new phrase in Conservative history with fresh thinking and new ideas tailored to today’s problems. I am optimistic that we can move forward on issues such as pensioner benefits and create bold policies for today, not yesterday.

Adam Afriyie is the MP for Windsor