The cost of the welfare state - challenges posed and solutions

[Bald Rick]

I'm still not sure that I've made my question clear

Well I thought I understood it, but given your last answer, I‘m now not sure I have understood you, or perhaps vice versa.

is the employer subsidy for the "older" pension greater and is differential pay based upon pension permitted by the inion?

That depends what you mean by “employer subsidy”. If you mean “employer’s contributions” then yes they are higher for the older pension schemes, but not much. But that has no impact on what individuals get paid.

I don’t understand what yiu mean by differential pay being ‘permitted’ by the unions. In the signalling grades, all signallers at Grade “x” get paid the same. Again, for clarity, what their pension contributions are is completely irrelevant to it.

If that's the case, then the newer workers are to an extent subsidising the older ones because they are getting less attractive headline future rises

Not so. Individual’s Pension contributions are not taken into account in pay discussions. In fact Idoubt whether any HR / Finance manager would know what particualr section of the pension scheme any individual is in.

What do / did you do instead (if not too outing)?

Railway!

 

[Egg Centric]

Well I thought I understood it, but given your last answer, I‘m now not sure I have understood you, or perhaps vice versa.




That depends what you mean by “employer subsidy”. If you mean “employer’s contributions” then yes they are higher for the older pension schemes, but not much. But that has no impact on what individuals get paid.

I don’t understand what yiu mean by differential pay being ‘permitted’ by the unions. In the signalling grades, all signallers at Grade “x” get paid the same. Again, for clarity, what their pension contributions are is completely irrelevant to it.



Not so. Individual’s Pension contributions are not taken into account in pay discussions. In fact Idoubt whether any HR / Finance manager would know what particualr section of the pension scheme any individual is in.

At an individual level, no. But surely when Network Rail make a 'global' offer of an average 3% uplift (or whatever) the finance team has worked out what this is going to cost, and in doing so they have taken into account the cost to the business not just of headline salary but also also their ongoing contributions to all the pension schemes.

If everyone were on the new pension scheme, they would have to contribute less to the pension schemes in cumulo and so perhaps they would be able to offer 3.5% instead. If everyone had been on the old pension scheme, they would have had to contribute more to the pension schemes so perhaps they would have been only able to offer 2.5%.

Whether the effect is 1% I've no idea, I'm just using round numbers.

In that sense younger workers are getting a less attractive offer than they would have done otherwise due to older workers getting a better deal, while the older workers are getting a more attractive offer than they would have done otherwise due to the younger workers getting a worse deal. This is the sense in which this subsidy exists.

 

[Broucek]

At an individual level, no. But surely when Network Rail make a 'global' offer of an average 3% uplift (or whatever) the finance team has worked out what this is going to cost, and in doing so they have taken into account the cost to the business not just of headline salary but also also their ongoing contributions to all the pension schemes.

If everyone were on the new pension scheme, they would have to contribute less to the pension schemes in cumulo and so perhaps they would be able to offer 3.5% instead. If everyone had been on the old pension scheme, they would have had to contribute more to the pension schemes so perhaps they would have been only able to offer 2.5%.

Whether the effect is 1% I've no idea, I'm just using round numbers.

In that sense younger workers are getting a less attractive offer than they would have done otherwise due to older workers getting a better deal, while the older workers are getting a more attractive offer than they would have done otherwise due to the younger workers getting a worse deal. This is the sense in which this subsidy exists.

UK occupational pensions have got worse as the old schemes were not affordable.

I'm not sure what else there is to say

 

[Egg Centric]

UK occupational pensions have got worse as the old schemes were not affordable.

I'm not sure what else there is to say

Not a lot other than to recognise that some of the cost of that unaffordability is being passed on to those illegible for the schemes themselves in the form of lower wages than they would otherwise be getting - even if the schemes are fully funded.

 

[Bald Rick]

At an individual level, no. But surely when Network Rail make a 'global' offer of an average 3% uplift (or whatever) the finance team has worked out what this is going to cost, and in doing so they have taken into account the cost to the business not just of headline salary but also also their ongoing contributions to all the pension schemes.

If everyone were on the new pension scheme, they would have to contribute less to the pension schemes in cumulo and so perhaps they would be able to offer 3.5% instead. If everyone had been on the old pension scheme, they would have had to contribute more to the pension schemes so perhaps they would have been only able to offer 2.5%.

Whether the effect is 1% I've no idea, I'm just using round numbers.

In that sense younger workers are getting a less attractive offer than they would have done otherwise due to older workers getting a better deal, while the older workers are getting a more attractive offer than they would have done otherwise due to the younger workers getting a worse deal. This is the sense in which this subsidy exists.

Right I get you. The impact is small as there’s very few people left paying into the ‘oldest’ pension scheme - you will have 33 years continuous service for that. I suggest that the impact of the differences on pay negotiations / affordability is nil.

 

[Egg Centric]

Right I get you. The impact is small as there’s very few people left paying into the ‘oldest’ pension scheme - you will have 33 years continuous service for that. I suggest that the impact of the differences on pay negotiations / affordability is nil.

Ok thanks - well dunno what anyone's moaning about then

 

[styles]

I don't know about railways of course but I have known people to negotiate better pensions instead of pay rises. Employers I suspect quite like doing it, assuming no great administrative overhead, because they save on employer NI contributions. Some employers are happy to donate those savings back to the employee in their pension but plenty just pocket the change.

In fact because of things like the 60% tax trap I think this sort of negotiation is probably on the rise. If it's not greater pension contributions it's extra annual leave or a 4 day working week for the same salary etc.

 

[JamieL]

Should the NHS be part subsidising foreign travel? At the moment it is - albeit not consistently - hence it is being flagged by campaign groups as MPs seeking to normalise such funding. The argument hinges around whether disabled people can use part of their publicly funded allowance to fund their assistants to travel overseas.

Disabled people must have a guaranteed right to travel abroad, MPs and peers have said, as further cases emerged of individuals barred from taking holidays as a result of “ridiculous” rules imposed by local NHS care boards and local councils.

Leading figures have called on the government to bring in clear national guidelines to ensure people who require full-time personal assistants (PAs) are not prevented from using funding for their 24/7 support team for breaks and work trips.

Disabled people in UK need right to travel abroad, say MPs, after ‘ridiculous’ restrictions

Outcry over ‘brazenly discriminatory’ funding practices among NHS care boards

www.theguardian.com

It strikes me that it is areas like this where the costs of health and welfare could be trimmed. I don't believe public funding should be supporting overseas holidays for anyone.

 

[AlterEgo]

What is the difference in care assistant costs between overseas travel and domestic travel? Quite often, a European holiday is cheaper, so I'm intrigued as to how this has been rationalised.

 

[JamieL]

What is the difference in care assistant costs between overseas travel and domestic travel? Quite often, a European holiday is cheaper, so I'm intrigued as to how this has been rationalised.

I am not sure any holiday - UK or otherwise - should necessarily be funded out of welfare payments.

 

[AlterEgo]

I am not sure any holiday - UK or otherwise - should necessarily be funded out of welfare payments.

Why should disabled people, who otherwise could not go on any holiday at all, not be able to use their allowance to pay for their care during it?

In this case some disabled people are being told they can't use *any* of their allowance abroad even if they meet the extra costs themselves.

 

[Cdd89]

In this case some disabled people are being told they can't use *any* of their allowance abroad even if they meet the extra costs themselves.

I suppose we've been down this road before with the Motability crackdown, which claimants are no longer able to use for 'luxury' cars even if they meet the costs themselves. People seem to want payments to disabled people to come with a load of moralising strings attached.

If the suspicion is that people are not truly disabled, I can understand that sentiment. There has been a precipitous increase in the last few years which I do feel needs looking into. But in this case the better place to start is surely refining the threshold and checks for disability, and once people meet those checks accepting the allowance is theirs to use as they wish.

 

[AlterEgo]

I suppose we've been down this road before with the Motability crackdown, which claimants are no longer able to use for 'luxury' cars even if they meet the costs themselves. People seem to want payments to disabled people to come with a load of moralising strings attached.

If the suspicion is that people are not truly disabled, I can understand that sentiment. There has been a precipitous increase in the last few years which I do feel needs looking into. But in this case the better place to start is surely refining the threshold and checks for disability, and once people meet those checks accepting the allowance is theirs to use as they wish.

That's not what is going on here. The people who require personal care to travel away from home to wash and dress themselves are unquestionably vulnerable and have severe disabilities. They already have an allowance for this, it is just that some people are not being permitted to use it abroad.

(FWIW I agree Motability sometimes was poor value to the taxpayer but this isn't the same)

 

[JamieL]

I think the issue is there are limits as to what the State can and should pay for. Everyone is different and our lives our influenced by factors beyond our control - that doesn't mean it is the State's responsibility to provide everything for everyone. Absolutely no dispute from me here that caring should be provided at home and in the local area for the cohort in question here. But I do question whether it is justified to fund overseas travel - that isn't a life necessity. And if we do it for one cohort, should we extend partial subsidies for foreign holidays into all welfare payments? Unfortunately, we all have to accept that there are some things not available to us.

 

[AlterEgo]

I think the issue is there are limits as to what the State can and should pay for. Everyone is different and our lives our influenced by factors beyond our control - that doesn't mean it is the State's responsibility to provide everything for everyone. Absolutely no dispute from me here that caring should be provided at home and in the local area for the cohort in question here. But I do question whether it is justified to fund overseas travel - that isn't a life necessity. And if we do it for one cohort, should we extend partial subsidies for foreign holidays into all welfare payments?

To you it isn't about foreign travel. It's about travel in this country too. That you seem to think disabled people should only be entitled to their care needs being met at home or "in the local area" says everything about how you view disabled people. It doesn’t matter if they don't get a holiday - I mean they couldn't even go on holiday to Butlins or to a BnB unless they lived nextdoor under this sort of plan.

Nobody is asking for disabled people's holidays to be paid for. It is that *if they can afford them*, in the same way you or I can, why should they have to pay a vast amount more money because they literally require a carer to get ready every day or to manage everyday tasks? A reminder that this is about whether something can come out of someone's already existing allowance, not some ex gratia expense. It's paternalistic and demeaning, as those affected have quite rightly said.

 

[JamieL]

To you it isn't about foreign travel. It's about travel in this country too. That you seem to think disabled people should only be entitled to their care needs being met at home or "in the local area" says everything about how you view disabled people. It doesn’t matter if they don't get a holiday - I mean they couldn't even go on holiday to Butlins or to a BnB unless they lived nextdoor under this sort of plan.

Nobody is asking for disabled people's holidays to be paid for. It is that *if they can afford them*, in the same way you or I can, why should they have to pay a vast amount more money because they literally require a carer to get ready every day or to manage everyday tasks?

Holidays away from home are not an essential part of life - they are a luxury. You can have a great time at home and in your local area without spending lots of money. If we extrapolate your argument, why should a family seeking to fly to Australia with children pay for the children? Can't the state pay because its not fair that a childless couple can fly cheaper than one with six kids? And before long, the State (Taxpayers) are paying for everything. Except the workers who are actually funding this can't afford to fly anywhere because the State is taking their money to pay for the benefits.

 

[BuhSnarf]

Holidays away from home are not an essential part of life - they are a luxury. You can have a great time at home and in your local area without spending lots of money. If we extrapolate your argument, why should a family seeking to fly to Australia with children pay for the children? Can't the state pay because its not fair that a childless couple can fly cheaper than one with six kids? And before long, the State (Taxpayers) are paying for everything. Except the workers who are actually funding this can't afford to fly anywhere because the State is taking their money to pay for the benefits.

The examples you give are not equal.

The disabled person isn't asking for the cost of the holiday to covered. They're asking for their care to be covered as it would be if they were at home.

 

[JamieL]

The examples you give are not equal.

The disabled person isn't asking for the cost of the holiday to covered. They're asking for their care to be covered as it would be if they were at home.

I would argue it is equal in that it is a non-essential expenditure. This bottomless pit of welfare has to end. It is supposed to be a safety net, not a trampoline.

 

[AlterEgo]

Holidays away from home are not an essential part of life - they are a luxury.

Agreed. But the whole point is that these people *can already afford those luxuries*, and you don't think they should be able to choose to use any of the money they have already been granted to facilitate it. That's money they can use for care in all sorts of places, as per their choice. Like going to other non essential activities like days out or watching football or seeing a film. It's just they'd rather spend their allowance on care abroad. If they spend a load of it going to France or Spain, they then get to go to the football or the cinema or the theatre less, just how it works with anyone else.

Nobody is asking for them to have more money. Just that the the money they have already been given for care that you no doubt agree they need - that they are allowed to choose to spend it on personal care on holiday even if they pay the extra costs. I don't think you have understood the issue here.

 

[JamieL]

Agreed. But the whole point is that these people *can already afford those luxuries*, and you don't think they should be able to choose to use any of the money they have already been granted to facilitate it. That's money they can use for care in all sorts of places, as per their choice. Like going to other non essential activities like days out or watching football or seeing a film. It's just they'd rather spend their allowance on care abroad. If they spend a load of it going to France or Spain, they then get to go to the football or the cinema or the theatre less, just how it works with anyone else.

Nobody is asking for them to have more money. Just that the the money they have already been given for care that you no doubt agree they need - that they are allowed to choose to spend it on personal care on holiday even if they pay the extra costs. I don't think you have understood the issue here.

The issue is it has illuminated that they should probably be getting less money. If they choose to go overseas, then the State's responsibility should end until they come back.

 

[AlterEgo]

The issue is it has illuminated that they should probably be getting less money. If they choose to go overseas, then the State's responsibility should end until they come back.

On what grounds should severely disabled people (who cannot do even basic tasks without assistance) be getting less money for their care?

 

[JamieL]

On what grounds should severely disabled people (who cannot do even basic tasks without assistance) be getting less money for their care?

From the perspective of welfare payments, the general principle should be that all benefits should be scaled to the meet the aim and no more - remember for every £1 of welfare paid it is £1+ taken from someone else - and most taxpayers are not wealthy millionaires. Generally speaking, means testing would seem wise for most benefits - if someone can afford an overseas holiday, there is probably scope to scale back the subsidy and give that support to someone else.

 

[AlterEgo]

there is probably scope to scale back the subsidy and give that support to someone else.

So this is not about reducing the benefit bill at all.

 

[JamieL]

So this is not about reducing the benefit bill at all.

State money doesn't have to be spent on welfare, there are plenty of other options for state patronage. Defence for example, which is desperately in need of an uplift.

 

[AlterEgo]

State money doesn't have to be spent on welfare, there are plenty of other options for state patronage. Defence for example, which is desperately in need of an uplift.

No no, you said support someone else, not buying warships.

Anyway - as it happens we will agree more than you may think. Jacob Rees-Mogg had an interesting video on YouTube recently where he said that defence security had to come above social security. As a point of principle, I agree. What I don't agree with is taking money away from people with the most severe disabilities, because there are many, many places we can look to first like the triple lock which affect much less vulnerable people.

I vehemently opposed people who argued the age grading for minimum wage was justified despite the workers doing the same job. On the other hand, I have been persuaded that removing that might leave fewer young people in employment, and I reluctantly agree that the age grading probably supports employment which relieves some of the welfare burden.

We also need to reduce housing costs, which eat up an enormous amount of our welfare budget. That's a bigger challenge but that's a huge dead weight on the tax payer.

 

[Yew]

Generally speaking, means testing would seem wise for most benefits - if someone can afford an overseas holiday, there is probably scope to scale back the subsidy and give that support to someone else.

Why, did they become less disabled?

 

[Cdd89]

That's not what is going on here. The people who require personal care to travel away from home to wash and dress themselves are unquestionably vulnerable and have severe disabilities. They already have an allowance for this, it is just that some people are not being permitted to use it abroad.

We are perhaps at cross purposes – I have no problem with disabled people being able to use their allowance for care as they see fit, wherever they are in the world, and I didn't actually have a problem with people getting BMWs on Motability as long as it came out of their allowance.

The optics are obviously not great ("why does someone with disposable income need the state's financial help?"), but that's only an issue if people are already suspicious about claimants' disabilities. Reassuring the general public on that front, which probably means cutting down the number of people eligible, is likely far more effective than the current perception of lots of claimants but with petty controls on what can be purchased (which, without reducing the allowance, doesn't save money anyway).

 

[AlterEgo]

We are perhaps at cross purposes – I have no problem with disabled people being able to use their allowance for care as they see fit, wherever they are in the world, and I didn't actually have a problem with people getting BMWs on Motability as long as it came out of their allowance.

The optics are obviously not great ("why does someone with disposable income need the state's financial help?"), but that's only an issue if people are already suspicious about claimants' disabilities. Reassuring the general public on that front, which probably means cutting down the number of people eligible, is likely far more effective than the current perception of lots of claimants but with petty controls on what can be purchased (which, without reducing the allowance, doesn't save money anyway).

Does anyone really think that people who are physically unable to dress, cook, wash themselves without a second person there aren't really disabled? I'm not sure. A lot of the rhetoric about disabled people is usually about other types of disability, particularly hidden ones, where the public may be more sceptical.

 

[brad465]

We also need to reduce housing costs, which eat up an enormous amount of our welfare budget. That's a bigger challenge but that's a huge dead weight on the tax payer.

Yes a lot of welfare was brought in with good intentions but only serves to subsidise the profits of the 1% in property and large corporations. The question is, if we take it all away, how do we make sure those in receipt of such payments don't become completely destitute while living costs and/or salaries adjust?

The other problem is rife hypocrisy, how many of those saying welfare must be cut were screaming like mad when Winter Fuel Allowance was to be means tested?

 

[GusB]

Should the NHS be part subsidising foreign travel? At the moment it is - albeit not consistently - hence it is being flagged by campaign groups as MPs seeking to normalise such funding. The argument hinges around whether disabled people can use part of their publicly funded allowance to fund their assistants to travel overseas.

Disabled people in UK need right to travel abroad, say MPs, after ‘ridiculous’ restrictions

Outcry over ‘brazenly discriminatory’ funding practices among NHS care boards

www.theguardian.com

It strikes me that it is areas like this where the costs of health and welfare could be trimmed. I don't believe public funding should be supporting overseas holidays for anyone.

Oh my, heaven forbid that anyone less fortunate than yourself should be able to enjoy life. It Will Not Do.

Some of the bits that you didn't quote:

While Joel, 40, a graduate who works in marketing for a global brand, is barred by his local health board from using his personal health budget to contribute to the travel costs of his PAs when going abroad, David, 25, who lives in a neighbouring health board area, receives a travel costs allocation.

Joel, who has spinal muscular atrophy, was initially allowed to use his health budget to pay for his PAs to travel with him and had two short breaks in Europe, at his own cost. Eight years ago, his NHS funder, now Cheshire and Merseyside NHS integrated care board, reversed its decision, ruling travel costs were valid for the UK only.

So Joel is well qualified, has a fairly decent job and probably pays a fair amount of tax. He paid for his holidays.

Just 40 miles (64km) away David (not his real name) said his local care board made very different rulings. Greater Manchester integrated care partnership blocked his requests for holiday PA expenses for five years. Officials finally relented last year after he submitted detailed evidence suggesting its decision would breach NHS guidance and human rights law.

It allocated £2,370 annually to enable David to contribute to his PA team’s travel and accommodation costs. David, a graduate with a first-class degree, last year took his first trip abroad without his parents, paid for by himself.

David is also well qualified and paid for his own holiday. It doesn't mention what he does for a living, but I think it's safe to assume that he isn't sitting at home on benefits.

They both have a Personal Health Budget, explained here:

What is a personal health budget?

Find out about the personal health budget including who can get it.

www.nhs.uk

A personal health budget is an amount of NHS money that is allocated to support your health and wellbeing needs. If you're eligible for it, you (or someone who represents you), will work with your local NHS team to plan how you spend the money and get the care you need.

A personal health budget allows you to manage your healthcare and support such as treatments, equipment and personal care, in a way that suits you. It works in a similar way to personal budgets and direct payments, which allow people to manage and pay for their social care needs.

There's a video explaining Personal Health Budgets on the same page:

It's worth noting that we're not using new money for personal health budgets, we're using money that's already available for care and support but in a different way. The evidence shows that personal health budgets help people have a better experience of care and support and improve their quality of life.

So this is money that they would likely receive regardless of whether or not it was used to go on holiday. Let's cut it and see what happens... Oh, they can't afford carers to help them wash, dress and eat. That's work out of the window. Just as well we have the safety net of Universal Credit and Personal Independence Payments so they won't go too hungry. Oh, wait...

You're not happy with people receiving extra help to allow them to go out to work and have fulfilling lives and you've made it abundantly clear that you don't want people sitting at home receiving state benefits.

What exactly do you want?