To wonder why child benefit is now means tested but winter fuel payments aren't.

[ImagineJL]

I can see the argument for reducing and removing child benefit for high earners (despite the fact that I am losing money myself), but why not apply the same principle to winter fuel payments? A colleague of mine is a hospital consultant, earning over 100k a year, so has just lost all his child benefit. But he still gets his winter fuel payment.

It seems a bit strange.

Yes. the discrepancy for families on joint incomes is very unfair.

And people who haven't paid a bean into the system won't be entitled to a full pension. They have to wait till their husband reaches pension age. Under the old rules you had to have 40 years worth of NI contributions now it's 30 years for a full pension.

My DF noticed two deposits of £10 in his and DM's joint account today. They had received a letter saying they were going to receive £100 each winter fuel allowance so he rfang and queried it.

It was a £10 Christmas bonus on their state pension each!

They are far from hard up - believe me. They are what a lot of people on MN would call wealthy.

What a waste of government money....

I still don't see how they'll make it work. An extra 500,000 tax returns will be a nightmare for HMRC. If they can't get tax from the likes of google and amazon, how will they have the resources to follow up an extra 0.5 million people. DH still hasn't had his letter yet. What if he doesn't get one? He doesn't self-assess normally, so why should he know that he has to now if they haven't told him? I mentioned this to a friend the other day. Her DP earns over 50k and she had never heard of this policy. It's hard to believe, but not everyone watches the news, reads the papers or has an interest in politics, so it is conceivable that if you don't get a letter you will be none the wiser. What will HMRC do? Will they check everyone again? How will they know who to send another letter to if they never you sent you one in the first place? Will they fine you? Will they send you to prison? How will they check everyone, particularly since people's incomes change every year. Will they write to everyone every year? How much will that cost? Seriously, I might be being a bit stupid here, but I genuinely do not understand how they will keep tabs on this every single year, particularly with PAYE employees.

Because there seeems to be some law that thou shalt not touch the benefits of pensioners. My Aunt got her £300 WF payment. She has £800K in the bank.

I completely support universal benefits (and am opposed to cutting child benefit), but think WFA should be means-tested. The reason is that child benefit (or family allowance as it was in one of its previous incarnations) is part of the original conception of universal benefits within the welfare state - the original rationale being that over the lifetime of an individual, in order that all citizens share in the creation of a socially secure society (the cradle to grave principle, where everyone has an investment in sharing social risks), a child is in receipt of a universal benefit (even if a token benefit), people of working age pay in to the system, and then those who are not working or have retired are again recipients of universal benefits. So everyone both takes out and pays in at various points in their lives. Child benefit/family allowance was (and still is) also the way non-working women caring for children accrued their state pension 'stamp' (recognising that raising children was also a form of paying in to society as much as working.) That was the original idea behind the conception of social security as something a whole society shared in rather than just charity handed out only to the poorest or most unfortunate.

Winter fuel allowance however is an extra benefit that I don't think has been around that long - does anyone remember when it was introduced? I don't recall it before the late Major era but maybe someone else knows more about its history and can comment? In any case the case for keeping it non-means tested is far less clear. Child benefit might be paid to the parents, but it is in fact really the child's benefit (and children have no income of their own so can't really be means-tested); whereas WFA could actually be quite easily means tested, as other posters on the thread have suggested, for example by tying it to the pension top-up for poorer pensioners. (Don't even get me started on the bus passes, which cost the taxpayer money in capital grants even if they're not used, and cost even more if they are....) Why can't poorer pensioners just get a slightly bigger top-up to reflect the cost of fuel, instead of handing out cash amounts to all? My dad spends his on cases of wine :( Compare how easily the coalition were able to get rid of the child trust funds and health in pregnancy grants with no public outcry at all. It's purely because the grey vote is a voting bloc (and I hear few complaints from that age group about the axeing of universal benefits for children - the children who will be paying for their pensions, healthcare, etc!)

Also completely agree with the poster who said there's an attitude of pulling up the drawbridge from many older people who benefited massively from a very favourable economic period between the 60s and 2000s and are completely unwilling to acknowledge how different things are for younger generations now. And in the main, most didn't have to work that hard - I have never seen any of my parents or their friends working the routine 70 hours a week both I and my DP work and have done for the last 10-12 years - we're exhausted, often ill, and we still can't afford to buy so much as a one-bed flat. The idea of retiring on a nice pension, or even being able to support a mortgage and family on one salary with one parent at home as our parents' generation did, is just pie in the sky for us. It would be nice if the boomers acknowledged this (instead of whinging about hard done they are because they want to retire at 62 but will have to work until 64 as my parents have taken to doing....) Obviously not all boomers are in nice situations, but statistics overwhelmingly show that that age group owns the vast majority of the UK's wealth and assets and had increased both wealth and income share more than any other group over the long boom. (Whereas from about 1999, unprecedentedly, incomes for people in their 20s and younger started to decline as a share of UK incomes compared to older groups.)

Virtuallyarts - I think, rightly or wrongly, there's a big difference in perception between providing a service free at the point of delivery, and providing the cash equivalent.

For example, asking a friend to babysit for an evening = OK; asking her to pay for you to get a babysitter = very weird. Even though an economist would say the net effect is the same.

I think it would feel different if, say, the energy industries were nationalised, and the government said, OK, every January pensioners get no bill - free heating that month. And that would actually be less fair, because those gaining most would be the ones rattling round big old houses. But it would seem fairer somehow.

The GDP thing - first, I think a lot of it is to do with housing costs; I think Paxman has set out some figures in his article...

Secondly, GDP is a bit of a blunt tool. I'm currently an SAHM, making no tangible economic contribution. If I went out to work for minimum wage, 40 hours a week, and put DS in nursery for the same amount of time, I'd personally make no money, but GDP would increase.

The increased GDP since the 60s and 70s basically just went to the rich - despite increased productivity it's now well-known that median incomes and below stagnated in the US from about the early 80s and in the UK from about 2000 - wealth increases since then have been basically funnelled upwards to the very wealthy who have increased their income share and wealth dramatically since then. Most housing assets in the UK are held by the over-50s which is a part of that, but in terms of GDP overall it really is the top 5-1% who captured all the real productivity and GDP gains since then. During the last 40 years the proportion of GDP accruing to capital rather than to labour has dramatically increased so that it's back to near nineteenth century levels at the moment - making the late 1970s now look like a historical aberration as it looks the the point when the income distribution across the population was the most equal in modern history, both here and in the US.

On an asset basis yes, the massive increases in housing "values" since the late 90s also represent one of the biggest wealth transfers in history, in generational terms, from younger generations to older generations. There's a population bulge anyway in the baby boomer generation which always meant that taxes would have to rise on following smaller generations in order to maintain boomers' pension and healthcare entitlements (this is about to start happening as the boomers retire in waves over the next ten-fifteen years); but the increases (up to threefold in real terms) in asset prices represent a double wealth transfer to that generation and above (who also at the same time benefited from the good pension entitlements, free tertiary education, and so on). Basically, if you're in your teens or 20s now, your share of the income pie has dramatically declined compared to the 1970s, and at the same time you have to pay vastly increased housing costs and can look forward to higher taxes to support older generations' pension entitlements (which you won't get yourself). Cheerful! :) I think young people today do have a huge amount to complain about - economically as a group they are objectively much worse off than their parents were, though of course there will be individual exceptions. (All this is supported by fairly incontrovertible evidence in terms of demographic statistics and income distribution.) Hence you now commonly get examples of young people who are very high-earning in terms of income, compared to UK incomes overall, but can't afford to buy a house because those assets have increased massively above the original income share of the people who originally were able to buy them in the 60s and 70s.

The two phenomena above are separate but they do essentially overlap as facets of the same trend, because what they both represent is a transfer of general wealth since the 1970s away from income and towards capital and assets (often more as speculation than any productive capital investment - the credit availability to support rising house prices came from speculation/credit expansion in the financial sector in the 2000s, for example). There are lots of things that aided this, from political and taxation trends to the growth of financialisation; population and demographic trends in the west (when the boomers were of productive working age this all looked great because they looked like they were benefiting from these overall trends - not so great suddenly when they come to retire), and even the fact we've had no major wars during the period have all contributed. It might rebalance at some point soon... But how? Will asset prices collapse? (They have to some extent in the US, but not here - as yet); will there be a period of massive wage inflation or similar?

Argh, sorry for massive essay - got carried away!

Have told my kids to all leave and go to Australia or Canada - much higher standard of living. We will follow when our parents are no longer with us. Oh and my lovely dad has offered us his winter fuel payment so can put petrol in car this winter. Redistribution of wealth !!

Oh and virtuallyarts I agree with you on the GDP thing re unpaid work. (Also included in GDP measures is "imputed" rent, or the theoretical value of the imagined cost of rent to homeowners based on property values, which means that if house prices/rents rise that looks like a rise in GDP even though in the real world that actually means that people have to pay more of their income in real terms to service the costs of housing! So GDP measures can hide all sorts of counterintuitive things going on on the economy)

There was a campaign last year, where celeb types who qualified for WFA urged rich pensioners to donate their WFA to the Surviving Winter campaign, who would then distribute the WFA they collected to financially struggling pensioners who needed MORE help.

Among the celebrities/celeb types who gave up their WFA and backed the campaign included Dame Helen Mirren, Sir Terry Wogan, Sir David Jason, Sir Michael Parkinson, Julie Walters, Anne Widdecombe, Sir Bruce Forsyth, and Nick Hewer.

If you know of someone who admits they don't need their WFA, then point them in the direction of Surviving Winter.

I'd rather have the money go to the pensioners who don't need it, so they can donate it to Surviving Winter, so it then gets to pensioners who need extra help, then it to go back to the Government.

Last year the campaign received £2.5million, obviously that wasn't only from wealthier people giving up their WFA, but many did just that.

The point is Winter Fuel Allowance is an allowance paid to people who qualify for the State Pension because they have paid their NI contrbutions. It is not a welfare handout. If people feel they don't need it then they should donate it to charity. I think it should continue to be paid to all people who qualify for state pension. Or then we will have people saying ah well that person has a good private pension or savings they shouldn't get the state pension. No, I was wondering about it but I think it should definitely stay for everyone.

"why not apply the same principle to winter fuel payments?"

Very simply because the Coalition pledged not to touch the winter fuel payments in this parliament and they won't go back on it. However, I am very sure indeed that documents have already been drawn up (by all parties) to rectify this anomaly in the next parliament.

Amother - Re your aunt. She qualifies for the WFA because presumably she qualifies for a state pension. And I haven't heard that child benefit is to be withdrawn for people with a certain amount of savings, only for people who earn over the stipulated amount. But I agree she doesn't need winter fuel payment.

But I read a while back on another thread where somebody wrote they knew someone who got over £4,000 a month maintenance but still qualified for £900 a month child tax credits. I don't think that person needs the money. And it's a lot more than the annual fuel allowance.

I'm with expat just attach it to those in receipt of pension top ups. They're the poor buggers who need it.

Anyone who can be independent of the state should be.

I'm unconvinced cogito.

Mess with the grey pound/vote at your peril.

No I don't agree with just attach it to those in receipt of pension credit. Why should people who have been prudent lose out. And a lot of these pensioners on pension credit are actually better off than the ones not receiving it. It is open to a lot of fraud by pensioners not declaring income, and telling lies about their assets.

I don't think those who have been prudent and can provide for themselves would be losing out.

WFA or any other benefit for that matter, isn't meant to be a reward or a little gift, it's meant to help those in need. And those in need are those on the very basic. People who in likelihood didn't have anyhting left over to be prudent with.

But viviennemary, it isn't about those who have been prudent losing out. It's about an additional discretionary top-up payment, created sometime in the 90s when pensioners as a group were much poorer than they are now, now also being given to a lot of people who don't need it and are not so poor. Fine when pensioners were poorer collectively as a group than those in work, but now things have changed - as a proportion of the population those over 60 are now better off collectively than most other groups! Many are still in work (my parents are), and own expensive housing assets and pension assets. The benefit they receive bears no relation to their prudence or saving: the NI they paid over their lifetimes doesn't touch the cost of providing even the state pension (NI is not an insurance scheme, despite the name - state pensions come out of general taxation paid by the non-retired). Retirement benefits are the single biggest item of government welfare expenditure - dwarfing all other benefits - but there is no magical savings fund that those people have been building up to pay it - it comes straight out from current taxes. To collect their benefits as a group, pensioners directly rely on the taxation paid by younger people, many of whom are and will be much worse off than them. So why shouldn't WFA be restricted to those pensioners who really are in poverty? Why shouldn't the amount go to poor children or families who now struggle with heating costs but are also paying in to support the welfare state as well?

I have explained to my parents many times that the cost of providing their free bus passes and WFA, to two people with zero housing costs, two expensive cars, and a high household income in the top 5% of the country, is at the direct cost of cuts in benefits for disabled children and young people - but they don't even seem embarrassed by it! (And then they lecture me that my house is cold despite me not being able to afford to turn the heating on a lot of the time...) It isn't part of any universal entitlement they were promised when young - it really is just a voting bribe nowadays. Pension entitlements as part of universal benefits are a good thing - but when the system was designed, at that time there were six or more workers for every retired person and life expectancy was much shorter; however that has changed and by about 2020, because of demographics, there will only be two workers supporting every pensioner (who might expect to live more than 30 years in retirement). How are those younger workers going to pay for that, as well as all the health and social care that will be expected too? Times have changed very dramatically since WFA was introduced. How can it be fair not to means-test it, if there are other sections of the population that are far more squeezed?

The irony is that sucking up all the income and assets will eventually rebound on the older generation if they are not careful - their only hope of getting what they want is if young people are employed and have good jobs = therefore able to pay lots of extra tax to sustain the system which is already stretched by the demographic difficulties of a bulge of older people and fewer workers to go around. But squeezing younger workers to keep additional benefits like WFA will just result in lower growth and lower tax takes overall, making it more likely that universal retirement and healthcare benefits will disappear entirely....

Cogito they said the same about CB and if they can utterly screw that up by continuing to give it to wealthy families on 100K but take it off those struggling in the middle on 50K I fail to see why keeping promises re WFA is so important unless of course they're trying to keep votes which we all know is exactly what they are doing.

georgette really interesting posts-so which party do you think will start thinking of the younger generation and squeezed middle more?Sorry but couldn't give a stuff re the economy or anything else now, it's clearly every man for himself now as the babyboomers like to illustrate.

The thing is it's not the current pensioners who will suffer, but the mugs trundling along behind.

When (if) we ever retire (those of us in 40s), there will be no free bus passes, WFA, free prescriptions etc. I am thinking Logan's Run...

Fil has been retired for 30 years. 30 years picking up free this, that and the other and still moaning about his lot. Makes me [frangry]