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Benefits Targeting

   
A massive amount of money is spent each year on pensions and benefits. Targeting these to go to the right people is the most difficult of tasks. Generally, the Government may decide to help some sector of society, pass the law to enact that help then, whilst they brag about their achievement, it is passed to civil servants to work out the rules of application and how to deliver the help. This puts an enormous burden on the minions. They often devise and apply rules that ensure next to no benefit can be claimed! Some years ago there was something called "The Enterprise Allowance Scheme". This was a scheme to pay £40 per week to anyone claiming unemployment benefit as compensation for loss of benefit. It was designed to help the unemployed to start new businesses or to go self employed. One of the rules of payment was that it MUST be paid into the new companys account. The minions didn't know the law. In the UK a private limited company is a person in its own right so the benefit was NOT paid to the individual entitled to it, but the minions didn't see this. A friend of CB's set up a new business, ltd company, and got the allowance. After 9 months trading the man saw his new venture could not succeed so he wound it up before any debts were incurred. He then told the Enterprise people that he had finished and to stop the payment. They did but only after paying 3 more instalments. This could not be touched as it was in a ltd companys account. Nine months later he applied again for the allowance for another new business and was told he couldn't have it as he owed £120 for the overpayment. They didn't realise that by paying the company, they had NEVER paid him! It is little things like this that screw up any enterprise or benefits system.

    In this country we have something called "fuel poverty" where 4 million homes (BBC news, 21/10/2009) are affected. This is when the household pays out more than 10% of its annual income on gas and electricity. To help pensioners and some benefit claimers who qualify there is a "cold weather payment" of £250 paid annually in November. It is designed to ensure that lesser well off people can afford to keep warm in the winter. There are also one off payments of £30 to these people every time the temperature falls below a certain figure (CB does not have this figure) for more than 1 week. These payments are made by giro OR direct into their bank account. There is no way to know if this cash will be used for the intended purpose. To get £250 in November would buy a lot of scotch for Christmas and New Year (well it would keep you warmish). It is sent to all who qualify. A friend of CB is a wealthy man who gets a pension because of his age. He also gets the cold weather money. Another friend of CB and his wife are multi millionnaires and THEY get cold weather money because they are both over 70 and pensionable. What about all the fraudulent claimers, they would get it too! The current cost of the cold weather payment is thought to be £2.5 Billion per annum (BBC news 21/10/2009)!

    Here is where the Government can save money, stop all fraud and ensure that the aid is used ONLY for the intended purpose and reaches ONLY those who need it. One of our largest energy suppliers has a non profit scheme for pensioners and those others on benefits who qualify called STAYWARM. On this scheme you pay a fixed monthly sum and can use as much gas AND electricity as you want. This guarantees you would NEVER be cold! You do not qualify if your home has more than 3 bedrooms (CB's very rich friends have 6) and there are various other exclusions that would exclude the very rich. Now the Government cannot tell all pensioners that they MUST use this supplier but they CAN legislate that any energy supplier trading in this country MUST have a Staywarm type package. This law must also convey the right for Government auditors to have access to the books of the energy suppliers scheme. The Government can now eradicate fuel poverty by paying the difference between the 10% of the homes income and the total fuel cost. The bottom line is there are 6 major energy suppliers in this country so the Government pays out just 6 cheques per annum directly to the supplier. The money is targetted as it is paying ONLY for fuel and is paid ONLY on behalf of the real qualifiers. Benefit fraudsters are excluded as they do not have real addresses, only postal addresses. Direct payment to the energy supplier with full audit capability stops fraud, mis-spending of the money and the audit COULD ensure that the schemes were really non profit schemes.

    Now lets do the costs. A friend of CB's is on the Staywarm package. His heating goes on at low in the middle of October and stays on 24/7 till May. He has found it is cheaper to KEEP the place warm than to constantly heat it up then let it cool down. He pays 17% of his income in fuel so is in fuel poverty. The difference, in his case, between 10% and 17% is £156. Last year he got cold weather payments of £250 PLUS £25 PLUS £60 which is £335 in total. To help him as CB describes would cost the Government £179 LESS which is a saving of 53.1/2%! If all other qualifiers gave the same result this would be a saving of £1.335 Billion per annum of our tax money. This is a demonstration of, with a little thought and logic, the correct end result can be achieved. CB, however, would not envy the person who had to sort out the spaghetti of all the other benefits and their targeting.



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© The JSC Group March 2006