For the people earning the least, it would be a financial disaster.
It’s all very well saying someone earning £27,000 a year could pay in £11 per month and claim 40 per cent of their earnings (£10,800) from an insurer over a 12-month period. Most people don’t earn £27,000.
If you’re on £13,000 or thereabouts, paying in the same percentage would bring you £5,200 over a year – less than the current level of Employment and Support Allowance (is this why it is being cut for those in the Work-Related Activity Group?), and an amount on which it is much harder to survive.
Not only that, but there is no guarantee that an insurer will pay out the money when it is needed. Consider the case of Unum, the giant US-based insurer that now has a criminal record for devising a system – a bastardisation of the “biopsychosocial” method – that does not rely on medical evidence as proof of illness but worked on a computerised ‘tick-box’ system and the opinion of a company assessor.
The system was devised in order to provide the firm with an excuse not to pay out on all those expensive American sickness insurance claims, and is why the firm now has a criminal record in its home country.
That didn’t stop the UK government – run at the time by Labour, to that party’s eternal shame – from adopting the same system to assess claims from Employment and Support Allowance and Personal Independence Payment, causing enormous controversy, huge cost when people started appealing against refusals, and – tragically – many avoidable deaths.
And Mr Godfrey, it seems, wants to make such homicidal rip-offs compulsory!
Are you going to sit there and let him have his way?
Get involved. Start or join a group ready to protest against this and get organised. And don’t forget to ask what the Tories would do with the tax they’re planning to save.
Theresa May is being urged to consider reviving the principle of social insurance to help struggling low-paid workers, as she prepares to flesh out her vision of “a country that works for everyone”.
May will chair the first meeting of her social reform cabinet committee this week – a gathering of relevant ministers – in a bid to show that improving the lives of those she described in her first speech in Downing Street as “just managing” is high on her agenda.
One option thought to be under consideration is to shift the focus of welfare policy from the cost-cutting approach of George Osborne, which many Conservatives believe reached its limit when reductions to tax credits and disability payments were rejected by his own backbenchers during a public outcry, to a self-help system.
May’s new director of policy, John Godfrey, is a keen advocate of what in his last job, at financial services giant Legal and General, he called “Beveridge 2.0”: using technology to introduce new forms of social insurance.
Godfrey told a campaigning group, the Financial Inclusion Commission, last year that the systems used to deliver auto-enrolment, the scheme that ensures all low-income workers have a pension, could also be used to help the public insure themselves against unexpected events.
“There is a clear lesson from auto-enrolment that if you have a plumbing network or an infrastructure that works, that auto-enrolment infrastructure could be used for other things which would encourage financial inclusion: things like, for example, life cover, income protection and effective and very genuine personal contributory benefits for things like unemployment and sickness,” he said. “They can be delivered at good value if there is mass participation through either soft compulsion or good behavioural economics.”
As an example he suggested that a worker earning £27,000, who paid in 0.5% of their earnings, or £11 a month, could then be entitled to claim 40% of their income for 12 months if they fell sick – perhaps two to three times what they might get on the existing contributory employment support allowance.
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