‘Social insurance’ proposal would hit the poorest hardest – and perhaps even kill some

Theresa May "is keen to show that social reform remains a priority", according to the now-Tory Guardian. By "social reform" it means "killing the welfare state and giving the money to the already-rich". [Image: Hannah McKay/PA].

Theresa May “is keen to show that social reform remains a priority”, according to the now-Tory Guardian. By “social reform” it means “killing the welfare state and giving the money to the already-rich”. [Image: Hannah McKay/PA].

There is only one surprise about John Godfrey’s proposal to scrap publicly-funded state benefits and replace them with compulsory ‘insurance’ – that it has taken the Tories six years to get around to it.

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.

Source: Theresa May urged to reshape welfare with ‘social insurance’ | Politics | The Guardian


Join the Vox Political Facebook page.

If you have appreciated this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!

Vox Political needs your help!
If you want to support this site
but don’t want to give your money to advertisers)
you can make a one-off donation here:

Donate Button with Credit Cards

Buy Vox Political books so we can continue
fighting for the facts.

Health Warning: Government! is now available
in either print or eBook format here:

HWG PrintHWG eBook

The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:


9 thoughts on “‘Social insurance’ proposal would hit the poorest hardest – and perhaps even kill some

  1. Stephen

    Not new. Things like this have been mooted before and right now the better paid workers already take out all kinds of insurances and assurances to buck up their incomes if/when the cannot work,

  2. Tony Turtle

    So, would all MPs who vote this crazy system in be guilty of corporate manslaughter when people start dying from these cuts?

    1. Berty

      So, what’s new? Since when have self-absorbed megalomaniacs concerned themselves with corporate manslaughter? They want a large scale culling of useless serfs anyway, they don’t even deny it.

  3. crazytrucker1951

    I’m 65, not much more than can do to me short of the glue factory, but I fear greatly for my grandchildren I really do. What will my legacy to them be? A fecking wasteland that’s what ruled by the rich and couldn’t give a toss where greed and profits are all that matter and the not so well off can simply die!

  4. June

    Proper well run companies such as my old one BT pay you for a year if sick, just like they pay me and many others final salary pensions. But of course our wonderful politicians have managed over the years in the name of competition and globalization to have less and less of these kind of companies and make them compete with more and more who don’t. Too many Sports Directs and similar today and people like Sir Philip Green who don’t care a damm. David Cameron and George Osborne were far from perfect but I honestly think,many might rue the day Theresa May became Prime minister, she seems to me more and more like Margaret Thatcher. and the party has definitely become ,much more right wing. Amazing so many people on lower incomes voted for Brexit,did they have any idea what they were voting for, when the EU did a hell of a lot for those in the lower income groups. They too might regret opening Pandoras box of Brexit, goodness knows what could happen very scary times ahead.

  5. maureen

    As a bookkeeper I know that firms deduct £2000 every year from monthly payment of Nic to hmrc. Ie from the employers Nic. That’s is stealing from the welfare budget. It was launched as helping firms to employ more staff, actually used as cash flow. If that was stopped how much would that raised for welfare budget which we pay for nhs, unemployment and sick benefit.

Comments are closed.