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Private insurance could replace benefits in move to save £17bn
Joe Murphy, Political Editor27 Jul 2009
Welfare benefits could be replaced by private sector insurance under radical proposals from a group co-chaired by the Chancellor.
The plans could see some sickness and unemployment benefits contracted out to the private sector, reducing the burden on taxpayers.
The industry claims it could take over about a twentieth of the welfare state - around £17 billion worth of benefits a year.
The move would mean a major rolling back of the cradle-to-grave welfare state.
Life insurance could be used to fund long-term care for the elderly, for example.
More radically, it could mean compulsory insurance for safety nets such as unemployment benefit.
Although highly controversial, the proposal carries the weight of an industry working group co-chaired by Alistair Darling, the Chancellor, and Andrew Moss, chief executive of insurance group Aviva.
Mr Moss said: "We are saying there is a debate to be had. The industry does have the capacity to take on more of these risks."
Pressure is growing for curbs in the welfare system to help rein in public spending.
Insurers have already moved in where benefits have been cut back to save money, such as offering policies to meet mortgage payments for people who lose their jobs.
Mr Moss said the public already accepts compulsory insurance when driving their car. "On a daily basis, things go wrong in people's lives and the individual, or the Government, or insurers have to pick up the bill."
Reader views (9)
So private companies will run the welfare state. Great news from a Labour government. How far these people have moved from their roots. Labours policies get more bizarre and confused by the day.
- Michael Riley, London, 28/07/2009 08:32
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We already pay NI for these benefits - is the government suggesting we don't have to pay NI? In any event, every time the government of the day privatise anything it is always detrimental to the consumer/public.
What happens, as now, when the insurance company tries to weasel its way out of making a payment on a valid mortgage sickness/death claim by claiming, for example, that the form was incorrectly completed? Insurance companies only interest is to protect their shareholders!
- Andy, london, 27/07/2009 16:06
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Another day, another shameful deception by this disgrace of a government. I've never bought into the socialist dream although I respect its aims - but even as a Tory it's staggering to watch this PM-to-end-all-PMs indulge in an even more astounding sell-out of his own constituency. "We've blown the budget - what about privatising healthcare?" And, amazingly, an insurance boss backs forced insurance sales to the masses...who'd have seen that coming.
Much as I enjoy seeing the scandalous and bankrupt nature of this cretin illustrated by his own hand, I can't truly enjoy it because no-one should accept the sheer scale of the damage he's done.
He will go down in British history as a regrettable error, much like Oswald Moseley, Arthur Scargill, Ken Livingstone and of course Blair. At least Blair had the sense of humour to apply as Middle East Peacy Envoy.
- David Chiene, London, 27/07/2009 15:34
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Where do the 4,000,000 unemployed in the UK stand?
Where do the poverty-stricken pensioners stand?
WHERE EXACTLY DOES JOE PUBLIC STAND IN THE EYES OF THIS UNSCRUPULOUS LABOUR GOVERNMENT?
THE ANSWER TO ALL THREE QUESTIONS IS THE SAME - IN THE GUTTER.
- Reuben Camara, Republic of Morecambe, UK, 27/07/2009 12:36
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I already pay a LOT of insurance its called NI and tax, Moss would say there is a debate to be had, he's the chairman of an insuarnace company.
Good old Labour, yet another silly idea to try and save money, if they had run the country properly we wouldn't be in this mess.
- P Staker, London, 27/07/2009 12:23
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Another lunatic idea from a failed government. Brown has squandered our reserves and now ordinary folks are expected to pick up the tab.
The sooner this shower are thrown out the better.
- Anil Chatterjee, Manchester, 27/07/2009 12:19
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How are School/College/University leavers going to be able to pay this? This government has ensured that there are no jobs for them. Oh yes! Of course! It will only apply to those currently in normal employment, not the self-employed like MPs or Company Directors or 'fat cat' bankers (those with the huge bonuses) who can afford expensive accountants (who will also probably be exempt).
- Jim, London, 27/07/2009 11:14
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I already pay for compulsory insurance, it's called taxation! If I'm forced to take a private insurance policy then I want a hefty tax reduction.
- Mark, London, 27/07/2009 10:26
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This idea couldbe good but I know that it will just be a charter for unscrupulous businesses to exploit and make profit from many of societies less well off.
There was a pilot scheme a couple of years ago in deprived areas to contract out the benefits service, Newham being one such area.
The company contracted to do it is one of the UK's biggest employemnt agencies and I can tell you from first-hand experience it didnt work.
- Russell, London, 27/07/2009 10:25
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