The Spending Plan policy 11: scrap contributory benefits

April 22, 2015 9:39 AM

Each day we are publishing a blog on one of the policies from our Spending Plan.
Click here to read the previous policy.

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Contributory benefits are paid dependent on national insurance contributions. While a significant sum is spent on them, most of the expenditure would be replaced by equivalent benefits where eligibility is assessed on income. The Institute for Fiscal Studies estimates that scrapping contributory eligibility for jobseeker’s allowance and employment and support allowance would save around £600 million in 2015–16. Adding the forecast expenditure on maternity allowance and bereavement benefits brings the total to around £1.6 billion.

These benefits are paid to people who do not need them. It makes little sense to tax people and then hand those same people back benefits in the form of insurance against events that they could otherwise afford to insure themselves against if they wanted to. It would also make abolition of national insurance simpler.

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