Iain Duncan Smith asks wealthier pensioners to hand their benefits back

The Work and Pensions Secretary says he “would encourage” those who don't need the money to return it to the state.

Iain Duncan Smith has said that he "would encourage" wealthier pensioners to hand back benefits like the Winter Fuel Allowance, free TV licences and free bus passes voluntarily.

In an interview with the Sunday Telegraph, Duncan Smith said: "I would encourage everybody who reads the Telegraph and doesn’t need it, to hand it back." He did stress, however, that beyond his plea for the voluntary return of "unneeded" benefits, there are no plans to make changes to the welfare system to enforce that idea.

Whether or not the principle of univeralism should remain in the welfare system is a significant point of difference between the Work and Pensions Secretary and the Prime Minister. David Cameron pledged to defend universal benefits for a whole parliament in his party's 2010 manifesto, and is understood to have ruled out removing them in 2015. Iain Duncan Smith has previously called the pensioner benefits scheme an "anomaly", while Nick Clegg has termed them "difficult to defend" in a time of spending cuts.

It's highly doubtful whether any Telegraph readers will accede to Duncan Smith's request and hand back their benefits, but the minister has raised what is going to be a key political argument going into the next election - whether any political parties will take the plunge and abandon universalism in our welfare state. My colleague George Eaton has made a powerful and persuasive case here for defending it - not only does it help ensure that benefits are received by those who truly need them, the projected cost of means-testing has been shown to outweigh the savings recovered from the fraction of pensioners who are wealthy enough not to need the benefits. For now, the political consensus around universalism is such that it would seem that asking wealthy pensioners not to claim is the furthest Duncan Smith is able to go. If we don't see substantial economic recovery before the next election, though, it might be that he is given the political latitude to be able to go a lot further.

Iain Duncan Smith. Photograph: Getty Images

Caroline Crampton is assistant editor of the New Statesman.

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.