The Department for Work and Pensions (DWP) has recently made two quiet, but significant, announcements; missed entirely by the mainstream media. If you read between the lines, you’ll find a sinister move – one that could well be the shape of things to come: the beginning of the end of a public welfare state.
The DWP: ending welfare, one benefit at a time
Support for Mortgage Interest used to be a welfare entitlement that covered the interest payments on people’s mortgages when they were unable to work. It was originally put into place by former chancellor George Osborne in 2015. But its scrapping came into full effect on 6 April this year.
Now, people can take out a Support for Mortgage Interest Loan from the government. But there are catches to this. Namely, that the loan is lent with an interest rate of around 2.61% and that the loan has to be paid back when the claimant sells the property or it transfers to someone else.
On Tuesday 17 July, the DWP quietly revealed that less than 15% of people entitled to a loan have actually taken one out [xls, table_1. rows 16/26, column M]. Previously, the low take-up of the loan led SNP MP Angela Crawley to brand it an “ill-designed policy”. But has the DWP intentionally made the loan “ill-designed”?
A sinister agenda
Possibly. Because last week, it revealed that people who have private protection insurance to cover mortgage interest payments will get special treatment from it. Specifically, as Your Money explained, the DWP:
has now confirmed that any income received from an insurance policy… to cover mortgage payments will be totally disregarded when entitlement to means-tested benefits is assessed.
This applies to both legacy benefits and Universal Credit claimants.
By ending a welfare entitlement, the DWP is clearly saving money.
But now, it’s also saying to the public: ‘It’s OK! You can have private insurance if you want! It’ll make up for what we’re not paying you! Here’s a carrot as well, though! Because we’ll still give you some benefits!’
In doing so, the department’s agenda has become a lot more sinister.
Privatisation by stealth
As far as I can see, this is a first from the DWP with welfare. It’s slyly encouraging people to take out private insurance (by making the state-paid option less appealing). But it’s also softening the blow by still giving people some support. It looks like a brazen step towards the privatisation of welfare. One the DWP is doing by stealth.
The perfect example of how the government gradually begins to privatise a public social security is the NHS. We all know it has been in a perpetual state of chaos since 2010. As the Guardian reported, in 2016, £13bn was paid out by the NHS to private companies; a 76% increase since 2010. But the effect this chaos has on private healthcare is more crucial.
Office for National Statistics figures show that between 2013 and 2016 there was a 4.6% increase in patients’ so-called “out-of-pocket” healthcare spending. This includes paying for private hospital treatments, care and also insurance payouts. Also during this period, private insurance take-up increased by 0.4%, but with a spiked increase of 3.5% in 2014. Philip Blackburn, an economist at LaingBuisson, told the Guardian:
There has been a clear rise in interest in private healthcare recently as more and more people are dissatisfied with higher waiting on the NHS and increased restrictions on NHS treatment. Private medical cover will benefit from this…
Remember British Rail?
The situation with the NHS and private healthcare is classic government ‘shock therapy’; as described by Naomi Klein in her groundbreaking book The Shock Doctrine. By running a public system so far into the ground the public think it’s unfit for purpose, governments intentionally push people into the arms of private companies. This paves the way for the wholesale sell-off of the public system.
As I wrote in 2016 for openDemocracy, we’ve seen it all before:
British Rail… had its funding more than halved between 1982 and 1990… and suffered numerous ‘top-down reorganisations’… It was the target of think-tanks… floating ideas around about privatisation from the mid-eighties… It was generally scorned by the Government and the press… [as] an outdated, cumbersome and failing public sector monolith that couldn’t even produce a good sandwich.
The end result? The fire sale of British Rail in 1993…
The DWP is now applying this method to welfare; albeit with the first baby step of ending Support for Mortgage Interest. Couple that with the billions of pounds of DWP cuts [pdf] since 2010 and the rolling back of welfare entitlement and you have a perfect pre-privatisation storm.
If you find it hard to believe, look at the reaction from the insurance industry.
The insurance industry: ready to pounce
Martin Sincup, head of propositions at income protection specialists Holloway Friendly, told Your Money:
We also believe that rental customers have similar needs, and we are hopeful that the next move would be that a similar policy could be applied to them… Income protection can offer a far superior financial safety net to state benefits…
State benefits also often have a complex and uncertain claims process, whereas income protection is usually far quicker, more personalised…
Finally, it’s imperative that consumers remember that state benefits can, and often do, change over time… while income protection provides a certainty of what you will get and when, thanks to a long-term contract.
Meanwhile, CEO of Lifesearch Tom Baigrie told Cover Magazine:
This is an important first step in making private provision of disability benefits dove-tail sensibly with those offered to some by the state…
The Hunger Games
The corporate vultures have already ravaged our rail industry, and are now picking on the bones of the NHS. It now seems that the DWP has signalled the beginning of the feast on the welfare state. And those same, corporate vultures are circling closely overhead.
More and more we have a ‘health based on wealth’ medical system. The UK also has a failing privatised transport network. And now, we’re seeing a move towards social security only for those who can pay for it. It’s official: the future is looking more and more dystopian by the day.
If you thought The Hunger Games was a work of fiction, you may wish to think again.
Featured image via UK government – Wikimedia [ALTERED]
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