WellFair Budget

Affordability
To address concerns about the cost of WellFair, we have developed the following provisional budget to show that WellFair certainly is affordable, and will deliver much better value for money than the current welfare system.

Developing Provisional Wellfair Content
We have used the Joseph Roundtree Foundation (JRF) estimates of Minimum Income Standards (MIS) to develop the per head costs of delivering the WellFair services. These costs are based on definitions of “minimum” standards of living, proposed by current UK citizens, and include levels of detail that allow us to determine what would, and would not, be included in the definition of WellFair.

Citizen-ContractWe have enhanced the JRF’s MIS by adding the following:

  • Added current UK government spending for housing, NHS, disability care, transport, protection and general government to the MIS numbers.
  • Added basic Internet and phone costs, as well integrating the TV License fee in to the Information WellFair service.
  • Double the current UK Transport budget, to ensure that local public transport systems can provide free local transport for all.

Items in the JRF MIS that we expect to deliver via UCC are:

  • Household items and insurance (£15.80/week)
  • Personal items (£10.80/week)
  • Clothing (£9.48/week)

Items in JRF MIS budgets that are not included in the WellFair budgets are:

  • Culture & recreation (£32.44/week)
  • Alcohol (£3.18/week)

These amount to an average weekly budget of £35.62. LIFE expects that local communities and charitable organisations (previously focussed on providing bare necessities) will be able to refocus their efforts on improving the joy of life, and assist with these expenses those without the capacity to earn anything.

The private transport budget (£22.39/week, which was only added to MIS in 2012 due to the chronic demise of the public transport system) will be replaced by LIFE’s plan to double expenditure on public transport, which will revive the energy-efficient, interconnected, public, mass transit infrastructure needed by any modern society.

Per Person WellFair Costs
Including LIFE’s service enhancements, the following table shows the full WellFair cost per person (including weightings for household size, and urban v. rural differences).

WellFair Costing

WellFair Service

Note

Weekly

Monthly

Annual

Shelter

Excl. personal household

£61

£264

£3,170

Food

£15

£65

£780

Personal & Household

UCC

£36

£156

£1,875

Health & Care

Incl. disability

£86

£373

£4,474

Education

£31

£136

£1,628

Transport

Double 2013-14 £s

£14

£61

£731

Information

Internet, phone & TV

£8

£34

£410

Legal Services

Govt, police & fire

£15

£65

£779

£266

£1,153

£13,846

UK WellFair Budget

WellFair Service

Annual (£Bn)

Shelter

68

Food

17

Personal (UCC)

40

Health & Care

273

Education

99

Transport

45

Information

25

Legal Services

48

Initial WellFair Budget

614

Local Delivery Efficiency (SSHEL)

-54

Labour unit cost reductions

-61

Final WellFair Budget

498

Budgeting assumes that 35% of the population will access the Shelter and Sustenance (Food + Personal) services, and that the remainder will be taken up by 100% of the population.
Two factors are projected to reduce the actual budget by nearly 20%, bringing the actual project spending down to £498Bn:

  • Efficiency: 10% greater efficiency and reduced waste in service provision; resulting from locally directed delivery by local resources (efficiency factor not applied to Transport and Information).
  • Reduced Labour Costs: 10% total cost savings, from the reduction in labour rates resulting from the introduction of WellFair and its effect on rates for low skill work, which comprises a significant percentage of the labour involved in delivering the WellFair services themselves.

These efficiencies will lag a few years behind increases in spending. The following chart shows WellFair spending over the first 5 years, including an additional £3Bn a year to fund Community and Regional Assemblies and their elections.

WellFair Introduction

WellFair Services (£Bn)

Current

New

2015

2016

2017

2018

2019

New Spending Introduction

£Bn

£Bn

Shelter

53

15

Inherited

50%

100%

100%

100%

Sustenance (Food + UCC)

0

56

Inherited

50%

100%

100%

100%

Health & Care

273

0

Inherited

Same

Same

Same

Same

Education

99

0

Inherited

Same

Same

Same

Same

Transport

22

22

Inherited

50%

100%

100%

100%

Information

5

20

Inherited

50%

100%

100%

100%

Legal Services

48

3

Inherited

50%

100%

100%

100%

Efficiencies Introduction

£Bn

Local WellFair delivery

-54

Inherited

25%

50%

75%

100%

Labour cost reduction

-61

0%

10%

50%

75%

100%

Total Spending

£Bn

£Bn

£Bn

£Bn

£Bn

Shelter

53

60

68

68

68

Sustenance (Food + UCC)

0

28

57

57

57

Health & Care

273

273

273

273

273

Education

99

99

99

99

99

Transport

22

33

45

45

45

Information

5

15

25

25

25

Legal Services

48

49

51

51

51

Budget before efficiencies

500

558

617

617

617

Local WellFair delivery

0

-14

-27

-41

-54

Labour cost reduction

0

-6

-31

-46

-61

WellFair Budget (£Bn)

500

538

559

530

501

Current Spending
Currently the government spends £500Bn on similar services.

UK Spending (2014 budget)

Central

Local

Total

Shelter

34.1

18.5

52.6

Sustenance

0.3

0

0.3

Health & Care **

216.1

56.7

272.9

Education

35.7

63.6

99.3

Transport

13.9

8.4

22.3

Information

4.7

0

4.7

Legal

24.9

22.7

47.5

Total WellFair-type Spending

329.7

169.9

499.6

Non-WellFair Spending

217.8

4.3

222

547.5

174.2

721.6

** Included in this Health & Care budget line for existing spending are: Sickness and disability, Survivors, Family and children, Social exclusion n.e.c., R&D Social protection, Social protection n.e.c.

It is worth noting that the JRF estimates that current welfare spending only provides 40%-60% of the Minimum Income Standards for working age people, and 80 to 100% of retired people.

Local v Central Spending
As can be seen in the above table, current government spending is weighted 2:1 in favour of central government (i.e. controlled from Westminster).

Because WellFair responsibility will be primarily held by local Communities, the balance of spending will shift in favour of local control. The following table shows the impact on Central v Local distribution by allocating new spending primarily to local Communities and shifting 50% of Health & Care responsibility down to Communities.

Local Impact WellFair Budget (£Bn)

Current Spending

New Spending

WellFair Total

WellFair Service

Central

Local

Central

Local

Central

Local

Shelter

34

19

2

13

36

31

Sustenance (incl. UCC)

0

0

0

56

0

56

Health & Care

216

57

0

0

136

136

Education

36

64

0

0

36

64

Transport

14

8

0

22

14

31

Information

5

0

4

16

9

16

Legal Services

25

23

0

3

25

26

Total

330

170

6

111

256

360

Share

66%

34%

5%

95%

42%

58%

The WellFair Support Grant (WSG) will be distributed directly to Community Assemblies, which are responsible for actually delivering the services.
Some portions of different budgets will be retained at the national level to cover services that are provided at a national or regional level (equivalent to the current Revenue Support Grant {RSG} “top-slice”). Once Regions have been formed and completed an election cycle, the portion of the WellFair budgets that are associated with services promoted to Regions, will be distributed directly to the Regional Assemblies.

Formulating a Budget for WellFair
After the election, we will follow these steps as the proper budget process for WellFair:

  1. Determine the minimum standards for each service.
  2. Collect budget estimates for those services from each Community and Region.
  3. Sum all of the costs and divide by the number of people = annual per person WellFair Support Grant (WSG).
  4. Figure out the Income Tax Base and Step-up rates necessary to cover the WellFair costs.
  5. If the tax rates are acceptable, OK. If tax rates would have to be too high, change the specification of the services (see 1 above).

During the first year we will engage in the above process to make a final determination of the content of the WellFair services and their full cost. The final content of WellFair services will be determined in a review following passage of the Wellfair Reform Act.

4 Responses to WellFair Budget

  1. aapercy says:

    LIFE will move £160bn in to local budgets.Commenting on the announcement, Ed Cox from IPPR North said:

    The Single Local Growth Fund is a pigeon step in the right direction, but given that Lord Heseltine proposed a £49 billion fund over 4 years, the announcement is less than one fifth of that which LEPs might have hoped for, only going to prove once again how hard Whitehall finds putting the rhetoric of decentralisation into practice.

    Like

  2. UK LIFE says:

    Recently published report by the RSA in cooperation with the LGA suggests that local service delivery tailored by the people who are recipients of the services could yield a 14% saving.LIFE policies assume a 10% savings.report: http://www.thersa.org/action-research-centre/community-and-public-services/2020-public-services/reports/managing-demand-building-future-public-services 

    Like

  3. UK LIFE says:

    the National Audit Office raises serious concerns about the long term sustainability of current local service funding run by the councils : http://www.theguardian.com/society/2014/nov/19/councils-risk-financial-failure-auditorsCouncils want more control over their finances, but they need to be more democratically accountable before that is a good idea. 

    Like

  4. Pingback: Crisis of Living Cost | LIFE : Proper Change

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