In this part of ‘Unbundling the Welfare State’, Professor George Yarrow argues that Alistair Darling must confine the government to the relief of poverty and allow the private sector to take up the task of providing basic pensions an social security benefits. He states that the welfare state has become riddled with complexities, inconsistencies and perverse incentives, and positively discourages low-income families against savings and insuring themselves for future needs. He sees means testing as a tax on personal saving and that the government must focus on improving the market.

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