There are no easy solutions. That should be self evident, since if there were, I or my predecessors would have adopted them. With this he dismissed such pet solutions of right and left as merging the tax and benefits system or using tax credits to save money. Any effective structural reform must involve either better targeting, or more self provision, or both. Yet he did not accept that targeting need lead him to an exclusively means-tested approach.
Disincentives are inherent in statutory benefits.
Means testing is not the only way of targeting benefits more closely on need. No one has the right to opt out of contributing to help those who cannot provide for their own needs. With this, Lilley entered the debate about allowing people to opt out of the system and make their own provision. Particularly in the case of pensions, he added, this would leave a gap in the public finances until the policies mature. The more the provision for needs and risks is monopolised by the state, the less the incentive to work and save to provide for them.