Iain Duncan Smith on Welfare reform

Iain Duncan Smith

Secretary of State for Work and Pensions

Millions of benefit claimants will be forced back to work in the biggest shake-up of the welfare state for 60 years,

The Centre for Social Justice 2009 report into the benefits system is indeed a breath of fresh air in what is a long and protracted debate around welfare reform.

Firstly I am not suggesting that IDS and the Centre have got it right in all areas but it is a bold and courageous foray into an emotive and complicated area of policy.

Secondly, As a result of the economic crisis, the government’s commitment to seeing full employment has been unceremoniously buried. The plans presented by Iain and his Centre for Social Justice will surprisingly do very little if anything to reduce the overall benefit count and rather than saving money it will cost £3.6bn more. You would be forgiven for concluding that in these straightened times IDS has a nerve or to put it another way he is “audacious”. However, if you pause for thought you will see that there is method in his madness.

• The proposals for a Universal Work Credit and Universal Life Credit would immediately simplify the entire benefit system reducing the complicated stream of 51 separate benefits into two simple streams. Whilst the Conservative party did allude to a single benefit it fell short of having a clear plan: The Centre for Social Justice has drafted one. Maybe as Secretary of State IDS will implement it!!

• Secondly, under the Centre for Social Justice’s scheme there would be no reduction in out-of-work benefits for any current recipient. The existing rules within each benefit would be rolled into the new benefit and there would be a taper system of payment as the earnings of the claimant increased making it simpler, easier, less stressful, and cheaper to start and stop claims.

• Thirdly, this proposal would remove the fear of the long delays experienced when jobs do not work out and a person has to start a new claim. Crucially there would be incentives for people to work

Apparently, implementing this proposal will not make people on benefits worse off because it will not change the amount of money awarded but will instead focus on moving all the benefits under the Department for Work and Pensions (DWP’s) and applying a taper mechanism to ensure that people who find work will not lose benefits: however any benefit reductions will be taken out of PAYE thus removing the need to reclaim benefits if the work stops or ends.

Why is this all so important? Well here’s why: it signals a change of consciousness with the state accepting that its bureaucracy is at times inhibitive and obstructive. The government will no longer put up barriers to those who need to reclaim.

The authors claim that the proposal would cost money in the short term (£3.7bn a year) but would be self-financing in the longer term.

The proposal claim that only two groups will be worse off: families earning over £30,000 a year, and a few people working just over the number of hours required to claim Working Tax Credit.

The report also proposes an earnings disregard which will effectively remove means-testing of benefits, as benefits can be awarded without looking at earnings, then taken away again by HMRC as and when the earnings reach appropriate levels.

What does this mean for Jobcentre

What does this mean for FND and PEP

More coming soon…