By Claire West
Employment Minister, Sir Reg Empey and the Secretary of State for Work and Pensions, the Rt. Hon. Iain Duncan Smith MP, met today to discuss the planned reform of the UK welfare to work system.
On 14 July the Coalition Government launched a public consultation on “21st Century Welfare”. At the heart of Government thinking is an understanding that many people on benefits perceive the financial risks of moving into work as just too great. For some groups the gains to work, particularly at low hours, are small, and any gain can easily be wiped out altogether by in-work costs such as transport. The Government has identified two key problems with the current system: work incentives are poor and the system is too complex. Government wants to reform the system to help people to move into and progress in work, while supporting the most vulnerable.
Speaking after the meeting Sir Reg welcomed the Government’s commitment to radical reform: “I think it is almost universally accepted that the current UK welfare system is fundamentally flawed. High levels of welfare dependency act as a barrier to an individual’s early transition back to work. I welcome the Government’s proposals, they rightly put the emphasis where it should be — on encouraging people to try work, to make work pay and to support those for whom work is not, unfortunately, a realistic option. I will now consider how best to take forward these proposals in Northern Ireland.”[i]
The Minister continued: [i]“Radical reform is necessary to break the cycle of benefit dependency and worklessness that has blighted the lives of so many of our citizens for generations”.
The Budget outlined the first steps in achieving these goals, but the scale of the Government’s ambition in this area warrants the consideration of more fundamental structural reforms.
The key options presented in the consultation are:
a single integrated Universal Credit, which could bring together out-of-work benefits, Tax Credits and payments for needs such as housing costs;
a Single Unified Taper which would ensure that all of someone’s benefit entitlement is considered when considering their earnings; and
possible changes to the conditionality rules for people getting benefits.
Government is also looking at proposals from a number of external organizations, including a Single Working Age Benefit, a family allowance and a negative income tax model.
Structural reform could deliver some fundamental changes to ensure that work always pays and is clearly seen to pay.