Cut their benefits and force them to work!

by John Fitzsimons on 17 November 2010  |  39 comments
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The Government has proposed a radical shake-up of the welfare system. We look at the changes, and what they may mean for you.

The welfare state is set to undergo a radical change, with the Coalition Government determined to redress the balance so that being in work always pays. Last week, the Department for Work and Pensions minister Iain Duncan Smith unveiled his proposals for adapting how the benefits system in the UK works.

Effectively he stood up and said: "Cut their benefits and force them to work!"

At least, that's the way it was spun in the media. Today, I'd like to go behind this headline and find out what is actually going on. Why is the Government doing this? And, most importantly, what does it mean for you?

The problem with benefits

The Government believes that the existing benefit system is badly unbalanced, effectively serving as a disincentive for those currently unemployed to get back into work. It also costs the nation a small fortune, accounting for a third of all public spending, the costs having rocketed by 45% over the past decade.

There is also an issue of complexity – there are simply dozens of different forms of benefit available, all with different qualifying criteria. The whole thing is a bit of a mess.

The Universal Credit

The Government’s big idea is to instead launch a Universal Credit, a single welfare safety net rather than the many smaller nets currently in place. Duncan Smith plans to consolidate the existing benefits (including jobseekers allowance, housing benefit and income support) into a single universal payment.

The payment would be paid monthly rather than fortnightly, a move which the Government argues will encourage more ‘personal responsibility’. However, the big changes are not so much about the credit itself, but the many reasons in place for taking it away from claimants.

You WILL go to work!

One of the (many) criticisms of the existing benefit arrangements is that it’s too easy to get away with claiming them, even if you have no intention of ever going to work. In other words, we are all subsidising the bone idle and lazy.

Under the new plans, that will certainly not be the case. A sliding scale of sanctions will be in place for those that try to play the system. Those who fail to prepare for work, where required, may lose all of their entitlement until they comply, while a failure to seek employment (or at least be available for work) will result in the loss of benefits for between a month and three months, depending on whether this is a first or second ‘offence’.

The most serious offenders, those who fail to accept reasonable job offers could then lose the credit for a fixed term of three months, though this could rise to as much as three years if they consistently breach the conditions of the credit.

The emphasis is very much that if you’re fit to work, you will do so!

The criticisms

I think you’d be hard pressed to find anyone who doesn’t agree with the aims of the changes. There are an awful lot of Brits out there who are able (and in most cases, actually want) to work. And anything which gets them back out there, earning has to be a good thing. However, there have been a number of criticisms of the plans, from a wide variety of groups.

Relying on the internet

One is a traditional complaint about Government programmes over the past few years – the reliance on technology.

The Universal Credit system will be administered online, with people expected to make claims and check their payments via the internet, despite the fact that even the Government acknowledges around 1.5 million unemployed Brits do not currently have internet access.

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There’s a pretty big risk relying on technology in this way – the previous administration’s attempts to utilise computers for centralising our health information cost a fortune and never actually came to fruition, so there's plenty of scope for things to go horribly wrong and end up well over budget. There may also be data protection issues.

A lack of jobs

Of course, such a scheme only works if there are jobs for the unemployed to go into. And as yet there hasn’t been a huge amount of talk about just how those jobs will be created. Indeed, the Government’s own cuts will lead to millions of jobs actually disappearing both within the public and private sector.

Some concrete support for new businesses would be welcome if these plans are to actually help.

A misuse of labour

Critics have also pointed out that forcing an unemployed engineer or accountant to sweep the streets in order to keep their benefit payments is a bit daft.

Personally I’m torn on this one. Obviously, there are better things that capable workers could be made to do than clean up a bit of graffiti alongside the local hoodlums doing community service, but at the same time getting back into the working habit and restoring a bit of community pride can’t be a bad thing.

Playing the long game

However, it’s worth remembering that it will be some time before we see the results of these changes. It will be 2013 at least before the Universal Credit comes in for new claimants, and another couple of years before existing claimants will be completely migrated over.

But the introduction of the new system is only the start – it will be years, possibly a good decade, before we can properly judge how effective the scheme has been in both cutting our welfare costs and returning people to the workforce.

Indeed, in the short term, there will be the costs of setting up the system, running alongside the existing benefits programme, to consider.

Will it work?

Only time will tell if the Universal Credit makes a difference. The fact that Duncan Smith had been proposing such an idea for some time, based on the research of his own think tank, the Centre for Social Justice, even before he was appointed minister gives me some faith that the sums have not simply been drawn up on the back of a fag packet, which is not always the case.

However, on its own, it will not make much difference. The onus is very much on the Government to do something tangible to increase the number of jobs in the private sector now that the public sector is being shrunk.

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