About The CampaignWhat we are fighting for
Work Incentives
Address work (dis)incentives which lead to benefit traps
I am not a statistic, I never wanted to have a life on benefits, I used to work and I really enjoyed it. When I worked I was a real grafter I loved being financially independent. Now when I work it's for cash-in-hand and it's at times when things are really tight. Living in fear of being caught is a terrible way to live but what is scarier is giving up benefits altogether and having no safety net.
Susan, a single mum
What are work incentives and what is the problem?
Work incentives are financial incentives within particularly benefits which aim to progress people off benefits into work, such as earnings disregards, permitted hour rules, and in-work credits. As an example, the levels of ‘earnings disregards’ for people in receipt of Jobseekers Allowance have remained virtually unchanged for the last 17 years (since 1988) and are pitifully low at £5 (less than one hours minimum wage!!).
This impacts greatly on individuals and prevents people from moving off benefits into work, it stops organisations from employing staff either part-time, sessional, or temporarily because people do not want to give up their benefits for such short term work = the benefits trap.
The consequence being that people remain trapped in poverty, reliant on welfare benefits and unable to contribute to the development of their community and society.
The Solution:
The benefit system should be a temporary measure, but with the maximum amount of dignity.
With the economic recession the number of benefit recipients will dramatically increase. To serve their purpose adequately benefits should be a safety net for people without employment. Being on benefits should not equate to living in poverty. This means there should be sufficient finances for an individual to be supported and be able to live a dignified existence. A minimum income standard for Britain: what people think
An alternative would be to encourage people to supplement their benefits through employment and retain the attributes that employment brings.
This could be brought about by:
- Increasing levels of earning disregard (for more in-depth recommendations please refer to Community Links Earnings Disregard Evidence Paper No.12. and a report by Ruther Lister
- Introducing a tapered benefit system (Model created by Deven Ghelani) which would incentivise people into work. This would result in less people participating in the informal economy as there would be no need for it.
- Introducing incentives for people who are already working cash-in-hand to encourage them to formalise their work or make the transition into formal employment and gradually come off benefits. This requires a combination of policy changes and a more positive DWP strategy to people working in cash-in-hand. Read about pilots in other countries about this
Work incentives need to be changed. A formal review process must be undertaken by DWP including wide consultation, and financial and behavioural modelling. We recommend that reforms to ‘work incentives’ should not be assessed in isolation, but incorporated into the wider context of reforming the benefits system, including benefit simplification.
IN THE NEWS:
Jobless to keep dole in new back to work plan: The Irish Independant
Campaigning for incentives for formalise work - Reducing VAT to 5% for domestic building work.
Urge lone parents into jobs: just put away the big stick The Guardian
Call to increase jobseekers allowance
Removing barriers to benefits take-up
Benefits need to be uprated in line with real costs of living