“We welcome this report as a timely and genuine effort to overhaul a system that, as it stands, is expensive, outdated and unfit for purpose.”
The Department for Work and Pensions have been asking for views on their 21st Century Welfare proposals for changing the benefit system. Community Links submitted our response today.
As we believe that people who experience a problem understand it best, we asked 560 people around the UK, many of whom were on benefits, about working age poverty issues. We also organised two events specifically focussed on the proposals, with 53 people attending in London and Manchester. And 60 people on low incomes responded to a questionnaire designed specifically for the consultation, 45 of whom were receiving benefits.
We have been arguing for a radical reform of the benefits system for many years, pointing out in particular that many people end up not declaring small pieces of work because the system is too complicated. This Government is being radical in proposing a higher disregard on earnings, especially for people on JSA. Previous administrations seemed to recognise the need for this but never acted on it. We see the current appetite for reform as a success, but more importantly the right thing for government to be doing.
However we were clear in our response that these structural reforms are only part of the solution to helping people on benefits move into work. We highlighted the other crucial factors: decent support and local jobs. Support and jobs motivate people to take up work just as much as a simpler or more generous benefits system.
Today we heard that the Treasury have committed to the reforms outlined by DWP, but a lot remains unclear. Our biggest concern is that the Treasury will not invest enough upfront. As one workshop participant said at the end, ‘Will they work in practice, on the ground?’
The taper level – the rate at which benefits are withdrawn as people earn more money – is going to be crucial. I’m not convinced that keeping 35p for every pound a person earns will be enough of an incentive to taking up work, (compare it with the controversial 50% tax on the highest earners). At this end of the labour market wages are very low. As a society should we not be doing more to ensure that those on very low incomes have the opportunity to work and receive a decent wage? If Government wants these reforms to work then the make or break question is on the level of the taper that will be set now. Get it right from the beginning, not a couple of years down the line.