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Britain urgently needs a 21st century welfare system

Submitted by on 23 Nov 2010 – 12:33

Photo: Steve Punter Flickr.

By Iain Duncan Smith, Secretary of State for Work and Pensions

Our welfare system is complex, inefficient and not fit for purpose. Too often it acts as a barrier to work and self improvement, rather than as a safety net for the most vulnerable.

So many of our social problems stem from endemic worklessness, which is now so deeply entrenched in our country that there are nearly five million people who do not work. Many of these are people have been abandoned on out of work benefits for decades, often with little intervention or assistance from the state.

The bill for our broken welfare system has spiralled out of control in recent years and has become a huge burden on the taxpayer. 1.4 million people have been receiving out of work benefits for nine out of the last 10 years. We spend £87 billion on working age benefits and tax credits. Housing benefit alone racks up £20 billion and has become a major disincentive to work for many of those receiving it.

But the real tragedy is the human cost of consecutive administrations’ failure to reform welfare. Many of the people who we set out to help through the distribution of benefits have become trapped into a cycle of dependency.

This is why the coalition government has already taken action to radically overhaul our benefits system. Within six weeks of coming to power we set out how we would reform Housing Benefit by capping Local Housing Allowance. We set in motion the process of reassessing everyone on Incapacity Benefit to see if they are able to work and we launched our consultation paper 21st Century Welfare, which puts forward solutions to the poverty trap created by the current welfare state.

From October we will start reassessing 1.5 million people on Incapacity Benefit to see if they are fit for work, with trial areas in Burnley and Aberdeen. Many of the people who claim Incapacity Benefit actually want to work but have never been given the support to enable them to do so.

That’s why we are implementing the Work Programme next year, which will offer personalised support to help people back to work. We are going to offer welfare to work providers real freedom to truly tailor support for Jobseekers for the first time. No more centralised, one-size-fits-all schemes, but real support to help people back on the path to sustainable work, no matter what barriers they face.

To ensure that we are getting value for money, the Work Programme will be run on a payment-by-results basis. We have to make sure people are found sustainable employment that will help them stay in work and lead to optimal outcomes for employee, employer and the taxpayer. We will also demand that Jobseekers take personal responsibility for accepting work when it is offered, so it’s no longer possible to choose a life on benefits.

We know that work provides the most sustainable route out of poverty. So to break the cycle of dependency, we need to make sure that work pays – especially for the poorest.

Under the present benefit system, it is not clear whether making the move into work would leave an individual any better off financially, and upon taking a job many benefit claimants will be smacked with a 90% marginal tax rate.

After the publication of our command paper 21st Century Welfare in July, we are currently consulting on the best way to simplify the benefits system and make sure that work always pays.

We fully understand the scale of the challenge ahead of us, but we will not shirk our responsibility to implement the full scale welfare reform that is so badly needed. This is a rare opportunity to reinvent our antiquated welfare state and build a benefits system that is fit for the 21st Century.