Monday, 02 March 2015

Change is coming

Just over two-and-a-half years ago, when the coalition government came into power, we made a promise to fix the welfare system - a system that was failing the very people it was designed to help. We faced a welfare state that had grown and become so complex it actively trapped people into benefits with no opportunity for change. We have worked tirelessly to bring in a system that encourages responsibility and makes work pay, while ensuring that support remains in place for the most vulnerable people.

The Welfare Reform Act provided the foundations for the benefit revolution and at the heart of the changes we are making is the introduction of the universal credit. This single benefit will create a new culture in which people are ready to take small risks, such as taking on a few extra hours or starting a short-term position, in the knowledge they won’t be walking into a labyrinth of benefit red tape and they won’t be worse off at the end of the working week.

Universal credit will reward people who choose to go back to work by ensuring they are better off in work than on benefits for taking that risk.

Benefits for all

In fact, as our impact assessment shows, around 300,000 people will move into work as a result of universal credit. I hope these families will see not only the financial gain of getting a job, but also the social and health benefits that are associated with employment.

The design of universal credit within the regulations means 3 million families will be better off by around £168 per month. The majority - 75 per cent - will come from the bottom two fifths of the income scale and transitional protection means no one loses out by moving to the new system.

During the summer, the independent Social Security Advisory Committee consulted on the regulations of the universal credit. I welcome the thorough and constructive recommendations they put forward and we have accepted the majority of them, including ensuring that victims of domestic violence have their housing costs funded outside the universal credit.

Trial and error

This coming year will be an important milestone. We are gearing up now for the first delivery in the Greater Manchester and Cheshire regions from April. This will enable us to test the system in a live environment with claimants, councils, and employers before a four-year national implementation programme begins in October, when 8 million households will be moved over to the new benefit. It is a long process that will allow us to learn and develop as we go.

The local authority-led pilots we are already running will let us test the support that must be in place to help people gain the right budgeting skills and to get online in order to manage their benefit payments and any income. This will enable councils’ local knowledge and expertise to be a firm part of what universal credit can do to help people.

The coming year will also see further findings from our direct payment demonstration projects. Paying housing benefit direct to tenants is an integral part of universal credit and while we have always been clear that there needs to be exemptions, it is an important way of helping people to manage their own finances and become more independent. The demonstration projects as well as the existing pilots are helping us prepare for the change, and there will be lessons for all of us.

Universal credit is just one part of our reforms, however. Before Christmas, we wrote to all local authorities to give them more information on the implementation of the benefit cap. The cap will come into effect from April as planned, starting in four London council areas before rolling out to the rest of the country over the summer.

Smooth transition

Our welfare reforms are delivering big change so it’s only right that we implement them in a controlled way. A phased roll-out will ensure a smooth transition for claimants and has been welcomed by local authorities and wider organisations.

This approach will also allow the government to monitor implementation closely and learn lessons ahead of national roll-out in the summer. Jobcentre Plus will continue to work hand-in-hand with local authorities to engage and support households focusing on helping them to find work.

Throughout this process my message is clear - our reforms are about restoring fairness and making work pay. But it also mean fairness to taxpayers in that their money isn’t wasted on trapping people on benefits.

We will continue to work with the housing sector throughout 2013 - with a common goal of helping tenants and others who receive our support to reduce their benefit dependency and improve their lives.

Lord Freud is minister for welfare reform

Readers' comments (20)

  • The reforms are exactly what is required to stop the well known problem i.e. "They are better off on benefits than in work". The reforms, in the longer term, will create an army of people who are prepared to work who would not have worked under the old system. Fairness will return to the benefits system. A life on benefits should be hard. It is exactly this which incentivises people back in to work. Working is the key to a satisfying and healthy life and sets a good example to children and young people...

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  • Rick Campbell

    It's not only the politicians who are spiteful -- there are big businesses which benefit greatly from the fact that social security (via tax credits) subside the low wages paid.

    A life on social security is not a life of luxury -- indeed, apparently, MPs are whinging that their £65,000 plus all the perks is not enough. for them.

    The government's 'welfare reform' is predicated on myth (some might say it's based on lies and untrue statistics) and hype promoted by the media, IMHO

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  • Colin Mcculloch

    "A life on benefits should be hard. It is exactly this which incentivises people back in to work. Working is the key to a satisfying and healthy life and sets a good example to children and young people..."

    I agree with your last sentence, but the sentence that precedes it shows your real agenda. Penalising the poor and unemployed for being poor and/or unemployed whilst giving the highest earners a tax cut is utterly reprehensible.

    Job creation should be the only objective of this Government. By jobs, I mean real jobs, not zero hour or part-time positions at local supermarkets. Where is the attraction for heavy industry to come to the UK? What about proper training for school leavers? This Government talks a good game, but its one million new jobs haven't increased tax revenues or closed the deficit.

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  • So, the benefit cap was always planned to come in on a rolling basis from April starting with specially selected local authorities.

    Funny, all the letters sent to those affected, the web sites, the circulars and all the local autorities who were to administer it for the DWP thought it was in from April!

    Also, the only people who will be capped are those on Housing Benefit (until Universal Credit properly arrives) so if you are not on HB, no cap. Haven't heard that mentioned a lot in the news although if you ask the DWP they say that most people who need to be capped will be on HB.

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  • For those who think a life on benefits is easy and luxurious I would welcome a social experiment where you, IDS and Lord Freud live in social housing with unemployment benefits to live on whilst trying to keep your family fed, clothed and warm in the winter, just try it for a month to see what tough choices you have to make between eating yourself or heating the home for your children.

    Wheather we like it or not these changes are going to happen, it will just be interesting how quickly we can quantify the catastrophic effects this will have on the community, health, social exclusion, financial exclusion, social services, RSL's, schools etc etc.

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  • michael barratt

    When New Labour were new soon after they came to power in 1997, the then secretary of State Harriet Harman let it be known that being on Job Seekers benefits was not an easy option. With Job Seeker benefits at or below the poverty line those affected were certainly not living the life of Reilly. The problem has been that wages for low skill workers in employment have dropped in real terms by 20% over the last two decades to a level that might just met the needs of an 18 year old living at home. Terms & conditions of employment workers have also drastically eroded in recent times eroded with employers backed by Government imposing 'flexible' working conditions making work even less attractive. In recent years, Governments' have addressed this problem by paying benefits to affected workers with families that raise their incomes to about or just below the level of poverty and in the process subsidised those employers not paying a living wage. In such circumstances their is often little incentive for affected workers to remain in employment. The Condems answer to the problem is not to created a financial incentive to work by increasing wages for those in employment (on the contrary), their policy is to reduce benefits for those unemployed, plunging them and their families to even lower depths of poverty.

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  • Rick Campbell

    I've asked the question below before in many different forms and never got an answer and even bunged it on twitter but no replies from housing professionals --

    What do you regard as the poverty line and could you live on social security of £71pw let alone the £40-53 was on last January?

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  • michael barratt

    Not that I would recommend it, the best way to understand the implications of poverty and where is the line drawn is to experience it as did my family when I was unemployed in the 1990s.

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  • Christopher Dale

    Ignorant statements from a smug man who has no knowledge of the reality of struggling on a low income. I hope his Bollinger goes off.

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  • Welfare Cap delayed and will be delayed again.

    Top IT people on Universal Credit have left - UC will be delayed.

    HMRC cant cope with RTI.

    There is no element of welfare 'reform' that is working.

    Mr Freud - welcome to the real world.

    Talk doesn't cut it, PR doesn't cut it - competence is all that matters and this Sir you don't have.

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