Benefits blueprint inspired by Easterhouse

Published on Thursday 27 May 2010 21:26

THE most radical shake-up of the welfare system in more than 60 years will see those who refuse to work lose their benefits, but will "make work pay" for the lowest earners.

• Iain Duncan Smith set up the Centre for Social Justice after visiting Glasgow while Tory leader. He is spearheading major reform of benefits. Picture: Robert Perry

Former Conservative leader Iain Duncan Smith yesterday began the process of overhauling a system which he described as "a tragedy" and claimed had turned into a trap for Britain's poorest.

In his first keynote speech as Welfare and Pensions Secretary, Mr Duncan Smith insisted that those who cannot work will always find help and protection from the state.

The task he has set himself is the culmination of years of work with his think tank the Centre for Social Justice, which was set up in 2004 after he visited Easterhouse in Glasgow.

But he made it clear that the changes will mean that many who live on benefits will be forced to change their lifestyles.

The first target will be the 2.5 million people in the UK – including 285,000 in Scotland – who receive incapacity benefit. They will now be reassessed for work under much stricter medical tests.

Mr Duncan Smith also made it clear that those who refuse to work will soon not be able to receive benefits. However, he said that he wanted to change a system where work "does not pay", adding it was unacceptable that for some people the move from welfare into work means they face losing more than 95p for every additional 1 they earn.

And in apparent agreement with his new Liberal Democrat coalition partners, who want the threshold for income tax to rise to 10,000, Mr Duncan Smith blamed this on a tax system where the poor pay a rate that far exceeds that of the wealthy as a proportion of income.

He said: "We have in effect taken away the reward and left people with the risk. That must and will change."

The approach will also be taken up in a keynote speech on the economy by the Prime Minister David Cameron today.

He is due to say: "Our economy has become more and more unbalanced, with our fortunes hitched to a few industries.

"It has become over-reliant on welfare, with mass worklessness accepted as a fact of life."

Mr Duncan Smith claimed that analysis of the current state of the nation proved that the status quo is failing.

New figures have revealed that 1.4 million people in the UK have been on an out-of-work benefit for nine or more of the last ten years, while income inequality in the UK is now at its highest level since comparable statistics began in 1961.

He also said that Labour had left a country where social mobility in Britain is worse than in the US, France, Germany, Spain, Sweden, Canada, Finland and Denmark and where a higher proportion of children grow up in workless households than in any other EU country.

Some 13 years ago, the then recently installed prime minister, Tony Blair, asked Labour MP Frank Field to "think the unthinkable" on welfare reform – then sacked him when he did.

Peter Lilley, a former Conservative cabinet minister in John Major's government, failed in the same job in the 1990s.

"We must not underestimate the challenge ahead," Mr Duncan Smith said yesterday.

The speech has received a cautious response from political opponents and campaign groups.

Shadow welfare secretary Yvette Cooper accused the government of getting rid of 80,000 jobs for the young by scrapping back-to-work programmes.

But former Labour welfare secretary John Hutton, who stood down as an MP at the election, said it was "potentially a very fruitful line of reform".

The SNP's Westminster welfare spokeswoman, Dr Eilidh Whiteford, who previously worked in the community care sector, said: "There is no doubt that welfare reforms are needed. I hope this will be a genuine review designed to deliver support to those that need it, and help people back in to work wherever possible."

But she added: "People with genuine incapacities … must not become the easy target of cuts."

John Dickie, head of the Child Poverty Action Group in Scotland, raised concerns about the threat of sanctions. He said: "This seems less Big Society and more a Big Brother approach, tightening the grip of top down bureaucratic sanctions rather than supporting claimants from the bottom up.

"There is no question that we need to reform benefits and make work pay. But we know, and Iain Duncan Smith's own Centre for Social Justice has made absolutely clear, that increasing conditions and cutting benefits does not get people into work. It is low pay, lack of decent jobs, unaffordable childcare and woefully inadequate benefit levels that trap people in poverty."

Peter Kelly, director of the Poverty Alliance, said there was a need for reform of a welfare system that is far too complicated.

But he added: "We want to see the system simplified, but only as long as that doesn't result in financial losers, thereby increasing poverty and inequalities. Simplification can all too easily mean cuts by the back door."

Iain Duncan Smith: 'We need to help these people to break the cycle and get into work'

IAIN Duncan Smith, the new Welfare Secretary and former Conservative Party leader, has spoken in the past of the moment that he realised Thatcherism got it wrong was on a visit to Easterhouse in Glasgow.

His experience of social problems, deprivation and unemployment there helped to drive him to create the think tank the Centre for Social Justice (CSJ).

And statistics confirm that in parts of Scotland the problems of joblessness and poverty are greater than almost anywhere in the UK.

The hard figures show that about 285,000 people are on incapacity benefit, a higher proportion than the rest of the UK.

Many of these claimants are in Glasgow, which the CSJ discovered had proportionally 50 per cent more of claimants than the Scottish average.

About 30 per cent of the adult population of Scotland's largest city are jobless.

Across Scotland as a whole, unemployment is below the UK average, but is still rising, with recent figures putting it at 205,000.

One of the questions asked by Mr Duncan Smith's CSJ was whether the breakdown of the family unit was contributing to the problem.

In Glasgow, 40 per cent of households are headed by a lone parent, it noted.

But the issue is a more personal one, where some school leavers are now the third generation of a family to be without a job, leading to chaotic and destructive lifestyles.

Tomorrow's People, a UK group with offices in Glasgow which aims to get people back to work, has tried to outline the barriers faced by young people whose family has no experience of work.

There is the tale of the young man who was found a job but disappeared after a few days. When he was tracked down to his home, he said he could not go to work because his father, who had never worked, was complaining that he was waking him up in the morning.

Then there is the issue of training, which young people seem to enjoy, but find the transition to taking actual responsibility in work too difficult, leading to a cycle of places on training programmes, but never a real job.

Brian Gibson, of Tomorrow's People, said that he agreed with Mr Duncan Smith that there needed to be "more flexibility" in the welfare system and a new approach.

But he warned that the change needed to be much more sophisticated than simply threatening to withdraw benefits.

"We need to help these people make what are some difficult decisions for them to break the cycle and get into work," he said. "Once there, they need to be properly supported and listened to, to give them the confidence to continue.

"We need to avoid raising expectations too high and simply provide the encouragement they need as well as the training."

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