Making welfare less taxing
Philip Barron explores changes to the welfare benefit system
Some readers of the Friend will have heard the two BBC Radio 4 programmes in which Melanie Phillips recently explored the effect that the welfare state has had in what came to be called the work ethic – the idea that not to work is demoralising and even shameful. She interviewed a number of people who were unemployed to see how they were ‘getting by’ and how they felt about being workless. Melanie Phillips discovered that the reasons for, and attitudes to, being jobless varied widely. One young man with dependants had gone on numerous training courses but seemed content to live on state benefits until a job that he could ‘enjoy’ presented itself. However, others were anxious to come off the dole – while many immigrants, coming from different cultures, preferred to work long hours for low pay to maintain their self-respect.
Many jobless are confused by the benefits system that, according to a recent count by the Centre for Social Justice (CSJ), lists over fifty separate possible entitlements.
The system has become so complex that many claimants find it difficult to work out whether they would be worse off working, as then they might have new expenses to meet such as travel costs to get to the workplace, and paying for school meals and medical prescriptions.
So what needs to be done to simplify and improve the current system?
The government has now introduced an employment and support allowance, which replaces two benefits (incapacity benefit and income support) with one, and is promising further new initiatives. They have made it possible for pensioners to claim three benefits (pensions credit, housing benefit and council tax benefit) in one call, without filling in a form. By April, says the Department for Work and Pensions, people will be able to claim benefits, tax credits and housing benefit in one visit at Jobcentre Plus offices.
They are currently rolling out a new system whereby people moving in and out of jobs will only have to notify Jobcentre Plus, who will then make sure all their benefit entitlements are right, without the ‘customer’ having to make multiple calls.
The DWP is also ‘looking at’ bringing in a single ‘working-age benefit’.
But the CSJ, the think-tank chaired by the former Conservative leader Iain Duncan Smith, is pressing for more radical measures.
The CSJ calculates that recasting of state support for the jobless and low-paid – built around measures to make work pay and increasing support for working couples – will lift more than 200,000 children out of poverty. The aim is to move 600,000 households off welfare and into work. Winners from the shake-up would be low-earning households working part-time. But some families earning more than £30,000 a year and receiving child tax credit would lose ‘modest’ amounts of money, said a CSJ spokesman.
The CSJ admits that there will be some short-term costs to the taxpayer, but say that these will be offset by savings elsewhere. In the medium term, they reckon that the reforms will save the state money.
It remains to be seen who, as the general election looms, can come up with a system that will be affordable and fair to all, without creating a financial disincentive to work.
