Thursday, November 11, 2010

Welfare Reform: Mostly good changes with a few stings in the tail

As I write, Iain Duncan Smith is on his feet in the House of Commons announcing his package of welfare reforms.

IDS was a rubbish leader of the Conservative Party, but I have more confidence in the welfare reforms he is announcing than I would if any other Tory were in charge. Partly because he's been working with the Liberal Democrats on this - in fact Nick Clegg has been doing the rounds in support of the proposals - and partly because I do believe that he's been trying to properly understand the issues involved over many years. I do believe that he's looking at the human angle as well as the financial.

These reforms are nothing to do with the deficit and saving money - those measures have already been announced. The Government says that there are three aims of their plans:

·         simplify and amalgamate the main welfare benefits into one single system;
·         ensure that work always pays; and
·         alleviate poverty by boosting take-up and encouraging job market participation. 
There's a lot to welcome in what he's announced.

Firstly, the Universal Credit is a brilliant idea and one which the Liberal Democrats and predecessors have been banging on about for decades. One of the first policies I ever learned about as a teenager was that we'd want to merge the tax and benefits systems. One single working age benefit will make it easier for claimants. One application form for people to fill in, with one agency to deal with, is a lot less confusing. It also means that people are more likely to get everything they are entitled to.  The implementation scares me slightly - this is going to involve the DWP and HMRC working on a common system to marry together current benefit and tax credit claimants. Any change in Government technology scares me as when things go wrong, real people, who can't afford to be mucked about, lose out. I have seen Government computer systems do some very strange things before and we need to be sure that if things go wrong they can be identified and remedied quickly.

Let me give you an example. For a while in the early days of tax credits, when the forms were scanned in, even though income figures had been correctly supplied, the HMRC computers scanned them in as zero. When people got their award notices, which were very complex, they often didn't notice this and ended up with huge overpayments. Although this was an official error, they had to pay the whole amount, often totalling thousands of pounds, back. This caused huge hardship for many families.

Having said all of that, I think it's really helpful that people are going to be able to keep a proportion of their benefits if they find work. The idea is that they will always be better off in work, so it frees people up to take part time jobs if, for example they have caring responsibilities. That has to be good for women.

If this works as it should, it should be really liberating for people. There are so many who are trapped on benefits because to take a job would mean that they were worse off because, for example, they would have to pay rent and Council Tax, lose entitlement to free school meals and so on. The vast majority of these people would prefer to work but simply can't afford to. I don't blame these people at all. They are doing what is best for their families. It is for the Government to create a system which ensures that being in work means that you'll also be better off. We won't know for sure until we see this in action, but it looks promising.

The Government is confident that nobody will be worse off as a result of these reforms, and they need to be held to that. We already know that some people will be worse off by cuts to housing benefit and DLA. I oppose these measures, but they are a separate issue.

The test of the system will be how well it deals with transitions, though - with people going into or out of work. People on benefits most often don't have any savings. They are people for whom the breakdown of a domestic appliance like a fridge or a washing machine is a major crisis. I've seen people under the current system be left without money for weeks on end because it's so lumbering and inefficient with dealing with changes of circumstances. The new system needs to be quick to respond. If it's not, people won't have confidence in it and will worry that if they take a job, it'll take ages for them to receive the credit they continue to be entitled to. It's really important that this aspect of the system works, and can be seen to work well.

Today's proposals are not without their flaws, though. I wrote the other day of my concerns about any plans to put the long term unemployed onto community service style programmes. I have no objection to work placement schemes that give quality skills and experience, but I feel that what is proposed could criminalise people who, through no fault of their own, have not been able to find work.

In terms of helping people into work, I am also concerned that there will be insufficient numbers of properly trained staff, either within the JobCentrePlus organisation or in any voluntary or private sector companies working in the field, to give each unemployed person the proper support and care they need. It's important that they look at people's skill sets, personal circumstances and support needs in great detail.

I am scared by the thought that someone who turns down three job offers should lose benefits for three years. That seems to be a bit over the top, to be honest. I know that that's the end of a process, but even one refusal can see you off benefits for 3 months. I want to be reassured that DWP officials will take people's personal circumstances into account. It would be perfectly reasonable, for example, for a lone parent to turn down a job which finished at 5pm that requires an hour's travel if they have children in wraparound care which closes at 6.

Despite these concerns, though, which I hope will be dealt with when the Bill is introduced early next year, these measures have the potential, if enacted efficiently, to really make a difference to people, to help them out of poverty and give them real options as to how they live their lives.  This is, of course, as long as there are jobs out there to suit - but that again is a separate issue.

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