I’VE always thought the benefits system should provide a lifeline for people at times of need – but it shouldn’t be a lifestyle choice.
Sadly, the truth is that in recent times that’s what it’s become for too many people thanks to a welfare system which trapped people on benefits.
Hundreds of thousands were left on incapacity benefit for a decade or more with little effort to find out if their condition had improved and they were capable of work, and millions more abandoned on out of work benefits with little incentive to get back into work because they would barely be better off.
That’s why, as part of the Government’s long-term plan to build a stronger economy, it’s so vital that we’re fixing the welfare system so it’s fair to hardworking Yorkshire taxpayers and gives people a real incentive to get into work so they can support themselves and their family.
Already we’ve capped the amount people can receive in benefits to £26,000 a year, so people don’t receive more in benefits than the average family earns. That’s fair – and so far that has meant capping the benefits in 1,872 households in Yorkshire and the Humber.
We also need to bring the housing benefit bill under control after it rose in real terms from £15.2bn in 2000/2001 to £24.4bn in 2012/13 while families languished in overcrowded accommodation or sat on waiting lists in the hope of getting a home. That is why we no longer subsidise people for spare bedrooms – introducing the same rules into social housing as already operate in the private sector.
But work is the key to lifting people out of poverty. Creating more jobs is a vital part of the Government’s plan, and with 164,000 more people in private sector jobs in Yorkshire and the Humber since 2010, and unemployment down by 7,000 over the past year, there are signs that this plan is working. Despite this, there’s lots more still to do – and that’s where Harrogate will begin playing a vital part in transforming the welfare state from later this month when it becomes one of the first areas to run Universal Credit.
Universal Credit brings six benefits and tax credits into one. Instead of jobseekers making a claim to Jobseeker’s Allowance from the Jobcentre, then going to their council for Housing Benefit, and then switching their claim to tax credits from Revenue and Customs when they move into work, they will make one claim to Universal Credit which will stay with them throughout their transitions through the welfare state.
It sounds simple, but I cannot overstate how much of a shift this will be. Not only because it will be easier both for people who claim benefits and for our people who administer them, but because the benefits system will finally work the way it’s supposed to, without conflicting and confusing rules, just one system that rewards work.
The fundamental principle of Universal Credit is that it will make work pay, so that people no longer face the absurd decision between remaining on benefits, or moving into work and making themselves worse off. When someone makes a claim for Universal Credit, and then takes up an offer of work, the amount of benefit they receive will decrease more slowly than it does under the current system. Making the transition into work smoother – and making sure they’ll be able to see how they are always better off in work, instead of being discouraged at the very first hurdle
Because we want to bridge the gap between benefits and work, Universal Credit is also paid differently to traditional benefits. People will claim online – with help available to those who need it – and, just like most working people pick up their wages monthly, so the benefit will be paid monthly, instead of fortnightly.
So Universal Credit isn’t just about a simpler system, it’s a cultural shift. That’s why jobseekers in Harrogate have had to sign up to a Claimant Commitment which changes the relationship between the claimant and the adviser since December – and this week I came to see it in action in Harrogate myself.
Claimants agree a detailed plan working with the advisers, which sets out day by day what they will do to get back to work. The Jobcentre Plus advisers act as work coaches and are a source of advice and support, but if claimants don’t meet the requirements set out in the commitment without good reason, they could lose their benefit. It’s such an important change that even while we roll out Universal Credit gradually and safely, we’re introducing the commitment to every Jobcentre in Yorkshire by April.
Universal Credit is already live in seven areas of the country, with Harrogate and Bath beginning to take claims later this month and Shotton in Wales starting in early April. We’re starting with single jobseekers but as we get up and running we’ll include new claims from couples and families. Our current plans will have the new benefit live across the entire country in 2016, a safe and gradual approach to avoid repeating the difficulties that blighted the big bang launch of tax credits which wasted millions of pounds of taxpayers’ money.
Fairness to the hardworking taxpayer as well as those who need support, bringing the benefits bill under control and making work pay – that’s how we’re fixing the welfare system.
Iain Duncan Smith is the Work and Pensions Secretary.