In a speech on the government’s welfare reform plans, which include a pledge to save £12bn over the next two financial years, the prime minister said changes are needed to tackle the “causes not symptoms” of low pay.
The Conservative election pledge to legislate so employees working 30 hours a week on the National Minimum Wage never pay income tax will move the UK towards a welfare system that encouraged well-paid work, he said.
Government is “complement” about helping people on low wages, Cameron told an audience in Sunderland.
“There is what I would call a merry-go-round. People working on the minimum wage having that money taxed by the government and then the government giving them that money back – and more – in welfare.
“It's dealing with the symptoms of the problem, topping up low pay, rather than extending the drivers of opportunity [by] helping to create well paid jobs in the first place.”
Chancellor George Osborne will set out more details of where the £12bn in savings will be found in his post-election Budget next month.
Ahead of this, Cameron will confirm the government’s policies to ensure that work was always “a better option” for people.
As well as ensuring those on the minimum wage keep more of their earnings, he will commit to increasing the pay rate – currently £6.50 an hour – to reflect improvements in the economy. Reforms to the education system, including action on “coasting schools”, would ensure that young people had the skills needed to compete in the workplace for higher-paying jobs, Cameron added.
In the speech, Cameron also confirmed that the government's Troubled Family programme would be extended to another 400,000 families. The initial programme had succeeded in helping almost all of the 117,000 families in the first round of the scheme, he said, through better integration of services.
"By radically changing the way we deliver services to the hardest-to-reach families in our country, we have tackled worklessness, addiction, truancy and anti-social behaviour. And I can announce today that almost all of the 117,000 families which the programme started working with have now been turned around – in terms of either school attendance or getting a job or both.
"This has saved as much as £1.2 billion in the process. And in the next 5 years, we will work with 400,000 more. This is a real government success, and I want to extend this thinking to areas where state institutions have all too often failed."
Cameron also warned that local authorities would need to be more accountable for failures by social services.
The government would expand the lessons of its education policy – which has seen it expand the number of academies in order to put schools under new leadership – to social work.
“We will say to any local authority failing its children: transform the way you provide services, or those services will be taken over by non-profit trusts like those in Doncaster, and partnerships like that between Hampshire and the Isle of Wight.”
