By Jaimie Kaffash
27 May 2010
Proposals by Work and Pensions Secretary Iain Duncan Smith to ‘urgently’ reform the benefits system will be expensive and the worst off in society might have to cover the costs, think-tanks have warned.
In a speech today, Duncan Smith said the current system is overcomplicated and takes away incentives for people to find work. He used the example of a young person who receives Jobseekers Allowance, housing and council tax benefits, who would lose 95% of all extra earnings were they to move to a low-paid job.
‘For too long, we have discouraged people from taking up their responsibilities as the welfare state has pushed in to fill the gap where family and society used to function far more effectively,’ he said. ‘For far too many people, work simply does not pay.’
He warned that the welfare bill at the moment stands at £87bn, with an extra £98bn going towards pensions.
However, Mike Brewer, director of the tax and welfare research programme of the Institute for Fiscal Studies, said that simplifying the system is ‘often costly, unless there are many people to be made worse off’. He added that the reason benefits are complicated is ‘because it targets money in very precise ways’.
Kayte Lawton, research fellow at the Institute for Public Policy Research, said that Duncan Smith had put too much emphasis on the jobseekers themselves, as opposed to the lack of employment opportunities. ‘He didn’t even reference the effects of the recession on employment,’ she told Public Finance.
She added that financial incentives to work were not the only reason people looked for employment, but there was a chance that unsuccessful jobseekers would be disadvantaged further.
‘My fear is that the government will be taking money off workless families to give to working families on low incomes,’ she said.
Duncan Smith confirmed that the welfare-to-work programmes would be merged in to a single scheme. He will also be heading a Cabinet committee on social justice, he added.
27 May 2010
Proposals by Work and Pensions Secretary Iain Duncan Smith to ‘urgently’ reform the benefits system will be expensive and the worst off in society might have to cover the costs, think-tanks have warned.
In a speech today, Duncan Smith said the current system is overcomplicated and takes away incentives for people to find work. He used the example of a young person who receives Jobseekers Allowance, housing and council tax benefits, who would lose 95% of all extra earnings were they to move to a low-paid job.
‘For too long, we have discouraged people from taking up their responsibilities as the welfare state has pushed in to fill the gap where family and society used to function far more effectively,’ he said. ‘For far too many people, work simply does not pay.’
He warned that the welfare bill at the moment stands at £87bn, with an extra £98bn going towards pensions.
However, Mike Brewer, director of the tax and welfare research programme of the Institute for Fiscal Studies, said that simplifying the system is ‘often costly, unless there are many people to be made worse off’. He added that the reason benefits are complicated is ‘because it targets money in very precise ways’.
Kayte Lawton, research fellow at the Institute for Public Policy Research, said that Duncan Smith had put too much emphasis on the jobseekers themselves, as opposed to the lack of employment opportunities. ‘He didn’t even reference the effects of the recession on employment,’ she told Public Finance.
She added that financial incentives to work were not the only reason people looked for employment, but there was a chance that unsuccessful jobseekers would be disadvantaged further.
‘My fear is that the government will be taking money off workless families to give to working families on low incomes,’ she said.
Duncan Smith confirmed that the welfare-to-work programmes would be merged in to a single scheme. He will also be heading a Cabinet committee on social justice, he added.
