The need for welfare reform - Mel Stride MP writes...
By Richard_Penny | Tuesday, March 15, 2011, 12:59
As I prepare this piece for posting on Okehampton People, I'm listening to Jeremy VIne on Radio 2. He's about to discuss the plight of Okehampton's jobless (now national news) and particularly the time it takes to receive any benefits. There have also been many references on Okehampton People to just how complicated - and often unfair - the whole benefit system has become.
MP for Central Devon Mel Stride
So when Okehampton's MP Mel Stride writes about the government's plans for welfare reform, it has particular relevance locally...
The Welfare Reform Bill had its Second Reading on Wednesday. I put down to speak but despite sitting in the chamber for many hours missed being called by a matter of minutes. I was next on the Government side but the debate ran out of time. It is frustrating when this happens because whilst it is useful to listen to what other members have to say much of this is repetitive and there are many things that you could otherwise be doing with the time (including looking after constituency issues).
Had I spoken I would have congratulated the Secretary of State for Work and Pensions, Iain Duncan Smith on the work he has carried out – the quest to understand how best to deliver social justice has been a long and worthy journey for Iain and along the way he has collaborated positively with many including politicians from across the political spectrum including Labour MP Frank Field, a man I admire greatly. The background to the bill is stark.
There are 5 million people of working age who are on out of work benefits with 1.4 million having been on them for a decade. Expenditure on these benefits has risen from £52 billion in 1996/97 to £74 billion today. At a time of austerity these amounts are difficult to carry.
But the arguments for welfare reform are not simply about cost. They are about making changes to a system that currently provides some perverse incentives and is in many ways unfair. The perverse incentives include the fact that for many, the loss of benefits on going into employment mean that they are simply better off not working. For some the effective marginal tax rate involved (taking into account benefit loss) can be as high as 96%. Hardly a fair rate when you consider that it is usually the poorest who face this situation. And that does not take into account the cost of getting to and from work. Another issue is the sheer complexity of the benefits system – it is often impossible for someone to even work out if it is worth their while getting a job and it can take the average Job Centre an hour to make the calculation for them. The result is that people get stuck on benefits when they would otherwise be working. This can be especially tough on those children who grow up in workless households (around 1.9 million at present).
The Government is simplifying the benefits system by creating an easier to understand Universal Credit that will replace the current myriad of benefits. This new approach will ensure that those taking work are always financially better off by doing so. This will be achieved by withdrawing the Universal Credit gradually through time rather than as soon as someone takes up a job. Full and proper support for finding work will be provided but those who are able yet decide not to take appropriate jobs will have their benefits withdrawn. Those who are not able to work or face a situation where work is not available will quite rightly continue to be supported within the benefits system. I strongly support these measures.