Jobs & Welfare

The Coalition’s large scale reform of the welfare system has attracted considerable criticism, and has, perhaps inevitably, led to suggestions from the Left that these changes are symptomatic of the “same old Tories”, living up to their “nasty party” credentials. The passing of the Welfare Reform Act was by no means smooth and there have already been a number of serious problems with the interpretation and implementation of the legislation. Reports of claimants facing financial confusion and damaging losses, coupled with local authorities struggling to deliver reforms via problematic software, are early indications of the potential threat that these reforms pose to society’s most vulnerable, and their ability to access the financial support they need. However, in February 2013 the Office of National Statistics reported the number of people in work had increased by 131,000, to 29.73 million. The claimant count – the number of people claiming Jobseeker’s Allowance – fell 1,500 to 1.54 million in February, the lowest level since June 2011.

Iain Duncan-Smith has been determined in his commitment to this radical set of reforms and has faced down considerable opposition from within the Cabinet, the Treasury, his own party and from the general public. Turning down a move to the Ministry of Justice and then rejecting the position of Lord Chancellor in the September reshuffle, IDS avoided Cameron’s attempt to move him away from welfare, and was in post to see the package of reforms come into force on 1st April 2013. Dubbed by Labour as ‘Black April’, the introduction of the “Bedroom Tax”; cuts to council tax benefit funding; a cap on welfare benefit; and no rise in welfare benefits and tax credits in line with inflation, will act as a further squeeze on claimants.

The challenge for the Labour Party in opposing these reforms is the fact that toughness on welfare is popular. In 1993 only one-fifth of people believed that a less generous system would encourage people to stand on their own two feet; by 2012 more than half did so. These results, from the British Social Attitudes Survey, also highlight a disconnect in how the welfare system is perceived. Indeed, those who take the hardest line are often those who are actually on the receiving end of the system. Whilst this certainly makes for an interesting debate, Labour has struggled to generate significant opposition to these reforms, with IDS managing to keep public opinion on side. How long this lasts will depend on a number of factors; namely implementation and the Coalition’s ability to stay on message. IDS has already started to move messaging away from saving money, instead focusing on creating a ‘fairer’ system with ‘greater opportunities’ for the unemployed. However, George Osborne’s fondness for the ‘strivers’ versus ‘shirkers’ rhetoric could do more harm than good.

However, no amount of effective PR and communications will protect the Coalition from public anger if the reforms fail to deliver. Some suggest that in response to reduced income, people will refuse to pay council tax, thus having a detrimental impact on local authorities and their already limited ability to spend. Claimants are already experiencing difficulties in accessing their benefits online and tougher sanctions on Jobseeker’s Allowance have already led the Government to the dock, and caused a significant rift in the Labour Party. It is acknowledged on both sides that welfare reform is long overdue, but whether the Coalition’s chosen approach will deliver on its promise of a fairer system, or send those who are already poor and financially vulnerable into ‘beggary’ remains to be seen.


Progress against the Coalition Agreement

Pledge: We will end all existing welfare to work programmes and create a single welfare to work programme to help all unemployed people get back into work.

Status: Done – An integrated welfare to work programme was launched in June 2011. The first sets of statistics released in November 2012 showed that 3.6% of the people on the scheme came off benefits and went into secure employment in its first 14 months, falling short of the original 11.9% target.

Pledge: We will ensure that Jobseeker’s Allowance claimants facing the most significant barriers to work are referred to the new welfare to work programme immediately, not after 12 months as is currently the case. We will ensure that Jobseeker’s Allowance claimants aged under 25 are referred to the programme after a maximum of six months.

Status: In progress - A three-month Work Programme referral point has been introduced for those claimants of Jobseeker’s Allowance facing the most significant barriers to work. The target of a referral within six-months to the Work Programme for jobseekers under 25 has not yet been delivered. Currently these claimants are referred to the Work Programme after nine months, and will only be referred earlier if they face higher barriers. In March 2012, the Government began referring prison leavers who claim Jobseeker’s Allowance to the Work Programme immediately on release from custody.

Pledge: We will realign contracts with welfare to work service providers to reflect more closely the results they achieve in getting people back into work.

Status: Done – The Work Programme is delivered by a series of 18 prime contractors and hundreds of smaller sub-contractors. Providers are paid by results, receiving the majority of the fee for finding someone a job once that person has been in work for an extended period of time (up to two years).

Pledge: We will reform the funding mechanism used by government to finance welfare to work programmes to reflect the fact that initial investment delivers later savings through lower benefit expenditure, including creating an integrated work programme with outcome funding based upon the DEL/AME switch.

Status: Done – The Work Programme is a ‘payment by results’ scheme. As performance levels increase, providers will be paid from the benefit savings being realised. This new funding model is a radical step, with the Government spending money on the Work Programme (from Departmental Expenditure Limits (DEL)) before it has been saved from the benefits budget (Annual Managed Expenditure (AME)). 

Pledge: We will ensure that receipt of benefits for those able to work is conditional on their willingness to work.

Status: Done – Universal Credit was introduced as part of the 2012 Welfare Reform Act. Central to Universal Credit is the expectation that claimants will do more to find, or prepare for work. The Mandatory Work Activity (MWA) scheme was launched in 2011 and extended in June 2012. The MWA requires jobseekers to do a month’s full-time activity to help them back into work.

Pledge: We support the National Minimum Wage because of the protection it gives low income workers and the incentives to work it provides.

Status: Done – The Department for Business, Innovation & Skills (BIS) and HM Revenue & Customs enforcement scheme to name employers who flout the National Minimum Wage (NMW) laws was announced on 1 October 2010 and came into effect on 1 January 2011. However, in April 2013 the Low Pay Commission was told by Government that it must formally consider the likely impact of any future increases of NMW on “employment and the economy”. The triennial review of the Commission by BIS advised caution against future rises in the NMW, raising the prospect of the first ever across-the-board freeze or cut in the minimum wage for everyone if the economic uncertainty continues.

Pledge: We will re-assess all current claimants of Incapacity Benefit for their readiness to work. Those assessed as fully capable for work will be moved onto Jobseeker’s Allowance.

Status: Done - All current recipients of Incapacity Benefit are being reassessed through the Work Capability Assessment and moved onto Employment and Support Allowance or other benefits as appropriate. Up to the end of February 2012, 462,100 claimants had started the reassessment process and it is estimated that 1.5 million people will be assessed by 2014. By November 2012, over a third of people being reassessed had been found to be capable of work.

Pledge: We will support would-be entrepreneurs through a new programme – Work for Yourself – which will give the unemployed access to business mentors and start-up loans.

Status: Done – National roll-out of the New Enterprise Allowance was completed on 31 August 2011. The NEA gives extra help to unemployed people who want to start their own business and who can show that their business idea could work. Claimants could receive a package of up to £2,274 (including a £1000 loan) and are given a mentor to provide advice and support. The scheme was extended in October 2012 to allow people to access NEA from the first day of their benefit claim. From January 2011 to November 2012 there have been 15,210 starts to the NEA weekly allowance and 31,540 starts were assigned an NEA business mentor.

Pledge: We will draw on a range of Service Academies to offer pre-employment training and work placements for unemployed people.

Status: Done – Sector-based Work Academies were launched on 1 August 2011. These offer pre-employment training, work placements and a guaranteed interview for recipients of Jobseeker’s Allowance or Employment and Support Allowance (work-related activity group) in sectors with high volumes of current local vacancies.

Work experience placements for 16–24 year olds on Jobseekers Allowance have also been introduced. However, reports of claimants being forced onto MWA schemes following a refusal to accept a voluntary placement have led to the Court Of Appeal quashing these regulations. The court found the regulations to be unlawful as claimants were required to comply with a scheme that had not been clearly set out. The Jobseekers (Back to Work Schemes) Act 2013 was recently passed to introduce clarity on the sanctions within the system.

Pledge: We will develop local Work Clubs – places where unemployed people can gather to exchange skills, find opportunities, make contacts and provide mutual support.

Status: Done – ‘Work Clubs’ is a nation-wide initiative, which facilitates the development of locally led support for unemployed people. These clubs provide a place for unemployed people to meet and exchange skills, experiences and make contacts. Support and guidance on setting up a Work Club has been made available and some localised funding is available through Jobcentre Plus. More than 2,400 Work Clubs are now being run within local communities by charities, voluntary organisations and businesses, among others.

Pledge: We will investigate how to simplify the benefit system in order to improve incentives to work.

Status: Done – Means tested working age benefits have been replaced with a single welfare to work programme. Universal Credit was introduced as part of the 2012 Welfare Reform Act. Pilots will run from April 2013; new claimants will be able to make claims from October 2013; and from April 2014, all new claims will be for Universal Credit. Existing claimants will move on to Universal Credit in line with a phased approach that is expected to be completed by the end of 2017.