Lawrence Kay is a Research Fellow in the Policy Exchange Economics Unit.
Iain Duncan Smith has laid out his plans for welfare reform. They revolve around his argument that there is too much waste of potential induced by the benefit system – particularly because of the way that worklessness seems to be passed from one generation to another in parts of the country.
His (right) answer is to do something about the poor incentives to work for people on benefits, to have greater expectations of claimants who don’t fancy getting a job, and to slightly expand the work programmes left to him by his predecessor. A lot rests on this. Welfare reform always gets talked about as one of the top priorities of any government.
But what is likely to happen? The easiest path of reform is in welfare-to-work. The principle of incentivising firms to help benefit claimants into jobs has been accepted by many across the political spectrum so there are really only technical arguments left. These will be around the point at which that incentivisation takes place and how the pricing structure should work.
Improving the incentives to work will be more difficult. The Secretary of State argued that it would be possible in his comments to the Guardian. However, when talking about having to bear the initial costs of his plans while waiting for the long-term gains, he said that he had “…yet to arrive at a point where everyone agrees that this is the way forward”. This suggests that reform will be tough.
Unfortunately, during the campaign the Conservatives ran posters talking about cutting benefits for people who won’t work that just repeated what the government does anyway. The Secretary of State is right to argue that work requirements are important, but his attention should be directed at the health assessments the system makes for some benefits and whether they are stringent and consistent enough.
There’s no point underestimating how difficult some of Iain Duncan Smith’s reform agenda will be. There are high expectations and a lot to fight for but many problems to overcome. Getting anything done will require some real appreciation of the trade-offs involved and a strong commitment to the cause.
