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Iain Duncan Smith sets out the Government's vision for Welfare Reform

Iain Duncan Smith speaking As trailed earlier, the Work and pensions Secretary Iain Duncan Smith has today set out the Government's vision for welfare reform.

He announced that he will be chairing a Cabinet Committee on Social Justice, stating that Social Justice would define his role and that he wants his Department to be "at the forefront of strategy to improve the quality of life for the worst off".

Several key aims were highlighted by Mr Duncan Smith and here are the appropriate excerpts from his speech:

Making Work Pay

"Let’s say someone on benefits is offered a relatively low-paid job. If you factor in the withdrawal of, say, JSA, plus Housing Benefit and Council Tax Benefit – all at different rates – it means that for too many people they are left with little more income in work than they received on benefits. Add to that normal costs of travelling to work and the loss of any passported benefits, and you soon start to see why work may not be the most financially sensible option."

"For some people, the move from welfare into work means they face losing more than 95 pence for every additional £1 they earn. As a result, the poor are in effect being taxed at an effective rate that far exceeds the wealthy. The system has become regressive. Extremely high effective tax rates also impact lone parents who want to work more than 16 hours a week. So our current benefits system is actually disinincentivising people from work. These prohibitive marginal tax rates mean that for some people, work simply does not pay." 

The Back to Work Programme

"I believe it is only right that if we are helping people to get back into work, then we also have a right to expect that those we support are ready and willing to take on work if it is offered. That is why reform of the Back to Work programme is so important. We will create a Work Programme which will move toward a single scheme that will offer targeted, personalised help for those who need it most, sooner rather than later... It seems obvious to me that if we know a particular older worker is going to struggle to get back into employment, it is only fair that we try to get them on to a welfare-to-work programme immediately, rather than pausing for 12 months as is currently the case

"To make sure we get the best value for money, we will also be changing the framework to bring the ideas and energy of the third sector and the private sector to the forefront of the process. We will reform the regime so that we properly reward the providers who do best at creating sustainable jobs that help people move out of benefits and into work. But we are not prepared to pay for anything less. At the same time, we will also make sure the system is fair by ensuring that receipt of benefits for those able to work is conditional on their willingness to work. So to be fair to the taxpayer, we will cut payments if they don’t do the right thing.

"In addition, we will re-assess all current claimants of Incapacity Benefit on their readiness to work. If people genuinely cannot work, then we will make sure they get the unconditional support they need. However, those assessed as immediately capable of work will be moved on to Jobseeker’s Allowance straight away. At the same time, those who have the potential to return to work will receive the enhanced support they need through ESA (Employment and Support Allowance) and the Work Programme."

Pensions

"We are phasing out the default retirement age so that we are not penalising perfectly healthy people who want to keep working and keep contributing. The idea of someone being fired just because they turned 65 is nonsense. People who are good at their job and want to work for longer should be able to do so.

"One of the big issues we have to face up to as a society is that we are all living longer and healthier lives. That has huge implications for the pensions regime. When the contributory state pension was first introduced in 1926, men were not really expected to live much past their pension age... Shifting demographics means that the pensions landscape has changed massively. That is why we have to make sure that pensions are affordable for the country and that is why we have to increase the pension age. Another thing we are doing on pensions is to end the rules requiring compulsory annuitisation at 75."

"And, of course, from April 2011 we are triple-locking the value of the Basic State Pension so that it will rise by the minimum of prices, earnings or 2.5%, whichever is higher. So if earnings are going up fast, the pension will increase in line with earnings. If prices are going up fast, it will increase in line with prices. And if neither is going up fast, it will go up at least 2.5%."

Jonathan Isaby

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