A Fair Approach to Welfare: Capita Welfare Reform Conference

Speech by Chris Grayling MP.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Chris Grayling MP


Good morning.

I expect many of you will still be digesting the detail of the Chancellor’s Spending Review yesterday.

Clearly, the Review is far-reaching.

But it had to be given the huge fiscal deficit that has left us facing huge debts and interest payments of almost £120 million per day.

That is why DWP has committed to a further £7 billion in welfare savings over and above the measures in the Emergency Budget in June.

This will save us £17.5 billion per annum by 2014-15.

However, the Chancellor’s announcements are more far-reaching than a reading of the headline numbers suggests.

The Spending Review represents nothing less than a new start for this country.

It starts to redefine what Government is for and how we can make it work best for people when they need it.

And it also starts the process of getting Government out of the way when it is simply interfering so that the real economy can get moving instead.

You can see that in many of the measures we have taken - from our approach to localism right through to our determination to tackle the deficit head-on.

You can also see it in our commitment to welfare reform.

Welfare Reform

Many of you here today will be wearily familiar with why we need these reforms.

A failing welfare system has left us with:

  • 5 million people stuck on out of work benefits
  • 1.4 million who have been receiving out of work benefits for 9 out of the last 10 years, and
  • a country with one of the highest rates of workless households in Europe where 1.9 million children live in homes where no-one has a job.

Not only that, but the system has clearly failed the taxpayer too, since the working age welfare budget has risen 40% in real terms from £63 billion in 1996/1997 to £87 billion in 2009/2010 (including tax credits, excluding pensions).

This is a staggering price to pay - not least in terms of the human cost of this unsustainable system - one that left literally millions of people abandoned on long-term benefits even when the economy was booming.

With the Spending Review, we are now on the way to putting this right and making the fundamental changes this country needs.

First, through the introduction of a Universal Credit that will simplify the benefits system and make work pay for the poorest.

And second, by introducing a new Work Programme alongside a major incapacity benefit reassessment, so we can finally create a welfare system that works for the poorest and most vulnerable - driving aspiration and hope for a better life.

Universal Credit

The introduction of the Universal Credit will be detailed in a White Paper to be published shortly and put to Parliament in a Welfare Reform Bill next year.

From there, it will take two Parliaments to get all the moving parts in place - but that only underscores the ambition of these reforms.

There is a massive amount of work to do in restructuring the maze of benefits that clog up the current system, but that is what the Universal Credit will do.

And when we do, we will have achieved a simple goal - to make it easier for people to see that it is always worth going to work.

To achieve this, the Universal Credit will:

  • cut the complexity of the benefit system, making it easier to navigate and understand
  • reduce the risks for people making the transition into and out of work, which is particularly important for people in short-term contracts or low paid jobs, and
  • create a simpler system that is cheaper to run and minimises the opportunities for fraud and error.

Most importantly though, it will ensure that work is always the simpler and more attractive option, so that we can root out welfare dependency and reduce the inter-generational poverty that blights communities up and down the country.

Incapacity Benefit migration

Overhauling the benefits system is a major project on its own, but we are not about to leave people languishing in the current system in the meantime.

That is why, for example, we are embarking on a major reassessment programme for those who have been abandoned on incapacity benefits.

For too long, the hard to help have largely been left to wither away, despite the fact that many of them would love the opportunity to start working their way back toward the workplace.

So over the course of the next three years, we will reassess some 1.5 million people to make sure that everyone gets the support they need.

Work Programme

At the same time, we will deliver a new Work Programme.

This will replace the ineffective and wasteful employment programmes of the past that provided help based on the benefit people were on rather than the support they need.

Instead, we will introduce a unified structure that treats people as individuals and allows providers far greater freedom to tailor the right support to the individual needs of each customer.

Not only will this be fairer for those receiving help, it will also be fairer to the taxpayer as it will be paid for by long-term results.

The new Work Programme is critical to the wider reforms we are implementing.

If we want to help individuals make the most of their lives, support their families and build stronger communities, then we need a welfare system that works - and works to get Britain working again.

Many of you will already be familiar with our approach to the new Work Programme - and just in case you are not Alan Cave from DWP will be speaking shortly and he can fill you in on all the details.

But it is worth reinforcing some of the key points.

First, this is very much a partnership.

It is a partnership between Government and providers.

And it is a partnership that tries to draw the best out of the Prime Providers who bring financial backing, an international perspective and high-level business skills - and the professionals on the frontline who possess the local knowledge and expertise to get the best outcomes for your customers.

In this sense, the new Work Programme echoes our determination to support local solutions with the best that the private sector and the Third Sector have to offer in terms of detailed expertise and financial efficiency.

We want to unleash the creativity that a “black box” approach to the Work Programme can offer, rather than put providers in straightjackets.

And by offering providers greater freedom to make the best choices for their customers, we are not just creating a market pricing mechanism - we are also creating the conditions for real innovation.

Providers with the best ideas will do well under this system.

That applies to the big groups who can offer financing and an international perspective on solutions.

But it also favours the best of the small and medium-sized groups who can combine creativity with flexibility.

That is what a properly functioning market should do and that is what we will support with this Programme.

It is not simply about cutting costs - it is also about being as effective as possible in offering the best help by fostering innovation and driving up standards.

Competition within the new commercial framework will help make that happen so that we can tailor the best support for each individual Jobseeker.

And by moving to a scheme where payment is based on results, we will ensure that we match high standards of delivery with value for money for the taxpayer.


I fully appreciate that these changes will be regarded with trepidation by some smaller and medium-sized groups.

But I hope that by now, you have had a chance to go through the details and see that we are serious about harnessing local expertise in the welfare to work sector - no matter how small the organisation may be.

Indeed, that is why people like Alan Cave have been working so hard with the sector to develop the Merlin standard.

No-one wants to see high-performing, smaller providers squeezed out.

Instead, we want to use Merlin as a tool to forge a stronger position in the supply chain for smaller and specialist providers.

And with the Merlin web portal, we will make it easier for small and medium-sized providers to get involved.

And as we build out the Merlin Web Portal concept and encourage providers to use the Indus Delta website, I believe we are well on our way to making sure this happens and we get the right partnerships in the right place.


The Work Programme is moving fast.

Several hundred Expressions of Interest have been whittled down to 102 Framework bids.

We will soon be able to see the final make-up of the teams that will take the Work Programme forward.

So this is an exciting time for your sector.

It is also transformational for the country.

Along with the other welfare reforms under way, we are making a fresh start for the country.

One that is long overdue.

One that is necessary.

And one that is crucial to the future of some of the poorest and most vulnerable in our society.

I urge you to become part of it.

And I look forward to answering your questions.

Thank you

Published 21 October 2010