Check against delivery
Most people agree that our welfare system needs to change. Before deciding how, we first need to answer a simple question: how do we judge the success of our welfare system?
Do we judge success by the amount we spend on it? By he number of people on benefits? Or do we judge success by the number of people we help out of the system? The number of people we get off benefits, and into work?
The coalition government is clear: the hallmark of a good welfare system is not how much it costs. It’s how many people it helps.
The people down on their luck who we help back onto their feet - independent, working, able to look after themselves. And, where we can’t do that, where there are people who need a helping hand because of illness or disability. A fair system gives those people the support they need, for as long as they need it.
That is what today’s announcements are about. Returning welfare in this country back to its original purpose.
Nearly 70 years ago its architect, the great liberal William Beveridge, imagined a system that gave people protection from cradle to grave. But not one that would act as a crutch every day in between.
Yes the state should offer security in hard times. But it should not, as Beveridge warned, ‘stifle incentive, opportunity, responsibility’. People should be encouraged to provide for themselves.
Beveridge’s dream has, however, been distorted. Today’s system discourages self-reliance; it disincentivises work; it condemns the most disadvantaged in our society to a life on benefits.
Some commentators would like to pretend that the problem is the claimants. They’ll tell you that everyone on benefits is workshy, lazy, greedy. But that’s not true, and it completely misses the point.
When 5 million people in the UK are receiving out of work benefits. When nearly one and a half million have been receiving those benefits for almost a decade. Clearly it is the system that is broken, and the system that must be fixed.
Too often, under the current rules, work doesn’t pay. Many claimants put a lot of effort into finding employment, we mustn’t ignore that. But we equally mustn’t ignore that, for too many, the jump into work simply does not make economic sense. In some cases getting a job means losing more than 90% of your income in tax and lost benefits - 90%.
So is it any surprise that some people choose not to, and end up living their life off their benefits instead? Their skills get rusty; they lose their confidence; their children grow up knowing no other way. And before you know it the whole family is stuck. Relying on a cash payout here, a bit of extra support there, with no real change to the opportunities open to them; no lasting change to their life chances.
Not any more.
Today the government is announcing the most radical overhaul of our welfare system since its inception, driven by a single, overriding principle: the purpose of welfare is to help people into work.
Because work is the surest route out of poverty; it structures lives; unlocks potential; builds confidence; forges friendships; cements communities; provides mental well-being.
Of course, there are people who are unable to work, whether because of reasons relating to their physical or mental health. And we will continue to provide them with the support they need. But, for the vast majority of people, the potential of work outweighs anything that can be achieved through welfare, however well-intentioned.
And that is something on which all political parties can agree. It’s why Iain and I, though we come from different political traditions, are able to stand here today and unveil a new approach we can all rally behind.
At the heart of our reforms is a new Universal Credit, which will bring together a raft of existing benefits into one single, basic household allowance. It will be open to families in work, as well as those out of it. And the amount they receive will depend on their income, with additional elements, like for the number of children, any disabilities within the family, or the cost of their housing.
Under the new rules, people will no longer be penalised for working. Our changes will ensure that work is always worthwhile, even if it is just a few extra hours a week. As people find jobs, or increase their hours, financial support will be withdrawn gradually and clearly.
And across the country households will be better off.
Not just better off because they’ve crossed a notional poverty line. Better off because they will have the chance of a better life for themselves, and a better life for their children. As the saying goes, a hand up, not a hand out.
A fair welfare system must also involve sanctions. We are introducing new, targeted sanctions for the small minority of people who refuse to look for work or take up job offers.
Jobseeker’s Allowance should be just that - an allowance for jobseekers.
Beveridge’s welfare system was always meant to provide help to those who want to help themselves. The same principle holds true today.
Jobcentre Plus advisers themselves have been asking for more tools to both encourage those who are engaging with the system as well as sanction those who aren’t.
We have heard that request, and more detail will be given in the White Paper when it is published later today. But let me say now that the government will only ever support penalties that are fair. If you are unable to work or look for work because of ill health or disability, you will continue to get the support you need.
So, to finish as I began: we judge the success of our welfare system not by the number of people in it, but by the number we help out of it. The number of lives we really change for the better. These reforms will do just that.
Iain will talk more about the background to these announcements, and the impact we expect them to have. He deserves enormous credit for the policies we are putting forward today, having brought his unrivalled expertise to an area of policy that has confounded government after government.
For years his predecessors have failed to fix our welfare system, and yet, in a matter of months, he has set out how we will do just that.