Speech

Universal Credit: welfare that works

Speech by the Rt Hon Iain Duncan Smith.

Introduction

Welcome to the Arlington Centre where Broadway provides its key services - projects like this change lives and transform communities long forgotten by others - they prove a better future is possible for people on the margins of society. 

My contract

Several weeks ago I set out my contract with the British people. 

In the clearest possible terms it says:

  • If you are vulnerable and unable to work we will support you.  This is our fundamental responsibility in office. 
  • It says this Government is unashamedly ‘pro-work’.  We believe in work and its wider benefits.  We recognise it is the best route out of poverty, and we should always reward those who seek a job.
  • Thirdly, it was a pledge to deliver fairness for those who fund the system: taxpayers.

So today, based on my contract, this vision and our consultation, I am delighted to publish “Universal Credit: welfare that works”.

The vision: understanding poverty

For me, this programme represents much more than a Ministerial brief or initiative.

My passion for welfare reform, and my desire to fight poverty within Government, has been driven by the stark reality of what I’ve encountered.

As I travelled to many of Britain’s poorest communities I concluded that tackling poverty had to be about much more than handing out money. It was bigger than that.

I could see we were dealing with a part of society that had become detached from the rest of us.

People who suffer high levels of family breakdown, educational failure, personal debt, addiction - and at the heart of all of this is intergenerational worklessness.

Only in understanding this can poverty be defeated. 

A Coalition Government for Social Justice

Let me explain why I believe the Coalition can be different. 

We recognise both the symptoms and the causes of poverty. 

We have Frank Field’s review - let me here pay tribute to Frank’s tireless efforts on poverty throughout his time in Parliament.

We recognise there is no better shield from child poverty than strong and stable families. 

And we know that our poorest children should be inspired and equipped to secure a better future.  And here I also want to thank Nick Clegg for his work championing this issue through Government.

As a result of this work we have announced £7 billion targeted early years support for two year olds, and the pupil premium to help the most disadvantaged school children.  

We will help people out of debt and utilise the brilliance of the voluntary sector to move addicts into recovery.

And, crucially, we will ensure that welfare works. 

Reforming welfare to secure economic growth

To achieve all of this we need fundamental welfare reform.

Some have said recently that it is jobs not reform which is important. But in doing so they miss the point.

Let us take the last 16 years, a period of sustained growth.

63 consecutive quarters, passed from one Government to another.

Around 4 million jobs were created in the UK during this period, and yet some 4.5 million people remained on out of work benefits before the recession had even started.

So inactivity was persistent, despite the unprecedented level of job creation.

That is one of the reasons why around 70% of the net rise in employment under the previous Government was accounted for by workers from abroad.

Businesses had to bring people in from overseas because our welfare system did not encourage people to work.

And there is a deeper tragedy - almost 1.5 million people have been on out of work benefits for nine of the past ten years - during the longest sustained period of economic growth this group of people never worked at all.

So it is not just jobs - something else is wrong.

Our reforms are about reconnecting with that group. 

We want them to be able to seize the opportunities of work as the economy grows - even today there are around 450,000 vacancies in the economy, and I want everyone to have the opportunity and support to fill these roles.

In prosperous times this dependency culture would be unsustainable.  Today, it is a national crisis.

The working-age welfare budget has risen by 40 per cent in real terms during the last decade - the decade of growth.

Therefore, I hope the publication of this White Paper sends an unequivocal message that this Government will not back away from necessary reform. 

Reforms - headlines messages

I will outline the specifics of our White Paper to Parliament later, but this morning I want to draw out some key ways in which it will deliver the change we urgently need.

First, to those who are vulnerable and unable to work, this White Paper proves we remain absolutely committed to supporting you. 

We will continue to provide extra support for those with disabilities, caring responsibilities and children.

Second, for those out of work who are capable of working, our reforms mean it will always pay for you to take a job.   

And by unifying out-of-work benefits, Housing Benefit and Tax Credits into a simplified single Universal Credit, we will end the risk and fear associated with moving in and out of work.

But this is a two way street.  We expect people to play their part too. Under this Government choosing not to work if you can work is no longer an option. 

That is our contract - we will make work pay and support you, through the Work Programme, to find a job, but in return we expect you to cooperate.

That is why we are developing sanctions for those who refuse to play by the rules, as well as targeted work activity for those who need to get used to the habits of work.

Impacts of reform

These reforms will transform lives.

Some 2.5 million households will get higher entitlements as a result of the move to Universal Credit.

We expect to lift 350,000 children and 500,000 working-age adults out of poverty by the standard measure.

This is just our analysis of the static effects of reform.

Analysing the dynamic effects isn’t easy, but we estimate that the reforms could reduce the number of workless households by around 300,000.

And around 700,000 low-earning workers will be able to keep more of their earnings as they increase their hours.

Third, this White Paper delivers a fair deal for the taxpayer.

We expect to reduce administrative costs by more than half a billion pounds a year, and to reduce levels of fraud and error by £1 billion a year. 

And clearly everyone will benefit if we move people off welfare and into work. 

Conclusion

These announcements are an important step towards reform. 

They aren’t driven by a desire to moralise or lecture.

Instead, they begin with recognition that as a political class we have got this wrong for too long. 

Our antiquated welfare system has become a complicated and inflexible mess.  It has been unable to respond to our evolving job market and the changing nature of our workforce.

Society has changed but the benefits system has failed to change with it.

So it is time to bring welfare into the 21st Century.  We want a system which isn’t seen as a doorway to hopelessness and despair but instead as a doorway to real aspiration and achievement.

I don’t say our programme is a panacea.

I can’t say it will change everything.

But I do say it’s a start.

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