Speech

Welfare to Work conference

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Speech by the Rt Hon Iain Duncan Smith MP, Secretary of State for Work and Pensions.

Introduction

It is a pleasure to be here today.

And it is always a pleasure to be in Scotland.

Glasgow in particular holds a special significance for me - as a place where my political priorities were refocused.

My time visiting and meeting people in Glasgow led me to found the Centre for Social Justice (CSJ)…

… to better understand the drivers of poverty and find effective solutions, solutions forged on the ground in communities like Gallowgate and Easterhouse.

In 2006, the CSJ published a report called “Breakthrough Glasgow”, in which we found that almost a quarter of Glasgow’s total population lived in the most deprived 5% of Scotland’s neighbourhoods - almost half in the most deprived 15%.

So in Glasgow, and across the UK, the challenge we face is how to rebalance the distribution of wealth and work - enabling those previously stuck at the bottom to play a productive role in society.

Root causes

On coming into Office in 2010, the Prime Minister invited me to chair the Social Justice Cabinet Committee.

With 7 different departments taking a joined up approach, this was an opportunity to do more to tackle the root causes of social breakdown - rather than, as has too often been the case, simply treating the symptoms.

Whether it be worklessness and welfare dependency, addiction, educational failure, debt, or family breakdown…

… these are the multiple and overlapping problems that underpin disadvantage - and if we are to make real progress on closing the poverty gap we must to address them.

Social Justice

In March this year, we published the Social Justice strategy, establishing a set of guiding principles.

First, early intervention - preventing problems before they arise, rather than waiting to pick up the pieces.

This means investing in stable families and improving children’s life chances - as we are doing by working with Devolved Authorities to expand the Family Nurse Partnerships scheme and through putting £30 million into relationship support across the UK.

But as well as prevention, the strategy is also about second chances.

That’s why, for example, we’re protecting the role of the money advice service and supporting Britain’s Credit Unions, to help people manage their finances and get clear of the loan sharks.

All this is underpinned by a belief that through the right interventions, delivered in the right way, we can help people turn their own lives around.

Work as the route out

Importantly, the Social Justice strategy shows that where families are facing multiple disadvantages, making a sustainable difference to their lives requires more than money alone.

So whilst this Government has promised to protect the most vulnerable and financial support will always be available to those in need…

… we must also do more to help people towards an independent life beyond the State - moving from dependence to independence.

For those who are able to work, we must promote this as the most sustainable route out of poverty.

For work and the income it brings is transformative - boosting confidence and self-esteem, providing a structure for people and giving them a stake in their community.

If we are serious about helping people find a foothold in society, we must do all we can to support them into work.

Work Programme

Take the example of someone recently released from prison.

Evidence shows that being in employment reduces the risk of re-offending by between a third and a half.

So although those with a criminal record often face difficulties obtaining work, if we are to break the cycle of re-offending it is vital to help them secure a job.

That’s why, working together with the Scottish Government and Prison Service to overcome differences in the prison release process, we have introduced a new provision in the Work Programme to ensure day one access for ex-offenders.

Instead of waiting for individuals to be released, we are now taking Jobseeker’s Allowance claims in prisons…

… ensuring that offenders are prepared for the transition from the prison to the community, and receive immediate support to get them work-ready, find a job and stay there for a sustained period.

What’s more, the Work Programme actually incentivises providers to support the hardest to help…

… pioneering the use of payment by results, with the biggest payouts for successfully keeping individuals in work for 6 months, one year, 18 months, or up to 2 years in some cases.

Because we are paying by results, we will only pay for what works - ensuring that every pound of Government money is only being spent where it has a positive impact on people’s lives.

Local providers

The Work Programme is a huge investment in local providers, giving them complete freedom to deliver support.

In Scotland, almost 70% of the supply chain and 83% of those delivering specialist interventions are made up of voluntary and community organisations.

It comes as no surprise to me that these figures are higher than the UK average.

Scotland’s third sector has long played an invaluable role in helping people to rebuild their lives and achieve their potential.

So as well as representatives from Local Authorities and the public sector, I am pleased to have so many representatives from the voluntary sector here today.

Working together with central Government, Jobcentre Plus and local businesses, I believe we can achieve even more.

Youth unemployment

Nowhere is this a more vital task than in tackling youth unemployment.

In Perth and Kinross, the £30 million Innovation Fund has already created Scotland’s first Social Impact Bond, targeted at supporting disadvantaged young people to turn their lives around.

The idea here is to unlock private finance in the pursuit of the social good, getting investors to do something positive for their community while seeing a return on their investment at the same time.

Equally, through our £1 billion investment in the Youth Contract, we now have hundreds of employers across the UK committing to help young people into work.

This is about working together to support young people in addressing the barriers they face.

We know that a lack of experience often proves a problem.

So we are working with employers to provide an extra 250,000 work experience places over the next three years, lasting up to 8 weeks - and with funding for another month where places are linked to an offer of an apprenticeship or a job.

We know that for businesses, employing a young person comes with both a cost and a risk attached.

That’s why we’re introducing 160,000 new wage incentives, worth up to £2,275 each to encourage employers to take on young people from the Work Programme - targeted in hotspots where youth unemployment is particularly high, including 3 areas in Scotland.

By easing the costs a bit, it becomes much more straightforward to give young people a chance.

All of this is about trying to make sure young people don’t end up stuck on the margins of society - intervening before worklessness becomes entrenched.

Promising signs

There are no quick fixes or easy routes to engaging people in the labour market - particularly in difficult economic times.

But whilst unemployment is still unacceptably high, the latest jobs figures do show some promising signs both in Scotland and across the UK - with the labour market holding up better than many might have expected.

Nationally, we have seen 3 consecutive quarters of positive job growth - 2 consecutive quarters in Scotland - with over one million more people employed in the private sector now than in 2010, over 50,000 of them here in Scotland.

This is more than offsetting job losses in the public sector, much to the credit of the British businesses that will drive our economic recovery.

Overall, there are 700,000 more people in work now than there were in 2010 - 54,000 in Scotland.

Yes, unemployment in Scotland is 0.1% higher than the UK average, but this in part reflects the changes we are making to move people off inactive benefits and into the labour market…

… helping more people to fill the vacancies available now, and ensuring that Scotland, as much as other parts of the UK, has the labour market it needs to support economic growth in the future.

And before anyone suggests that the UK-wide figures mask a much worse picture in Scotland, let me say that Scotland actually has similar employment rate than the UK - 71.4% compared to 71.2%…

… and like the UK, has seen two consecutive months where the claimant count has fallen.

Scotland also has an inactivity rate broadly equivalent to that of the UK - against a backdrop of economic difficulty, we have managed to get the national rate down to its lowest since 1992.

In fact, what has been particularly interesting in recent years is how little different parts of the UK have diverged compared to past recessions.

I do not mean to say that there aren’t differences.

Some areas faced a more difficult situation before the recession, some have since been hit harder since - and we will do whatever it takes to respond to these challenges.

Unemployment remains my top priority - and we are making some progress even in an immensely tough economic climate.

**Universal Credit

We still have more to do…

… getting welfare inactivity down even further as our other reforms take effect.

This is particularly pressing in Scotland where the workless household rate, at 20.3%, is 2.4 percentage points higher than for the UK as a whole.

From next year, we will begin to tackle the biggest disincentive that many people face…

… the fact that the current mess of benefits and tax credits creates a clear perception that work does not pay.

It is this factor which can stop an individual’s journey back to work in its tracks.

Changing this is what the Universal Credit is all about. 

A single, simple payment… withdrawn at a clear and consistent rate when people move into work…

… it will make work pay, at each and every hour - removing the stumbling block in the current system whereby some people lose up to 96 pence of every pound they earn.

Universal Credit is dynamic.

In Scotland alone, around 100,000 people will have a better incentive to increase their hours in work - on average keeping an extra 37 pence per pound they earn.

And UC is progressive.

With 80% of the gains going to the bottom 40% of the income distribution, reforming the system will start to redress the imbalance between the top and bottom of society that has persisted for too long in places like Glasgow.

Implementation

Let me be very clear. Universal Credit is on time and within budget.

The delivery programme is challenging, but we are handling the risks.

There is an investment of £2 billion to get the infrastructure and IT system right - and we have made good progress so far, ready for phased roll-out across the country in October 2013.

Before that, we are running a range of projects to learn valuable lessons about what works and what doesn’t.

This includes 5 projects to trial direct payments to landlords…

… 12 council-led pilots that will test the online claims service, including 3 in Scotland…

… and the Universal Credit Pathfinder which will be launched in Greater Manchester in April 2013.

There is no big bang launch here.

And rightly so, since the safe delivery of Universal Credit is our primary objective.

The staged Agile approach means the transition from current benefits and tax credits is expected to be completed by the end of 2017…

… with scope to continually improve and develop the service along the way.

Conclusion - working together

It is my belief that we need to work together on delivering these changes, both in Scotland and the rest of the UK.

For although Scotland now has its mandate to hold a referendum on independence, while we might spend a lot of time talking about these issues in the media or the corridors of power…

… from day to day, the UK and Scottish Governments will be getting on…

…in partnership… with supporting our most disadvantaged groups.

I believe we’re better off, stronger, and fairer doing so together.

Take the fact that having a single welfare system allows Scotland to absorb spending per person at a level 6% higher than the rest of the UK.

Or the fact that Scotland’s population is ageing faster than the rest of the UK.

In Scotland over a quarter of the population will be over 65 by 2033, and this proportion is rising further, increasing cost pressures in pensions, health and social care. 

The UK as whole does not reach this point until after 2050, a generation later.

So while some want the debate about independence to be about raising welfare provision…

… the reality is that these increased pressures would need to be dealt with.

Together, the UK - with a broader and more sustainable tax base - is in a stronger position to tackle these challenges and to maintain public services in the process.

And just as our welfare union is of considerable benefit to Scotland, by pooling both the resources and risks, we all share in the benefits of a unified UK.

This doesn’t need to be an all or nothing choice - through devolution, I believe Scotland can have the best of both worlds.

So I hope that when the Scottish people come to vote, Scotland will continue to play a central role in shaping Great Britain’s future.

Let welfare reform be a joint ambition - with solidarity between everyone in the UK.

As we take steps to reshape the economy…

… investing in infrastructure, business and regeneration…

… we must accept that we will fail unless we can lock all in society to the benefits of this change…

… so that those now left behind are enabled to play a full part in this future.