Promising news on welfare spending as major reforms set for go-ahead

On Friday I mentioned how the old Liberal Democrat policy of integrating and simplifying the tax and benefits systems is getting a revival courtesy of Iain Duncan Smith. The former Conservative leader turned Work and Pensions Secretary has been arguing hard for the funds to introduce a simplified universal benefit that also is more generous than current rules to people in low-paid jobs. This would mean that people who currently find that taking a job makes them worse off, or only marginally better off, than being unemployed thanks to loss of benefits would lose less of their benefits and so not be trapped in a system that encourages them to stay out of work.

One of the risks of simplification is that, particularly in the current budgetary environment, it can be code for cuts. However, the BBC now reports:

Chancellor George Osborne has confirmed there will be a major overhaul of the benefits system with a new universal credit introduced…

The BBC’s political correspondent Robin Brant said the plans were probably the “most significant reform” of the coalition so far.

Some savings are already being made through restrictions in payments such housing benefit. But the overall cost to the government is initially expected to rise after the changes are brought in as people return to work and retain some financial assistance.

There are no specific details on how long it will take for the savings to be realised but it is likely to be 10-15 years, our correspondent added.

Iain Duncan SmithIf that turns out to be correct – and the savings expected are long term ones from people finding work and moving up the job ladder rather than from short term cash cuts – this could not only be one of the government’s major achievements but also one that Liberal Democrats are happy to have contributed to, courtesy of Nick Clegg having been a key ally of Iain Duncan Smith in the internal debates over the policy. Certainly Steve Webb’s backing for the policies is a promising sign.

There may yet be devil in the detail and the overall state of the economy and the job market is crucial to the plans working. Views of IDS’s ability to manage detail well vary greatly, even amongst Conservatives and civil servants let alone political opponents. Some of the other changes introduced by IDS are also unlikely to grow in popularity with Liberal Democrats (particularly the changes to housing benefits).

However, the combination of universal benefit and the restoration of the link between pensions and earnings may yet rather surprisingly turn welfare into an area of strength rather than embarrassment for Liberal Democrats talking about what has been achieved by the coalition government.

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24 Comments

  • Maybe I’ve missed something but hasn’t there already been some £14 Billion in welfare cuts announced ?
    This is definitely one of the things that can’t be judged on pre-conference spin from Osborne and must be seen in detail before any claims about it can be verified. Given the scale of what may be proposed and the effect it could have on a massive section of the poorest and most vulnerable in society, I’m going to stay skeptical where Osborne is involved.

    From what I gather they are going to go big on this reform at the Conference simply to give Cameron something else to talk about rather than just the Cuts.
    But if this ‘reform’ is code for yet more welfare cuts (and just because Ian Duncan Smith once saw a poor sink estate doesn’t make him Mother Theresa) then this will be yet more policy posturing that will backfire calamitously in the months and years to come.

    Education, the NHS and now the entire Welfare System are having tanks moved onto their lawns that aren’t being driven Liberal Democrat MPs but Conservative idealogues.
    Nick Clegg has better find out exactly what is going on and have an informed realistic opinion on these areas soon, instead of blindly trusting his friend David Cameron. Because if reform of any of those three areas, where reform is being steamrollered through, are ill thought out sops to the right to mask cutting to the bone, then Liberal Democrats will have to deal with the catastrophic fallout.

    It is long past the the time Nick should have snapped out of the isolated Cameroonian bubble where he chants “things will all turn out for the best in the long run if every Liberal Democrat learned to trust Dave like I do.”

  • I am glad we have Steve Webb here: he is both reliable and sensible/clever enough to work well with civil servants on this sort of thing.

  • Anthony Aloysius St 3rd Oct '10 - 11:10am

    An article on the BBC website says this:
    “The Department for Work and Pensions and Treasury have worked hard to make sure that there will be no losers as a result of the migration plan,” said a statement.
    http://www.bbc.co.uk/news/uk-politics-11459055

    The “devil” may not be so much in the detail of this reform as in changes to other benefits that will be required to pay for it.

    The Press Association says:
    The agreement is also thought to be contingent on other reductions in welfare payments, with reports that child benefit could stop at the age of 16 rather than 18 to save £2 billion a year.
    http://www.google.com/hostednews/ukpress/article/ALeqM5jdS62hbZMSlLfkhs38fyx61oUKJQ

  • Philip Rolle 3rd Oct '10 - 11:45am

    If other benefits are to be cut to pay for this, they must be the ones received by middle earners.

    Child benefit is the number one target. Rightly so.

  • Anthony Aloysius St 3rd Oct '10 - 12:33pm

    Philip

    I agree, but we’ve already seen that Osborne’s instinct is against means-testing or taxing benefits. In the Budget he opted instead for a freeze of child benefit, and if the reports mentioned by the Press Association are accurate the further cut now under consideration would be another across-the-board one, not one targeted at middle (let alone high) earners.

  • @bob could you expand on the alleged £14bn of welfare cuts ?

  • My mistake. It’s not £14 Billion. It’s £15 Billion.

    “(Reuters) – Chancellor George Osborne plans an extra 4 billion pounds of welfare cuts on top of an 11 billion pound reduction to the annual bill already planned, the BBC reported on Thursday.”

    http://uk.reuters.com/article/idUKTRE6883Q320100909

  • Anthony Aloysius St 3rd Oct '10 - 1:49pm

    Bob

    Yes, but that (alleged) extra £4 billion is what Iain Duncan Smith was reported to be resisting, presumably with some success judging by these reports, though that aspect isn’t entirely clear.

  • ‘Sophie Corlett, of Britain’s largest mental health charity, Mind, said: “You don’t have to cut mental health services to put people’s mental health at risk. Reducing benefits and pushing people into poverty, job losses, and less investment in community services are just some of the things that can have serious repercussions for our well-being. The recession has seen a greater need for the Government to look after the nation’s mental health.”(Independent 3 Oct. 10).’

    Can LibDems please make sure that any changes to the benefit system is really fair and doesn’t disadvantage the vulnerable especially the mentally ill? Reading other blogs where mentally ill people are saying how suicidal with worry they are of what is going to happen to them makes me really sad that in a so called ‘first world country’ we can’t take care of our disadvantaged people. Even one death as a result of benefit changes will be one too many.

  • What they are saying is that work will pay and nobody IN WORK will lose out.. However at the conference in an interview with the BBC the question of whether those OUT of work would be worse off was in true politician speak only answered with that people In work will not lose. The politician would not answer the question when pressed. See BBC news on Iplayer. I am still bemused on where this ‘work’ is by the way.
    What do you think this means? The most vulnerable will be in dire poverty, the people least able to defend themselves.
    They are also saying that everything will be on one database. Considering the problems with other government computer systems I think we should be even more worried about the mistakes that will occur, mistakes that impact on lives not just data. What sort of ‘fair society’ is this? Are Lib Dems going to support measures that will put people into poverty?

  • Mark Pack
    Why a picture of Duncan Smith and not Clegg (key ally)? Transition complete?

  • John Fraser 3rd Oct '10 - 11:21pm

    @Mark,

    can you even hazard a guess as to how housing benefit can be integrated into a single benafit without in some way undermining itse purpose. I am very much in favour of getting rid of the benafits trap, buit i am starting to sense a hint that this will be a way of shifting money from the unemployed poor to the employed poor . We need to wait and see … but I hope your feeling like mine is that this would be wholly unnacceptable ???

  • I would not be difficult to integrate housing benefit into a single credit – it would just vary by place, just as benefits vary by household size. Apart from simplicity, I can’t honesty see a big advantage from doing so.

  • Anthony Aloysius St 4th Oct '10 - 8:26am

    Surely this has to mean something more than just making a single payment to cover things that are currently paid separately?

  • I am fully behind any measures to streamline/simplify the benefits system and at first glance the the proposals so far announced seem to be on the right track however, given the Tory history and a certain MR G Osbourne we should study the details very carefully before we hail the reforms as progressive, anything that impacts on the disabled, that section of our society that cannot work and have no possibility of working (no matter what ATOS says) should be scrutinized with a fine tooth comb. already there are many disabled that are fearful for the future because of ATOS, (but that’s a subject for a different time)

  • How Lib Dems see the next 5 years: “We saved the Country! Aren’t we grown up”

    How the Country will see them: “You took our Housing benefit, child benefit, capped our welfare, raised our VAT. Why did we vote for you again?”

  • John Fraser 4th Oct '10 - 7:01pm

    @Mark
    What I don’t see is a reason in principle to say that housing benefit must be administered via a separate system.

    This was your response yesterday to my pure ‘hunch’ that the welfare reforms would be used as a cloak for slashing the housing benefits of the unemployed. We hear today that George Osbourne has announce that NO family will get more than £26K in total benefits . This will effect 50,000 of the larger families and probibly > 250,000 people many of them children. It will either mean that large families are herded into jobless ghettos away from their roots where accomodation is cheap, or could well send many onto the streets and their children into expensive care. As I said yesterday someone in the Tory party will use this for their own nasty bigoted ends. Taking from the poor to give to the poor is not social justice in anyones books. (Even Orange Ones)

    Could you now either tell me what part of Osbornes speech you think i have misunderstood or agree with me that what I admit may have seemed like promising news on welfare, quickly seems to be dying a nasty death. what i hope you do not try to say is that even when money is tight treating the unemployed in this way can be justified. I know you well enough to know you would not have said that last year, and am starting to worry that one by one people in this party are trying to justify the unacceptable in a ‘stepford’ like way . (I’m sure this wont apply to you).

  • What all this shows is that we are not an enlightened society aiming for fairness and equality but that we are still entrenched in a bitter class divide.
    When asked if children will suffer all the Tories come back with is that it is the parents’ responsibility, therefore they know children will suffer but do not care. The way that ‘The Poor’ are talked about now is nothing but disgusting, as if they are a diferent breed. I would still like an explanation of where all this housing in cheaper areas is coming from. Nobody seems able to answer that one. Tent cities?
    When money is taken from people who now expect to have does anyone think that they will sit back? This is not the 30’s or the 80’s. Start fitting grills to your windows and doors as crime is going to rise but do not expect police support as they are being cut as well and will be used to protect the rich. If people become desperate they will do desperate things, would not we all?

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