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Welfare Reform

With permission, Mr. Deputy Speaker, I wish to make a statement on the Government's Green Paper, ““No one written off: reforming welfare to reward responsibility””. The welfare state is a vital part of our country. We take pride in it. It is how we come together as a nation to support those who are vulnerable and in need of help. But our welfare system has not always kept pace with the changes in our society. In preserving some of the structures inherited from its founders, we have neglected their principles. William Beveridge's contract for welfare had three founding ideas, the first of which was that revolutionary times called for revolution, not patching, and the second was that welfare was about more than just income. He wanted to topple not just want, but the other four giants of disease, ignorance, squalor and idleness too. These became the defining issues for the Attlee Government and inspired that Administration's creation of the welfare state. However, over time, Beveridge's third principle—that the system of social security should not stifle incentive, opportunity and responsibility—was perhaps lost. The purpose of the welfare state was to help people in need today so that they could reduce their need tomorrow. From the 1960s onwards, that principle was eroded. The nadir came in the 1980s, when all conditions were removed from unemployment benefit and unemployment rose to more than 3 million—much higher than it needed to do. In 1997, we inherited an essentially passive welfare state. Since then, we have been turning it into an active one. The Green Paper completes that transformation. It is based on the marriage of two simple ideas: more support and more responsibility—the root of a fair system for claimants and the taxpayer. It aims to meet five main goals. First, the Green Paper aims to end the idea that there is a choice between claiming and working. Instead, from now on, the longer people claim, the more we will expect in return. At three months and six months, claimants will intensify their job search and have to comply with a back-to-work action plan. After a year, they will be transferred to an outside provider, who will be paid by results. Claimants will have to work for their benefits for at least four weeks—longer if the provider requires it. For the 2 per cent. whom we anticipate to be still out of work after two years, we will explore mandatory full-time work programmes and other approaches, such as daily signing. We will give our advisers the power to use full-time work as a sanction at any stage of a claim for those who abuse the system. We will improve treatment for those who have a problem with crack cocaine and opiates, but require them to take up that support. We know that our support works, but we also know that conditionality works. By getting more people to take up the support, we can increase employment and reduce poverty. When we introduced the new deal, we started to end the idea that people could claim benefits indefinitely when work was available. As long-term youth claimant unemployment fell by nearly 80 per cent., we extended that principle to other workers. Consequently, we now have more people in work than ever. Claimant unemployment has been halved, saving £5 billion a year. Nine out of 10 people leave jobseeker's allowance within 12 months of claiming. Work works, and it is only fair that we make sure that a life on benefits is not an option. The second goal is to ensure that no one is written off. In 1979, around 700,000 people were on incapacity benefits. By 1997, the total had risen to 2.5 million and was going up by 50,000 every year. We have reversed that trend, and the number on IB is the lowest that it has been for eight years. Annually, nearly 400,000 fewer people are flowing on to IB compared with 1997. We have created the Pathways to Work programme, which helps people improve their health, adapt to their condition, rebuild their confidence and look for work. We know that that support works, too, and have made it mandatory for all new claimants. We have legislated to abolish IB and replace it with the employment and support allowance. That new benefit treats people as individuals, looking to what people can do, not what they cannot. Today, I am announcing that we will migrate everyone from IB on to ESA between 2010 and 2013, with personalised support for everyone, based on our successful pathways programme. We will review the medical test to ensure that it reflects the latest evidence that work is generally good for people's well-being, and we will reassess all existing claimants to ensure that they are on the right benefit for them. Those who are ready to work will move on to JSA. Those with the greatest needs will get a higher benefit rate—up from £86.35 to £102.10—and can volunteer for Pathways to Work. We will increase funding for our specialist training programmes and for supported employment. Everyone else will get personalised help, based on pathways, to get them back to health and back to work. However, they will be required to take up that help, and look for work when a doctor recommends it. The changes mean that, for the first time, no one will be abandoned to their fate, to get by on benefits. For the vast majority, ESA will be a temporary benefit, not a permanent snare. Our third goal is to transform the rights of disabled people. Disabled people do not want to be told that they cannot work. Instead, they want society to remove the discrimination that makes it harder for them to work. So we will double the Access to Work budget, paying for sign language interpreters, specialised IT or help with mobility. Our aspiration is that everyone who could benefit from access to work should be able to do so. We will also consult on a new right to control. We know that individual budgets work. I want to give disabled people the right to know how much the state is spending on them, and request that that money be given to them as a budget that they control. We want to put disabled people in control, not under the control of others. The fourth goal is to strengthen parental responsibility. We have lifted 600,000 children out of poverty and, following the £1 billion invested in the Budget, we are set to help another 500,000. But we need to strengthen family life, too. So, for the first time, we will allow parents on benefits to keep all their maintenance payments and require both parents to register the birth of their child. Together with our changes to lone parent benefits, we estimate that these welfare reforms will lift 200,000 children out of poverty. Fifthly and finally, we propose to devolve power, so that services can be personalised to the needs of the individual. We want a triple devolution: to our advisers, to our providers and to local communities. Jobcentre Plus is recognised as one of the best back-to-work agencies in the world. Its staff have unrivalled knowledge of their customers and their needs, so we will give our advisers greater flexibility over how much time they spend with each client. We will offer our providers the right to bid for any part of our services that they think they could do better. We will also give local communities the chance to shape how back-to-work services are delivered in their area. Most of all, we will implement all the reforms in the Freud report, the report that inspires our Green Paper. We will release the creative energy of the private, voluntary and public sectors. By paying them out of the benefit savings that they generate, we will free our providers to help even more of our customers back into work. And, as David Freud recommended, we will simplify the bewildering complexity of the benefits system. We propose to abolish income support and move current customers on to JSA when resources allow. The result will be a dual system of working age benefits, with ESA offering the right help for sick and disabled people, and JSA doing the same for those actively seeking work or with caring responsibilities. The conditionality regime would be appropriate to each and would not change for carers or parents of younger children. Today's publication marks the beginning of the consultation process. We want these proposals to be shaped by the opinions of the public and Parliament, and by the expertise of charities, providers and academics. In the past, people were able—in many cases encouraged—to spend a lifetime on benefits. Once they had signed on, the welfare system all too often switched off. There was no expectation that anything could change and precious little support to make that happen. This Green Paper ends all that. It puts us on the road to our ambition of an 80 per cent. employment rate, with 1 million people off incapacity benefit by 2015, the eradication of child poverty by 2020 and equality for disabled people by 2025. The Green Paper will also restore Beveridge's third principle—the principle of incentive, opportunity and responsibility—to where it always should have been: right at the centre of the welfare state. For that reason, the Green Paper will transform the lives of hundreds of thousands of people. I commend it to the House.