30th October 2006
Jim Murphy MP – Minister of State for Employment and Welfare Reform
The Welfare Reform Bill: The right reforms at the right time?
Edinburgh Conference on Welfare Reform
[Check against delivery]
Introduction
For too long, too many people have been written off.
That’s why I’m delighted to be here to talk to you about Welfare Reform.
Over the past decade, there has been the greatest extension of disability civil rights this country has ever seen. From establishing the Disability Rights Task Force in 1997 to the Disability Discrimination Act 2005, we have put in place a secure legal foundation of rights for disabled people. Employers and service providers of all sizes are now – almost without exception – subject to the DDA.
In December this year, the public sector disability equality duty will come into force, establishing a variety of obligations for public authorities to actively promote and support equality of opportunity for disabled people.
But we now need to go further. The crucial next step in empowering disabled people is extending their opportunity to work and play a full role in society. The framework of legal protection against employment discrimination is in place – but the support for the people who have until now been written off has been missing.
That is a frank admission that not enough has been done before. But in the past decade we have come a very long way in employment and welfare in the UK.
Legacy in 1997
It is important to remember that:
- Not so long ago the UK suffered higher child poverty than nearly all other industrialised nations;
- Over a period of 20 years, the proportion of children living in relative poverty had more than doubled and one in three children in Britain was poor;
- By 1997, almost 5.5 million people were on benefits, 3 million more than in 1979; and
Over that same period, the number of people claiming unemployment benefits had risen by 50% –and the numbers claiming lone parent and incapacity benefits had more than tripled.
These appalling statistics paint the picture for the country, but they cannot capture the impact on communities, on families, and on individual lives – the neighbourhoods where unemployment and benefit dependency wasn’t a matter of months, or perhaps even years, but of a whole lifetime; a way of life.
And even today a child born into the most disadvantaged 5% of families is 100 times more likely to have multiple problems at age 15 than a child from a family in the most wealthy half of the population.
Progress since 1997
Of course, there has been real progress.
Since 1997, we have tackled worklessness with a strong economy and by investing in Jobcentre Plus and the New Deal:
- More people are now in work in the UK than ever before, with more than 2.5 million more people in work than in 1997;
- We have the best combination of high employment and low unemployment and inactivity of the world’s major industrialised countries;
- Thanks to our reforms to the tax and benefit system, families with children are on average £1,500 per year better off in real terms, and those in the poorest fifth are £3,400 per year better off than in 1997.
Future Challenges
But just because there are no longer enormous marches for jobs, it doesn’t mean that our job is done.
There remain great causes in British public life including eradicating discrimination, ending child poverty and making all our public services world class.
I want to talk about three specific areas today:
- Welfare Reform, in particular our changes to Incapacity Benefit;
- Globalisation and skills; and
- Shaping our services around the citizen.
Incapacity Benefit Reform
It is inactivity – rather than unemployment – that is the principle employment challenge we now face. In the years up to 1997 the number of people claiming unemployment benefits had risen by 50% – but the numbers claiming lone parent and incapacity benefits had more than tripled.
The reasons for people coming onto Incapacity Benefits have changed dramatically since the benefit was first introduced. It was previously considered a legacy of an industrial heritage. But now:
- People with mental health problems now account for 40% of the IB caseload – up from 27% in 1997; and
- One third of new claimants now report mental and behavioural disorders as their main reason for coming onto the benefit, compared to a fifth back in 1997.
And we know that:
- About three-quarters of Incapacity Benefit customers have been on the benefit for more than two years; and
- After two years on Incapacity Benefit, a person is more likely to retire or die than ever work again.
But society has changed since incapacity benefits were introduced – and in particular attitudes to mental health and learning disabilities. It used to be thought that work would be the worst thing possible for people – whether they had a bad back or a mental health problem. Now we know that there is:
- Strong evidence that work is good for physical and mental health; and that
- Work can be therapeutic and can reverse the adverse health effects of unemployment and the damage it does to people’s self esteem.
But our systems haven’t kept pace with these advances in our understanding. We know that barriers still exist and discrimination still goes on. But without the DDA, disabled people wouldn’t have the right in law to challenge unfair treatment.
I know too that disabled people sometimes do face limitations in the sort of activities and work that they are able to undertake. But that’s why the essence of our Welfare Reform proposals is to focus on capability. To look at what people can do, rather than concentrate on what they can’t.
We intend to provide the support that will help those people that can do so, to work:
- That’s why our Welfare Reform Bill will replace Incapacity Benefit with a new Employment and Support Allowance;
- Turning the current system on its head, we will focus on what steps could help people into work, rather than simply assuming they are incapable of doing so on the basis of a health condition or disability;
- We will match this new work focus with greater support for those people for whom it would not be reasonable to require to take steps towards a return to work, giving them a higher rate of benefit, together with the option of taking up the work-focused support on a purely voluntary basis;
- But for the majority who – with help – can reasonably build their capacity to work, this support will be coupled with the responsibility to take up the help that is available;
- These reforms will be built upon the foundation of our innovative Pathways to Work programme, which provides a holistic approach to tackling the health-related, personal and external barriers people face to returning to work;
- And the new Personal Capability Assessment – reviewed by medical experts and stakeholder groups to ensure that it meets today’s needs – will provide Personal Advisers with work-focused health-related assessments for each claimant, so they can tailor packages of help and support for each individual customer.
Globalisation and Skills
Secondly I want to talk about globalisation.
Too often in the past, the conversation about globalisation is about what it means for nations and businesses rather than what it means for citizens.
Today’s young people are the first generation who can truly be said to be competing in a single global economy. Their competitors in the job market are the citizens of China and India, not just their peers from their community, country or continent.
- Emerging and developing economies have increased their share of world trade by around a third since 1990;
- China is now the sixth largest economy in the world, and is projected to be the third largest within a decade; and
- China and India are producing 4 million graduates a year.
There is little future in low-skill employment. Today our economy has 9 million highly skilled jobs – but by 2020 will need 14 million highly skilled workers. And whereas we now have 3.4 million unskilled jobs, it is estimated that by 2020 we will only need 600,000 unskilled workers. This is another reason why we need to build the confidence and skills of the 2.7 million people currently on Incapacity Benefit.
So we need to look ahead and think now about how we can build the highly skilled workforce we will need. The Leitch review of skills will provide us with a valuable starting point. I believe we must build on the remarkable progress made in tackling unemployment by developing new approaches to help customers enhance their skills – considering how Jobcentre Plus can support people in low-skilled, low-paid work to progress in the workplace.
Making an impact through building skills will mean working effectively with a broader range of partners, at national and local level, to develop the kind of innovative approaches that will make a difference and will deliver the capabilities that employers need.
Skills are also crucial if we are to eradicate child poverty. Employment is the most effective route out of absolute poverty. Skills are a major part of eradicating in-work poverty because enhanced skills are the best path to sustained employment and a career.
All the tools of the Welfare State have to be better directed at helping families with children, including refocusing our employment programmes and the delivery of our future reforms, so that helping parents back into work is fully integrated into their objectives and ways of working.
Making further – greater – progress on tackling child poverty doesn’t just mean children’s lives changed for the better now. It’s the most important step we can take to break the chain of disadvantage that traps the poorest and most socially excluded in our society. That chain of family disadvantage which is passed from generation to generation – where each successive generation is a link in that chain. In recent years we have weakened it. But if we are to eradicate child poverty we need to break the chain of disadvantage.
We simply cannot accept poverty as an intrinsic feature of the social landscape of the UK.
- That’s why tackling child poverty is DWP’s number one priority;
- That’s why we are reviewing the work of the entire Department to assess what more we can do; and
- That’s why we appointed independent child poverty expert Lisa Harker to advise us as we develop our renewed strategy – Lisa’s report will be published very shortly.
Shaping services around the citizen
Thirdly I want to talk about shaping our services around the citizen. I believe we must focus relentlessly on the needs and wishes of our customers.
The private sector has revolutionised the way that it does business as a result of the development of ever more powerful IT systems. It’s become the norm for many of us to book our holidays, do our shopping and our banking online. And these innovations have taken off because they meet our need for convenient access to services. I think it is reasonable to talk about Government for a Google Generation. We know that people are more impatient and – I think rightly – more demanding in the standard of services they expect from us.
There has been real innovation in public services. But an enhanced focus on customer services has been slow to reach the poorest people in our communities. Those who, in fact, depend the most on their interactions with public services.
That’s why I’m delighted to announce today a series of changes that will help Jobcentre Plus to provide a better service to our customers at the first point of contact:
- We’re establishing 0800 numbers for people making new claims to working age benefits – everything from Jobseekers Allowance and Income Support to Incapacity Benefit;
- For the majority of our customers, a single call is now all that will be required to make a new claim;
- So there will no longer be a need to await a return call from Jobcentre Plus, meaning that the system will be quicker and customers will spend less time on the phone. Unsurprisingly our customers tell us that they prefer dealing with a single person and not having to repeat themselves;
- And because the initial telephone process is quicker, customers get to meet a personal advisor sooner for work-related support and advice – which has to be good news in helping them get back into the labour market!
Such changes can make a big difference – our focus on reforming and renewing the welfare state must be matched with a continuing commitment to getting the details right in our relationship with our customers.
Conclusion
As we look ahead, to the impact of our current welfare reforms when they are rolled out in 2008, and beyond – to the future challenges that will shape our evolving welfare system – it might seem that the only constant is change.
But this change is driven by fundamental – and unchanging – values:
- The commitment to offering every individual and every generation the opportunity and support to achieve their potential; and
- The dedication to tearing down the remaining barriers that still hold people back.