Chapter 2 Problems with the current system
Summary
Our welfare system has failed to keep up with the pace of change in the economy and society. Successive governments have made piecemeal reforms without rationalising the overall landscape.
There are two key problems.
1. Work incentives for some groups are poor:
- interactions between benefits and Tax Credits make the transition to work risky and uncertain;
- the financial incentives to enter work at less than 16 hours are relatively low: this works against the successes of the strong conditionality regime; and
- the rate at which benefits and Tax Credits are withdrawn as earnings increase means that some people see no more than a few pence for every extra £1 earned – resulting in the perception that work does not pay.
2. The system is too complex:
- for claimants – arising from the interaction between different benefits and Tax Credits and layers of previous reforms, with many different benefits addressing the same underlying issue and entitlement to benefit paid by one agency affecting the benefit payable by another; and
- to administer – where people may need to provide the same information to different agencies, often through paper-based transactions.
As a result we have rising costs of state support – including waste through unproductive administration, error and fraud – accompanied by high rates of welfare dependency and poverty.
1. The benefits system has evolved with good intentions but with flawed results. Successive governments have tinkered with bits of the system but have failed substantially to address:
- rising costs of state support;
- high rates of welfare dependency and poverty; and
- a structure and set of rules that can drive negative rather than positive behaviours.
2. The situation stems from two key underlying problems:
- work incentives can be poor; and
- the system is too complex.
Rising costs of state support
3. The costs of maintaining a failing system are spiralling out of control; we cannot continue spending at such a rate on welfare that all too often has a negative rather than a positive impact. In the last decade, spending on working-age benefits and Tax Credits rose from £63 billion in 1996/97 to £87 billion in 2009/10 (in real terms, 2010/11 prices). [4]
4. Multiple agencies use valuable resources to gather and manage largely the same information in very similar ways. The Department for Work and Pensions and its agencies spend around £2 billion a year to administer and pay working-age benefits, Local Authorities spend a further £1 billion to administer Housing Benefit and Council Tax Benefit and HM Revenue & Customs spends more than £500 million a year.
5. Overpayments hit the poorest hardest, while error and fraud is estimated to cost the taxpayer around £5.2 billion a year: £2.1 billion in Tax Credits (around 8.9 per cent of entitlement in 2008/09) [5]and £3.1 billion in Department for Work and Pensions benefits (around 2.1 per cent in 2009/10).[6] Underpayments are also a problem, leaving customers without entitlements estimated at £1.3 billion a year in benefits and £260 million a year in Tax Credits.[7]
6. As we noted in chapter 1, the cost of welfare is rising at a time when we can least afford it. The Budget announced a number of changes to existing benefits to curb rises in expenditure and to make the system fairer. Other countries are similarly considering their social security spending as public finances deteriorate. For example, the Irish government has reduced expenditure on social insurance and social assistance schemes through percentage reductions in benefit payments and tightening entitlement criteria for certain benefits. In Iceland, austerity measures include freezing welfare benefits for two years. In the UK we are considering further targeted reforms as part of the Spending Review.
High rates of welfare dependency and poverty
7. Welfare dependency has become a significant and growing problem in Britain, with huge social and economic cost for both claimants and wider society. The welfare state is now a vast, sprawling bureaucracy that can act to entrench, rather than solve, the problems of poverty and social exclusion.
8. 12 million working-age households receive benefits and Tax Credits costing more than £85 billion a year.[8]
- More than one in four working-age adults in the UK do not work and 2.6 million people have spent at least half of the last 10 years on some form of out-of-work benefit.[9]
- Around a fifth of families with children are in poverty at any one time, and around two-fifths experience poverty at some time in a three year period. [10]
- 35 per cent of families remain in poverty when a parent enters work [11] yet 2.4 million households now receive Working Tax Credit. [12]
9. The welfare system has failed to tackle intergenerational disadvantage and poverty. For example, a higher proportion of children grow up in a workless household in the UK than in almost any other EU country [13] and the risk of poverty is higher for those who are poor as children or teenagers. [14]
Question 1
What steps should the Government consider to reduce the cost of the welfare system and reduce welfare dependency and poverty? (Leave a formal response to this question)
Failure of the current system to generate positive behavioural effects
10. The current benefits system gives little consideration to the behaviours it generates. Complexity and poor financial incentives to work are a key factor in trapping people in worklessness. This is strongly linked with poverty and reduced well-being, poorer physical and mental health and an increased likelihood of becoming involved in the Criminal Justice System. Previous changes have failed to address the impact of benefits on these issues. Where parents have multiple disadvantages (such as low income, poor health, no qualifications), their children are also likely to experience disadvantage themselves.[15]
Work incentives can be poor
11. The current benefits and Tax Credits system influences financial work incentives through:
- earnings disregards – the amount people can earn without it affecting their benefit;
- additional payments for people working at least 16 or 30 hours through Tax Credits; and
- tapered withdrawal – the rate at which earnings in excess of a disregard are deducted from benefit.
12. This system currently leaves some groups facing poor work incentives. These include lone parents who work less than 16 hours a week and young people for whom Working Tax Credit is not available.
13. People working fewer than 16 hours a week can continue to be eligible for out-of-work benefits but, for many claimants, there is little gain as every penny of earnings over a small disregard is lost. It is not surprising, therefore, that very few people on these benefits are doing any work at all. [16] [17]
14. Working Tax Credit provides support for people on low wages, but an individual or couple must satisfy the minimum-hours rules in order to qualify. The upshot is a system that can trap people into certain hours of work: they lose disproportionately if they work a few hours less and gain little by working more.
15. The introduction of Tax Credits improved work incentives for some groups but the picture is still patchy. The Institute for Fiscal Studies [18] has long pointed to the problems with work incentives in the current system while evidence from the Citizens Advice service shows the negative impact the benefits system has on lone parents. [19]
16. It is estimated that in total, more than 600,000 people could face a Participation Tax Rate[20] [21] in excess of 90 per cent – that is more than 90 per cent of their gross earnings are lost through tax and withdrawn benefits. This measure does not take account of in-work costs such as travel, which can easily wipe out a meagre financial gain.
17. Table 1 below shows the number of people facing Marginal Deduction Rates [22] of different degrees of severity – it shows for instance that 130,000 people face a Marginal Deduction Rate over 90 per cent who would gain 10p or less from a £1 increase in their pay because of the amounts lost through tax and withdrawal of benefits and Tax Credits.
Table 1 [23]
| Marginal Deduction Rates | 2011-12 |
|---|---|
| Over 90 per cent | 130,000 |
| Over 80 per cent | 330,000 |
| Over 70 per cent | 1,710,000 |
| Over 60 per cent | 1,935,000 |
The Marginal Deduction Rate figures shown are for working heads of families in receipt of income-related benefits or Tax Credits where at least one person works 16 hours or more a week, and the head of the family is not receiving pensioner or disability premiums.
18. Figure 1 shows the complex way that benefits and Tax Credits interact with earnings to produce an overall household income. The way that benefits and tax credits are withdrawn as income rises combines with increased income tax and NI contributions to produce high Marginal Deduction Rates in some cases. In this example, based on current benefit and tax rates, a couple with a single earner and two children sees a Marginal Deduction Rate of 95.5 per cent [24] on earnings between £126 and £218. This means that someone at the National Minimum Wage would be less than £7 per week better off if they worked 16 extra hours and earned an extra £92 (an effective wage rate of 44p per hour). A system that produces this result cannot be right.
19. Leaving the security of the benefits system is made harder by uncertainty about how to get benefits reinstated quickly if the job does not work out. Distinct in-work benefits have failed to convince some people to make the transition to work. People often worry about the loss of Housing Benefit when they are thinking of returning to work, or are concerned that their Working Tax Credit may not be accurate or paid quickly enough.[25]
20. People planning a move into work have understandable concerns about how they will support their families during the transition. They ask themselves: “Will the in-work benefits kick in quickly enough to fill the gap before my pay arrives?” and “How long will it take to get out-of-work benefits again if the job does not work out?”.
21. The complexity of the system means that these legitimate questions can be difficult to answer. The fear and uncertainty that people experience when thinking about returning to work is real and understandable. For many, the world of work is an unknown that raises feelings of apprehension. Underpinning their fears is the perception that the rewards from working are small, leaving people feeling that they are being punished for working while their neighbours are rewarded for doing nothing.
22. As a result, working legitimately is not a rational choice for many poor people to make. Fraud is always wrong, but we must recognise that the benefits system is making matters worse by pushing valuable work, and the aspiration that this can engender, underground. [26]
Box 1: Case study – weak work incentives in the current system
Ms A, a lone parent with three school-age children, earns £7.50 an hour as an office administrator. She is working 23 hours a week, which gives her a net weekly income (including benefits and Tax Credits) of £345 after paying rent and Council Tax. She has been offered the opportunity to work for 34 hours a week. However, this extra effort would only give her about £10 more, so she has very little incentive to take on the extra work.
Question 2
Which aspects of the current benefits and Tax Credits system in particular lead to the widely held view that work does not pay for benefit recipients? (Leave a formal response to this question)
The system is too complex
23. The complexity of the system is also a barrier in itself. Successive attempts to adapt the benefits system to meet immediate priorities have resulted in layer upon layer of ill-fitting changes, often with long periods of transitional protection, adding steadily to the complexity.
24. There are three basic income-maintenance benefits for people who are out of work: Jobseeker’s Allowance, Employment and Support Allowance (replacing Incapacity Benefit) and Income Support, all paid by the Department for Work and Pensions and often providing the same level of financial support. These benefits combine with Housing Benefit, Council Tax Benefit, Child Tax Credit and – for people moving into work – Working Tax Credit to create an elaborate and confusing tangle of support. Added to this are contributory and universal benefits which create further benefit interactions.
25. This complexity is inefficient, with customers having to go through multiple application processes with different thresholds, rules and payment periods. It also increases the risk of error, creates opportunities for fraud and puts decisions on benefit expenditure beyond effective democratic scrutiny. [27]
26. The overlaps in what people can receive are significant. People can get support from different benefits and different benefits support the same needs. A lone parent with a young child, for example, might be receiving Income Support, Child Benefit, Child Tax Credit, Housing Benefit, Council Tax Benefit and a series of other ‘passported’ benefits, each with their own eligibility criteria and rules.
27. Many people have to deal with more than one agency. Nearly half of the six million people getting benefits from the Department for Work and Pensions also get Housing Benefit from a Local Authority. Around 1.6 million people receive a Department for Work and Pensions benefit and some Tax Credits from HM Revenue & Customs. About a third of Housing Benefit claimants also receive Tax Credits and have to deal with both HM Revenue & Customs and their Local Authority. This includes virtually all families with children on Housing Benefit.
28. Research shows that this complexity makes it difficult for people to know what benefits and Tax Credits they can get. Sometimes people are overpaid Tax Credits and have to return money later. Complexity undermines trust in the system and stops customers focusing on getting back to work. [28]People may fail to take up their entitlements. The transition between benefits and work can also cause severe financial hardship and emotional stress. [29]People from ethnic minority groups are more likely to have English as their second language and so may have particular difficulty with benefit complexity.[30]
Box 2: Case study – transitions between benefits
Mr B is claiming Jobseeker’s Allowance. After suffering an accident, he loses entitlement to Jobseeker’s Allowance because his work capability is limited. He needs to claim the Employment and Support Allowance to continue to receive financial support. Any delay in making this claim could mean that he loses money and he could also lose support for his rent and Council Tax. It can take Jobcentre Plus a week or two to sort out Mr B’s Employment and Support Allowance claim, during which time he may need to claim a Social Fund Crisis Loan to pay for food and other living expenses. After three months, Mr B has recovered enough to start looking for work again. His Employment and Support Allowance then ends and he has to claim Jobseeker’s Allowance again.
Question 3
To what extent is the complexity of the system deterring some people from moving into work? (Leave a formal response to this question)
Complexity in delivery
“The Department for Work and Pensions issues a total of 14 manuals, with a total of 8,690 pages, to its decision makers to help them to apply Department for Work and Pensions benefit rules correctly. A separate set of four volumes totalling over 1,200 pages covers Housing and Council Tax Benefits, which are primarily the responsibility of local authorities. The Tax Credits manual used by HM Revenue & Customs is a further 260 pages, even though it omits details for many relevant tax concepts which are found in other tax manuals. In addition to these encyclopaedic works is a cornucopia of circulars, news releases and guidance notes issued to professionals and claimants. The underlying legal statutes and statutory instruments make up a vast mass of further material.” (from David Martin, “Benefit Simplification: How, and why, it must be done”[31]).
29. Given the range of benefits and agencies, it is hardly surprising that delivery is also fragmented and complex, requiring customers to make multiple contacts with different organisations. Applying for, varying or leaving benefits still requires too much paperwork from too many different government agencies and too much unproductive time dealing with officials either face-to-face or on the phone.
30. Customers may be required to communicate changes of circumstance separately to Jobcentre Plus, the Pension, Disability and Carers Service, the Local Authority and HM Revenue & Customs so that adjustments can be made to payments they receive. In many circumstances, the same information is requested several times over. This increases the number of unnecessary customer contacts, at a cost to both the customer and the taxpayer, and creates potential for error and fraud.
31. When people do move into work, delays in payment can occur as claims stop and start and entitlement is reassessed. This can affect crucial support, including in-work Housing Benefit and Council Tax Benefit. A significant number of people each year transfer between Jobseeker’s Allowance and incapacity benefits alone, even though the claim is with the same agency.
32. Delays in awarding or reassessing entitlement cause negative experiences of the general service.[32] [33]The resulting overpayments (and subsequent repayments) can affect those least able to cope with fluctuations in their relatively low levels of household income which can create stress and mistrust of the system.
Question 4
To what extent is structural reform needed to deliver customer service improvements, drive down administration costs and cut the levels of error, overpayments and fraud? (Leave a formal response to this question)
Conclusion
33. The Government has strong ambitions for the benefit system. The current problems and experience from previous reforms suggest that structural reform of the benefits and Tax Credits system as a whole may be needed to address the key problems of work incentives and complexity. In the next chapter we look at how we might do this and outline a set of principles to guide reform. In addition, there are complex interactions with other forms of welfare support for basic needs (for example, the financing of affordable housing provision and sub-market rents) and different options for delivery of a reformed system. Chapters 4 and 5 explore these.
This consultation is now closed.
It is unfair for someone on weekly/fortnightly Benefits to have them stop the moment they start work. Benefits should continue until the first wage is paid. Most jobs are paid monthly and so most people starting work are without an income for a few weeks at a time when as well as food and household costs they may have to be paying out for travel/childcare. And as if that wasn’t enough they may have to wait for 2 months payslips before any housing benefit calculation can be worked out. This can result in rent arears. We should be supporting people to return to work not putting them into debt for the first few months.
If the starting rate of tax was moved so that people on minimum/low wages didn’t have to pay any tax then people returning to work may be more enclined to take a job. Most tax payers would rather a low earner didn’t pay any income tax than being cought in the working doesen’t pay trap dependent on state benefits.
I work with single parents who get paid 3 different income benefits. They are paid benefits on different days totaling 10 seperate payments in a month! Could you budget for your household on this sort of income? I support the single payment.
in house reforms must be carried first before any attempt is made to reform the actual benefit system. Also to make the reforms fit the situations that many people on benefit find themselves,claiments must be closely involve from the begining.
Minimum wage needs to be meaningfully increased to £10ph so that work actualy does pay. Work needs to be redefined, there are a lot of people receiving high wages paid by the tax payer whome are not productive in their jobs, some very destructive, giving their opinions about poverty when they dont even know.
The whole country needs an overhall, we can start with an effort by the Gov/Media to erradicate our abomnible institutional class system which is taught in our colleges.
I agree that marrage should be rewarded financialy- but just because children may be raised in socalled workless households because of an absent parent or disability does not mean they dont have ethics..I see a lot of unhappy people wanting to blame it all on usualy the most vunrable people.
We have to stop bullying, and tax should be drasticly lowered its the % that makes it fair, the more you earn the more you pay, whats 10% of £250million? Its a lot, that would encourage the rich to bring their interests home, it would also encourage them to give more to charity for the unfortunates.
The Govenment would not lose out.
Also the current economical system is uneconomical..it is based on the more transanctions- the more generated revenue dah. Cut out the middle men and let the poor feed themselves.
Cutting Costs
State support costs will rise as the population is growing, however in theory state income should rise form taxes paid by more people. This isn’t happening because more and more people are out of work so in essence the outflow of pensions will be greater than the inflow of income taxes unless wsomething changes.
In benefit administration information is duplicated for every benefit. If these benefits are linked would it not be wise to have some method of gathering the required data from a central database? This would reduce errors and speed up processing times and the amount of repetition required.
Tax Credits
Separating money required to support adults from children was good however one part of the Tax Credit system doesn’t work. They have an odd “one off payment” system. Whenever a change is made they make a single payment which is then deducted from your regular payments over the year. Most people on benefits are very poor at budgeting and will spend this immediately; they then need to survive on less than they need. They are expected to do something beyond many people’s capability… save the one off payment and release it slowly throughout the year. I, for example, received 3 payments last week despite knowing my payments should not change and now my regular payments are £30 lower than they should be!
CTC should be paid for the first 2 children, this replicates the family unit of 2 parents. In reality it also doesn’t take twice as much money to feed and clothe twice as many children with hand-down clothing and bulk shopping. It would prevent too rapid a population growth if people stuck to it as well (I’ve got 1 and another on the way!) The current incentive is the more children you have the more money you get.
Work Incentives
I support earning disregards and a tapering as it supports those going back into work. I don’t support extra incentives for those working 16/30 hours as they should already receive extra incentives by working more hours = earning more money! It creates such a large jump in earnings people see it isn’t worth taking a job for less than 16/30 hours a week. This says to those under 25 especially “if you can’t get yourself a full time job, don’t bother trying because we won’t help”. Looking at the charts and from my own experience you are little better off working 40 hours to working 30 or 29 to working 16 hours.
As most of those on long term benefits are only likely to receive minimum wage, even with the proposed changes someone returning to work may be between 50p and £2 per hour better off. For those with an inbuilt work ethic who understand working improves your life this is acceptable but for those who don’t have this upbringing they only see the physical benefit through what cash is in their pocket and what they can buy.
Those who grow up in households fully dependant on benefits and with no work ethic cannot possibly be expected to go against this once they are adults. As they grow up they (generally) do not travel or experience different lives, watch mum/dad get money for doing nothing and most of all as children they have little so they will be content with little when they are adults. They cannot be expected to know what they’re missing if they’ve never had it.
Finally, more emphasis should be put on showing those who can the benefits of returning to work, not the money but all other aspects.
In theory, I would love to obtain a job of more than 30 hours a week. In reality, without the ‘relevent’ skills, qualifications and experience that precisely matches the increasingly rigid job and person specifications for steady full-time work (let alone part-time work), I don’t stand a snowball’s chance in hell. This human resources driven ‘closed shop’ mentality of employers prevents me from getting anywhere near such an opportunity to better myself.
Also, as a single male living on my own, the benefit system seems to hate people like me for accepting anything less than a steady full-time job of 30 hours a week or more.
So I’m stuck between a rock and a hard place on JSA until this stupid catch 22 situation with the benefit system is sorted.
Absolutely. I am in exactly the same position as you and my own experience mirrors yours 100%.
We had skillcentres up to the early 1980’s for training into trades, we could do with similar places now, attitude in the workplace needs to change, if you train for a particular trade and you are around middle age you have no chance if you are to join apprentice trained staff, and they are not all they make themselves out to be, skillcentres disappeared because of the conservative tradition of cut! cut! cut! they will not invest a penny into anything that would positively get people back into work, if they could slash benefits without any repercussions it would happen now, conservatives dont really need the recession as an excuse to put public sector on the dole, it would have happened anyway.
I am one of the millions of unemployed who’s also of the unemployable in this modern age. I didn’t choose to be this way, all the employers that I continue to ask for a job to make a living for myself keep turning me down for not being ‘relevently’ experienced, skilled and qualified enough for them have continuously forced this ‘choice’ upon me. They moan about the idle unemployed living on their taxes through benefits, about nobody around their business meeting up with their increasingly extensive and obscure ‘relevent’ skills, qualifications and experience requirements. Well, you want us to earn a living instead of living on benefits, then get hold of us ‘idle’ unemployed & train us up from the ground up & equip us to do the jobs you want doing. It’ll take a while, cost you a fair bit up front, but it’ll be better for the both of us in the long term as your profits rise from the money you’re earning from us working hard for you and us having the means to contribute to the economy instead of having to take from it for our survival. Then those that can work and should work really can work and the British economy can flourish, which’ll be ultimately good for your profits. Win Win!
I have varied experience of people who are unemployed, I have been unemployed, I am related to unemployed, I have worked as a works manager setting on unemployed, the street I live in seems to have more than its fair share of unemployed, I have been unemployed in the past, three times made redundant and once through ill health, the first thing that hits you is the claim, then the feeling of being lost, what am I to do next? I needed help and never got it, I saw my unemployment as an opportunity to get some extra training, no chance! I had not been out of work long enough!
after a period you do get into a rut that you either cannot or do not want to get out of, I did eventually get work again but this was down to still having an ounce of motivation, there was no help at that time to find any work or education from the Jobcentre, when I got finished through health problems, this is when I really did need help, my problem was industry related and I needed to retrain into a different area, I managed to enrol on a course, but had to wait three months! again, I had not been out of work long enough, after waiting this period I managed to get on the course, complete it and got work in this field even though it was a starting pay of minimum wage, (at that time approx £3.60 p/h) at this time I started coming under a lot of peer pressure because of the pay rate and also why would I go and get a job when I could have stayed unemployed? Needless to say I persevered.
This is one of the areas I believe is where the system needs reform, to help people when they are still “work ready” to try and assist them in avoiding the slippery slope, why not let newly unemployed take education or retraining immediately (has it changed since I was last unemployed).
I also have relatives who are unemployed, one close relative, after what should roughly be around forty five years of working life is nearer to a fragmented ten years, I see other relatives seemingly trying to get on to incapacity benefits through various “illnesses” while I also see another relative who has worked, had an accident, is wheelchair bound for the rest of their life and still makes an effort to go to college and apply for work but also struggles with finances, because I believe because he does not know the system.
I became works manager at a company and because of increased workload we decided to double up on staff, starting pay was minimum wage, this was because we were looking for people with no…[truncated by the system]
Iam a married woman who has worked since my only child was six months old. My daughter will be 32 in a few days time. My husband and myself have both worked since we left school at fifteen, we are now in our late fifties. Neither of us have degrees, and on the very rare ocasion we have claimed the dole (as it was called in our days) we treated it as a very temporary measure. For most of our working lives we have supported ourselves and our daughter, until she bacame old enough to support herself. Both my husband and myself have been manual workers, working long hours for very little reward, and in order for me to work and bring in more money for us as a family, my husband would look after the child whilst I went out to work in the evenings in a care home. Would have loved the chance to take a degree….could never afford it…no help because we both worked. Single parents in my younger days were signing up for degree courses for a fiver. Our reward for working hard all our lives is an increase in the years we have to work until we can claim a state pension. In our younger days we knew we would never be high earners, so planned a family with that in mind. We didn’t have loads of children, and expect other people to keep them. We relocated from Wales in the late 70’s to look for work, in fact it was when Norman Tebbit told everyone out of work to get on their bikes and look for work. During the late 70’s and 80’s the benifits were just not around. Today, the benifits people receive can pay for hoildays abroad, and designer clothing. The whole of the benifit system in this country needs a serious shake up. The idea of the welfare state is that you pay into it and take out of it only when necessary. Too many people today are taking out of the system without having contributed too it. Our daughter, like us has always been encouraged to work, and although she hasn’t always been able to get work in her own feild, she has always worked. I cannot understand what these stay at home people do all day…..I would be bored out of my senses. Of course we will always have people that are too ill to work, and no one minds supporting these paople. The axe will will continue to fall under this new government, and just where it will fall no one quite knows yet, but my feelings are that fairness should be observed accross all areas for the people n this country who work hard, and have done for years, and to reward all people who still beleive in Marriage.
I agree that the system is expensive to run, difficult to maintain, and is a nightmare for those that need to use it. As a single parent who has three grown up children now who have each had different experiences. My own story is that of a single mother who has tried to work whenever I can and have had several part time jobs to fit in around school care and other childcare arrangements. This was expensive and not really worth the energy used and in fact left me with mounting debts and alot of negativity about employment. I was overjoyed when tax credits came in. They helpped considerably. However, my daughter who has become a mother and lives with her partner and both work extremely long hours discovered that they were not entitled to tax credits or child tax credits because their joint salary was just over £2 over the threshold. I personaly gave up work and went to university to take a degree to enable me to earn a better salary and discovered that I was so much better off being a student then going out to work! my middle daughter is on Income support and is struggling to keep a roof over her head because she is living in private rented accomodation and raising a child on her own. The third child who is just 19 stayed on at school gained qualifications that she could not use and then went to college. She stayed on at college for 1 year and left with a qualification but was then unemployed for a long time. All the time she was in college I had to pay transport costs and activities etc. and I was on Long term incapacity benefit – Where was I supposed to get this money so that she could stay on at college?
I have a disability for which I am on means tested benefit which if I come of all the form filling in doesn’t make it worth while coming of and on it again I also work casually for the council which suits me fine I could do more hrs but If I do they knock it of my benefits pound for pound if it is over £20 and it has been £20 for as long as have had my disability I also have to travel to work by a taxi which I have to pay for out of the £20. I can come out of my work £7 pound richer for four hrs work! how is that fair.
Because of my Disability I can’t work full time casual work suits me fine I can go in when I want. They are now talking about getting rid of the taxi card scheme which will mean that I could earn £3 a night which is ridiclouse!!
And then I come on to this site it is so complex to navigate round and there is no easy way to put your views across and it the bit that says what type of person are you there is no space for benefit claimant.
just because we are on benefits doesn’t mean we don’t have any good ideas.
I would pay a low level tax amount if I could earn up to £90
a week and keep all my benefits because I am never going to get any better and I am probably going to get worse. I love my job it is really good for me to be in the work place but don’t treat me like a mug.
I have worked across all sides of employability and recruitment and it is highly complex in which each case is individual and no set of procedures will fit all. People’s reasons for not being in employment are not always immediately apparent and it is therefore very difficult to judge. However, I do agree that a more simplistic approach will be fairer but that it should also take into account what people have paid into the system.
However, the main difficulty is that no matter what steps are taken, there are currently not enough jobs available for all – this will be added to by the current public sector spending cuts, the proposed rise in pension age, the increase in costs to companies, the development of new technology and the introduction of more voluntary opportunities. Companies are being provided with numerous excuses (genuine and not) to expect more and pay less. Despite working time regulations, the hours that people are expected to work are increasing continuously. Examples include not replacing people that leave and expecting remaining staff to undertake the additional duties, or actually making staff redundant and then reassigning the duties to remaining staff. I have first-hand experience of both these situations. I believe that contracts should return to hourly paid, which would increase the number of job vacancies available significantly and staff would be able to make informed decisions on the number of hours they worked.
I am currently facing redundancy, due to spending cuts and even though I am a specialist in the employment field, I am completely daunted by the current job climate. Without completely re-training (something I cannot afford to do) there are limited jobs available in my field and the majority advertised are either very specific with no flexibility from employers, or on very low or minimum wage (which would not cover my basic outgoings – mortgage and bills).
The long term consequences of spending cuts do not seem to have been properly analysed and the risks mitigated. Surely by cutting public sector jobs and services, there is a knock-on effect to their suppliers and so on and so forth, thereby increasing the number of claimants and subsequently the cost of the welfare system, which is completely false economy. Only when sufficent job opportunities are created can you realistically start reforming the welfare system with any real effect.
Spending cuts have happened far too quickly without assessing the…[truncated by the system]
The main problem is the financial reward for not working is too great. Why do people on benefits need to be ‘incentivised’ to find a job if that isnt the case?
Benefit reform needs to be harsh and time bound- it should be a temporary stop gap, not a replacement way of life. Why is it fair that because someone has 2 children and registered as a non working lone parent for example receives more in actual income than someone who works full time and has to fund all of their own housing needs?
It is wrong that someone who has worked for years, bettered themselves by having savings and a house/mortgage , then finds themself unemployed can claim JSA for only 6 months on a contribution basis, whereas some people can claim for years because they claim to have no other income and in many cases have never worked?
Stop paying child benefit after 2 kids. Do not pay more benefit for more children if you are already on benefit i.e you have 2 kids, dont work, then decide to have more kids you cannot afford.The total benefit package anyone can receive should be capped at 50/60% of average income including housing/council tax benefit. We need to look at cause and effect, not continue to reward bad behaviour.
We need fairness for the taxpayer not just benefit recipients.
The main structural problems for ordinary working people are very high housing costs, low wages, pegged by minimum wage, which is NOT a living wage,and high travel costs. Tax credits are infact the Government subsidising many wealthy profitable companies who do not pay living wages. This low wage culture makes most people dependent on benefits. Why not a policy to encourage firms to pay decent wages. Forcing single parents to work full time would be detrimental to
their children, many being at home alone. Don’t forget school holidays account for about l6-17 weeks a year. ll year olds are too young to be left at home.
Simplification is a great idea in all respects.
Having moved to Norfolk, and worked most of four decades, I now find I am only allowed 6 months on Job Seekers Allowance. I have paid into a system to find myself penalised, yet others are having full support and probably never paid into it. This system is unfair, offers no rewards. In fact it has encouraged people to live off benefits and get as much out of the system , putting little back into the country.Work is important to morale, making people feel useful, keeping active, and this lead needs to come from the govt. You also need to reward people for their long contributions, and not shy away from dealing with people constantly living off the state.We need jobs available with realistic salaries, and get rid of the bonus culture of the banks who have not been made accountable for past mistakes and helped to get us in the financial position we are in.Greed,profiteering,and selfishness is at the heart of what is wrong with the national culture today.
I agree with the first bit of what you say. That woman working 23 hours a week is earning far more than me, including benefits, and I work a 40 hour week, out of which I have to pay my mortgage and Ctax – she is getting that £345 on top of the rent and CTAX. How is that fair, I would feel rich if I got that. Added to which the six months JSA contributions then nothing, zilch nada if the person you ‘live with’ earns a bit more than minimum wage! I’m sorry but if you only work 23 hours a week, you should get 23 hours a week worth of pay and have to pay your rent and ctax out of it, like we do.
I thoroughly agree with Iain Duncan Smith on his ideas for reform of the benefit system. Is there a way of supporting him to make his ideas happen? I am particularly interested in the need to allow people to work without immediately losing ALL their benefits. It must be the first most block to people trying to get themselves out of the benefit system.
I happen to live in Lymington where my daughter has had incredable help to get her on her way, but I gather this is now stopping to a large extent, but she is now re-trained with the authorities help, but if she gets a job she will lose everything in the way of help. This is stupid when she could be becoming a part of the workforce and start paying Tax for the country instead of using the tax-payers money
One big item here that appears to not have been considered is the effect of keeping housing benefits only payable to the rental market. One of the most effective methods of improving independance for people is to allow housing benefit to paying off someone’s mortgage. This is precisely what occurs in Scandinavia and it really helps. It would also have the wonderful extra benefit of underwriting mortgages for low cost housing. I.e. the banks would know that the repayments for a given loan are in effect assured by the state, meaning that a massive deposit is not required.
You would of course have to set a general payment amount for a given area. But this should really be occuring for the rented sector, not just a blank cheque to pay whatever is requested by the landlord.
Your website is a waste of time, far too much information, too confusing for people, no wonder people never praise you when they call, better customer service training, etc, etc. Need to be more informative to people who are claiming benefits. You also need to provide better incentives for people returning to work, for example benefits should continue for at least the first month, if not longer, travel, clothing, food expenses should be paid also, as you give benefits to the alcoholics and drug addicts to spend on their vices, as I completely agree with the others, it is extremely hard when you start work and your benefits stop. Your staff need to learn to be less robotic, stop reading from a script and be more personable, sympathic to peoples needs, as we do have human rights, although as I have said and I am sure that many will agree, doesnt feel like it. Yes, the DWP does need to get its house in order before tackling other issues. Employ more staff, if you did your job properly, communicated with other departments before sending out unnecessary paperwork, allocated people to just taking messages, sorting paperwork, would not need to work saturday or sunday to catch up as 9-5 are the hours you work, so should be able to manage your workload in those hours. I can understand why the large turnaround at local authorities, as who really wants to work somewhere where you do not receive any praise! So many improvements, treat the genuine cases better and tidy up the rest, just like we keep being told you are doing!
I see your point, but I don’t see any reason to just blast the DWP. Surely better to encourage them politely?
I agree that “blasting” other people is not a good idea. However I do agree with speakmymind that there the website for those on JSA (like myself) does not contain anything like enough information for the website to be of any value at all.
In my experience, though, the staff at my local Job Centre are so poorly informed that 33% of them say one thing, 33% say the exact opposite and the remaining 33% say that they haven’t a clue about what the answers might be to the relevant, important questions I have been trying to ask them.
A few come across as being robotic and uninterested. The majority of the staff seem to be pleasant people. However when they are so ill-informed as to be un-informed, it is completely impossible for any of them to provide adequate (ir indeed any) realiably accruate “advice” to any of the claimants. The Government is keen to blame the claimants but what about the idea of the Government training its own staff people properly?
The biggest disincentive for many people who would otherwise be prepared to go ito work is the poverty trap due to the loss of income between the ending of benefits, due to starting work, and the time when they finally get paid.
The majority of jobs these days are paid on a monthly basis, usually at the end of the month. In some cases, due to starting on the ‘wrong time of the month’, pay may not be forthcoming until the end of the following month.
In the meantime, everyday bills and expenses need to be paid NOW, right at the start of work, to make ends meet.
Without that necessary continuity of income, many people are faced with all the problems associated with not being able to pay their way while they are waiting to get paid by their employer.
Even when people are finally paid, due to most accessable jobs these days being low paid, the problem of not being able to pay your way and make ends meet becomes an ongoing one if there is simply not enough money to pay for the following months bills expenses coming in.
This makes being in work unsustainable for many who would otherwise wish to carry on in work as the situation results in being on the ‘fast track to cardboard box city’.
So living on benefits as a way of paying for necessary bills and expenses and making ends meet become the only sustainable way of maintaining the steady income necessary to pay their way.
This is before you even consider the added problems of temp work that’s ‘here today and gone tomorrow’, an unresponsive and slow benefit system that hates you for taking on such work in the absense of more sustainable alternatives, the need for affordable childcare for parents, single lone adults faced with numerous financial penalties for taking on anything other than a steady full-time job, despite their ongoing absense in the economy, the lack of money to retrain for better work or relocate to better employment areas, etc.
Basically, get rid of the zero income gaps between benefits and employer payments, get rid of much of the existing fear, and the enormous financial and personal risks, of taking on work.
It’s worth adding that the worst ‘culprit’ for accentuating this income gap between benefits ending and the first pay cheque is the Public Sector. The public sector can be empowered to lead by example here by introducing mechanisms to give pay advances or loans to new staff to see them through this most challenging and daunting period.
I disagree with martybalvey. I went from Jobseekers (or whatever it was called in 2005) to working for a Government agency. They had a sceme of paying newcomers twice a month for the first 3 months if wished. That made the transition bearable financially because my Housing Benefit and Council Tax were also paid on my behalf for the first month.
I suspect that it is much harder to get an employer in the private sector to help out in this way.
I agree that the current system whereby clients are dealing with the DWP, Local Authority and Tax system is the root problem for many in overcoming the ‘fear’ of coming off benefits. This is compounded by ‘horror stories’ of anecdotal stories from friends who have had unacceptable expreinces with their transition from benefits. Not only does the current system not incentivise when working properly, it penalises when it gets things wrong.
Remember, it costs ‘more’ to go to work than to stay at home. Apart from the cost of travel and work wear, ‘integrating’ into the work place costs money e.g. – contributing to ‘in work collections’ for wedding or leaving presents, colleagues collecting for charity, work social events etc.
One of the main issues faced by the current system is the cost of administration. The current JCP setup has far too many layers of management and the divisional role could be abolished over night without any negative results. The JCP also have a policy of allowing term-time contracts for some employees… what’s that all about?? If they are not needed for seven weeks during the summer then where is the case for employing them for the remainder of the year?? The current system says that a lone parent with a child of 12 should be available for work… not if you work for the DWP!! You can have a term-time contract! The DWP needs to get its’ own house in order before attempting to reform the benefit system.