17 February 2011 – Welfare Reform Bill: restoring the welfare system to make work pay

Launching the Welfare Reform Bill with the Prime Minister today, Iain Duncan Smith hailed what promises to be the biggest shake up of the system for 60 years.

Central to the Bill will be the introduction of Universal Credit, which will simplify a benefits system that has become unmanageable, make work pay and help release millions of people from the misery of welfare dependency and break intergenerational cycles of worklessness.

These changes will mean:

• 2.7 million households are better off.
• Over 1 million households seeing an increase in their weekly income of £25 with 85 per cent of this increase going to the poorest families in the country.
• Nearly 1 million people out of poverty including 350,000 children.

The Bill will radically reshape Britain’s welfare system for the next sixty years by:

• sweeping away the patchwork of benefits and credits and replacing them with a Universal Credit to make work pay;
• introducing a proper system of conditionality and make sure that unscrupulous individuals are not able to abuse or defraud the system;
• a Personal Independence Payment for disabled people targeting support at those who really need it;
• a new system of child support which puts the interest of the child first;
• introducing new powers to tackle the problem of fraud and error.

From this summer Ministers will also bring in the biggest back to work programme since the war helping millions of people get into jobs.  Delivered by private and voluntary sector organisations, the Work Programme will end the culture of a one size fits all approach.

Announcing the Bill Iain Duncan Smith said:

"The welfare system was created to meet the demand for a fairer society. Today, this Bill will seek to restore the welfare system to those founding principles."

"Our reforms will end the absurdity of a system where people too often get rewarded for doing the wrong thing, and those who strive to do the best by their families get penalised.

"The publication of the Welfare Reform Bill will put work, rather than hand-outs, at the heart of the welfare system. It will ensure that we continue to provide appropriate support for those genuinely unable to work, as we must and as we should. And it will provide a fair deal for the taxpayer."

Alongside the publication of the Bill, the Prime Minister and Secretary of State announced a review into the sickness absence system. With 300,000 people off work every year claiming sickness-related benefits, the Government has asked David Frost and Dame Carol Black to consider whether with the right help and support more people could stay in work in some form.

Notes to Editors:

The Welfare Reform Bill will include:

• Universal Credit, which will make more than two and a half million of the poorest people in Britain better off. At its heart, the Universal Credit has a simple ambition – to make work pay, especially for the poorest. This will finally make it easier for people to see they will be consistently and transparently better off for each hour they work and every pound they earn.
• The Personal Independence Payment which will replace Disability Living Allowance with a new, more transparent and sustainable benefit fit for the 21st century.  It will be supported by a new assessment which makes greater use of evidence, enabling us to more accurately and consistently assess individuals to determine who will benefit most from additional support.
• By 2012 we will also have new powers to tackle the problem of fraud and error, which under the current system is highly susceptible – costing the taxpayer around £5.2bn a year.  The new measures include, tougher one-strike, two-strike and three-strike rules, with a benefit ban of 3 years for people who offend repeatedly.  A single investigation service and a new mobile regional taskforce will be set up to investigate each and every claim in high fraud areas, along with Civil Penalties - £50 for more minor offences.
• With Housing Benefit expenditure spiralling out of control for over a decade, it’s absolutely vital that we take urgent steps to return fairness to the system to make sure that people on benefits make the same choices about the homes they rent as hard working families have to make.
• It is not reasonable that households on out of work benefits should receive a greater income from the state than the average working household receives in wages. We will therefore introduce a cap, linked to average weekly earnings, which will limit the amount of benefits a household can receive.
• The Welfare Reform Bill will time-limit contributory Employment Support Allowance to 12 months for those who are able to prepare for work. Those with low or no other sources of income would qualify for income-related Employment Support Allowance once their contributory ESA had ended. This underlines the principle that ESA claimants are expected to move towards the workplace and will reduce long-term inactivity or benefit dependency.

The bill is published at:

• http://www.publications.parliament.uk/pa/cm201011/cmbills/154/11154.pdf
• http://www.publications.parliament.uk/pa/cm201011/cmbills/154/en/11154en.pdf

Media Enquiries: 0203 267 5125
Out of hours: 07659 108 883
Website: www.dwp.gov.uk