England & Wales

The Welfare Reform Bill: additional remarks

This post is based on a LGiU members briefing (£) written by Jazmin Glassborow

The intention of the Welfare Reform Bill is to address key identified deficiencies in the existing benefits system: complexity, weak work incentives, and costly administration. The central proposal is the introduction of a Universal Credit, replacing various means-tested working-age benefits, to be implemented in 2013 and completed by 2017 (see video below).

The Bill is the culmination of prolonged process of policy development carried out by the Conservative Party and its advisors whilst in opposition. Following the 2010 General Election, the Government’s overarching strategy for welfare reform was set out in the Green Paper: 21st Century Welfare, published in July 2010. In November 2010, detailed proposals for benefits reform were set out in the White Paper Universal Credit: Welfare that Works.

Considerable comment followed the publication of the November White Paper, to which only a small number of additional remarks are required here.

First, the underlying principles of the reform are universally welcomed. There is a self-evident requirement for greater transparency and flexibility in the system in order to support people in accepting job-offers in a very uncertain labour market. The current system not only supplies disincentives to work, but also creates considerable uncertainties for people in various transitions between not working, part-time working (which might only be for a few hours a week) and full-time work.

Whether these aims are intrinsically realisable, however, remains to be seen – after all, no government ever set out to create a complicated system. The outcome will probably be a simpler system which is still far from simple. Further, making work pay will create winners and losers – many families will lose out as a consequence of the proposed benefits cap and limits to housing benefits.

Second, considerable uncertainties still remain concerning the operations of certain parts of the welfare reform package. How the new arrangements for Council Tax Benefit, for example, will work are currently the subject of discussion between CLG and local government. One particular area of anxiety is how sanctions will be applied to people whose circumstances limit the hours of work they are able to undertake – lone parents in particular need more clarity in this respect, in addition to clearer details on how support in childcare is to be provided.

Third, the benefits reform will be underpinned by the introduction of a new Work Programme – one of the largest and most flexible welfare-to-work programmes ever delivered, but whose funding depends entirely on achieving results in sustainable job outcomes. The prime contractors in the new programme will be expected to absorb the risk in up-front funding because of an expected reward in benefits savings – but this could be a tough call in a labour market that currently looks far from healthy.

Below is video of the speech David Cameron made at the launch of the Welfare Reform Bill.