The Secretary of State's Speech - "No one written off: reforming welfare to reward responsibility"

21 July 2008

Rt Hon James Purnell MP

Secretary of State for Work and Pensions

Oral Statement "No one written off: reforming welfare to reward responsibility"

Monday 21 July 2008

With permission, Mr. 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 the fabric of our country. We take pride in it. It's 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. First, that revolutionary times called for revolution, not patching.

Second, 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.

But perhaps, over time, Beveridge's third principle was lost. He was emphatically clear that the system of social security should not stifle incentive, opportunity and responsibility. The purpose of the welfare state was to help people in need today so they could reduce their need tomorrow.

From the 1960s onwards that third principle was eroded. The nadir came in the 1980s when all conditions were removed from unemployment benefit and unemployment rose to over 3 million, much further than it needed to have done.

In 1997, we inherited an essentially passive welfare state. Since then, we have been turning it into an active one. This 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 tax payer.

It aims to meet five main goals.

First, to end the idea there is a choice between claiming and working. Instead, 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 - and longer if the provider requires it. For the 2% who we anticipate to be still out of work after 2 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 are abusing the system. We will improve treatment for those who have a problem with crack cocaine and opiates, but require them to take up that treatment.

Mr Speaker, we know our support works. But we also know that conditionality works - by getting more people to take up this 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 there was work available.  As long term youth claimant unemployment fell nearly 80%, we extended that principle to other workers.

As a result, we now have more people in work than ever before. Claimant unemployment has been nearly halved, saving £5 billion a year. Nine out of ten people leave Jobseeker's Allowance within 12 months of claiming.

Work works, and it is only fair that we make sure a life on benefits is not an option

The second goal is to ensure that no one is written off. In 1979, there were around 700,000 people 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 now the lowest it has been for 8 years.  

Annually nearly 400,000 fewer people are flowing on to IB compared to 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 it works, and have made it mandatory for all new claimants.

And we have legislated to abolish IB and replace it with the Employment and Support Allowance. This new benefit treats people as individuals. It looks to see what people can do, not what they can't.

Today, I am announcing that we will migrate everyone from IB on to ESA between 2010 and 2013, with personalised support 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 re-assess 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 will be able to 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. But they will be required to take up this help, and look for work where a doctor recommends it.

These changes will mean that for the first time ever, no-one will be abandoned to their fate, to just 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 don't want to be told that they can't 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 should be able to do so.

And we will consult on a new right to control. We know individual budgets work. I want to give disabled people the right to know how much the State is spending on them, and request 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 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 we will require both parents to register the birth of their child. Together with our changes to lone parent benefits, we estimate these welfare reforms will lift 200,000 children out of poverty.

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 they think they could do better.

We will give local communities the chance to shape how back to work services are delivered in their area.

And most of all, we will implement all the reforms in the Freud report, the report which inspires this Green Paper. We will release the creative energy of the private, public and voluntary 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 onto JSA, as resources allow. The result will be a dual system of working age benefits. ESA will offer the right help for sick and disabled people, and JSA will do 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 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 should change, and precious little support to make it happen.

This Green Paper ends all that. It will puts us on the road to our ambition of an 80% employment rate, with a million people off incapacity benefit by 2015, the eradication of child poverty by 2020, and equality for disabled people by 2025.

And it will restore Beveridge's third principle, the principle of incentive, opportunity and responsibility to where it should always have been: at the centre of the welfare state. And, for that reason, it will transform the lives of hundreds of thousands of people.

Mr Speaker, I commend this Green Paper to the House.