Thursday, 2 February 2012

Welfare Reform

This week the government’s welfare reform proposals came back to the House of Commons after a bumpy debate in the House of Lords. I think that dealing with the problem of welfare dependency is one of the most important priorities for the government because it’s one of the ways that you improve the life chances of the next generation. The evidence is clear that having a working role model in the family is one of the key determinants of a child’s life chances.

It is why I simply cannot understand why certain members of the House of Lords have objected to the idea of capping benefits at the average amount of money earned by working families. The proposal is to cap the total benefits that any one household can earn at £26,000 per year. That is still a lot of money, amounting £500 a week. It would be the equivalent income after tax of someone in a job being paid a salary of £35,000 per year. What sort of message does it send to people working hard to support their family, sometimes on the minimum wage, that there are other families who don’t work at all but who are taking home more money and living in a home that many working people could not afford? It may be controversial, but we need to start taking concrete steps to get the right incentives in the welfare system.

Another dispiriting problem I sometimes come across is where people tell me that they can only work, say, 16 hours a week because, if they do more than that they lose their various benefits and tax credits and end up worse off. It is not their fault, but something is wrong with the system. We need to make work pay. The government is planning to radically simplify our benefits system, merging many different types of benefit into one single Universal Credit where the support paid is tapered so that it will always pay to take a job, work longer hours and take a full time rather than part time job.

There are also moves to reform Housing Benefit which has been spiralling up in cost in recent years and in many instances has actually driven up rent levels in the private market making it even harder for people working to afford their own home. The reform aims to reduce rents at the lower end of the market by allowing councils to pay Housing Benefit directly to private landlords if those landlords agree to cut their rents. That means the landlords are given some security in return for accepting less money.

It is not easy delivering welfare reform against a backdrop of a difficult job market but it is important that we make a start, and alongside benefit changes give people the right support to get a job.

George Eustice can be contacted at george.eustice.mp@parliament.uk or 1 Trevenson Street, Camborne, Cornwall TR14 8JD or by telephone on 020 72197032.