Mr Cameron’s speech this week on welfare reform was a thoughful and important contribution to the debate about the future direction of welfare policy.
He acknowledges that welfare accounts for almost £1 in every £3 the government spends. He rightly wishes to be generous to those in need through disability or ill fortune. He also wishes to promote work as the best kind of welfare for most people of working age. He identifies many of the perverse incentives in the system.
There are 400,000 more people in work than in 2010 when the government was formed. This is good progress, against a difficult economic backdrop. The private sector has comfortably created many more jobs than the public sector has shed, despite all the dire warnings to the contrary when critics saw the forecasts for job reductions by government. Mr Duncan Smith’s programmes to help people back into work are having some favourable impacts. The numbers for both employment and retail sales also make one wonder how accurate the GDP figures are, as they tell a different story.
Mr Cameron says he wants to carry on with his welfare reforms to show he is on the side of “those who work hard and do the right thing” He wishes to end features of the system which trap people in poverty and “encourage irresponsibility”.
He asks if it is a good idea that last autumn out of work benefits were increased by 5.2% in line with the RPI, when wages rose much less. This is a good question. If you wish to make it more worthwhile to work, raising benefits by much more than wage rises sets you back in your task.
He asks if it is right that Housing Benefit can lead to young people in benefit dependent households leaving home to set up their own benefit dependent household, when the children of working people have to stay living at their parent’s home for longer until they can afford a place of their own.
He asks if people who have been on out of work benefits for years should have to do some work in return for their benefit. He asks if there should be a higher rate of benefit for people out of work for a short period, reducing if they are not successful in returning to the workforce. He rules out the Clinton approach of removing benefits altogether from people out of work for a long time.
Looking at the size of the current welfare bill and the substantial increases recently reported, there is need for more reform. Welfare benefits are not high for most people who need to rely on them. There are too many people on them. The government needs to do more to encourage people off benefits. It needs to do more to limit eligibility in future for potential new claimants where Mr Cameron has identified unfairness in the system between benefit claimants and the rest of us. Some of this work needs to be done now, not later.