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A life on benefits will no longer be an option for people after a shake-up of the welfare system, Work and Pensions Secretary Iain Duncan Smith said today.
He said job vacancies will no longer be filled by foreign workers while “millions” of Britons stay on benefits because radical welfare reforms due to be unveiled by the Government will provide financial incentives.
Mr Duncan Smith is to launch the Welfare Reform Bill at an event in London today with Prime Minister David Cameron.
The proposals include replacing most existing benefits with a universal credit – designed to ensure people are always better off when they are employed, and close the loophole where some couples receive more living apart.
Those who refuse to take up job offers face losing their handouts for up to three years, and there will be tougher sanctions for fraud.
The Prime Minister will also announce moves to tackle the UK’s “sicknote culture”, pointing out that 300,000 people leave work and claim sickness benefits every year.
The Government’s national director for health and work, Dame Carol Black, and David Frost of the British Chambers of Commerce are to lead a review of the problem.
Mr Cameron will warn that people can no longer be trusted to claim only the benefits they need, saying a “standardised” system of sickness and unemployment handouts was sustainable after the war because people felt “shame” when they abused it.
The Government says perverse incentives introduced over the years have undermined aspiration and “collective responsibility”, and left the taxpayer with a multibillion-pound burden.
According to Mr Duncan Smith, the new system will be simplified and result in nearly a million people being “lifted out of poverty” and around a million of the poorest Britons seeing increases of £25 a week as they return to work.
“What will happen is British people will genuinely be able to get British jobs because they will be incentivised to take those jobs, we will expect them to take those jobs but work will pay better than benefits,” he told BBC Breakfast.
“A life on benefits will no longer be an option for somebody.
“After all, right now there are huge numbers of people sitting on benefits, sometimes in rented accommodation, that people who are working could never dream of affording.
“That system has got to change. Fairness to the taxpayer as well.”
Asked where the jobs will come from in the current economic climate, Mr Duncan Smith said there were still around 500,000 vacancies every week.
“So there are jobs being created, there are jobs available,” he said. “Of course we will need even more jobs to be created but that’s the nature of the economy.
“The real thing is this: that even when the going was good, before the recession, during 16 quarters of perpetual growth, this country produced about two million new jobs.
“Of those two million new jobs, over 50% went to foreign nationals whilst we had around four million people on benefits. That doesn’t make any sense to me.”
Claiming the situation of new jobs going mostly to people from overseas would become a “thing of the past”, Mr Duncan Smith added: “The key thing is when you make that choice, with all the help we give you, we will ensure that work pays but we insist then that you do take the jobs that are available.”
Setting out his argument for shaking up welfare, Mr Cameron is expected to say the system was originally based on a “collective culture of responsibility”.
“More than today, people’s self-image was not just about their personal status or success,” he will insist.
“It was measured out by what sort of citizen they were; whether they did the decent thing.
“That meant that a standardised system of sickness and out-of-work benefits – with limited conditions – was effective.
“It reached the people who needed that support, and not those who didn’t, in part because fiddling the system would have brought not just public outcry but private shame.
“In other words, personal responsibility acted as a brake on abuse of the system.
“And because the ethos of self-betterment was more widespread, the system supported aspiration rather than discouraging it.
“Now let’s be honest about where we’ve travelled to, from there to here.
“That collective culture of responsibility – taken for granted 60 years ago – has in many ways been lost.
“You see it in the people who go off sick when they could work or the people who refuse job offer after job offer.”
Mr Cameron will say the “finger of blame” should not simply be pointed at those who claim benefits, but at the “sheer complexity and perverse incentives” of the system.
“Yes, there are those who, with no regret or remorse, intentionally rip off the system – and that makes hard-working people, including many on low incomes who pay their taxes, rightly angry,” he will say.
“But I refuse to believe that there are five million people who are inherently lazy and have no interest in bettering themselves and their families.
“What I want to argue is that the real fault lies with the system itself. The benefit system has created a benefit culture.
“It doesn’t just allow people to act irresponsibly, but often actively encourages them to do so.
“Sometimes they deliberately follow the signals that are sent out. Other times, they hazily follow them, trapped in a fog of dependency.
“But either way, whether it’s the sheer complexity and the perverse incentives of the benefits system, whether it’s the failure to penalise those who choose to live off the hard work of others, or whether it’s the failure to offer the right support for people who are desperate to go back into work, we’ve created the bizarre situation where time and again the rational thing for people to do is, quite clearly, the wrong thing to do.”
Shadow work and pensions secretary Liam Byrne said: “We’ll support the Government where it builds on our big reforms to sort out sickness benefits and get people who can work into work.
“But welfare to work won’t work without jobs. We need a plan B for the economy because yesterday’s figures showed the private sector isn’t creating jobs fast enough to pick up public sector job cuts.”
Mr Duncan Smith announced that he had ditched controversial proposals to cut Housing Benefit by 10% for anyone on Jobseeker’s Allowance for more than a year.
The cut, due to come into effect in 2013, was included in Chancellor George Osborne’s emergency budget last June as a means to create incentives for the long-term unemployed to take work.
But Mr Duncan Smith said it had been ditched because all those affected would be undertaking back-to-work programmes.
He told BBC Radio 4′s Today programme: “You won’t see this in the Bill for one very good reason – all of those people were going to move onto the Work Programme anyway, so they would be having intensive help to get them back to work.”
Mr Duncan Smith denied reports that the idea was blocked by the opposition of Deputy Prime Minister Nick Clegg and other Liberal Democrat ministers.
The Work and Pensions Secretary insisted that no benefit claimants would lose out as a result of the changes in today’s Bill.
He said: “Nobody will be worse off because every single person, as we migrate them on to this new credit, will be cash-protected.
“That means that whatever system you are on, we will stay at that level whilst the new system is set.”
Mr Duncan Smith said the new system would help lone parents who currently lose out by as much as 95p of every pound earned if they work more or less than 16 hours a week.
“What will happen to lone parents will be very beneficial, particularly in the low-income areas, because for the first time they can afford to take work at 10, 15 or 20 hours a week, whereas right now they are penalised if they try to do that,” he said.
Mr Duncan Smith said a key aim of the reforms is to break the cycle of benefit dependency trapping families in unemployment over as many as three generations.
“Too many people out of work – generations of them – do not think it is worth their while to even enter the world of work,” he said.
“This will change. This is a contract between the unemployed and the taxpayer who is paying for these benefits. When work is available, you must take it or you lose some of your benefits.”
Mr Duncan Smith added: “Alongside the Universal Credit, we will be introducing the Work Programme which is all about getting the long-term unemployed, the young unemployed, people with drug problems, into programmes run by the voluntary and private sectors to sort their problems out and get them work-ready, so they can get into work.
“That will help enormously to get people ready to do those 500,000 jobs that exist in the JobCentres even now.”
Life on benefits ‘no longer an option’ – UK Politics, UK – The Independent.