Welfare Reform

Iain Duncan Smith has announced big plans to reform the welfare system with a view to reducing dependency on benefits which, he says, will lead to a reduction in poverty and a reduction in wasteful spending at a time when the country can least afford it.

I run a children’s nursery in a deprived area and most of the families we cater for do not contain a working adult. Some of these claimants are lazy and choose not to work and I agree that this is not desirable. I work hard and pay tax and do not want to subsidise people who can’t be bothered to get out of bed in the morning. I would not, however, swap my life for theirs as I do not think living on less than £70 per week is attractive, even if you don’t have to work for it. More importantly, children who grow up in an unemployed household will be living in poverty with all the social and health related problems that brings. Incidentally, this is also an issue for ‘in-work’ households where hours are part time and/or pay is very low.

For many though, they would love to find a job which fits in with their childcare arrangements. They are poor, lonely and feel stigmatised. We live in a very materialistic society and they can’t buy the things they would like and that their children pester them for. In order to work they need to be able to find affordable, suitable childcare which covers their working hours and sympathetic employers who will allow time off if the children are sick. Suitable childcare is not just about affordability, it has to be what the child and parent(s) feel comfortable with. Many parents do not want to leave their children for 10 hours a day and they shouldn’t have to. Many of the families I work with are single parents, not a situation they have chosen – who would? I was a single parent myself for nearly three years with two young children; it is an extremely stressful and often lonely existence. Without the support of a partner, working is even more difficult; I have not seen any detail on whether IDS will expect single parents to work and at what age their children will be before this is expected. I hope he will think carefully before forcing parents with young children to take up work.

IDS talks about the steep decline in keeping earned income when people come off benefits and return to work. This is only a considerable issue when pay is low and/or hours are part time. Working tax credit has helped many parents and it certainly helped me when I worked full time. Without it I would not have been able to complete my NQT year and 4 years at university would have been wasted. Maintaining tax credits, increasing their value and increasing the minimum wage would all provide the incentives IDS would like to see in place to get people back to work.

In terms of the actual savings to the economy, this sums up the situation nicely:

“Benefit fraud is at an all-time low, costing £1.1 billion a year, less than 1% of claims. Overpayments cost £1.9 billion a year, underpayments £1.2 billion and £16 billion goes unclaimed which should be helping the poorest households. Rather than recycling myths about ‘benefit scroungers’, we want all the parties to pledge to tackling error and helping those who are entitled get the support they need by making the system simpler and easier to understand.

“The truth is that tax fraud is a much bigger issue for the public finances. Every year £15 billion is lost to tax fraudsters, which could be making a major difference to Britain’s poorest families who have been hit hardest by the recession.

“More money is lost every second to tax fraud and error than a family gets paid for child benefit in a whole year.” Imran Hussain, Head of Policy, Rights and Advocacy at the Child Poverty Action Group April 2010

 http://www.cpag.org.uk/press/2010/090410.htm

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2 Responses to Welfare Reform

  1. neil scott says:

    Good article. The stats about tax fraud are sobering. To add to this, those who decide not to pay tax, including individuals, companies and corporations through tax loopholes or tax havens, cost the country an estimated £130BILLION a year. Around £20bn is tax avoidance by rich individuals. So,when people talk aboutbenefit fraud, it must be put into perspective in the current economic crisis… it is the very rich who are telling us we must live austerely while they avoid contributing to the countries finances that bailed them out (no poor person created the economic mess… it was rich greedy casino capitalist gamblers squeezing money from poor sub-prime workers).

    • anpa2001 says:

      Thanks for the reply and for the stats, yes, talk of benefit fraud must be put into perspective. There seems to be an overriding presumption from IDS that all claimants could work if they just tried and that there are jobs out there to be had – this is becoming far less likely by the day!

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