Economic Dependency

"Dynamic Benefits: Towards Welfare That Works" A Policy Report by the CSJ Economic Dependency Working Group | 16/09/2009

Published in association with management consultancy firm Oliver Wyman, this 370-page report presents a review of the UK benefits system and proposals for a radical recasting of state support for the jobless and low-paid.

The policy proposals in Dynamic Benefits would result in 600,000 households coming off welfare dependency and into work, boost the incomes of the lowest paid by nearly £5 billion and help move more than 200,000 children out of poverty. The overhaul will make welfare spending predictable and promote a culture of working rather than not working.

Dynamic Benefits is the most far-reaching review of the UK welfare system in 60 years.

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Executive Summary
Preface by Rt Hon Iain Duncan Smith MP

"Breakdown Britain: Economic Dependency and Worklessness" | 14 December 2006

Click here for the "Breakdown Britain: Economic Dependence and Worklessness" report

Economic Dependency

There are around 3.5 million working-age people on inactive benefits that require virtually nothing of them, and unemployment has increased in the last year. As well as this, the benefits system penalises both two-parent family formation and progression in work - both of which help protect against poverty. The Government is failing the very people it claims to be helping.

The Economic Dependency and Worklessness Working Group have recommended a series of policy proposals to strengthen Britain by supporting people in taking the sustainable routes out of poverty: work and married couple family formation. The proposals focus on the most disadvantaged people in society, particularly those facing multiple barriers to work. The proposals are not aimed merely at moving people off benefits and into work, but at increasing social inclusion, enabling the best outcomes for future generations, and ensuring that people are able to sustain and then progress in work. These policies will lead to greater social cohesion and, in the medium – to long-term, significant savings to the Exchequer.

Over 80% of welfare expenditure[1] requires nothing in return for state benefits– this is despite the Government’s rhetoric of rights and responsibilities.

Vida, London

Vida is a single mother of three girls. Before having children she worked as a secretary in a law firm, but when she became pregnant she decided to stay at home to look after her children whilst they were young. Now that her youngest child is 9 she wants to go back to work. She believes that having raised her three girls, the oldest of which will be going to university in the next year, she has numerous skills to offer an employer. However because she has no recent work history, and no relevant qualifications, she cannot find work. She has been on the New Deal for Lone Parents, which she says was useless, and is currently doing youth work on a voluntary basis which she hopes will show her employability. She has now joined A4e – a private provider of back-to-work support – and after participating in a motivational course has ‘taken responsibility for where [her] life is’. ‘Jobcentre don’t offer anything close to A4e…the efficiency, the service, its fantastic’. She is now doing a childcare course and firmly believes that she will be back in employment very soon.

"A one-size fits all approach will simply not work with the hardest-to-help"
Steve Swan, Tomorrow’s People

"We have created in this country a whole culture of dependency – if you pay people to do nothing they begin to expect something for nothing. You need to reward people for what you want."
Philip Collet, Motivational Systems

‘Before I was working 40 hours…they didn’t tell me that Housing Benefit was deducting money. I was in £700 rent arrears. I was threatened to get kicked out of my house. So I had to stop work and sign on otherwise I would have been homeless.’

Lynsey, Jobseeker’s Allowance claimant, London

1. Government to provide appropriate support for people who truly cannot work

Severely disabled people and carers to be supported appropriately to ensure a decent standard of living.

2. The benefits system must be a ‘something for something’ system

People who can work, including disabled people, should do so. Lone parents should work part-time when their youngest child is 5, and full-time when they are 11.

3. Back-to-work support must be tailored to the individual

Programmes must be personalised, comprehensive, based on an accurate assessment of the individual’s needs, and focused on work. The emphasis must be on long-term job placement with aftercare.

4. Back-to-work services to be state determined but not state delivered

Support programmes to be delivered by private and third sector organisations – who achieve much greater outcomes than their public sector counterparts – with contracts being awarded to the best performing providers.

5. Back-to-work services to be community-based and tailored to the needs of the local economy

Piloting ‘local employment consortia’ would devolve decision-making, funding and contracting of welfare-to-work services to local bodies. This would also ensure the co-ordination of local budgets.

6. Payment of providers of back-to-work services should be results-based, and should reflect the complexity of an individual client’s case

Paying providers for getting people back into work, and, crucially, for keeping them in work, creates a focus on long-term employment.

7. Parents should have the opportunity to draw forward Child Benefits in the early years

This would allow parents to choose to care for their children in the early formative years (0-3) of a child’s life, and provides the financial ability to do so.

8. Increasing financial support for low income two-parent families

There is currently a financial penalty built into the tax credits system for couples living together – a lone parent and a two-parent family receive the same amount of Working Tax Credit.

9. A Commission to look into simplifying the benefits system and making it more work incentivising

A Centre for Social Justice Commission to look into the possibility of phasing-in a single out-of-work benefit and increasing work incentives in the tax credit system.

10. A serious and thorough review of the Housing Benefit system to be conducted

A Centre for Social Justice Commission to look into making the Housing Benefit system simpler and fairer.