Government faces uphill task with welfare shake-up

With the best will in the world, boosting the employment rate in the current climate is a lot to ask...

Last Updated: 31 Aug 2010

The government has announced plans to overhaul the welfare system, in a bid to get more of the long-term sick and unemployed off benefits and back into work. Incapacity benefit is being scrapped over the next five years, with a new Employment Support Allowance being introduced for those incapable of work and everyone else downgraded to the (lower) Jobseekers Allowance. Other proposals include forcing those on the dole for more than two years to undertake community work (like litter collection) and refusing to pay drug addicts unless they get treatment for their dependency. Labour ministers are hailing it as the biggest welfare shake-up since the days of Nye Bevan.

One of the main targets of the new system (which, like all our big ideas these days, is based on a US model) will be to reduce the number on Incapacity Benefit, which currently stands at well over 2.5m – more than half of all benefit claimants. The government wants to make it harder for people to get signed off on long-term sickness – a sentiment which many employers will probably share. From now on, the assessment of people’s fitness for work will be based on what they can do, rather than what they can’t – and they’ll have to get another GP (as opposed to their local one) to sign them off, the theory being that this will make the process more objective. (There seems to be a widespread casual assumption that a sizeable proportion of IB claimants are feckless layabouts - which may be true, but it'd be interesting to see a bit more evidence for it.)

All sounds good in theory - but not everyone’s convinced. Labour MP Frank Field, the man Tony Blair once invited to ‘think the unthinkable’ on welfare reform (and then ignored completely when he did), says the get-out clause offered by the new ESA means that the new system will inherit the biggest flaw of the current one (i.e. that you get a higher level of benefit if you can get through the test). And Labour left-wingers are also grumbling about the philosophy of getting tough on the disadvantaged. In fact, Work and Pensions Secretary James Purnell finds himself in the unfortunate position of having David Cameron as his most vociferous supporter: the Tory leader claims Labour has pinched all his ideas, but is at least going to support the bill enthusiastically in Parliament.

But politics aside, this is a tough time for the government to be trying to reduce the jobless total. Purnell suggests the reforms could push the employment rate up from 75% to 85% - but with doom-mongers still making dire predictions for the UK economy over the coming year, it’s a bit hard to see the unemployment rate doing anything other than rising. Even if Labour has finally got round to thinking the unthinkable, it may have done so a bit late....

In today's bulletin:
Investors give HBOS the cold shoulder
Government faces uphill task with welfare shake-up
Domino's takes even bigger slice of the action
Bratz boffin busted by Barbie
Helping the UK fire on all cylinders 

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