Will the new welfare rules really get Britain working?

The Coalition's efforts to get people working should be good for UK plc. But it's a bit hard to see what jobs they'll actually do.

by James Taylor
Last Updated: 19 Aug 2013
The Government has unveiled its much-trailed shake-up of the welfare system today, and the underlying aims make a lot of sense: it's all about removing disincentives to work, and cracking down harder on people who deliberately choose not to work. The trouble is, of course, that tackling entrenched worklessness is a hard enough job at the best of times - let alone when there aren’t really enough jobs around for those who actually want to work and have some relevant skills...

The new system dreamed up by work and pensions secretary Iain Duncan Smith involves a single universal benefit to replace the myriad work-related benefits currently on offer (which sounds a lot simpler, but will no doubt be horribly complicated in practice). Currently, people can end up being worse off if they choose to work, because of the benefits they have to give up. The idea is to prevent this happening - so people who work will always be better off, even if it's just a part-time job. And to complement the carrot, there's also a stick - any people who refuse to play ball could end up losing their benefits for up to three years, a big jump from the current maximum of six months.

It's true that simplifying our sprawling and hugely complex welfare system makes a lot of sense, in theory, at least. And the Government has naturally been banging the drum about how the new set-up will transform the lives of the millions of Brits who have become trapped in the welfare system; Duncan Smith claims it will leave 2.5m people better off, and reduce the number of workless households by 300,000. The UK's dependency culture would be unsustainable at the best of times, he said, but at the moment, it constitutes a 'national crisis'.

But of course, the other reason the Government is doing this is because it wants to slash the welfare budget, which constitutes a huge chunk of its spending. And that reminds us of the difficulties the new scheme is going to face. For a start, other countries that have overhauled their welfare system successfully have done so when their economy was in a good shape - not in the aftermath of a deep recession, when the unemployment rate remains stubbornly high (and looks likely to go even higher in the coming months). The Government's critics have pointed out that even if you try to force these people into work, there just won't be enough jobs to go round. So there's a risk that money saved on benefits could end up spent on the same people by another department.

Still, it evidently can't be good for UK plc if such a big proportion of the country's potential workforce remains economically inactive; it provides a major check on our potential output. So any moves that encourage people off benefits and into work are surely to be welcomed - even though it will be devilishly hard to pull off in practice.

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