The Welfare State in 2020

9 February 2015

To build a fairer society we need a social security system that protects people from poverty. For those for whom work is not an option, it is essential that the system provides this safety net.

But we must also help people get on in life and that means providing opportunities and incentives for people to take responsibility for themselves. Having a job is not just about earning an income; it is also strongly linked to health and building dignity and self-esteem.

The Liberal Democrats are committed to finishing the job of simplifying our benefits system and making work pay. It shouldn’t be the case that someone who finds a job cannot afford to go back to work because they would lose their benefits. Universal Credit will ensure there is a more gradual withdrawal of benefits when someone enters work.

The social security system isn’t just about getting people into work. It also needs to support social mobility by helping people who are in work to move out of poverty and develop their skills. This means providing better advice and support to people in low paid jobs to help them to get on in life, for example through incentivising Work Programme providers or Jobcentre Plus advisers to keep working with people once they are in work so that they get support to increase their hours, or train for a new role. This will also help to build a stronger economy – it makes no sense to keep paying people extra benefits on top of their wages while leaving them in low wage jobs with no support to move up the career ladder.

The Liberal Democrats believe that the welfare bill needs to be contained, and we support the policy of an Annually Managed Expenditure threshold so that government monitors spending on benefits more carefully, but our priority for tackling this would be to tackle the causes of high benefit bills. We should start with the causes of poverty, and of rising benefit expenditure.

These are some of the ways we would achieve this:

  • Incentivising the building of more homes to reduce high levels of Housing Benefit going on high private sector rents.
  • Rolling out free childcare for two year olds from disadvantaged families, which will help their parents get into work.
  • Encouraging employers to improve occupational health support so that people don’t lose their jobs when they go through periods of mental or physical illness.
  • Continuing to support the National Minimum Wage whilst encouraging employers to adopt the Living Wage.

We must strike the right balance between interventions to prevent poverty and cash payments to relieve it. We would re-centralise Council Tax Benefit into Universal Credit (both to make work pay and to provide a standard entitlement), and we would reform the Spare Room Subsidy. We would retain pensioner benefits but use the tax system to ensure fairness across generations – so, for example, we would withdraw Winter Fuel Payment and free TV licence entitlements from higher rate taxpayers.

One of the strengths of the United Kingdom is a system where benefit entitlements are the same regardless of where you live, but there is a strong role for more local delivery of back to work support. Much more needs to be done to help people with disabilities and health conditions back into work, as this can have a major impact on someone’s health, independence and social mobility. In order to do this, the welfare system needs to work more closely with other areas of local government policy, such as housing and social care support.

But in the end we recognise that a stronger economy goes hand in hand with a fairer society.

Lord German, Co-Chair, Liberal Democrat

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