Malcolm Moss MP welcomes proposals to reform the benefits system

Malcolm Moss, MP for North East Cambridgeshire, has welcomed a new report published by the Centre for Social Justice. The think-tank, founded and chaired by the MP and former Conservatives leader Iain Duncan Smith, calls for reform of the benefits system in its newly published report Dynamic Benefits: Towards welfare that works.

The report comes as new figures show that 2.5 million people in Britain are unemployed, with 2,654 people receiving Jobseeker’s Allowance in North East Cambridgeshire alone. However, the real unemployment rate in NE Cambs is likely to be considerably higher as the Government has transferred many unemployed, and particularly those who have been out of a job for some time, on to incapacity benefit instead.

Young people have been particularly hard hit by the recession with a record high of 15.6% (935,000) of 16-24 year olds in Britain not being in education, employment or training (NEETs). Compared with the national unemployment figure of 5.6%, many worry that a whole generation may be consigned to a life on benefits after going straight from school into unemployment.

The Centre for Social Justice report suggests several ways to reform the benefits system:

1.      Many people in low paid jobs face benefit withdrawal rates of 75% and higher when they return to employment. Many also automatically loses other benefits such as free school meals and prescriptions.

This acts as a deterrent to seeking work and only entrenches worklessness and benefit dependency. The report proposes to reduce the withdrawal rate to 55% across the board, so that low earners will be better off working than by staying on benefits.

2.     The report proposes to reduce the penalties for couples, those with mortgages, and low-earning savers as these groups are being penalised in the current system. For instance, 1.8 million low earning couples lose an average of £1,336 each year because they live together.

3.     The current system is very expensive because of its complexity. The report proposes to reduce the number of benefits from 51 to just two:

The Universal Work Credit, for those out of work or on very low wages, which would include benefits such as Jobseeker’s Allowance, income support and incapacity benefit.

The Universal Life Credit, to help with additional living expenses for those on low incomes, would include benefits such as housing benefit, disability living allowance and working tax credits.

Although the costs of introducing these measures would increase the welfare bill by £3.6 billion per year in the short term, it is estimated that the new system would become self-financing within few years.

The incomes of 4.9 million low-earning workers would be increased by £1,000 per year. 600,000 previously workless households would enter employment and the national income (GDP) would increase by £4.7 billion per year.

Malcolm Moss MP said:

“New benefits, new restrictions and more paperwork have been introduced several times in order to make the system more efficient. Yet the cost of the welfare system has only increased. The situation we have now with multiple agencies dealing with 51 different benefits is completely unsustainable.”

“What we need is a reform of the entire benefits system. The report by the Centre for Social Justice raises some interesting points, and I welcome a number of the proposals that they have put forward. Of course we need to look at the costs and benefits of any reform, but in general we need a more cost-effective system that does not consign people to stay on benefits long-term or even permanently.”

“More people must get back into work and more people must be encouraged to do low income jobs. The current situation where many find themselves better off on benefits than in employment is totally unacceptable.”

“Many constituents contact me every week about unemployment or benefits, and I can see that there is a real need for reform. A more efficient welfare system that helps get people back on to the employment ladder will help those who need it the most at the same time as raising more money for the public purse.”

“It may also improve many social problems such as apathy, crime, and alcohol and drug abuse. It may even help with the local housing situation in North East Cambridgeshire, in that people can better afford private sector rented housing. Moreover, getting more local people back in employment is likely to reduce the dependency on migrant workers.”

“The Conservative Party is currently looking at ways to reform the benefits system should we win the next election, and these proposals are a welcome suggestion of how the system can be changed for the better.”