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Benefits plan to 'make work pay' Benefits plan to 'make work pay'
(about 2 hours later)
Plans to get 600,000 people off welfare and into work are being proposed by an independent think tank set up by former Conservative leader Iain Duncan Smith.Plans to get 600,000 people off welfare and into work are being proposed by an independent think tank set up by former Conservative leader Iain Duncan Smith.
The Centre for Social Justice proposes scrapping a system which it says makes it difficult for people to earn more at work than they get in benefits.The Centre for Social Justice proposes scrapping a system which it says makes it difficult for people to earn more at work than they get in benefits.
It says spending more than £3.7bn to subsidise those on low wages in the UK would make work pay for more people.It says spending more than £3.7bn to subsidise those on low wages in the UK would make work pay for more people.
But experts warn that politicians will be cautious about the high cost.But experts warn that politicians will be cautious about the high cost.
All parties are looking to cut welfare bills and reduce the long-term jobless.All parties are looking to cut welfare bills and reduce the long-term jobless.
Working couples should get more financial help, especially those on low wages, the think tank report says. The think tank report comes ahead of the latest official unemployment figures due to be published later.
Working couples should get more financial help, especially those on low wages, the report says.
But it says families on incomes of £30,000 will see some entitlements cut.But it says families on incomes of £30,000 will see some entitlements cut.
It also proposes changes to ensure people who save or who own their homes are not penalised by the benefits system.It also proposes changes to ensure people who save or who own their homes are not penalised by the benefits system.
Exclusion warningExclusion warning
The right-leaning body says help should be concentrated on getting at least one person in each household into work.The right-leaning body says help should be concentrated on getting at least one person in each household into work.
Mr Duncan Smith said the current "complex and inefficient" benefits system was an impediment to getting people into work.Mr Duncan Smith said the current "complex and inefficient" benefits system was an impediment to getting people into work.
We simply cannot go on talking about the importance of getting people into work while we persist in creating disincentives for the very people we say should be in work Iain Duncan SmithWe simply cannot go on talking about the importance of getting people into work while we persist in creating disincentives for the very people we say should be in work Iain Duncan Smith
Under current rules, the think tank says claimants taking a job with a salary of less than £15,000 find themselves worse off than if they remained out of work once state support is taken away.Under current rules, the think tank says claimants taking a job with a salary of less than £15,000 find themselves worse off than if they remained out of work once state support is taken away.
People are being put off from applying for and accepting jobs , it argues, and benefits should be removed gradually by lifting the income threshold at which they are phased out.People are being put off from applying for and accepting jobs , it argues, and benefits should be removed gradually by lifting the income threshold at which they are phased out.
At the same time, other financial disincentives preventing people from applying for work, seeking better paid jobs or working longer hours should be dealt with.At the same time, other financial disincentives preventing people from applying for work, seeking better paid jobs or working longer hours should be dealt with.
Mr Duncan Smith warned that despite the government's efforts to help the unemployed, many - especially younger people - could be permanently excluded unless the system was put right immediately.Mr Duncan Smith warned that despite the government's efforts to help the unemployed, many - especially younger people - could be permanently excluded unless the system was put right immediately.
"That is why we simply cannot go on talking about the importance of getting people into work while we persist in creating disincentives for the very people we say should be in work," he said.
It says its proposals would benefit low-income households by £5bn and lift 200,000 children out of poverty but that middle-income families would see "modest" falls in certain tax credits.It says its proposals would benefit low-income households by £5bn and lift 200,000 children out of poverty but that middle-income families would see "modest" falls in certain tax credits.
The report also calls for the welfare system to be simplified with the amount of benefits available to those over 16 reduced to two.The report also calls for the welfare system to be simplified with the amount of benefits available to those over 16 reduced to two.
Costly measureCostly measure
Eventually, the report authors believe, the changes would save the taxpayer billions of pounds.Eventually, the report authors believe, the changes would save the taxpayer billions of pounds.
But an expert on poverty and welfare at the Institute of Fiscal Studies, Mike Brewer, warns politicians of all hues will be put off by the immediate price tag.But an expert on poverty and welfare at the Institute of Fiscal Studies, Mike Brewer, warns politicians of all hues will be put off by the immediate price tag.
In the first year more than £3bn of extra spending would be needed on top of the £74bn already being spent on benefits.In the first year more than £3bn of extra spending would be needed on top of the £74bn already being spent on benefits.
Mr Duncan Smith said the principle behind the proposals - which he says should be considered by all parties - was that work "was the sustainable route out of poverty".
He said unless the system was put right now, there was a risk of increasing the number of "residually unemployed".
"That is why we simply cannot go on talking about the importance of getting people into work while we persist in creating disincentives for the very people we say should be in work," he said.
The report has been presented to Tory leader, David Cameron - but the Conservatives say it merely raises "interesting questions" which they would be "looking at closely".The report has been presented to Tory leader, David Cameron - but the Conservatives say it merely raises "interesting questions" which they would be "looking at closely".
Addressing union leaders on Tuesday Prime Minister Gordon Brown pledged to cut unnecessary programmes and low priority areas to stabilise the public finances.Addressing union leaders on Tuesday Prime Minister Gordon Brown pledged to cut unnecessary programmes and low priority areas to stabilise the public finances.
He contrasted his approach with the Tories who he said were committed to "across-the-board" cuts in spending. He said the Tories were committed to "across-the-board" cuts in spending.
The Tories say their welfare reform proposals are focused on getting people back into work and have pledged to review the status of all those currently on incapacity benefit. The Tories say their welfare reform proposals are focused on getting people back into work and have pledged to review the status of all those on incapacity benefit.
The Lib Dems say more than £1.3bn could be saved by reducing the amount of family tax credits paid to better-off families.The Lib Dems say more than £1.3bn could be saved by reducing the amount of family tax credits paid to better-off families.