Tory work and pension minister Iain Duncan Smith’s new welfare reform programme represents the most brutal government attack on poor and unemployed people since the creation of a welfare state.
Around five million people will be affected—the 1.5 million on Jobseeker’s Allowance (JSA), 700,000 single parents and 2.6 million claiming incapacity benefit.
The Tories and the media have laid the ground for this assault by painting a picture of the unemployed as “workshy” and “scroungers”.
And the new reforms will have employers rubbing their hands with glee.
The Tories want to smash the idea that the welfare system is there to protect people if they lose their jobs.
Duncan Smith called it a “sin” if unemployed people do not take up available jobs.
He claims the new programme will “make work pay” and demands that benefits claimants enter into a “claimant contract”.
The Tories plan to introduce the system for new starters in 2013 and bring it in for everyone by the end of 2017.
But the punishment system starts immediately.
A claimant who fails to take up a job offer will lose their benefits for three months. A second refusal will mean you lose benefits for six months and a third for three years.
But the penalties go much deeper.
Disabled people and lone parents with children under five will be forced to attend “work preparation” and “keeping in touch” interviews. They will be expected to be preparing for work.
A parent who fails to attend an interview because their child is ill can be “sanctioned”—and have their benefits withdrawn for a week.
The proposals also suggest withdrawing the hardship fund currently available to those who lose their benefits—a lifeline that prevents people sinking further into poverty.
Charities are worried that the two million children living in households where no one is employed will be hardest hit.
The reforms also include changes to the way in which benefits are administered.
Some 30 different benefits will be combined into a new Universal Credit.
These include JSA, housing benefit, child and working tax credits, income support and employment support allowance.
Overall, the Tories have announced plans to slash £18 billion from welfare benefits.
Currently, every £1,000 increase in household income sees tax credits cut by £390. Under the new plans, that could rise to £650.
Some benefit claimants who lose 73p in every extra pound they earn if they take a few hours work will see that rise to 76p under Duncan Smith’s plans.
As the Financial Times put it, “few bankers would get out of bed to earn extra if their tax rate were 76p in the pound”.
Help with childcare will be restricted to those in work, and will be reduced as earnings increase.
The government admits: “it is possible that, in some families, second earners may choose to reduce or rebalance their hours or to leave work”.
Duncan Smith claims that his reforms will reduce the number of workless households by 300,000—that is because they will be forced into low-paid employment.
And more will be forced off benefits for failing to take up work that doesn’t exist.
On average, five people compete for every job. Job centres currently have 383,344 jobs on offer across Britain, but many are part time.
Yet 2.5 million people are unemployed—and there are 1.2 million part-time workers who want full-time work.
The Tories want the new programme to break the idea of “welfare”—as the US president Bill Clinton did in the 1990s when he introduced a similar scheme.
The attack on welfare also threatens the wages of those who have work—since unemployed people will be pushed off benefits and into badly paid jobs.
But a 2008 Department for Work and Pensions review of these schemes in the US, Canada and Australia showed they don’t help people find work.
It stated they “can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers”.
Unemployed people will be hounded as scroungers under the new scheme when, in reality, they are the victims of a rotten system.
There is a simple way to really make work pay—increase wages.