The Government faces a tough task in fixing ‘broken Britain’ by 2020, but an ongoing programme of welfare reform will give it a fighting chance of seeing through this task.

Its welfare reform programme since 2010 has helped the Government make some welcome progress. Record numbers of people are now in work and the welfare bill for households below retirement age is being brought back under control.

Much of this progress has been achieved through the Government’s welfare-to-work scheme, known simply as the Work Programme. It has helped large numbers of people move from out-of-work benefits into a job, and kept them there for at least six months. The Work Programme’s overall success rate is marginally better than those programmes it replaced, and at a much lower cost per person.

That’s the good news. But the flipside of this success is that the bill taxpayers previously were asked to meet for out-of-work benefits has been switched to in-work benefits. Many of the jobs into which people have been placed since 2010 pay low wages that are then only topped up to a more adequate minimum by support from the tax credit and Housing Benefit systems. The cost to taxpayers of these two wage subsidies has grown exponentially, not only since 2010, but over the past decade. Low pay has long characterised too many regions and industries in this country, and two thirds of Britain’s poor now work for their poverty. 

One challenge which the Government will therefore need to meet head on with its welfare reform programme, is to help low-paid workers raise their earnings. The aim here is to enable people to become financially independent, thereby minimising the need to draw benefit. With the new National Living Wage of £9 an hour by 2020, the Government has a proper wage floor on which it can build. But the desired outcome can only ever become affordable (i.e. be achieved without simultaneously costing jobs) if the Government tasks the Department for Business, Innovation and Skills, in partnership with businesses and trade unions, with raising productivity. Only by increasing productivity across the board, starting in low-paying industries, can real living standards be raised and sustained over the longer term.

A second major challenge for the Government’s welfare reform programme is to extend job opportunities to the least advantaged in our communities who are participating in the welfare-to-work scheme. Those with an illness or disability, but who would like to work, as well as those aged over 50, tend to be the hardest to help into the labour market. The Government’s welfare reform programme should therefore scale up the voluntary Work Choice programme which helps people with an illness or disability overcome some of the steepest barriers that stand between them and finding work. Such an effective programme, which has produced impressive results since being rolled out on a limited scale, should then form a main plank of the new Work and Health Programme which replaces all existing welfare-to-work provision next year.

Two further moves would enhance the job prospects of the least advantaged. Those private and voluntary organisations that are paid to deliver the main welfare-to-work programme should be given the chance to help the least advantaged as early as possible during a benefit claim, and the payments on offer to these organisations to help this group find and stay in work should more accurately reflect the challenges involved in addressing those difficulties which have prevented them from working. 

Moreover, a key reform to help claimants aged over 50 will need to involve Jobcentre Plus finding out during a first signing-on meeting whether they are equipped with the computer skills that are so necessary – not only to look for work, but to hold down many of the jobs that are available in today’s jobs market. Failure to do so can result in an extended period of time on the welfare rolls. Voluntary groups, mutual and social enterprises should then be invited into Jobcentre Plus offices to help this group of claimants develop their confidence and ability with the necessary IT equipment.

Here then are two of the key challenges confronting welfare reformers who have been tasked with fixing ‘broken Britain’. Success on these two fronts – raising productivity and real wages across the board, as well as guaranteeing the prospect of work for all – would represent major progress.

By Rt Hon Frank Field MP