Tailor benefits to match local needs and costs, says Citizens Advice charity

Critics say 'local welfare' would lead to 'postcode lottery' and that people would move to places where there were higher benefit rates

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Indy Politics

Britain’s welfare system should be radically reformed to allow different rates of benefits across the country, the charity Citizens Advice will say this week.

The national welfare budget should be removed from the Treasury and devolved to local councils, who would be allocated funds depending on working-age population and levels of deprivation, it believes. Councils would then decide how to spend the money – cutting unemployment benefits where that would encourage more people to work, for example.

Such “local welfare” would be controversial; critics say it would lead to a “postcode lottery” and that people would move to places where there were higher benefit rates.

However, the Citizens Advice report rejects this claim, insisting that councils would be tailoring their welfare spending according to existing local needs. Local authorities are already able to set their own council tax rates. They work with the Department for Communities and Local Government on varying business rates, and ministers are looking for other ways to devolve power to the regions in the wake of the Scottish referendum.

The Citizens Advice report is being launched to coincide with this week’s 100-day countdown to the general election. The charity is urging all political parties to take a fresh look at welfare. It says that, in contrast to other areas of government policy, welfare is stuck in the 1970s, with an over-centralised bureaucracy. The national rollout of Universal Credit has been hugely delayed, in part because of an overly bureaucratic Whitehall IT system.

The report says: “Because the reality of need differs around the country, it is illogical that benefit rates do not. A weekly Jobseeker’s Allowance payment of £72.40 goes substantially further in Blackburn than in Islington. There is also variance across the UK on housing, wages, childcare, petrol, public transport, gas and electricity costs.

Energy bills in 2012 were highest in the North-west, a region which contained five out of the 10 most deprived electoral wards in England. Meanwhile , workers in Reading earn an average £200 more per week than those in Hastings, while the chances of being low paid are highest in the North-east, where 7.5 per cent of jobs  offer only the minimum wage .

The report adds: “National out-of-work benefit rates just cannot respond adequately to regional variances in wages and in the cost of living.

“National retailers expend significant resources on researching local areas before making commercial decisions to invest – because local variance matters.”

Citizens Advice says that under the reforms the welfare budget would remain the same, with no added cost to the public purse. It also calls for an “intelligent front line” in welfare, especially for those who deal with complex cases – modelled on professional social work or nursing qualifications.

In an illustration of the reforms, of the £81.4bn budgeted by the Treasury to be spent in 2015/16 on working age benefits and tax credits closely linked to public services, £3.25bn would be allocated to Greater Manchester (4 per cent of the total, which takes into consideration the size of its working-age population, and scale of local deprivation). The local authority would have a statutory responsibility to usethis funding to promote core social objectives – perhaps reducing unemployment benefits for young people to strengthen incentives to earn or study.

Gillian Guy, the chief executive of Citizens Advice, said: “The Government is missing a trick by not looking at welfare from a local perspective. With billions spent each year through the benefit system, it’s important to consider how this money could work harder to tackle the different social and economic challenges around the country.

“In its pioneering work with Greater Manchester, the Government has already shown a welcome willingness to share some of the financial risk and reward around public expenditure. In the future we may look back at this example as the first step towards a broader and more whole-hearted localism.”