This October, the Government will roll out the most important changes made to the benefits system since the war. The introduction of Universal Credit will make sure that, in this country, work always pays. It hardly sounds revolutionary. Surely, it should always pay to work. For every pound you earn, you should be better off. Whether you’re a small business, parent or self-starter, the suggestion that it pays to work isn’t just a nice idea – it’s your entire livelihood. It’s how the system should be run.
But for over a decade, and for millions of people, it hasn’t been the case. For years, the gap between those who earn and those who live on benefits has grown. Consider this fact: since 2007, the pay of those working in the private sector rose by 12 per cent. In the same five-year period, benefits going to those of working age rose by nearly twice that amount. During the recession, while British working families tightened their belts, benefits soared. Those going out to work weren’t getting a fair deal. To them, it may have felt like work didn’t always pay.
I believe that investing in welfare is crucial – but I also believe that it only works if you’re getting help to those who need it. If you’re doing it with no results, it’s disastrous.
The benefits system has needed attention for a long time. The last Labour government spent billions on welfare, but their approach lacked results. During that administration, welfare spending increased by 60 per cent, but that increase was never reflected in the number of people getting back to work. In fact there were half a million more unemployed people by the time Labour left office, compared to when Blair was elected.
Picking up the tab
The system simply wasn’t getting jobseekers the jobs they sought. Labour voted to increase welfare spending again and again, without considering the effect that the spending was having, either on the people it was designed to help or those working to support the system. Meanwhile, the taxpayer picked up the tab and has continued to do so throughout the downturn. The cost of uprating benefits has topped £6.3bn since 2008 alone. In difficult times, it’s an unwelcome squeeze for those working to pay the bills.
Labour’s favourite statistic in this debate is that over the past 10 years, wages have outstripped rises in the Jobseekers’ Allowance. But that’s moving the goalposts. By stretching to a longer period of time, which includes the boom years, and only including Jobseekers Allowance in their calculations, Labour have skewed their figures.
Tomorrow, Parliament will vote on the Welfare Uprating Bill – measures which will save the economy £4bn. Before they consider voting against the proposals, Labour have to let the country know how they’d fund their opposition to our plans. That extra money would need to come from somewhere. Would they close hospital wards, take money out of the schools budget or perhaps slash pensions?
Labour face the prospect of having a completely unfunded welfare pledge. They are raising expectations. But overpromising is a dangerous game, especially when they know they cannot deliver.
We’ve had to make difficult decisions on spending, but we’ve made one thing clear. We will never stop supporting those who need our help. So we’re protecting benefits for carers. We’re protecting disability benefits such as Disability Living Allowance, the disability elements of tax credits and the Attendance Allowance. Plus the Basic State Pension is protected by our triple lock guarantee leading to the biggest ever rise in the weekly pension this past year.
Taken together with other pro-job measures we’ve introduced, there are signs of real progress. Nearly 30 million people are now in work, which is a record high. More women are in employment than ever before, and inactivity levels are close to the lowest in a generation.
We’re also making sure that work pays. The personal allowance is about to rise to an unprecedented £9,440 for each individual. As a result of that change, 25 million Britons will pay less tax – and two million of the lowest paid workers will be taken out of the tax system altogether. That’s hardly about targeting shirkers – it’s a basic principle that those who go out to work each day should never be in the position where they’re worse off.
With resources stretched, we need to demonstrate that our country’s system is just. It’s not enough to simply reduce the deficit and put this country back on track. We also need to make sure that, while we’re making those tough economic choices, we’re rewarding people who want to get on in life and do the right thing. We need to make sure that people are progressively better off in work than they would be on welfare. In short, we need fairness. Our welfare reforms are a stepping-stone to a fairer society.
Labour have long since forgotten that people work hard to pay their taxes and support our welfare system. Tomorrow’s vote will be an opportunity for them to show they get it, by joining us in the fairness lobby.
Grant Shapps is a Conservative MP and Minister without Portfolio.