Theresa May: Britain's costly welfare system now needs urgent reform

One of the most difficult challenges facing the Labour Government today is welfare dependency. There are nearly five million people claiming some form of out of work benefit. This is not a result of the downturn but a social catastrophe that has always been lurking on the sidelines. The costs of welfare dependency, both social and financial, are enormous and complicated, and fixing this problem is part of the challenge of fixing our broken society and our economy.

On top of this existing problem, we now have to cope with rising unemployment – last week that figure reached two million. We are seeing redundancies in every sector and in every part of the country.

The current welfare system is not fit for purpose. After a decade of economic boom there are 2.5 million people on incapacity benefit. It is my job to face up to this challenge and take on those who say recession is a convenient excuse to do nothing. We cannot afford to do nothing. We need a robust welfare system able to withstand every twist and turn of the economic cycle. A strong welfare state will help everyone, be flexible enough to adapt to changing circumstances and offer real financial incentives to get people into sustainable work.

We are committed to working with the private and voluntary sectors to roll out our welfare to work provision and we are currently exploring ways in which we can help those providers take on this challenge in a recession.

I'm also working with my colleagues in the shadow Innovation, Universities and Skills team to make sure that our ideas help people through the whole work and training cycle.

This particular recession is going to have an acute impact on the pattern of employment in this country. The numbers of people who are out of work are swelling. But these policies cannot just be a sticking plaster for the short term. We want to be much, much more radical than that.

The ideas we are working on will offer help to people through the downturn and beyond. Britain should weather the downturn and emerge from it stronger, with a skilled workforce ready to take advantage of new opportunities.

Theresa May, the shadow leader of the House of Commons, is addressing the St Steven's Club, in Westminster today