21st Century Welfare

This discussion document outlines illustrative examples of structural reform, including options presented by external organisations.


Foreword by the Secretary of State 1.
Executive summary 2.
Chapter 1 Introduction 4.
Chapter 2 Problems with the current system 7.
Chapter 3 Principles and options for reform 17.
Chapter 4 Other areas of reform 27.
Chapter 5 Delivery of a reformed system 32.
Chapter 6 Conclusion 38.
Chapter 7 Questions 40.
Annex Seeking views 42.
List of figures.
Figure 1 Benefits, Tax Credits and earnings 12.
Figure 2 Universal Credit – outline structure 20.
Figure 3 The Single Unified Taper 23.
Figure 4 Conditionality 28.
Figure 5 A real-time payment system 35.

Foreword by the Secretary of State

After less than three months of innovative Coalition Government, we want to begin real change to the benefits system by making it simpler and more efficient, with a view to fewer benefits, fewer layers of bureaucracy and with financial support firmly focused on making work pay. Less than one year ago, I said that unless politicians and civil servants acted to reform our complicated and inefficient benefits system, then further talk about work being the best route out of poverty would be more empty rhetoric.

Too often governments have tried to tackle poverty but ended up managing its symptoms. The changes outlined here are based on a recognition that poverty cannot be tackled through treating the symptoms alone.

The benefits system has shaped the decisions of the poorest in a way that has trapped generation after generation in a spiral of dependency and poverty. This has cost the country billions of pounds every year in cash payments and billions more in meeting the social costs of this failure. The only way to make a sustainable difference is by tackling the root causes of poverty: family breakdown; educational failure; drug and alcohol addiction; severe personal indebtedness; and economic dependency.

These problems are interrelated and their solutions lie in society as a whole. However, we must recognise that the benefits system has an important role to play in supporting personal responsibility and helping to mend social ills.

We are going to end the culture of worklessness and dependency that has done so much harm to individuals, families and whole communities. Our aim is to change forever a system that has too often undermined work and the aspiration that goes with it.

By actively putting work at the centre of working-age support we want to create a new contract with the British people, which is why we are consulting them in this paper. We will help them to find work and make sure work pays when they do. They in return will be expected to seek work and take work when it is available. No longer will we leave people for years on long-term benefits without contact or support. This contract is about a responsible society working together to improve the quality of life for those who are worst off.

The Rt Hon Iain Duncan Smith MP
Secretary of State for Work and Pensions