Welfare reform: who will suffer most?
Updated on 30 June 2010
With Britain's ballooning welfare budget, Iain Duncan Smith says there is "no choice" but to set a bold agenda for reform. Writing for Channel 4 News, Chris Goulden of the Joseph Rowntree Foundation says the agenda will see pain for most, but chronic pain for those in poverty.
Analysis of the budget by the Institute for Fiscal Studies shows that the reforms will bring pain for most - and a strong likelihood of chronic pain for people in, or at risk of poverty.
The impact of the coalition budget would have been even harsher if not for the inclusion of Labour's last-minute progressive reforms.
The pain will be made worse by the regressive impact of suggested spending cuts.
The debate now opening up is how to decide who is in poverty or in need, and how to prioritise between these different groups in a time of austerity.
Working-age adults without children were the forgotten cause in Labour's anti-poverty agenda. Before the budget, there were some signs that this was not going to continue under the coalition.
More from Channel 4 News on welfare reform:
- FactCheck: Osborne on housing benefits, child poverty and taxes
- Budget cuts will hit the poorest hardest
- Budget 2010: welfare benefits cut by £11bn
The review of poverty in the UK by the Cabinet Office for Iain Duncan-Smith a few weeks ago drew particular attention to the large rise in poverty among working-age adults since 1998/99.
But downgrading the rate by which benefits are increased each year will hit this group the hardest, as they will not be protected by either Child Tax Credits or Pensions.
The detailed story on how benefits, employment and poverty are meant to interact remains unclear.
Next week, the Joseph Rowntree Foundation is publishing the 2010 update to its 'Minimum Income Standard for the UK'.
This research describes the cost of a minimum acceptable standard of living, as defined by members of the public.
It is a goal we should aspire to enable everyone in society to reach.
In 2009, however, it highlighted how far someone in a minimum wage job is below this threshold – about £1.40 an hour for a full-time worker with no children.
Our research shows that bad jobs do not provide a sustainable route out of poverty and that it is not only benefit levels that put people below an acceptable standard of living.
Frank Field therefore puts his finger on one aspect of the problem that is backed up by research – the lack of well-paid, good quality, secure jobs with a decent chance of career progression; particularly for young men and in certain longer-deprived areas of the country.
Iain Duncan Smith sets out 'bold' reform
In a speech this morning, the Secretary of State for Work and Pensions Iain Duncan Smith outlined his agenda for a radical reform of the welfare state.
"This agenda is, I believe, a bold agenda. But we have no choice," he said.
The coalition's plan focuses on two main areas: housing benefits and the new Work Programme, which aims to get people who can work off long-term incapacity benefits.
Mr Duncan Smith said: "There is nothing good about a society that accepts people growing up without work, aspiration or hope.
"The prize is a society more in balance where work is well distributed and where children grow up seeing work as a normal activity and responsibility is ingrained in them."
But this cannot simply be put down to fecklessness – there is a much bigger problem with the structure of the UK labour market, with dwindling opportunities to escape from low-paid, unskilled jobs.
Many just churn between work and benefits – over half of men who make a new JSA claim were last claiming less than six months beforehand.
Despite making much of high marginal tax rates during the election campaign, the Treasury's own analysis shows that the effect of the budget leaves them more or less unimproved.
We need a much better understanding of how to build realistic ladders out of low-pay.
We need a full anti-poverty strategy that helps and encourages industries and employers to provide more opportunities for workers to escape poverty.
This will involve looking at more than access to professional jobs, as per the Milburn Review. We can't all expect to become lawyers and doctors – it's more mundane than that, perhaps, but much more vital to society and the economy in the long run.
Chris Goulden, Programme Manager, Joseph Rowntree Foundation
