The Devil and the detail – Inclusion’s Fran Parry on the Welfare Reform Bill

Last Thursday saw the very high profile launch of the Coalition’s Welfare Reform Bill. As befits a Prime Minister who was previously a PR professional it is perhaps unsurprising that he took the lead in the launch of a Bill that most agree has the potential for the most far reaching welfare reform since the Second World War. That said we all need to pop a reality pill because the past David Cameron painted was pretty much unrecognisable to anyone who actually lived through it. We also need to be mindful that these reforms will impact significantly on very many households both positively and negatively.

There’s a considerable consensus of support across the party lines for the Bill, which primarily sets out the changes to be made to the tax credits and the benefits system . This is hardly surprising when one considers that the work began under the last Government. Who’d argue that making work pay is a “no-brainer”? However, the cracks are already beginning to show around the specifics and the “devil” really is “in the detail” on this one. The Bill will need to be monitored closely, and challenged appropriately, as it proceeds through its Committee stages and the House of Lords.

There’s much that’s praiseworthy about the Bill. The aim of improving financial incentives to work and simplifying the system, both for recipients and those who administer it, cannot be a bad thing. It’s absolutely right that these reforms are happening in tandem with the major reform of employment support through the Work Programme. But, there are some sizeable caveats including: where the jobs are (and will be) geographically and sectorally; what the skills requirements are that are attached to these jobs; Jobcentre Plus’s and the Work Programme’s ability to meet employer demand side requirements – and a sluggish economy to take in to consideration too. All these tricky questions are fundamental to the success of the Coalition’s wider welfare policy.

More important still will be ensuring that there really will be no losers in the reform as the Coalition claims. And, it’s becoming clearer as we start to unpick the detail that there will likely be very significant losers with the Coalition itself saying that while 2.7 households will see an increase in their entitlements, 3.5m will see no change and 1.7m households will experience a reduction. 1.2m of this latter group are already amongst the poorest. We should also reflect on the working families who will be disadvantaged by receiving no credit at all if they have more than £16,000 in savings. What incentive is that to save for the betterment of your family and children?

It’s to be hoped that the Coalition will continue to listen pro-actively to the experts in the field. They clearly can listen. The plans to impose a 10% Housing Benefit cut for anyone unemployed for more than a year were quietly dropped. Maintaining an effective and humane balance of challenge and support to jobseekers will be an imperative.

As well as the detail there are some glaring fundamental issues that need to be addressed including the handling of childcare costs. Childcare, says the Daycare Trust, rose twice as fast as wages last year but childcare credits will be cut by 10%. Where’s the incentive here for single mums to work? The matter of Council Tax benefits has to be bottomed out too.

Skills as ever remains an over riding issue. Low earning, low skilled job seekers cycling in and out of temporary work in insecure jobs never getting the chance to get their feet on the skills ladder and gain the work-based skills UK plc actually needs. We need to see evidence of continuing joined up thinking going on between John Hayes’ and Chris Grayling’s teams and to encourage more engagement on this issue and less diversion on the relatively small numbers of individuals who “play” the system.

Critical will be not losing sight of the massive ambition of Universal Credit. It’s too easy to be a naysayer. Most agree this is the way forward. Better to be on board and offer critical support than shoot barbs from the sidelines. This is a once in generation (possibly even a lifetime) opportunity to get it right – lets get on with it.

Inclusion will be publishing our response to issues as the bill progresses at http://www.cesi.org.uk/NewPolicy/news/welfare_reform_bill_inclusion_response

Fran Parry is director of policy & communications at the Centre for Economic and Social Inclusion