How to run a country: working age welfare

The welfare state is central to the wellbeing of the nation. Multiple objectives, however, require trade-offs to be made and government must balance the interests of claimants and taxpayers. The legitimacy of the welfare system relies in large part on perceptions of fairness, a theme that the Coalition Government adopted and one that the new Government looks set to continue.However where the Coalition was able to make significant cuts to expenditure, the current Government faces a harder task.

The chapter argues that the Government should avoid making short-term cuts that will erode the wellbeing of those on very low incomes and instead focus on the drivers of demand. As such, the Government should prioritise moving people into and keeping them in work. Within this it must have a particular focus on tackling the high number of people on sickness and disability benefits.

This will require reform not just of the way employment support services are delivered but of the design of Employment and Support Allowance itself. The Government must also seek to address the other key drivers of high benefit expenditure: a shortage of social housing and the persistence of low wage, low skill jobs. The chapter recommends that the Government:

• Stops the freezing of benefits;
• Abolishes Child Benefit and compensates low income families through Universal Credit;
• Taxes or means-tests Disability Living Allowance and Personal Independence Payment;
• Reconsiders extending Right to Buy to Housing Association tenants;
• Completely overhauls Employment and Support Allowance, including increasing conditionality and reducing the Work Related Activity Group rate to that of Jobseeker’s Allowance.

Please read the accompanying blog here. Read Senior Research Director Charlotte Pickles' article on welfare reform for ConservativeHome. Read Stephen Evans', Deputy Chief Executive, NIACE blog for Reform here.