Cameron: benefits change can end welfare gap

In a speech on Monday afternoon the prime minister is to suggest stripping housing benefit from the under-25s and forcing them to live with their parents.

He will also float time-limited unemployment benefit, and hint at restricting handouts for those who have large numbers of children.

The prime minister will say the coalition’s reforms are based on getting people into work, insisting that “compassion isn’t measured out in benefit cheques – it’s in the chances you give people”.

Mr Cameron will tell an audience in Kent: “We have, in some ways, created a welfare gap in this country – between those living long-term in the welfare system and those outside it.

“Those within it grow up with a series of expectations: you can have a home of your own, the state will support you whatever decisions you make, you will always be able to take out no matter what you put in.

“This has sent out some incredibly damaging signals. That it pays not to work. That you are owed something for nothing.

“It gave us millions of working-age people sitting at home on benefits even before the recession hit. It created a culture of entitlement.

“And it has led to huge resentment amongst those who pay into the system, because they feel that what they’re having to work hard for, others are getting without having to put in the effort.”

Mr Cameron will say it is time to ask “searching questions about working-age welfare: what it is actually for; who should receive it; what the limits of state provision should be; and what kind of contribution we should expect from those receiving benefits”.

But he will risk fuelling friction with the Liberal Democrats by signalling that the Tories want a much more radical programme than has currently been agreed.

“We need to think harder about who receives working-age welfare,” Mr Cameron will say. “If it is a real safety net, then clearly it’s principally for people who have no other means of support, or who have fallen on hard times.

“But there are many receiving today who do not necessarily fall into these camps.

“For example, the state spends almost £2bn a year on housing benefit for under-25s. There are currently 210,000 people aged 16-24 who are social housing tenants. Some of these young people will genuinely have nowhere else to live – but many will.

“And this is happening when there is a growing phenomenon of young people living with their parents into their 30s because they can’t afford their own place – almost three million between the ages of 20 and 34.

“So for literally millions, the passage to independence is several years living in their childhood bedroom as they save up to move out; while for many others, it’s a trip to the council where they can get housing benefit at 18 or 19 – even if they’re not actively seeking work.

Mr Cameron will indicate that he wants to adjust the benefits system so it does not encourage people to have large numbers of children.

“If you are a single parent living outside London, if you have four children and you’re renting a house on housing benefit, then you can claim almost £25,000 a year,” he is to say.

“That is more than the average take-home pay of a farm worker and nursery nurse put together. That is a fundamental difference.

“And it’s not a marginal point. There are more than 150,000 people who have been claiming Income Support for over a year who have three or more children, and 57,000 who have four or more children.”

The premier will admit that he is straying into “difficult territory”. “But at a time when so many people are struggling, isn’t it right that we ask whether those in the welfare system are faced with the same kinds of decisions that working people have to wrestle with when they have a child?” he will add.

Mr Cameron is to suggest that more should be demanded from claimants, complaining that it is possible to stay on benefits for years without being forced to achieve basic literacy and numeracy skills

“And we have yet to introduce a system whereby after a certain period on benefits, everyone who was physically able to would be expected to do some form of full-time work helping the community, like tidying up the local park. But wouldn’t this be a perfectly reasonable thing to expect?”

The Prime Minister will indicate that most of his plans would be taken forward by a Tory government in the next parliament.

The Lib Dems have insisted they are “very relaxed” about the speech, stressing that both party leaders will need to address comments at their political base from time to time.

But sources also made clear that the junior coalition partner did not support much of what Mr Cameron was proposing.

Work and pensions secretary Iain Duncan Smith told the BBC this morning that the housing benefit payment system for under-25s would be restricted rather than eradicated altogether.

“The details of these, of course, we have to be careful about. We have to be sensitive to the different reasons people have housing – people coming out of care, being in difficulties in foster care.”

He added: “He’s looking, quite rightly, at the balance between those families that work and try and do the right things against those families that aren’t necessarily working and have understood how to work the system.”

Shadow work and pensions secretary Liam Byrne said: “We don’t disagree with the basic principle that you should be better off in work. That’s why Labour introduced tax credits to help millions get back into work. That’s why we are angry that thousands of people are now better off on benefits.

“I think he (Mr Cameron) is coming at it from the wrong approach for the long term.”

In a statement, Mr Byrne said: “David Cameron has put worklessness to a record high and he’s inviting us to believe that it’s the fault of everyone except him.

“It’s now very clear that a welfare revolution was all talk. Out-of-work benefits are going through the roof. Each week we hear of another new initiative, another crackdown, another test.

“Meanwhile in the real world, the cost of out-of-work benefits is up nearly £5bn, housing benefit over £4bn, the work programme is failing and the multibillion-pound universal credit scheme is running late and over budget.

“Welfare spending is going up under this Government because too many people are out of work.”

‘Wrong approach’

Shadow work and pensions secretary Liam Byrne said: “We don’t disagree with the basic principle that you should be better off in work. That’s why Labour introduced tax credits to help millions get back into work. That’s why we are angry that thousands of people are now better off on benefits.

“I think he (Mr Cameron) is coming at it from the wrong approach for the long term.”

In a statement, Mr Byrne said: “David Cameron has put worklessness to a record high and he’s inviting us to believe that it’s the fault of everyone except him.

“It’s now very clear that a welfare revolution was all talk. Out-of-work benefits are going through the roof. Each week we hear of another new initiative, another crackdown, another test.

“Meanwhile in the real world, the cost of out-of-work benefits is up nearly £5bn, housing benefit over £4bn, the work programme is failing and the multibillion-pound universal credit scheme is running late and over budget.

“Welfare spending is going up under this Government because too many people are out of work.”

Channel 4 News spoke to two experts in welfare policy who both questioned whether these proposals fit in with the government’s thinking on welfare to date.

Tony Wilson, director of policy at the Centre for Economic and Social Inclusion, described the ideas set out in Mr Cameron’s speech as “a set of modest proposals designed to reduce the welfare bill rather than a fundamental overhaul of the welfare system”.

He said the proposal to reward people who have paid into the welfare system with more support when they fall on hard times was a departure from the government’s previous benefit policies:

“I am not sure that this has been totally thought through,” he said. “The consequence is that you pay welfare for longer.

“That doesn’t seem consistent with what the government has done in the past or with the universal credit. It is odd to reopen that debate two years after making a decision.”

Jonathan Wadsworth, a senior research fellow in the London School of Economics’ centre for economic performance questioned the idea of taking forward regional benefits at a time when a housing benefit cap is being implemented. “You have to take the whole thing together,” he explained.

Professor Wadsworth added that the constrained jobs market makes it difficult to operate a welfare system that is designed to encourage people to take advantage of job opportunities: “It is much easier to do in good times then where we are now. In policy terms it is the wrong time to talk about these things.”

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