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Iain Duncan Smith: Reforming our pensions and welfare system

Rt Hon Iain Duncan Smith, Sunday, March 6 2011

Iain Duncan Smith

When we last met, in Birmingham in October, I told you to get ready for the biggest welfare reform since 1945. Well, we've started.

Last month I introduced the Welfare Reform Bill to Parliament - ...and I tell you, after all the debates, all the visits, all the years I've been working on this issue, it felt good.

It felt like the beginning of the end.

The end of wasted lives, wasted money, the end of a system which keeps people in poverty and dependency...

...The end of welfare as a trap.

Labour's legacy

Let no-one underestimate what we're trying to do - what we have to do.

When we came into office last year there were some five million people on out of work benefits.

One in four working age adults weren't working at all.

And working age benefits and tax credits were costing us, the taxpayer, almost 90 billion pounds a year.

A huge proportion of our national wealth - much of it going on people who either can work but won't, or want to work but can't.

It's a tragedy for our society and a nightmare for our economy.

The challenge

My first instinct when I arrived in Government was to understand the problem, so that we could tackle it effectively.

It wasn't as easy as it sounds.

Debate ensued on one of the questions you'd have thought would have been the most straightforward to answer - just how many benefits are there?

It turns out that there are multiple possible answers, depending on whether you include premiums, additions, passported benefits and a host of other payments with improbable sounding names.

By the time my officials got to the end of the explanation I was almost sorry that I'd asked.

As if that wasn't bad enough, they then explained the different rates at which benefits are withdrawn as someone moves into work - close to 100% in some cases.

Not that a claimant would necessarily know it - so many different benefits had so many overlapping rates that you'd be lucky to understand your own withdrawal rate without the help of a computer model.

No wonder the people who depend on benefits are so confused - and no wonder it's so hard to get out of the web of dependency.

People know that if they do the right thing they'll be punished, and if they do the wrong thing they'll be alright.

The system is crazy and wasteful and wrong.

Changing lives

But I'm here to tell you it's changing.

I want to congratulate my colleagues - Chris Grayling, Steve Webb, Maria Miller, David Freud.

As well as Andrew Selous, Chloe Smith and Esther McVeigh.

They're the best team I could wish for, and they are working night and day to reform our pensions and welfare system - and on behalf of all of us I thank them.

We're doing something pretty huge, and we're doing it with energy and passion.

For the first time, the DWP has a proper mission: not just spending taxpayers' money, not just redistributing the national wealth.

But changing lives.

It's as simple and as big as that.

Everything we do - from pensions to unemployment and disability benefits - everything we do is about seeing lives transformed.

It's not just about making sure everyone has enough money to live on.

That's the starting point.

But not the destination.

The destination is making sure everyone has a life they can be proud of:...

...supporting themselves, and their families, if possible...

...and if it's not possible, then receiving the support they need, with dignity and kindness and respect.

The principle of reform

So that's the ambition.

And we've made progress.

Less than a year into office and we've got a real welfare reform Bill into Parliament at last.

Let me set out the principle behind the Bill.

It's this:

We will make sure it pays more to be in work than it does to sit on benefits.

And because of that, we can say that if there's work you can do, we expect you to do it - or no more benefits.

Work that pays.

Benefits with conditions.

The two halves of the equation: fairness for the jobseeker, fairness for the taxpayer.

This Bill will help jobseekers become taxpayers - and more than that.

Because when you start to look after yourself and your family...

...when you start playing your part as a parent and a citizen... end up being a neighbour too.

It's a strange thing I call collective self-interest.

You're busier than ever, but you find you want to help, to get stuck in with your community.

You're a giver not a taker.

Third sector

And that's why I'm so passionate about the third sector.

Government is vital.

But it can't do everything.

In actual fact it can't do much except organise the money.

It's people - not politicians and civil servants, but ordinary people- who have the answers, as neighbours and citizens, in private and voluntary organisations.

Helping people change their lives - that's the job of those with the flexibility, the compassion, the local knowledge...

...those with the time and ability to make relationships that last with the people who need help.

That is why we have created a new Work Programme to help those with the most significant barriers to get back to work.

The voluntary sector will play a crucial part.

For the first time we won't just talk about how good the voluntary sector are, we will get them to use their skills to change lives on a massive scale.

That is why I am passionate about the Big Society.

It's another name for what I've been saying for years - we need a welfare society not a welfare state.

Where help is available in difficult times from someone who lives near and who cares about you.

Jobs or reform?

Now you might have heard the counter-argument to all this.

Labour think they have a good line which they're rather pleased with.

They say it's all very well to reform welfare.

But - they say - there's no point reforming if there aren't any jobs.

Getting people off welfare and into work... won't work... if there's no work... for people to go to.

That's Labour all over.

A combination of the short-sighted and the bleeding obvious.

Of course we need jobs.

That's why this Government is so unashamedly pro-business.

Investing in science, reforming higher education, cutting red tape, building the infrastructure... that Britain can lead the world in economic development once again - growing businesses and creating work.

But it's also short-sighted to say there aren't any jobs at the moment.

The fact is there are around half a million vacancies in the economy at the moment.

It's not the absence of jobs that's the problem - it's the failure to match the unemployed to the jobs there are.

The last 13 years saw the number of people in employment increase by some 2.5 million.

And yet we had around five million people on out-of-work benefits ten years ago - and around five million people on out-of-work benefits today.

So who took all the new jobs?

Over half of them went to foreign nationals.

This isn't about immigration. It is a simple question of supply and demand.

We had a supply of labour - the unemployed.

We had a demand for labour - all the new jobs.

But we couldn't match them up, so we had to import people who could do the work.

So much for Brown's British jobs for British workers.

The choice

That's the problem we have to tackle - whether our economy is booming or struggling.

Because the economy will recover.

Jobs will be created.

There will be a need for workers once again.

And when that day comes we will either reap the rewards - or reap the whirlwind.

We'll either have the whole working age population in the active economy -working or available for work, skilled and incentivised to get a job.

Or we'll have five million people still sitting on the sidelines -

...poor, demoralised, excluded, with their children facing the same life their parents led, another generation lost.


I once promised that whatever I did in politics I would do what I could for people suffering from worklessness and dependency in housing estates all over Britain.

I am more passionate than ever to fulfil that promise.

Because this isn't really about our national finances.

That's the starting point.

It's not the destination.

Yes we have to balance the budget.

But beyond that - above that - there's a higher purpose.

We have to do right by our fellow citizens...

...the people who look to us - the Government, the taxpayers, those with the wealth and the power in our society - to help them.

It is our duty, and Conservatives are good at duty.

So I thank you for your support for these reforms.

I need it - because it's going to take the strength of all of us to do the job we have to do: create a society that changes lives.

We have the strength.

So let's use it - together.

Rt Hon Iain Duncan Smith

Iain is the Secretary of State for Work & Pensions and Member of Parliament Chingford and Woodford Green.

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