Select Committee on Work and Pensions Third Report

11  Recent Announcements and Future Policy Developments

339. Towards the end of this inquiry, the DWP made important announcements about future policy. As the Introduction noted, it was announced that there would be a review of Welfare to Work Policy.[388] More recently, the DWP has announced it will move to encourage lone parents back into work.[389] This concluding section will look briefly at the recent policy announcements and set out our view of how policy can best develop in these areas.

Review of Welfare to Work

340. The DWP has recently announced a review of welfare to work policy, which we mentioned in the introduction to this Report. The Secretary of State announced in a speech that the review would cover the following three points:

• "Firstly, the design of welfare to work policy. The balance between rights and responsibilities; whether and how we should strengthen incentives to work; and whether there is a role for greater conditionality within the system. It will look at the steps we can take to promote social mobility, especially by supporting progression through work and through an integrated approach to skills which builds on the recommendations from the Leitch report earlier this month.
• "Secondly, to consider the devolution of welfare - building on the City Strategy and other local initiatives to open up new opportunities for delivering employment services to some of our most disadvantaged communities.
• "And thirdly, to examine the delivery of welfare in Britain over the next ten years. How we can build a more effective market in the provision of employment services - with a more customer-focused welfare delivery system that better reflects the Government's wider public service ambitions of greater choice and empowerment."[390]

341. The accompanying press notice stated that the review had terms of reference "to review progress on Welfare to Work programmes since 1997, taking account of evidence from the UK and international experience, and make recommendations on how the Government can build on its success in using policies such as the New Deal to continue to reduce inactivity and in-work poverty, and to help meet the Government's 80% employment aspiration."[391]

342. Given the importance of welfare to work policy, we are concerned at the lack of clarity around the timetable for the review (which is not mentioned in the press notice) and the fact that there seem to be no formal consultation arrangements. Such a crucial process must not be rushed and should be - and be seen to be - transparent and actively engaging all those who have an interest. We expect DWP to ensure that this takes place.

343. Much of this review will cover the areas identified by our inquiry, and this Report, and we hope that members of the Committee will be fully engaged in the review as it goes forward. We expect our recommendations and conclusions to be considered and taken forward as part of the review process, along with the key themes we have identified:

• We recommend more clarity over how the 80% aim is defined, with clear links to PSA targets for the employment rate as a whole and for disadvantaged groups.
• Change should focus on more outreach to those who are furthest from the labour market, coupled with more flexibility to provide a tailored service. BoND, or a programme based on the same principles, should be piloted as soon as possible.
• Provision and contracting must focus on meeting local labour market needs and working more closely with employers.

Changes to lone parent benefit requirements

344. In a speech on 30 January, the Secretary of State for Work and Pensions, John Hutton MP, announced that the DWP would be reviewing "the way we help lone parents get ready for a return to the labour market." He said: "A significant proportion of our progress so far in tackling child poverty is due to helping lone parents move into work." He added that there was "absolutely no case for cutting lone parent benefits."[392]

345. As this measure has been announced at the end of our inquiry, we have been unable to consider in detail the proposals put forward by the DWP. Evidence to the inquiry has, however, addressed the issue of increased conditionality for lone parents. We recommend that any changes to the system of benefits for lone parents take account of the fact that paid work may not be the best option for a lone parent, even if they have children of secondary school age. There may be a range of reasons why a lone parent does not wish to work. We recommend that the DWP concentrate its efforts on providing better support for the majority of lone parents who do want to work, as discussed in the chapter on lone parents above.

346. We recommend that the Government continue to improve the provision of suitable, affordable childcare in all areas, which will be essential in order to improve the ability of lone parents to enter and keep paid work.

Benefit Simplification

347. During this inquiry, we have heard evidence which has touched on the problems caused by the complexity of the present benefits system and its interaction with work and training. For example, we heard that non-dependent deductions, which mean that the entry of one member of a workless household into a job can substantially reduce the benefits payable to other family members, can act as a perverse disincentive to work. On the Committee's visit to New Zealand, we were told that New Zealand is planning to introduce a simplified benefits system. We conclude that the effects of complex benefits are potentially significant, and we intend to inquire into benefit simplification in the near future.

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388   "Hutton launches wide-ranging welfare review", Department for Work and Pensions press release, 18 December 2006 Back

389   Speech by Secretary of State for Work and Pensions, 30 January 2007, www.dwp.gov.uk Back

390   Speech by Secretary of State for Work and Pensions, 18 December 2006, www.dwp.gov.uk Back

391   "Hutton launches wide-ranging welfare review", Department for Work and Pensions press release, 18 December 2006 Back

392   Speech by Secretary of State for Work and Pensions, 30 January 2007, www.dwp.gov.uk Back

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Prepared 21 February 2007