Written evidence submitted by Govtech
Solutions Limited
RESPONSE TO
WELFARE REFORM
WHITE PAPER
In simplifying welfare, Government has two policy
objectives:
- To make it easier for people who wish to work
to prepare for and take a job, sure in the knowledge that they
will be better off (simplification).
- To make it harder for people to unreasonably
refuse to take a job (conditionality).
The desired policy outcomes from achieving these
objectives are:
- Lower welfare expenditure from having more people
in work.
- An end to workless households.
We believe the Government may achieve its policy
objectives and yet fail to achieve the associated policy outcomes,
because its delivery strategy is fundamentally flawed.
We support plans for a Universal Credit, to replace
a plethora of entitlements. It's an idea whose time has come.
It is difficult to argue that a single payment with a common rate
of withdrawal would not be easier for people to understand.
We think proposals to administer the Universal Credit
through a single, centralised DWP entity are mistaken and based
on IT development and human behavioural assumptions that are wholly
simplistic and unrealistic.
As important, the Government's reforms and strategy
fail to resolve two fundamental problems with the existing welfare
system. For this reason, reform itself will probably fail.
Firstly, the reforms and the strategy do not resolve
the issue of Welfare budget ownership. Welfare is and will
remain "a system". Nobody owns the budget. It's one
of the causes of the mess we're in. The Welfare budget should
belong to local communities because welfare makes a difference
to communities. Whether recipients are in crisis, ill, disabled,
between jobs, long-term unemployed, or have simply gone off the
rails, the impact is felt at the community level and welfare helps
to shape communities. In some areas, welfare is the largest source
of income. Yet communities do not feel that the money is "theirs",
or that it is being spent on their behalf. It's just a system.
People who opt out, or get left behind, can blight communities,
yet communities are powerless to anything about it. Welfare reform
should change this and empower communities to take responsibility
for their own.
Secondly, the reforms and the strategy do
not resolve the issue of Welfare budget management.
This is not a question of administration but of active
management. A private company with a budget of £90 billion
would set itself a more ambitious objective than accurate payment.
It would seek a return on the expenditure. Management effort across
agencies which dispense welfare payments is devoted entirely to
customer service (paying on time) and audit (paying accurately).
This is set to continue under the new system. Government reforms
fail to recognise that if ten residents move off welfare into
work, it transforms a street and communities are therefore uniquely
motivated to obtain returns from Welfare expenditure. Local communities
should own and manage the £90 billion Welfare budget.
There are several groups of people at whom reform
is targeted, including those who wish to work but for whom there
are no jobs locally; those who refuse to work; those who would
work but regard the risks as too high. The government's reforms
really only address the last group. They will fail to address
the first two groups effectively. To bring an end to workless
households, work must be found for people who live in areas where
there are no jobs, as well as oblige those who do not wish to
work to do so. This is conditionality.
Conditionality cannot be managed from the centre,
or by private companies. Private companies are unaccountable to
local communities and civil servants working for large centrally-run
government departments are neither motivated, nor paid enough,
to take on the tough or the devious workshy. If workless households
are to become a thing of the past, local support and accountability
for conditionality measures is essential.
How might this be achieved?
First, and in accordance with the Government's Localism
agenda, the new, simplified welfare system and the budget to administer
it should be handed to Local Authorities to manage on behalf of
their communities.
Second, and in return, Local Authorities could be
given a new statutory duty to minimise economic inactivity, similar
to their responsibility to house the homeless, and instructed
to use this power to bring an end to workless households. (Or
could this fall under the new General Power of Competence provisions?)
Third, Government should agree the rules that determine
Welfare Subsidy payments between itself and councils, including
withdrawal rates when a person moves into work.
Fourth, councils should have discretion to vary application
of these rules, subject to any additional costs falling outside
Subsidy arrangements.
These changes in strategy will engender both ownership
of the welfare budget and accountability for effective management
of expenditure. Instead of a subsistence payment, welfare can
become a £90 billion catalyst for community cohesion
and regeneration. A centralised system will not achieve this.
The Welfare budget will belong to local communities
who will use it to bring an end to workless households. The consequences
of long term unemployment are not the Government's problem anymore
- they're yours. Locally elected Members will be accountable for
how well the welfare budget is spent and for dealing with those
who cannot find, or unreasonably refuse to, work. Local Authorities,
in partnership with local employers, education providers, private
sector placement experts and the third sector, would be able to
tie welfare payments, low cost housing, school places and social
support to promote employment, mobility, training and work experience,
building a skills base to meet local needs and attract inward
investment.
Councils will be responsible for enforcing conditionality
measures that the local community has agreed to via consultation
and answerable to their electorate for this. If jobs are unavailable,
or individuals refuse to take them, councils may be obliged by
their local communities to engage people in economically active
or socially useful activities. For example, these might include
helping the elderly to live in their own homes, running an after
school sports club, mentoring the young or a single mother, reducing
landfill, improving parenting skills, learning to read, write,
cook, swim, cleaning up graffiti, planting trees, maintaining
parks, marshalling community events; the list is endless but,
in an age of austerity, communities are likely to embrace the
exploitation of conditionality for community good. Indeed, with
ownership of the budget, they may demand it.
Further measures to enforce conditionality, such
as eviction, suspension of benefit, provision of vouchers, etc,
must also be subject to community consultation if such enforcement
is to command local support.
Simplifying welfare is not a policy objective in
itself. It is but one component of a means to an end. Clear ownership
of, and accountability for, welfare expenditure are both equally
important in bringing an end to workless households. Neither is
currently part of the Government's plan.
December 2010
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