Below is the text of the speech made by Iain Duncan Smith, the Secretary of State for Work and Pensions, on 24 August 2015 at an event held by Barclays and Reform.
Today, I want to set out where our reforms of the last 5 years have taken us – and what I see as my priorities for the next 5.
Let me start with the last Parliament.
It was clear from the situation we inherited in 2010, that something had gone very wrong in this country.
We had a welfare system where a life on benefits paid more than having a job.
That wasn’t fair to the hardworking taxpayers who paid for it – and it wasn’t fair to the people who were trapped in a system with no hope for a brighter future.
We lived in a country where:
- nearly one in 5 households had no one working
- the number of households where no one had ever worked had nearly doubled
- 1.4 million people had been on benefits for most of the previous decade
- and where close to half of all households in the social rented sector had no one in work
This bleak picture was the reality just 5 years ago.
Welfare spending had gone up 60% and the benefits system cost every household an extra £3,000 a year.
Spending on tax credits increased by 335%.
That’s £23 billion.
Of course money has a role to play, but greater and greater handouts were not actually extending opportunity – they weren’t transforming lives – and they failed to improve people’s life chances.
Government spending was poorly targeted and there was a focus on inputs rather than outcomes.
The result was a country where worklessness had become engrained.
A life without work, for many, had become ‘the norm’.
It was taking root in families and starting to pass through the generations.
This was a national scandal – and above all, a personal tragedy for each and every person and their family not in work.
The sickness benefit culture in this country, I believe, is in dire need of reform – so that will be my focus in the coming months.
And I want to be clear about the principles that will drive action as we move forward.
Principles driving reform
I have said many times that I believe work is the best route out of poverty.
It provides purpose, responsibility, and role models for children.
As a one nation government, we believe everyone in the country should have the chance to benefit from the security and sense of purpose that comes with being in work.
That is why our guiding principle has been to place work at the heart of everything we do in our reforms.
Getting people into work is more than just earning a salary and certainly more than balancing the public purse.
These matter, of course, but they are not the primary reasons.
For culturally and socially, work is the spine that runs through a stable society.
We could not have continued with the situation we were left in 2010.
Significant numbers of people saw work as something completely alien to them and their families.
For many, work was something they simply didn’t do, and never had.
It was something other people did.
Many had fallen into a life of dependency.
This is damaging for society.
A dependent society is one that’s:
- more likely to suffer crime
- more likely to be ill
- more likely to call on the health service
- and more likely to increase the cost to the criminal justice system
But critically, families where no-one works, lose their sense of self-worth.
Children grow up without the aspiration to achieve and they become almost certain to repeat the difficult lives of their parents – following a path from dependency to despondency.
I want those who remain trapped and isolated on welfare to move from dependence to independence.
That is real social justice – giving people the power to decide their own lives – not live a life dictated by others.
That’s why we are helping people back to work and to stay in work.
Let’s take the Work Programme.
The Work Programme is, I believe, the most successful back to work programme we’ve ever seen.
By March this year:
- over 1 million people – or 70% of all referrals – had spent some time off benefit
- and over 430,000 people had moved into lasting employment
Jobcentres are also now working in a more flexible way, providing that longer term support.
But we can see the change that has been made since 2010:
- nearly 2 million more people are in work
- the number of workless households has reached a record low – down over 670,000
- and the workless households rate in the social rented sector is also at its lowest on record
But we know that we must not stop there.
We need to be relentless in our efforts to get more people into work and off welfare.
But work is more than just salaries, tax, numbers and statistics – it is what shapes us and helps us develop.
In short, it is about self-esteem, self-confidence and self-worth.
Work is good for health
Yet there is one more area which we haven’t focused on enough – how work is also good for your health.
Growing evidence over the last decade has shown work can keep people healthy as well as help promote recovery if someone falls ill.
By contrast, there is a strong link between those not in work and poor health.
So, it is right that we look at how the system supports people who are sick and helps them into work.
Let me be clear – a decent society should always recognise that some people are unable to work because of physical or mental ill health – or both.
It is right that we protect these most vulnerable people in our society.
And that support is there.
For despite the scaremongering, it is worth reflecting on the fact that we in this country spend more on sick and disabled people than the Organisation for Economic Co-operation and Development (OECD) average.
To put that in perspective – and according to the OECD, the UK spends more on incapacity than France, Germany, or Japan.
However, we are also ensuring that the resources are in place to support people into work.
I’m proud that we are providing significant new funding for additional support to help claimants into work – £60 million in 2017 rising to an additional £100 million a year by 2020.
We are seeing a continued rise in the number of disabled people getting into work.
The latest figures show a rise of more than 200,000 disabled people who are now in work compared to the same time last year.
That’s now over 3 million disabled people who are in employment.
Yet, this is only the beginning.
For we know there remains a gap between the employment rate of disabled and non-disabled people.
We want to ensure everyone has the opportunity to transform their lives for the better by getting into work.
That’s why, as part of our one nation approach, we have committed to halving this gap.
On current figures, that means getting 1 million more disabled people into work.
I want to be clear – this employment gap isn’t because of a lack of aspiration on the part of those receiving benefits – in fact, the majority want to work or stay in work, but I believe this gap exists because of 2 factors:
First, some employers are reluctant to employ people with disabilities.
That is why I have set up the Disability Confident campaign.
This shows employers that the reality is quite different from the perception – in fact, that once employed, people with disabilities are in the vast majority of cases more productive than others.
Second, the poor quality of support they receive leads too many sick and disabled people languishing in a life without work, when work is actually possible for them.
Challenge to employers
It is this support that I want to turn to now.
I want to look at the support people receive right from the start when they first get sick – which can very often be from their employer.
Too many businesses do not pay any attention to the health condition of an employee who has fallen ill – or make any attempt to understand what the problem is.
The employee goes to their doctor, and after a short assessment, their doctor signs them off work.
Too often, even early on, no one at work maintains regular contact with them.
And after successive sick notes, their original condition then gets worse.
An opportunity to keep the prospect of a return to work within sight is lost.
Instead, they move onto sick pay, and then at some point are left to cascade onto sickness benefit.
This has become a damaging cycle which affects everyone.
Instead, employers need to recognise the importance of staying in touch with their staff when they get sick – and of providing early support to someone to stay in work or get back to work.
This makes sense for 3 important reasons.
First, it makes sense for businesses who invest a lot of money in their staff, not to lose that investment through illness and absence that could be avoided.
Second, it makes sense for society by stopping people falling onto expensive sickness benefits and then into long term worklessness – we know each month a person is on sickness benefits, they become progressively less likely ever to work again.
And third, perhaps most importantly of all, it makes sense to ensure that a fellow human being isn’t written off with all the negative consequences that follow for them and their families.
Some companies understand this.
They realise the benefits of investing in staff health and wellbeing – they have come to see that it improves productivity and reduces the costs of sickness absence.
In these organisations, employees who fall sick:
- will experience regular and direct communication;
- they will receive a work-focussed health assessment to overcome any obstacles to a return to work – and review what work they can do and what support they need to do it
- together with the employer, they also will agree a plan of action with timescales to support a return to work, taking into account their health condition and any workplace adjustments
At every step, there is tailored support and a realistic expectation on both sides of a return to work.
Importantly, and where possible, that vital link with work is not lost.
Sadly, this is however, by no means common practice.
Other countries do this better than us – and it’s something that both the private and public sector in Britain need to get much better at.
Fit for Work service
We know the personal and professional empowerment that is possible if the right support is provided at the right time.
But employers can’t do it alone.
GPs are also vital in this process.
They need to see the health benefits for their patients of early support and a return to work.
The good news is that now businesses and GPs will be able to use the new Fit for Work service that is being rolled out by us.
So, instead of asking, ‘How sick are you?’ – the new service asks, ‘What help can we give you now that will help and keep you close to your job?’
Sophisticated early support can have a positive effect on both health and employability.
We are also working with the Department of Health so that GPs routinely send people to Fit for Work to get their Return to Work Plan.
In fact, all GP practices in England have been sent a letter asking them to do just that.
Focus on mental health
I do want to take a moment to look at what is one of the biggest causes of work absence in the UK.
One in 6 people have a common mental health condition – and you’re much more likely to fall out of work if you do.
In fact, almost 1 in 4 people on Jobseeker’s Allowance has a mental health condition.
The vast majority are related to anxiety and depression, which we know are treatable conditions – and the sooner someone gets treatment, the better.
And we know the longer you are out of work, the more chance you have of worsening mental health, even if the original reason for your ill health was a physical one.
So, every day matters.
That is why our Fit for Work service includes professional experts skilled in helping people with mental health conditions.
That is why this government is investing in psychological treatment services which are helping thousands of people return to work from a period of sickness absence.
And that is why we are also investing and testing new ways of joining up health and employment services to improve access to treatment and support.
So, I see the Fit for Work service as the first line of defence when someone falls sick – helping employers and GPs to step in early.
But even when someone is out of work, it is critical that we have a modern and flexible benefit system that supports them – keeps them close to the labour market wherever possible.
That’s what is so important about Universal Credit.
The roll out is well under way – half of all jobcentres are now using Universal Credit.
However, there is a tendency for people to focus on Universal Credit’s technical innovation.
Today, I want to explain just how transformative Universal Credit is in a human sense.
Under tax credits, once someone claims, they lose any human interface with the jobcentre.
Under Universal Credit, people can expect early and continued support about what work they can do and what support they need to do it, until they leave the benefits system.
As a result, work coaches will spend time working with claimants focussing them on what they need to do and how the system can help them progress.
It is that human interface with the adviser – who through Universal Credit – will work on their plan and help motivate them and support their return to independence.
Moreover, with Employment and Support Allowance (ESA) becoming part of Universal Credit – it is that access and human interface which opens the way for us to re-think the relationship between sickness benefits and work.
Case for further reform – ESA and the Work Capability Assessment
I spoke earlier about what good employers do when one of their staff goes off sick:
- they keep in touch on a regular basis
- through a clear action plan, they look at the obstacles that may be preventing a return to work and do everything they can to remove them
However, what happens to a claimant on Employment and Support Allowance is very different.
Under the existing system, there is a limited opportunity to work with the jobcentre.
Instead, they receive an assessment of their condition that focuses on what they can’t do rather than on what they can do.
That assessment will force them into a binary category saying they can be expected to work or they can’t.
So it’s not surprising that over the last 2 decades, the number of people on sickness benefits has stayed at around 2.5 million.
While the number of people on unemployment-related benefit has nearly halved since 2010, a fall of around 700,000 – the number of sickness benefit claimants has fallen by 88,000.
The design of ESA as a short term benefit, where the vast majority of people are helped to return to work, simply hasn’t materialised in reality.
ESA may have been designed with the right intentions, but at its heart lay a fundamental flaw.
It is a system that decides that you are either capable of work or you are not.
Two absolutes equating to one perverse incentive – a person has to be incapable of all work or available for all work.
Surely, this needs to change.
In the world beyond ESA, things are rarely that simplistic.
Someone may be able to do some work for some hours, days or weeks, but not what they were doing previously.
As ESA becomes part of Universal Credit, the 2 approaches seem at odds.
We need to look at the system and in particular the assessment we use forESA.
The more personalised approach under Universal Credit sits alongside a Work Capability Assessment, which sets the wrong incentives.
That’s why I want to look at changing the system so that it comes into line with the positive functioning of Universal Credit.
A system that is better geared towards helping people prepare for work they may be capable of, rather than parking them forever beyond work.
We need a system focussed on what a claimant can do and the support they’ll need – and not just on what they can’t do.
So, whether it’s through Fit for Work, Universal Credit or an improved assessment – the more that people feel there’s someone with them, helping them get over the hurdles back to work and to stay in work – the more likely their lives will change for the better.
I want to place people at the heart of the system, and make the system work around them, rather than the other way round.
It was this back-to-front approach that we inherited – a system that people crashed into, and struggled to figure out.
We are giving everyone in this country the chance of a better life – the chance to fulfil their potential.
That is surely something we can all support.
As part of our one nation approach, we are committed to continuing to reform the system – so that it travels with people through every step of their journey from dependence to independence.
When we achieve that, we will finally have a welfare system fit for the 21st century – a welfare system that focuses on those most in need, and helps ensure that, people who can, become independent from the state and live better, more fulfilled lives.