Category: Speeches

Below is the text of the speech made by Iain Duncan Smith, the Secretary of State for Work and Pensions, at Business for Britain on 7th April 2014.

Introduction

Thank you for coming to Pimlico today, and my thanks both to Pimlico Plumbers and Business for Britain for their efforts in making this event happen.

It is a pleasure to be here…at the site of a real British success story.

What better setting to discuss the turnaround in our country’s fortunes, as the Chancellor set out last week.

The recession slashed 7.2% off our economy and cost 750,000 people their jobs.

Following the crash we heard gloomy forecasts of a million jobs disappearing from the private sector, mass unemployment, lost generations…

…yet they could not have proved more wrong.

Britain’s economic recovery is established and taking hold faster than forecast – and nowhere are the signs of this recovery clearer than in our labour market.

Logical process

Whilst others have questioned and puzzled over the record employment Britain is now seeing…

… as the Work and Pensions Secretary, I have long believed that the strength of our labour market would both drive Britain’s economic recovery, and increase as a result.

Let me explain.

The logic behind that belief is twofold – you will know most about the first step, and the second is my area of responsibility – but the two are linked.

First, this government created the conditions for growth, and gave businesses the freedom and confidence to create jobs… which is precisely what you have done.

Second, we drove a programme of welfare reform where every change was designed to get Britain back to work…

… giving people previously left to languish out of work, the skills and the incentive to take those jobs.

In doing so, welfare reform is, at its heart, about breaking the chains of dependency and supporting people to achieve their potential…

… giving them the freedom to secure a better future for themselves and their families.

Getting Britain working

In reforming a broken welfare system, I have had one overriding intention – to get Britain working again.

Now, the results are clear to see:

we have more people working in the private sector than ever before, up over 1.7 million since the election

we have record employment – more than half a million higher than its pre-recession peak

and – less known – we have falling numbers of people absent from the labour market… falling long-term unemployment… and, perhaps most importantly of all, falling numbers of workless households

It is easy to get lost in what feel like abstract numbers – so let me make clear what this means.

The increase in employment is equivalent to the cities of Manchester, Liverpool and Bolton now all in work.

It means individuals in jobs, really feeling the impact of the recovery.

Families able to feel secure about their futures…

…. breadwinners able to feel proud that they can support them…

… and children with that all-important role model to look up to, offering hope and self-worth, with aspirations for their own future transformed.

Human capital

At last year’s Budget, and so too this year, the Office for Budget Responsibility has revised its estimates for employment up and unemployment down.

Yet even still, the labour market has continued to outperform the forecasts.

In looking to explain this trend, there is much to be said of the labour market reforms that took place in the UK many decades ago – freeing up the labour market and ensuring flexibility, even to this day…

… and particularly in contrast to rigid and uncompetitive markets that continue to plague some of our neighbours in Europe.

Yet, I believe there is even more to this recovery than economics alone – which is why, to my mind, the latest labour market statistics are not a source of confusion – but make logical sense.

On entering office in 2010, I was not only determined to get Britain working, but more than that: I was determined that economic reform should be matched by social reform…

… taking action, not only to rebuild our finances, but also to restore our nation’s greatest asset – that is, the British people.

Legacy

Too often in the past, when Britain recovered from an economic crash, the poorest were left behind.

I was determined that would not happen here.

When I arrived in office, too many people had been left to languish in dependency…

… not only an unsustainable drain on productivity… but a tragic waste of human potential.

Under the last government, millions of people were stuck on out of work benefits – a million for a decade or more.

Unemployment had risen by half a million, and youth unemployment by nearly half.

1 in 5 households was workless, and the number where no one had ever worked doubled – from 184,000 to over 350,000 – rising even during the boom years.

Essentially, I found a persistent and sizeable group of people who were inactive – having dropped out of the labour force altogether – neither in work nor looking for work, even when jobs were available.

Migrant workers

With so many trapped on the sidelines, British business looked to migrant workers to fill the jobs which British people didn’t want or couldn’t get.

In just 5 years between 2005 and 2010, the number of British people in jobs fell by over 300,000, while the number of foreigners in British jobs soared by more than 650,000.

Clearly there is a powerful argument to be made here about immigration – but actually, this an issue of supply and demand, as much as it is about borders.

That is why when British business found British people were unwilling or unable to work in the UK, they quickly looked elsewhere.

Taxpayers paid a financial cost for rising welfare payments, and society paid the cost as well – with too many of our own fellow citizens falling into dependency, hopelessness, and despair.

No one knows this better than employers – like yourselves – those wanting to expand but struggling to find workers to fill their vacancies… or whose staff turn down extra hours for fear of losing their benefits.

But even apart from being bad business, it was also damaging people’s lives…

… destroying the ethos of a whole section of our society, left behind in workless households where no one knew what it was to hold down a job.

In too many cases, it was a combination of the welfare system trapping people in dependency and removing the drive to go to work… and the open door immigration policy which meant they were so easily replaced by foreign workers coming in.

Social recovery

Surely common sense should tell us that Britain cannot run a modern flexible economy, if at the same time, so many of the people who service that economy are trapped in dependency on the state, unwilling or unable to play a productive part.

That is why I knew that welfare reform needed to play a vital part in Britain’s recovery: a stable economy matched by a strong society where people are ready and capable of work.

Unlike in the past, when economic recovery meant all too little for those furthest from the labour force…

… now, the evidence of a linked social and economic recovery is clear to see – in an improving jobs market where no one is being left behind.

This is the greatest marker of how successful our welfare reforms have been:

inactivity is at its lowest on record excluding those in education, down by nearly half a million since 2010… driven by falling numbers claiming inactive benefits – down by 350,000, and falling in every single local area of Britain

there are a lower proportion of workless households than at any time on record, down 450,000 since 2010

and we are now seeing promising signs that the trend of more migrant than British workers gaining jobs is being reversed…

… with the latest data showing that of the rise in employment over the past year, nearly 90% went to UK nationals

As the economy improves, this is where the real effect of our reforms is felt: British people reengaging with the workforce and regaining the opportunity to access the jobs being created…

… ensuring everyone who is able can play a part and realise their potential.

Life change

But for me, the drive and the energy has been about ensuring that behind each of these statistics, the recovery reaches those previously at the very bottom of the career ladder.

For, in every case, these statistics represent massive life change for individuals and families.

For the young person: once with bleak prospects, but now one of a growing proportion in employment or education… who has their foot on the first rung of the ladder, able to move onwards and upwards.

For the lone parent – more of whom are now in work than ever before – which we know is the best route to lift their family out of poverty… with children in workless families 3 times more likely to be poor.

For the long-term unemployed, and those for whom worklessness had become a way of life – too often written off in the past, but now receiving meaningful help to overcome the problems that hold them back.

Already, the number of people stuck on Jobseeker’s Allowance for a year or more is down by almost a fifth…

… and the Work Programme is succeeding, helping those further from the labour market into work.

Half a million people have started a job so far – including 22,000 people who might once have been left unseen on sickness benefits, cut off from any real support – and outcomes are ever improving.

Just think of the transformation for someone whose life was one of dependency on the state, but who now has hope for a life they are able to shape for themselves and their family.

Instead of being trapped in that vicious circle – be it crime, addiction, debt – now we are seeing individuals on a journey from dependency to independence…

… regaining control over their own lives and security for their futures.

Welfare reform

Britain will only be great again if all in our society – every disadvantaged group, every deprived community – are part of our nation’s prosperity.

Since coming into office, it has been this belief that has underpinned my programme of welfare reform, arguably the most significant in a generation.

Across all these changes… every day, every policy decision, every visit, every instruction… my purpose has been to get Britain working…

…. restoring the incentive for British people to get back to work and removing the barriers in their way…

… in doing so, transforming the lives of those locked out of the labour market for too long, so that we all benefit as one nation from Britain’s recovery.

Early intervention

Yet powerful as that may be, alone it will not be enough. We also need to go further back and intervene before families fall into dependency and disadvantage in the first place.

For that process of life change to be as effective as possible, it must start at the first opportunity – which is why I am getting involved earlier than ever before…

… working alongside my colleague Michael Gove, who is leading the vital changes in the education system… to prevent the next generation of young people from facing entrenched problems.

I set up the Innovation Fund – a £30 million investment – which catalyses cutting-edge programmes to improve the employment prospects of our most disadvantaged young people… intervening as early as 14 to avoid wasted life chances.

Such has been our success in testing new schemes, that now we’re taking a pioneering approach into the jobcentres too…

… ending a situation where, for too long, jobcentres have been unable to support young people who fall out of school at too young an age.

For 16 and 17 year olds – locked out of both the classroom and the jobcentre – the wage scar caused by being out of work can damage their prospects for years to come.

Now, by opening the jobcentre door to these teenagers, and trialling what works best in helping them, we can do a huge amount to secure their futures.

Support into work

When it comes to my department’s employment programmes, I am using every tool at my disposal to get people into work.

But – equally deliberate – from start to finish, that is the purpose of welfare reform as well.

That is why:

I have fought so hard to create and introduce Universal Credit, now running in England, Scotland and Wales, and set to roll out further across the north west.

The old benefit system too often rewarded the decision to turn down work and for too many, the decision to move into work left them worse off. For too many, to take a job was not seen as the logical choice.

Universal Credit is the great reform that changes this: ensuring that at each and every hour, work always pays.

Already, as we roll it out, the behavioural effect of this reform is striking, with those on Universal Credit spending twice as long looking for work, better understanding their requirements, and working harder to meet them.

That is why:

We took the decision to invest in childcare in Universal Credit, so that families could take that job and earn their way out of poverty.

That is why:

We have capped benefits at average earnings and restricted housing benefit, so that families on benefits face the same choices about where they live and what they can afford as everyone else.

This is putting an end to the something for nothing culture that too often meant work wasn’t worthwhile – meaning welfare became a lifestyle choice.

And if these are the reforms which restore strong work incentives, together with raising the threshold so people now pay no tax on their first £10,000 of income…

… our conditionality system is designed to send a clear message that we expect every effort to be made to find and take work.

We have set clear requirements in return for state support, and are making sure that if someone fails to meet their responsibilities, they face the consequences…

… getting the balance right again in the welfare system, just as for those in work…

… and ensuring fairness for the taxpayers who fund it.

Conditionality and sanctions

Our reforms make this deal unequivocal.

We are requiring everyone to sign up to a Claimant Commitment as a condition of entitlement to benefit – it is deliberately set to mimic a contract of employment… setting out what individuals must do in return for state support.

From this month, we are going further still – the final nail in the coffin for the old ‘something for nothing’ culture.

A more stringent regime will require claimants to do all they can to get work-ready even before they sign on – taking the initiative and showing they are serious about finding work…

… as well as attending the jobcentre weekly, rather than fortnightly, if they need more intensive supervision.

This will be backed up by increased support – no one will be overlooked or left without help… but we are saying to everyone that there is no longer any opt-out from a tough jobseeking regime.

If individuals fail to meet their requirements without good reason, they must face the consequences… with a robust set of sanctions that mean for the most serious offences, they lose their benefit for 3 months for the first time, 6 months for the second and 3 years for the third.

Yes, it is challenging and there is still much more to do if we are to finish the job… but already, it is working… which is why I am baffled when commentators cannot understand the jobs figures.

In response to those who were puzzled by such a strong fall in unemployment, it was the Bank of England which said:

“a tightening in the eligibility requirements for some state benefits might also have led to an intensification of job search.”

In other words, it is this process – everything we have been doing, every reform we have implemented – which has been about getting Britain working.

Access to benefits

Yet in striking the right balance between give and take in Britain’s welfare system, there is still one final issue we must confront.

We have ended the something-for-nothing culture for those already living in Britain…

… and, equally, I believe it is only fair and reasonable to say to those coming into our country: if you haven’t made a contribution, you shouldn’t be able to claim benefits.

So we have also had to reform the way our benefits system works for those, arriving on our shores.

Here too the same principle of fairness must apply.

That is why for those migrants who do come here, we’re ensuing our benefit system is no longer an easy target for abuse…

… limiting access, to prevent migrants from taking unfair advantage of our system by accessing benefits as soon as they arrive.

We have introduced a tougher test that stops individuals from getting jobseeking benefits until they have been living in the UK for at least 3 months…

… ending that entitlement after 6 months unless the person has genuine prospects of finding work.

Those prospects are severely hampered if someone can’t speak English – so, from this month, jobseekers who struggle to speak English will now be mandated to English language courses, and their benefits stopped if they don’t attend.

Banning new migrants from claiming Housing Benefit altogether, we have also clamped down on those trying to manipulate the tax credits system…

… for too long a source of income for those in bogus jobs or falsely declaring themselves self-employed.

Now, until those who come here start paying National Insurance contributions, individuals must prove to us that they are working in a real job.

And we want to go further still – the right to say to migrants that we require a much longer record of commitment before you get benefits…

… restoring the principle that nation states run their own national welfare arrangements…

… something the UK is not prepared to change.

Together, these new immigration and benefit checks will clamp down on those trying to exploit the system…

… ensuring that Britain’s growing economy and dynamic jobs market deliver for those who work hard and play by the rules.

As we reshape our economy, and revitalise the entrepreneurial spirit that our great nation has always shown, we cannot shut the door on the rest of the world.

But those who come here should know that we will not compromise when it comes to protecting the principles on which our welfare state is based.

We must do right by those born here, living here and working here, whose contributions fund the system. That is only fair.

Chancellor’s commitment

It was just last week that the Chancellor talked about a commitment to fight for full employment in Britain – as he put it, to have the highest employment rate in the G7.

And he is right.

We must no longer limit our ambition, nor avoid facing up to a challenge that would improve so many lives.

Indeed, it is my belief that this should be, perhaps, the most vital aim: with help and support, everyone contributing as far as they possibly can.

We’ve done a lot already, and will continue to make progress…

… our long-term economic plan ensuring we help businesses like yours to create new jobs and generate opportunities.

Yet we must go further still, following the recession, to seize a real opportunity: ensuring that our social settlement offers all in our society a fair chance of securing those jobs.

Progression in work

For too long, the prevailing attitude was that a bit more money paid out to those on the sidelines would make their lives a bit better.

Yet the reality is that whilst this approach might have pacified the problem in the short-term…

… the long-term consequence has been a state of even more entrenched dependency.

Given the chance, I believe people will want to make the most of their talents – but instead, what this did was trap them, with little opportunity to take control of their own lives.

Locked into dependency on the state, people’s talents were too often wasted…

… either in trying to get more money from the state…

… or in dodging the state, as individuals were pushed into the shadow economy or a dark world of petty crime.

Still now, some commentators fail to recognise the damage that worklessness and dependency can inflict on people’s life chances and aspirations…

… persisting with the same misguided thinking, through an argument that denigrates those who are taking the first steps into the labour market

The way our opponents would seem to have it, people are better off in dependency than taking a part time or entry level job.

It is hardly an argument many of those on Jobseeker’s Allowance would recognise, desperate to get a job and start earning their way in the world.

Nor does it reflect the dynamic nature of our labour market.

The way I see it, securing a job is the first step – the beginning of a process in which people are able to take control of their futures.

Make the first step too difficult or too high, and a person may never get there.

But help them to take that step, make that positive move, and the rest is in their hands.

Conclusion

Our purpose must be to release people from the trap and so that they can break free from dependency, participating equally as our economy improves.

That is the aim of the reforms we are pushing through.

It is hardly a small undertaking – for it requires a huge cultural change, both within government and for those caught in the system for so long.

And it is not easy, as attacks from all quarters seek to misrepresent what we are doing…

…. angling for a return to failed and expensive policies, when welfare was about how much money was paid out to people, rather than how their lives were improved.

Yet I believe this task is vital – and without it, we risk Britain slipping behind, as growing levels of dependency hinder our progress.

Whilst our critics persist in arguing that a minimum wage job is stepping into a hole…

… I believe, quite the contrary, that it can be the first step on the ladder to an independent life.

Our nation is only as great as the people in it.

That is why our ambition must be pitched so high:

All those who are able, adding to our prosperity…

… and playing a part in their communities.

People supporting their families…

… inspiring the next generation…

… being the best that they can be.

Below is the text of the speech made by the Work and Pensions Secretary, Iain Duncan Smith, to the Capita Welfare Reform Conference in Edinburgh on 27th March 2013.

Introduction

It is a pleasure to be here today.

All across the UK, few issues provoke as much debate as welfare reform.

But then few issues matter as much to our society.

Our welfare state is not simply a question of institutions and systems.

It is, and always has been, about people…

… providing effective support to the most vulnerable, and helping those who have fallen on hard times to get back on their feet.

Social costs

This Government is on the side of the welfare system – we believe in the values that created it and recognise that these are common values across the UK.

We all benefit from having the welfare safety net to fall back on.

But equally, when welfare doesn’t work, we all feel it.

We feel the social costs:

The four and a half million people of working age, trapped on out of work benefits – 450,000 of them in Scotland.

The 1 million people on sickness benefits, unseen for a decade or more.

The 3.7 million workless households, 367,000 in Scotland…

… and the 1.8 million children living in households where no one works – 145,000 in Scotland alone.

Across the UK, in communities blighted by disadvantage, as a whole section of people are cut adrift from the rest of society…

… what we are left with is a tragic waste of human potential and lost opportunity.

Welfare spending

As well as the social cost, we must also acknowledge that this entrenched dependency weighs heavily on the public purse.

Welfare is vitally important, but the reality is that it comes at a cost.

Across the UK, we spend over £200 billion annually on benefits, tax credits and pensions…

… an amount that increased by 60% under the last Government, from £122 billion to £197 billion, some £3,000 a year for every household in Britain by 2010.

The rising cost of paying benefits was one significant reason for the increase in the UK’s deficit – a hole in the government finances worth 11.2% of GDP in 2009/10, unprecedented in peace-time.

Hard decisions

This Government has taken hard decisions on tax and spending in order to piece our economy back together.

If there were ever to be an independent Scotland, that new Scottish state would not be immune from similarly hard and difficult choices.

The Scottish Government’s own independent Fiscal Commission talks of the challenge of “ensuring long-term fiscal sustainability”…

… indeed, the UK Government’s commitment to restoring a strong economy is not separate from our commitment to a resilient welfare state.

We need only look to Ireland to see how far the two are linked.

Back in 2008, Scotland’s First Minister spoke about Scotland drawing a lesson from Ireland, “the Celtic Tiger economy”.

So too now… only the lesson we learn is of the vital measures Ireland has had to take as an independent nation, in order to stabilise their banks and maintain competitiveness.

In the face of the global financial crisis and the country’s plummeting GDP, Ireland’s leaders have had to implement difficult public expenditure cuts.

Doing so has hit benefit recipients hard…

… with social welfare cuts of around £680 million for the year 2010, and £780 million for the year 2011.

For a workless couple with two children, this equates to an actual cut in income of around £900 a year.

For a childless couple, where one person is caring for a spouse in receipt of Disability Allowance, it is a cut of £840 a year.

And it is not only Ireland having to make these cuts. Other countries – Spain, Portugal – have found themselves having to do the same.

In contrast… with a broader and more diverse economy, the UK has been better able to cope with shocks such as the Eurozone crisis and volatile oil revenues… whilst keeping our welfare safety net in place.

Across the UK – contrary to the headlines – all those on benefits will still see cash increases in every year of this Parliament.

Life change

A sound economy and a properly structured social settlement go side by side.

And when it comes to welfare, the point is not just how much we spend…

….but how we spend it.

Instead of big spending to grab media headlines and placate interest groups in the short term, I believe that for every pound we spend, we should be asking – how does it promote lasting and positive life change?

We need to look at the results that welfare spending is having in terms of transforming people’s lives…

… investing in a dynamic system that promotes work as the best route out of poverty, setting people on course to an independent life beyond the state.

Benefit cap

That is what our welfare changes are all about.

First, the benefit cap – removing perhaps the greatest catch in the current system… the fact that for too many people, it pays more to languish on benefits than to enter work.

We are exempting the most vulnerable, including war widows and those with severe disabilities.

But by capping the total amount others can receive in benefits, we restore the incentive for them to move back to work…

… restoring fairness to those who work hard and pay into the system in the process.

As we are move towards implementing this change, we are already seeing signs of this positive behavioural change.

Housing reform

Much has also been said about the impact of our Housing reforms in Scotland, with claims that we are cutting the Housing Benefit bill.

But here are the facts:

Housing Benefit spending doubled in the last decade from £11 billion to £23 billion, our reforms are starting arrest that rate of growth.

House building under the last Government had fallen to its lowest peacetime level since the 1920s, down by almost a third, with the fall in Scotland even worse than that in England.

There are 188,000 households on waiting lists in Scotland, and overcrowding stands at 60,000…

… meanwhile 80,000 homes in the social rented sector are under-occupied, with taxpayers having to subsidise those spare bedrooms.

So the real story here is not the impact of our reforms, but the failure of past housing policy both North and South of the border.

I am not saying that ending the spare room subsidy will not present some difficult cases, which is why we have allocated an additional £370 million in Discretionary Housing Payments to help manage the transition… £10 million to Scottish local authorities in the first year.

But let me remind you that tenants on Housing Benefit in the private sector do not receive payments for spare bedrooms – it is only fair to taxpayers to bring the social sector back into line.

Work

As well as ending the snags that have too often trapped people in dependency, we are also investing in dynamic reforms to get people into work.

From the Work Programme – paying providers by the results they achieve in supporting those further from the labour market into work and keeping them there…

… to Universal Jobmatch – an online jobsearching and matching service which is already revolutionising how claimants find work, with over 2 million already registered…

… and the introduction of the Personal Independence Payment, focusing support on those who need it most and helping those on DLA and PIP to gain the independence they need through entering work…

… our purpose is to target support where it will make the greatest difference, giving people the tools they need to regain control of their own lives.

Universal Credit

Perhaps the most important single change will be the introduction of Universal Credit – starting with the Pathfinder in April, followed by a progressive national roll-out from October…

… making work pay, at each and every hour.

In Scotland, around 300,000 households will have higher entitlements, gaining £162 more per month on average…

… with around 80% of gainers are in the bottom 40% of the income distribution, meaning support is better targeted at those most in need.

Together with significant increases in the Personal Tax Allowance, now rising to £10,000 by 2014…

… benefiting 2.2 million people in Scotland and lifting 224,000 out of tax altogether…

… this is what dynamic investment is all about – making sure that those who take positive steps towards financial independence see the rewards.

Single Tier

But the changes we are putting in place are not just about improving the prospects of workers today.

They are also about securing their position in future, as they enter retirement.

We are already successfully rolling out auto enrolment – helping up to 9 million people into a workplace pension scheme to make saving the norm.

But auto-enrolment won’t work unless it pays to save – which is what the Single Tier pension is all about.

For too long, the UK has spent rather than saved, one of the main reasons we see our economy in so much debt.

Whilst restoring our economy today, it is even more important that we put the UK on a sound financial footing going forward.

As the Chancellor announced in last week’s Budget, the Single Tier will be introduced from April 2016 – meaning after 60 years of tinkering with a more and more complicated pensions system which penalised savers…

… we can finally deliver the vital reforms that the UK needs.

You see, Universal Credit and the single tier are two sides of the same coin – ensuring that it pays, first to work and then it pays to save…

… delivering a fairer social settlement, underpinned by sound public finances.

An independent Scotland

It is my belief that we are better placed to achieve this, doing so together.

All across the UK, our ability to support those in retirement is something we should be proud of.

By shouldering the responsibility on broad shoulders, even in difficult times the Coalition has been able to pledge its support to UK pensioners now…

… introducing the Triple Lock to protect their incomes against inflation, and guaranteeing universal pensioner benefits for all…

… and to improve pension provision for the future – through reforms such as auto-enrolment and the Single Tier.

Were Scotland to leave the UK for good, an independent’s Scotland’s pension provision would no longer be a shared obligation.

Let me quote Finance Minister John Swinney, on the issue of future pensions:

“at present HM Treasury and DWP absorb the risk…in future we will assume responsibility for managing such pressure. This will imply more volatility in overall spending than at present”.

Not my words – the words of John Swinney, who has apparently already warned his Cabinet colleagues in a private note about the risks of underwriting Scottish state pensions.

So John Swinney and the SNP already admit that it is the broad shoulders of the United Kingdom that underpin the fundamental solidarity of our pensions system.

“Volatility” and “responsibility” – two simple words but what lies behind them is of enormous importance.

Pensions challenge

People in Scotland thinking of their grandparents and parents, or indeed looking ahead to their own retirement, have no doubt been wondering what such casual references mean.

As a UK Secretary of State who knows only too well the cost of paying pensions… let me tell you what it means.

Ultimately, all of the UK faces a challenge to pay for future pensions.

But Scotland has an older demographic than the rest of the UK AND an old age support ratio predicted to deteriorate faster over the next 50 years.

Currently, there are 32 working age people supporting every 10 pensioners both in Scotland and the UK overall.

By 2060 this is expected to fall to 26 working age people in the UK.

Scotland, however, sees a bigger fall, to just 23 working age people per 10 pensioners… which in turn comes at a much greater cost.

Overall, the proportion of UK GDP spent on pensioner benefits is projected to rise by 1.8 percentage points over the next 50 years – from 6.9% to 8.7%.

But in Scotland the increase is much worse – a 2.8 percentage point rise from 7.2% to 10.0% – costing an extra £3.6bn in today’s terms… and roughly an enormous 20% increase in Scotland’s overall welfare spending.

For the benefit of the Scottish people worried about “more volatility”, let me put that another way:

In today’s terms, in 50 years time, it will cost each working age person in the UK £700 more per year to pay for state pensions and other pensioner benefits than it does now.

In Scotland, the position is much worse – it will cost another £1,100 per working age person to pay for pensioner benefits.

So the SNP have some serious questions to answer.

First and foremost, how would they pay for this?

Extra money would be required to meet Scotland’s demographic pressures.

Whilst both oil and gas revenues are projected to decrease significantly over the next decade, and remain minimal thereafter.

So having laid out the facts, the question mark remains:

Higher taxes? More borrowing?

Or in the minds of Scottish people: “if Scotland goes it alone, will I pay more… or will the state pay more?”

The question of future pensions provision is a legitimate one… and in the context of welfare, I believe the biggest single question that those seeking independence must answer.

Conclusion

United… we are in a stronger position to respond these challenges…

… sharing both the resources and risks…

… able to sustain welfare spending on the back of broader shoulders.

The great strength of the UK’s welfare system is that help goes to the parts of the country where the need is greatest.

Today, for some benefits, that may be in parts of Scotland.

Tomorrow, as circumstances change, it may be somewhere else.

Wherever, the commitment is the same – a strength of the UK that is widely recognised in Scotland.

So when people here come to cast their vote in the referendum, I hope they will vote for a Scotland that continues to play a central role in our United Kingdom….

… and one that would not allow a disproportionate burden to fall on people working in Scotland to pay for the increasing cost of pensions.

Pulling together when times are tough.

Working together, so that everyone has the chance to play a full part in our shared future.

Together, united in a common purpose for the common good…

… we can be sure that there is a secure welfare safety net in place now…

… and one which will endure in future.

Below is the text of the speech made by Iain Duncan Smith, the Secretary of State for Work and Pensions, to the Social Justice Conference on 30th October 2013.

Introduction

Let start by saying thanks to our chair for today, Naomi Eisenstadt.

And thanks also to the other speakers, whose contributions will no doubt be the starting point for much debate and discussion.

It is a pleasure to be here, to mark the second annual social justice conference. Thank you all for coming.

I was struck, in the run-up to today, by the significance of these 2 years.

From nought to 2 – so often a formative period in an individual’s lifecycle, as the many advocates of early intervention in this room will tell you…

…they have also, I believe, proved decisive for us.

On entering government, we published the Social Justice Strategy.

That was about posing a landmark challenge to the status quo…

… even in the face of scepticism and uncertainty… establishing a radical new vision for how we support Britain’s most disadvantaged individuals and families.

We recognised that a new approach was needed – one founded on early intervention to prevent problems from arising in the first place, alongside tackling the root causes of disadvantage to make a meaningful difference to people’s lives.

Since then, making that vision a reality has required an enormous cultural shift.

From top-down, to bottom-up. From national to local. Reactive to preventative. Dependence to independence.

It has not always been easy, and there is still a great deal to do, but the last 2 years have shown that this far-reaching cultural change can be achieved.

Progress

As you all well know, when it comes to tackling social problems, the media focus is often overwhelmingly on welfare reform.

Rightly so, for welfare reform is vitally important.

But that focus too often obscures the inspiring and crucial work that people like you are leading, to improve the lives of the worst off.

Since publishing the strategy, we have made substantial progress against over 100 social justice commitments.

Even in tough times, we are seeing striking positive signs:

– 429,000 fewer people out of work than a year ago, and the lowest proportion of children living in workless households since records began

– in schools, the unacceptable attainment gap between disadvantaged youngsters and the rest is at last narrowing – for teenagers taking GCSEs last year, a far greater improvement in equality than any we’ve seen for a decade

– on our streets, we are seeing continued overall falls in police-recorded violence in England and Wales

– and there is an increasing proportion of people successfully completing treatment for addiction in England – the latest stats showing 13,000 more people leaving rehab entirely drug-free compared to 3 years earlier

– crucially, in terms of new ways of delivering this social change, we now have 14 social impact bonds up and running, making the UK a world leader… and a social investment market which by some estimates, stands to be worth £1 billion by 2016

Local solutions

All of this marks a strong beginning, which gives us every chance of success in years to come.

And today, it is right that we mark this progress by bringing together representatives from across the public, private, voluntary, and social enterprise sectors…

… those of you who have set to work in delivering social justice, putting our strategy into action.

In facing up to our most challenging social problems – be it worklessness, family breakdown, educational failure, addiction, or debt – I have long believed that the answers were not to be found in Whitehall.

That mistake was made too often in the past. And as a result, the government approach to tackling social breakdown too often overlooked complexities at a local level…

… allowing vested interests to obstruct change, and preventing dynamic new approaches from moving forward.

Despite good intentions, it is my belief that we achieve far less from sitting in ivory towers drawing scientific conclusions on social policy…

…and far more from listening to people on the ground, freeing up grassroots organisations to apply their insights, and working together with experts to deliver practical solutions.

Social justice awards

Local initiatives and local leadership hold the key to unlocking social justice.

We know, from the many projects already underway, that new local approaches to funding and delivering services are producing better outcomes for those most in need.

Nothing illustrates this better than the work of the individuals and organisations nominated for today’s inaugural social justice awards.

The finalists that have been chosen are people committed to helping those on the margins to rejoin society…

… people who are offering addicts and offenders a chance to change…

… people who are committed to ensuring individuals get the help they need to get a job and realise their potential.

This is inspirational work, and I would like to congratulate all of you on your success, especially the winners who will be announced later today.

It is to your credit – you, and others championing social justice – that we have achieved such progress against a difficult economic backdrop.

St George’s House

Yet there is, I believe, still more we can do.

Just today (30 October 2013), St George’s House published their independent report on delivering social justice, having brought together leaders from across the social justice world, away from the media spotlight, to have a frank and realistic discussion…

… the aim being to break the trait all too often seen in government, of papering over recurring problems.

Some of the more innovative challenges highlighted in their report we need to explore further – for example, looking at the role head teachers might play in delivering social justice even beyond the school gate.

Others we already know about – such as the need for better links between local and central government.

The report’s welcome recommendations remind us that we cannot lose momentum now.

Local authorities have a crucial role – using their commissioning power to take advantage of the best local service providers.

But central government too must play its part, when it comes to information sharing, for example, or opening up procurement to smaller organisations.

Social justice toolkit

Our purpose is to put in place the mechanisms that aid and enable your vital work.

So when you tell us that data remains a problem – too often patchy, inaccessible or unavailable…

… well, we must push harder than ever to put the right structures in place, and remove the obstacles that hinder your work.

To this end, following joint development with the Centre for Social and Economic Inclusion, we are pleased to announce the launch of the social justice toolkit…

… aimed precisely at helping anyone – whether a civil servant, a provider, or the man on the street – to understand and get involved in tackling the social problems in their area.

For local areas in particular, the toolkit will enable a better identification of their immediate priorities…

… sharing best practice and learning from communities with a similar demography.

What’s more, by measuring local progress against our key social justice indicators, the toolkit will help to align local work with national objectives, allowing central and local government to work in tandem.

Families

Change measured against these indicators will not happen overnight.

But already, we can be sure that we are delivering real, tangible improvements in the daily life and future prospects of the most vulnerable in our society.

Take the young family, who might once have struggled to cope with a new baby, and risked falling apart…

… but are now one of 48,000 parents having received couple counselling, able to get specialist help from one of 1,000 additional health visitors in post since 2011.

With extended free early education from age 2 for the most disadvantaged children… and a Pupil Premium worth £900 per child this year…

… the life chances for that newborn now look very different – set on an upward trajectory, rather than a downward spiral.

So too when it comes to this country’s most troubled families, once at the hands of a whole host of piecemeal and inefficient services…

… now being offered intensive tailored support through a designated support worker.

Already, the lives of over 14,000 troubled families have been changed for the better – meaning children back in school where they were previously playing truant or committing crime; adults off benefits and into work.

These are some of the hardest families to work with, the ones known to all local services – police, children’s services, housing associations and so on – but who have never before received this intensive, tailored support that can bring lasting change.

So too for those sadly lacking a functional family structure – young people leaving care, who have, for too long, seen persistently poor social outcomes.

This week, we have launched our ‘Care Leavers’ Strategy, brokered through the Social Justice Cabinet Committee…

… which will ensure, for the first time, that government’s pooled resources – from education and employment, to health, housing and justice – are tailored to the challenges facing these young people.

These may be simple strategic steps, but they stand to make a significant impact on a group too often left to struggle alone.

Individuals

Through interventions such as this, and many more, we are making a real difference…

… giving to individuals who might once have been left on the sidelines, the tools to turn their own lives around.

Just a few examples of what that means in practice.

For the ex-offender – it is early processing of benefits claims so they have money in their pocket and support through the Work Programme from the moment they leave the prison gates.

For the seriously indebted – it means being able to escape the spiral of problem debt through money advice, budgeting support and credit unions, whilst government finally clamps down on the predatory practices of payday lenders.

For the drug or alcohol addict – it is help to get clean and back on track, through pioneering new approaches across the prison, employment and rehabilitation services, that focus on freedom from addiction and lasting life change.

This is social justice in action – not just government putting an extra pound in someone’s pocket to try and lift them over an arbitrary poverty line…

… but meaningful support to tackle the problem at its source…

… and from there, enabling people to sustain that improvement in their lives, moving from dependence to independence.

Social investment

This is a historic break from a system that for too long, fostered dependency rather than transforming lives…

… and one which will not happen using the same old methods.

As I said at the beginning, the Social Justice Strategy was always about challenging the status quo.

Encouragingly, I believe one final measure of our progress over the past 18 months has been emergence of radical and creative ways of achieving social change.

We now have over 30 schemes and pilots up and running, where providers are paid at least in part for the outcomes they achieve in improving in people’s lives.

Because the focus is on results, instead of inputs, providers are freed from rigid processes and given scope to innovate.

Spurred on by a growing social investment market, new models are coming to the fore, such as social enterprises and social impact bonds…

… in turn bringing in new investors – private sector companies, high-net individuals, and venture capitalists… groups who might never before have seen themselves as part of the solution for change.

The introduction of a social investment tax relief will open up that market even further.

Just as Gift Aid has encouraged charitable donations, so my hope is that the tax relief will incentivise anyone with savings to put their money into social investment.

Alongside new infrastructure – a Social Stock Exchange and the Early Intervention Foundation, which is already starting to assess and advise on programmes’ social return on investment…

… this is opening up exciting new prospects.

Conclusion

Now is the time to seize those emerging opportunities.

Some are doing so already: scouting out local talents in the voluntary sector and encouraging social entrepreneurship…

… opening up the commissioning of services to allow newcomers to the market…

… or harnessing new funding models, where the discipline and rigour of the business world is built in.

But in straightened times, and faced with tight budgets, all of us need to find new ways of tackling social problems…

… building momentum in the years to come.

Delivering social justice offers a way forward.

By intervening early and efficiently, we prevent costs from building up further down the line.

By tackling problems at their source, we save money otherwise spent on ineffective remedial policies.

And by focussing on meaningful outcomes, we ensure that each pound we spend has a demonstrable purpose.

Restoring our finances, as we are compelled to do…

… but most of all, restoring hope and aspiration to those on the furthest reaches of society…

… at the same time, restoring lives.

Below is the text of the speech made by the Work and Pensions Secretary, Iain Duncan Smith, to the Recovery Festival on 12th March 2013.

Introduction

It is a pleasure to be here today.

I’d like to start by thanking the Recovery Partnership for organising today’s festival…

… and also to express my gratitude to Noreen Oliver.

Noreen is a remarkable woman who has single-handedly changed the debate – focusing it on setting people free from their drug and alcohol addiction and on the path to a better life…

… rather than just maintaining individuals in dependency.

It is a real inspiration to see today’s Recovery Festival championing the same approach…

… uniting politicians of all hues, alongside charity workers, top employers, and even celebrities… in support for giving recovering addicts a second chance.

A waste of potential

For too long, I think, where people are suffering from addiction, we as a society have focused on containing the problem…  managing the symptoms rather than treating it at its source.

In my area of interest – the welfare system – there is clear evidence of this.

There are around 100,000 people claiming sickness benefits whose illness is primarily down to their drug or alcohol addiction.

Of these, a staggering 23,000 have been claiming incapacity benefits for a decade or more…

…. many unseen for that entire duration… no one checking whether their health has changed, or might improve if they were to engage with treatment.

It cannot be right that people suffering from addiction are simply written off on benefits, all too often, without any belief that their life could change.

Turning things around

The work of Bac O’Connor, and other organisations like it, shows that nothing could be further from the reality.

Visiting a rehab centre some years ago, I met an ex-prisoner who had been a serious drug user – whose story was a source of real inspiration.

He told me:

“I was, until I recovered, a one-man crime wave in my area. Every day was spent figuring out what house to burgle… how I could get money to feed my drug habit… essentially, how I could survive, just kicking along.”

“I did it”, he told me,”for 20 years. God knows he said how many places I robbed, how many people I hurt, trying to steal their property or their money… how degraded I became. I was arrested endlessly, I was charged, I was let lose again, I was in prisons, I was out of prisons.”

“Until finally I went through this programme to get off my drug addiction altogether – and that was what turned things around.”

By addressing the root cause of the problem – tackling the addiction itself – he had finally broken free from a life of crime.

When I met him he was seeing his children for the first time in years, putting what mattered to him into perspective.

The help and support offered whilst in rehab was playing a vital part – but I was also struck by the man’s strength of character and conviction…

… his determination to take control of his own life and do something positive with it.

Ending stigma

Strength, conviction, determination.

Not necessarily three words you would use to describe someone with a history of substance abuse and crime.

Yet for an individual in recovery, these characteristics are precisely what is required of them if they are to maintain their motivation… make positive choices… and overcome adversity.

In taking steps to address their addiction, individuals gain valuable knowledge… both about themselves, and about how to deal with and understand their impact on others…

… which can readily be applied in other aspects of their life.

In fact, there is much to suggest that recovered addicts can make for extremely motivated, loyal and committed employees…

… all the more grateful for the opportunity to work because it offers a highly valuable opportunity to stay on track…

… whilst bringing tenacity, drive and dedication to the job – a set of skills that employers might otherwise struggle to find.

Managing the risk

Sadly, too often, this talent has been left untapped.

Potential employers have been put off by the misconception that employing people who have been through rehab is overly risky.

Ironically, research suggests that this stigma itself can negatively affect people’s chances of recovery.

The reality is that, yes, there is a risk involved for employers.

But that is true of taking on any new employee.

What’s more, with the help of the treatment sector, the Government is taking important measures to minimise any uncertainty around employing a recovered addict.

Just a few words to explain how.

Focusing on recovery

We have already started changing how the state supports people with an addiction…

… with promising signs that the right interventions can have a positive effect.

Since 2005, the proportion of drug and alcohol users successfully going through treatment AND not returning, has increased by around a quarter.

This is real progress, but we must do more to improve these outcomes further still.

The Government’s Drug and Alcohol Strategy sets out our commitment to prioritise full recovery, meaning freedom from dependence on drugs and alcohol.

This is crucial.

For if the outcomes are to be sustainable, recovery must be about getting clean – rather than just bringing someone’s addiction under control…

… abstinence instead of maintenance.

No one knows this better than Noreen, and others here today.

Bac O’Connor have advocated this approach for years…

… but we are now starting to see it put into practice across the treatment sector.

Holistic approach

We are also promoting a broader, more holistic approach to recovery…

… recognising that the problems faced by drug and alcohol users are often interlinked and overlapping.

Alongside someone’s addiction, we must address the other issues that hold individuals back, limiting their capacity to improve their own life.

That is why we are taking steps to join up different support services and treat problems together.

Take the 8 pilot programmes launched last year, where we are incentivising treatment providers to identify and address a whole range of social problems.

Paying them not just for helping someone break free from drugs and alcohol…

… but also for the outcomes they achieve in terms of preventing re-offending, getting people off the streets, and improving their overall quality of life.

For someone going through rehab, the value of these positive changes cannot be underestimated.

Having a stable family life… a safe place to live… good overall health… and feelings of self-worth…

… all these are vital in supporting a full and lasting recovery.

Importance of work

Yet there is one final step in the recovery journey – perhaps the most important of all.

If we are serious about making a sustainable difference to people’s lives… moving from dependency to independence… then work is the best stepping stone to doing so.

Earning a wage can help in itself – helping get on top of problem debt, for example, or in terms of the opportunities it brings.

Even something as simple as earning a holiday can make a big difference to normal family life, where insecurity had previously prevailed.

The money earned through work is a big step towards individuals regaining control over their own lives, making a contribution and having a sense of achievement.

But more than that, work itself is a vital component in our daily lives – it shapes us, develops us, and helps us create friends and sense of belonging.

The money we earn gives us choices, and the work we do helps us to develop, so we can make the most of those choices.

Put simply, having a job is one of the best ways for individuals to find a foothold in society again – and stay there.

Given the transformative effect it can have, we must do all we can to help those who are able, to move into work.

Work Programme

For people who are a long way from the workplace, who lack skills or the work habit… who have been through rehab or recently released from prison…

… that means addressing the barriers that hold them back, giving them the best prospects of securing a job.

That is what the Work Programme is all about.

I know you have already heard today from Stuart Vere, Chairman of Avanta – one of our Work Programme providers – but I just want to reiterate why this is so important.

Through the Work Programme, we have tasked the best organisations in the voluntary and private sectors with delivering personalised employment support for the hardest to help individuals.

As part of this, we have launched two pilots programmes specifically targeted at supporting drug and alcohol addicted claimants into work.

The ‘Recovery Works’ pilot will test the impact of higher job outcome payments for individuals engaged in drugs treatment – offering a financial incentive to support addicts into rehab AND into work.

The other – ‘Recovery and Employment’ – is about promoting cooperation between providers and the treatment experts, with better sharing of existing knowledge and resources.

Work readiness

But in both cases, because we are focused on long-term outcomes, paying for the results achieved in sustaining people in work for two years…

… providers must make sure that individuals are ready to move into work and stay there.

Whether through getting clean… engaging in training or education… gaining work experience… or building confidence…

… in the process, individuals are given a real opportunity to rebuild their own lives.

Just last month I visited the Brink restaurant in Liverpool, an excellent social enterprise putting all this into action – and which I believe is represented here today.

As well as providing a space where people can meet and socialise, the Brink also acts as a recovery hub, bringing together a wide range of different services.

It is a venue for fellowship groups to run sessions… it has onsite counselling and referrals… and importantly, it offers employment advice and support – delivered by both Action on Addiction and a local employment agency.

The majority of the staff are recovered addicts themselves, with work experience opportunities for others like them…

… giving individuals in recovery a sense of self-respect… helping them to understand and cope with the pressures of a job… ultimately, getting them ready for the world of work.

What’s more, all the profits go directly back into the community, in turn funding rehab programmes for those still battling with addiction.

Supply and demand

Nothing illustrates better our vision for change – restoring hope and stability to those previously left on the margins, giving them a chance to turn their lives around.

As I have said, within Government and the treatment sector, we are already making progress.

Yet I believe there are two sides to the process.

In a scenario very familiar to the businessmen and women here today, it is a question of supply and demand.

By getting and keeping addicts clean, equipping them with the skills and experience they need, and helping them to establish a stable life…

… we are ensuring that individuals are prepared, willing and able to move into work.

So there is a highly motivated, highly determined supply of labour.

What now remains is the demand side.

We need employers – of all sizes and from across different industries – who are willing to take on recovered addicts…

… able to look beyond someone’s past and see their skills and aptitude now…

…. and their loyalty and potential for the future.

That is what today’s Recovery Festival is all about.

Challenging the preconceptions around employing people who have been through rehab…

… opening employers’ eyes to the possibilities…

… encouraging demand.

Through offering work placements and opening up job vacancies to recovered addicts, you stand to gain from the knowledge and talent that they can bring to the workplace…

… confronting widespread prejudice, and giving individuals a real chance to get on in life.

Conclusion

At a time when consumers have never been more demanding…

… looking at the quality and value, not just of the goods and services they’re buying, but also the quality and value of the companies themselves….

… I believe this offers a real opportunity to set yourselves apart.

To prove that you’re different…

… that you care about your community, just as your care about your business…

… building your workforce, and rebuilding lives at the same time.

Below is the text of the speech made by the Work and Pensions Secretary, Iain Duncan Smith, to the Kid’s Company in London on 31st January 2013.

I would like start by thanking Camila for generously hosting today.

Camila is a remarkable woman, and it is a real pleasure to be back at Kids Company – an organisation that I know very well, and of which I am a great supporter.

The work you do here is a real inspiration – offering a lifeline to children who need it most, and working tirelessly to help them reach their potential.

It is far from an easy task.

Listening to your stories, it is clear that the children who come here – like too many others across the country – face profound disadvantages.

Growing up in very dysfunctional or violent families… often with emotional and mental health difficulties… or facing problems around substance misuse…

… their need for Kids Company could not be more pressing.

Relative income

This Government will always stand by its commitment to tackle child poverty…

… supporting those frontline organisations, such as Kids Company and others represented here today, who are best placed to turn children’s lives around.

You understand the reality of these children’s lives, and what it means to grow up suffering severe disadvantage.

Yet for too long, I believe, the common political discourse has been lagging behind – fixated on a notion of relative income and moving people over an arbitrary poverty line…

… at the expense of a meaningful understanding of the problem we are trying to solve.

Visiting today has only reaffirmed that belief.

Life change

If we are to make real headway in ending child poverty, we must learn the lessons of the last decade…

…. where for too long, Government chased income based poverty targets without focusing on what happened to the families they moved above the income line.

Despite an unprecedented amount of spending, some £170 billion paid out in tax credits between 2003/04 and 2010, 70% of it on child tax credits…

… sadly the 2010 target to halve child poverty was missed.

Good intentions failed to translate into effective policies…

… for whilst moving a family from one pound below the poverty line to one pound above it might be enough on paper, it does not do enough to transform their lives.

There must be a sustainable difference in the family’s life, or they simply risk slipping back into the poverty cycle… leaving the underlying causes unchecked.

I believe that we need to focus on life change so that families are able to sustain the improvement in their lives beyond government money.

Poll findings

Income matters – and surely must remain a key indicator in defining what it means to be in poverty.

But how we measure child poverty must do more to expose the real challenge we face…

… drawing on how it is experienced by children themselves, and how poverty is perceived by the wider public.

The Government is currently consulting on a new multidimensional measure of child poverty – with the aim of doing just that.

A recent poll conducted as part of the consultation process shows that whilst not having enough income is thought to be one important factor…

… other criteria are considered equally or even more crucial.

Interestingly, having a parent addicted to drugs or alcohol was thought to be the most important factor of all…

… above and beyond other dimensions such as going to a failing school, living in a cold damp home, or having to care for a parent.

Three quarters of people said having an addicted parent was very important, almost 20% more than the next most significant factor….

… and only 2% of people saying it was not important – lower than any other single factor.

Of course, not every child in poverty will have drug or alcohol addicted parents.

Nor have we made a decision on which on which factors should be included in the new measure.

But it is striking that so many people pick out as central to a child’s experience of poverty, a factor that so rarely features in the poverty debate.

It seems obvious that having a parent with addiction problems will have a huge negative impact on a child’s life and prospects…

… but the debate has pushed us away from the kind of direct thinking that is intuitive for most people.

Nothing illustrates more clearly how far off course the current measure has taken us AND why we need a new measure…

… one which both identifies those most in need and entrenched in disadvantage and is widely accepted by as being meaningful and accurate.

Breaking the cycle

Let me explain why.

For a poor family where the parents are suffering from addiction, giving them an extra pound in benefits might officially move them over the poverty line.

But increased income from welfare transfers will not address the reason they find themselves in difficulty in the first place.

Worse still, if it does little more than feed the parents’ addiction, it may leave the family more dependent not less…

… resulting in poor social outcomes and still deeper entrenchment.

What such a family needs is that we treat the cause of their hardship – the drug addiction itself.

Rather than simply tracking income levels, this surely is what a measure of child poverty should capture…

…  measuring whether the family has an opportunity to break the cycle of disadvantage…

… so that parents can take responsibility for their own lives and improve the life chances of their children.

Routes out

This Government is committed to addressing the pathways that lead families into poverty in the first place, and offer meaningful routes out.

For those who are able, we know that work is the best way for families to lift themselves out of poverty.

It is not just about more money.

Work and the income it brings can change lives – providing a structure to people’s lives, giving them a stake in their community…

… in turn, having a transformative effect on children’s lives and aspirations, equipping them to fulfil their potential.

This belief underpins the whole package of reforms that I am delivering in the Department for Work and Pensions.

We are introducing the Universal Credit, a single payment withdrawn at a single rate, so it is always clear to people that work pays more than benefits.

And we are delivering the Work Programme – offering personalised support to get people back into employment and keep them there.

Universal Credit and the Work Programme are two sides of the same coin.

Either without the other would not have the same impact.

Together, they will become formidable tools for taking people on a journey from dependency to independence.

Drug pilots

Where someone is paralysed by an addiction, they cannot make progress on this journey.

Their addiction keeps them from getting into work, but being unemployed in turn traps them in dependency, limiting the control they have over their own life.

There are around 100,000 people claiming sickness benefits whose illness is primarily down to their drug or alcohol addiction.

Of these, a staggering 23,000 have been claiming incapacity benefits for a decade or more.

And whilst addicts may face real barriers to work, if we are to break the cycle, it is vital that we help individuals break their addiction and secure a job.

Today, I am pleased to announce two Work Programme pilot programmes, which will be specifically targeted at supporting drug and alcohol addicted claimants into work.

The first of these – the ‘Recovery Works’ pilot will test the impact of higher job outcome payments for individuals engaged in drugs treatment…

… giving providers a financial incentive not only to support addicts into work rehab but also into work.

Launching in the East of England and West Yorkshire, the focus will be on helping those battling drug and alcohol dependency to break free from their addiction…

… using work as a stepping stone to recovery.

The second ‘Recovery and Employment’ pilot works on a slightly different principle – harnessing the existing knowledge of treatment experts, in tandem with that of Work Programme providers.

Here we will be testing how far better sharing of skills and resources can deliver better outcomes for addicts.

Our aim is that two further pilot sites within the West Midlands will provide a flagship example of cooperation between providers…

… working together to support people through recovery and into employment.

Sustainable outcomes

In both cases, the pilots are about sustainable outcomes…

… which means full recovery, supporting people to live a life free from drugs and alcohol…

… and into meaningful employment, getting them into work and keeping them there for up to 2 years.

By focusing on long-term outcomes, we can support individuals to rebuild their future – make a real and lasting difference to their own lives.

Importantly, because we are paying by results, we will only pay for what works…

… at once reducing the risk on the taxpayer, and ensuring that every pound of Government money is targeted where it will have a lasting impact.

Solve that problem – get someone clean…

… get them into work…

…and you help them find a foothold in society again – and stay there.

A new measure

Whether it be addiction, poor housing, educational failure, unemployment, or debt…

… across Government we are tackling the barriers that hold people back, through dynamic interventions which will make real difference to individuals’ wellbeing and their children’s future life chances.

Our commitment to developing a new multidimensional measure of child poverty means that, finally, we will be able to measure the effect of interventions like these.

By segmenting the central drivers of poverty, identifying those children most entrenched in disadvantage and who are on poor trajectories…

… we can both target policies that have the most impact, and hold ourselves accountable for the results.

Consultation

As I have said, we are consulting now on what this measure should look like.

Addiction is one important form of poverty, but it is not the only form.

The process provides an opportunity and a forum to consider our options.

There are many we could pursue – as part of the consultation we need to consider how different dimensions interrelate, which overlap, and which can be easily quantified.

In developing what a future measure might look like, we accept that expertise lies far beyond Whitehall.

In fact, the success of our future measure relies on listening to what you have to say.

The consultation closes in two weeks’ time, on Friday 15 February.

Before then, I urge you to offer your views and bring your knowledge to bear on what the future measure could look like.

This is a unique opportunity to shape how child poverty is understood…

… now and for generations to come.

Conclusion

In truth, no statistic will ever perfectly reflect what it means for a child to live in poverty.

But through a better representation of the reality of children’s lives I hope we can get much closer to doing so…

… in turn, putting us all in a better position to measure, address and ultimately end child poverty…

… a commitment which, as I said at the start, we will always stand by.

Below is the text of the speech made Iain Duncan Smith, the Secretary of State for Work and Penions, to the Wave Trust in London on 25th April 2013.

Introduction

It is a pleasure to be here today, in support for the Wave Trust’s 70/30 campaign, and I’d like to thank George for inviting me.

I have long been a supporter of Wave’s work and philosophy…

… and this latest aim – to drive a 70% reduction in child abuse, neglect and domestic violence in the UK by 2030 – exemplifies your dedication, ambition, and drive to make a real difference.

The difference that could be achieved in terms of improving children’s chances and transforming lives is enormous.

For thanks to your research, and that of other pioneers in the field, we now understand how strongly a person’s earliest experiences shape their later life.

Compelling evidence shows that what happens inside the family, when a child is very young indeed, strongly determines how they will interact with people… how ready they will be to learn… ultimately, where they will end up in life…

… for better, or indeed, for worse.

Early years

In a country as wealthy as ours, it is an injustice that so many children are trapped in disadvantage from an early age.

Whilst some children thrive despite growing up in difficult circumstances, all too often, the mark left by this experience lasts a lifetime… confining individuals to the margins of society because of where they have started out in life.

By as young as 4 years old, there is already an attainment gap of a fifth between disadvantaged children and their more affluent peers.

From the back of the classroom, it is a slippery slope to truancy, to school exclusion, from there to a life of benefits, and in extreme cases, gangs and crime.

More than half of young offenders were permanently excluded from school…

… and two in every five prisoners report having witnessed violence in the home as a child.

Early intervention

This is a bleak future, and we must end it.

Yet for too long, our social policy has been based on maintaining social problems rather than preventing them… allowing disadvantage to become entrenched.

As a result, we have paid out ever increasing amounts in welfare, social programmes and care… whilst feeling the social costs at the same time.

Take the fact that 120,000 of Britain’s most troubled families cost the state £75,000 in special interventions each year… £9 billion annually overall, of which £8 billion is estimated to be spent reactively – on visits to A&E, police call outs, prison services, and more.

£8 billion spent picking up the pieces of social breakdown, but doing little to transform the families’ dysfunctional lives.

Social Justice

That’s a policy of late intervention and it has to change – for it’s not only a drain on public funds, but also a tragic waste of human potential.

Across the UK, despite the number of workless households having fallen by 240,000 since 2010, there are still 3.7 million households – around 1 in 6 – where no-one works…

… meaning over 1.8 million children living in a workless household.

Especially in tough economic times, every pound we spend must bring about the positive, sustainable outcomes that people so badly need.

Instead of a maintenance approach, this government is determined that early intervention should be a defining principle in how we tackle social problems…

… central to our strategy delivering social justice…

…breaking the cycle of disadvantage…

… and transforming the lives of those most in need.

Just today, we published our Social Justice Progress Report, which shows how far we’ve come over the last year in putting this principle into practice.

Early years

As the Wave Trust has long advocated, we are starting with the family…

… taking action in the earliest stages of a child’s development, and helping parents in order to give their infants a better start in life.

Whether it be in terms of health, where we are training an additional 4,200 health visitors and doubling the number of Family Nurse Partnerships to 13,000 by 2015…

… education, where we are extending free early education to the most disadvantaged two-year-olds…

… or families, where we are investing £30 million in support to build strong, resilient relationships …

…through all this, the government are steering the focus and the spending towards areas which we know can make a real difference to improving children’s life chances.

Cross-party consensus

What’s more, even across party lines, there is a growing consensus around the vital importance of children’s formative years.

This was one of our priorities on coming into government, and led to the commissioning of a series of reports, including Frank Field’s report on poverty and life chances, and two reports from Graham Allen that focused on early intervention…

… aimed at developing cross-party agreement on what needed to be done in this space.

But there us someone else in the House of Commons who has done a huge amount over the years to advance this cause, and that is Andrea Leadsom.

Andrea was chairman of OXPIP – the Oxford Parent Infant Project – and a founding trustee of NORPIP in Northampton…

… and is now championing the roll-out of a national network of PIPs, offering therapeutic support across the country to help mothers and babies develop a strong and loving attachment.

She has also played a vital role in establishing the first All Party Parliamentary Group on Early Intervention, which had its inaugural meeting just last week.

With a cross-party manifesto to follow, focussing on the importance of conception to two…

… all this will help to establish a resolute commitment to children’s early years, now and under governments to come.

Government spending

This is a historic shift in how we deliver services for the most vulnerable…

… replacing reactive policies, and a short-term focus on politicians’ pet projects, with a meaningful, sustained approach that will pay dividends further down the line.

Yet alongside this shift from a maintenance approach to a transformational one… we must also achieve a shift in how government funds its interventions.

We have to reject the old tendency to lavish money on programmes in the hope that more money alone will solve the problem…

… and instead, we must open up a whole new dimension – one focussed solely on the return that money is achieving.

Every pound for life change.

Social investment

I believe that here too, we are starting to make real progress.

In particular, we are opening up new funding streams based on payment by results…

… where we pay for what works, reducing the risk on the taxpayer…

… and the money follows the outcome, meaning providers are only rewarded for the positive life change we want to see.

You may have heard of the Peterborough social investment bond, the first of its kind – where investors are funding charities to run rehabilitation programmes with prisoners.

If reoffending falls by 7.5%, the investors receive a financial return, paid for out of the reduced costs of social breakdown… whilst making a real difference to society at the same time.

Such is the success of Peterborough that we have now seen 13 social impact bonds spring up across the country, from Perth to the Midlands, Merseyside to London… making the UK a global leader in social investment.

In all cases, it is about saying to investors: ‘You can use your money to have a positive impact on society, and you can make a return.’

Huge potential

Our aim is to strengthen the UK’s position further still, by making it as easy as possible for the social investment market to develop.

One vital step has been the establishment of the Early Intervention Foundation, which launched on 15 April, with both huge cross-party support and the backing of leaders in the local and community sectors.

Let me say here this evening that we owe a debt to Graham Allen – a colleague and a friend, whose drive and dedication made this happen.

The Early Intervention Foundation will play a crucial role:

advocating early intervention over late reaction in tackling social problems amongst children and young people…

… rigorously assessing what works, to determine both the best early interventions available and their relative value for money…

… and independently advising local commissioners, providers and potential investors on the best evidence-based programmes, enabling them to make the best choices in how they support children and families.

The work of the Foundation will be aided by a government investment of £20 million in a new Social Outcomes Fund, with the aim of catalysing new social impact bonds and topping up their returns…

… specifically in complex areas such as children’s early years, where the yield is spread across different services – health, welfare, education, and so on.

A more cohesive society

Yet there is still more to do, capitalising on a predicted rise in demand for social investment to as much as £1 billion by 2016.

If we can get it right, I believe social investment has huge potential.

Clearly, it has the potential to greatly increase the amount of funding available for social programmes by bringing in private investment money on top of that provided by government or pure philanthropy alone.

But more than that – perhaps most importantly – I believe social investment could be a powerful tool for building a more cohesive society.

The gap between the top and bottom of society is in many cases larger than it has ever been.

We have a group of skilled professionals and wealth creators at the top of society who have little or no connection to those at the bottom.

Yet as George and others at Wave will tell you – in so many cases, what divides the two is little more than a different start in life.

I believe social investment gives us an opportunity to lock not just the wealth but also the skills of those at the top of society back into our most disadvantaged areas.

Imagine you create a social bond in a particular deprived neighbourhood. Investors buy into it and as with any investment, will want to see it flourish – taking an interest in that community where they would otherwise be totally detached.

At the same time, these wealth creators can have a dramatic effect on the communities themselves – taking the city to the inner city…

… and showing those at the bottom that they have an opportunity to turn their own lives around and move up the social ladder.

Conclusion

For too long, our failure to make each pound count has cost us.

Not only in terms of a financial cost – higher taxes, inflated welfare bills and lower productivity, as people are trapped in dependency long-term.

But also the social cost of a fundamentally divided Britain – one in which children born just streets away from each other, are left miles apart in terms their life chances and outcomes.

We can no longer afford to spend ever greater amounts on ineffective remedial policies.

Instead, by investing in the early years – harnessing the expertise of our early intervention community and the power of social investment – we can make a transformative difference.

Setting children on the path to a productive and independent life beyond the state…

… restoring hope, aspiration and belief to communities who have been left behind…

… laying the future foundations for a cohesive and successful society.

The below speech was made by the Work and Pensions Secretary, Iain Duncan Smith, at the Cambridge Public Policy lecture on 25th October 2012. The speech was titled “Reforming Welfare, Transforming Lives”.

Thanks to Simon Heffer, Miranda Gomperts and others for arranging tonight’s event.

It is a pleasure to be here this evening.

With a new Masters degree in public policy starting at the University next year, I hope that vigorous policy thinking in Cambridge will filter through to Westminster…

… strengthening the links I know my Department already has with the Centre for Science and Policy…

… and bringing a network of knowledge, evidence and expertise to bear on what we are delivering in Government.

In my area of responsibility – welfare policy – the challenge we face is not an abstract one.

Nor is it simply a question of institutions and systems.

My mission has always been about people – improving the life chances of the most disadvantaged and providing effective support to those in need.

That was the reason I founded the Centre for Social Justice back in 2004, an organisation set up to better understand the drivers of poverty and to find effective solutions.

And it remains my purpose in office – where tens of millions of people rely on the Department for Work and Pensions every day.

We are currently delivering an extensive reform of the benefits system, and I do want to spend some time reflecting on this programme.

But if we are to make a real difference to people’s lives, what we need to deliver is cultural change – both in society and even in Government itself.

Beveridge

To explain what I mean let me start by taking you back to the early 1940s, when Beveridge was laying out his vision for the modern welfare state.

Beveridge was driven by a desire to slay the ‘five giants’ that he identified in society at the time: want, disease, ignorance, squalor and idleness.

But he was also clear about the risks that were attached to this laudable cause.

He warned that:

“The danger of providing benefits, which are both adequate in amount and indefinite in duration, is that men as creatures who adapt themselves to circumstances, may settle down to them.”

And he was clear that the system should not be allowed to “stifle incentive, opportunity, or responsibility”.

In other words he was focussed on the kind of culture that the welfare system could underpin.

Would it be one that fostered a society where people took responsibility for themselves and their families, and treated welfare as a temporary safety net in times of need…

…or one that conditioned people to grow dependent on state support, and treat it as a long-term crutch?

His fear was that if the balance was wrong it would lead to the creation of a semi-permanent underclass.

70 years after the publication of Beveridge’s seminal report, I wonder what he would make of the system now?

Welfare inheritance

Some 4.6 million people –12% of the working age population – on out of work benefits.

1 in every 5 households with no one working, and 2 million children living in workless families – a higher proportion than almost any country in Europe.

This culture of entrenched worklessness and dependency was not just a product of the recession.

There were over 4 million people on out of work benefits throughout the years of growth.

Under the previous Government whilst employment rose by 2.4 million, more than half of that was accounted for by foreign nationals.

Let me be clear, this is not even a point about borders.

It was an issue of supply and demand.

The facts serve to illustrate an issue with our workforce at home – and the enormity of the first cultural challenge we faced.

Large numbers sitting on out of work benefits unchallenged, many unwilling or unable to take advantage of the job opportunities being created.

Whilst companies were unable to get British people to fill these jobs, workers from overseas stepped in.

Overburdened system

Part of the problem was that while our economy was subject to a fundamental overhaul – freeing up the markets and moving power away from the state…

… after Beveridge, governments of all hues seemed to forget about the need for social reform.

They assumed that the renewed economy alone would do the trick of creating a more prosperous and more cohesive nation and so our welfare system was subject to an incredibly reactive process of change.

A new challenge would emerge and governments would respond by tweaking things…

… creating add-ons to employment support – at one stage, the New Deal for young people, the New Deal for those 50+, even the New Deal for musicians…

…and introducing new supplements, even new benefits into the welfare system.

Small wonder we were left with a hugely overburdened system, comprised of over 30 benefits.

For disabled people alone a complicated muddle of 7 additional payments, 3 different premiums, 4 components in the main out of work benefits and tax credits… each with separate rules, rates and purposes… some means-tested, others linked, many overlapping.

On top of this over 25 passported benefits in England, and around 20 in Wales and Scotland.

For example:

Non-repayment of children’s welfare loans. Healthy Start vouchers and vitamins . Exemption from paying the cost of board and lodging on residential trips. Energy Assistance Package Stages 3 and 4. WaterSure.

Ah yes, WaterSure. I had to ask around to find out what this was, and it turns out it is to cap the bills of certain utilities customers who have a water meter.

You might think this is an isolated benefit – but no, there is also one for reduced telephone tariffs called BT Basic.

All these benefits introduced with the best of intentions – yet each with different eligibility criteria and each giving rise to confusion, fraud and error.

It is a system of byzantine complexity.

Worse still, it is a system set around the minority.

An exemption here, an addition there, all designed around the needs of the most dysfunctional and disadvantaged few.

Instead of supporting people in difficulty, the system all too often compounds that difficulty – doing nothing for those already facing the greatest problems, and dragging the rest down with it.

Obsession with spending

What do we find as a result?

Under the last Government, spending on benefits and tax credits increased by over 60%, rising even before the recession – when growth was booming, jobs were being created, and welfare bills should have been falling.

More money spent on welfare than ever before – by 2010, costing every household in Britain an extra £3,000 a year in tax.

Small wonder that the Government racked up the largest deficit since the Second World War.

We were unable to pay our way, with an economy built on debt and consumption.

This then is the second cultural challenge I want to touch on tonight – a problem which lies, to a large extent, in the culture of government spending which has developed.

This is a culture marked by an obsession with inputs – with pouring money into social programmes – so that governments are seen to be doing something.

Of course big spending is attractive because it brings big headlines.

Chasing media attention and placating lobby groups in the short term.

But my concern is that no one asks about the outcome – in other words what impact the spending will have on people’s lives.

Take the fact that 120,000 of the most disadvantaged families cost the Government some £9 billion per year in special interventions, from an array of agencies.

The police, the ambulance service, the Council, youth offending teams…

… all of them administering selective help, most often without discussion with other groups, trying to manage their own bit of the problem rather than addressing what was holding the family back.

We were paying out some £75,000 per family, yet without doing anything to transform their dysfunctional lives.

So we saw social breakdown on the rise at the same time.

And income inequality stretched to its highest level since records began.

That is what I mean when I speak about inputs versus outcomes – we have become comfortable with the idea of measuring the money we put in, but without really caring to ask what that money achieves in terms of life change at the other end.

Pensions

In many ways the problem I’ve touched on here is also relevant to our pension system.

Irresponsible government spending is symptomatic of a wider problem – of a society reliant on debt, rather than saving and investment.

Currently, some 11 million people the UK aren’t saving enough for their retirement.

Why?

Because under the pensions means test, hard-working people who try to save can find themselves retiring on the same income as their neighbour – someone who hasn’t saved at all but is eligible to claim for Pension Credit.

What kind of message does that send out?

It tells people on low incomes that it’s not worth saving – it’s not even worth working. Just sit back and wait for the government to pay out when you retire.

Over the years we seem to have become addicted to debt instead.

Even before the recession we accumulated one of the highest rates of personal debt in the whole of Western Europe, around £1.5 trillion – the size of the whole UK economy.

We embraced a culture of ‘live now, pay later’ and looked to future generations to pick up the bill.

Reform

How far from Beveridge’s original vision.

And clearly a system ripe for reform.

But how do you reform when there is no money?

Gone are the days when governments could buy their way out of a problem.

This Government is rightly committed to the vital task of cutting the deficit – and no department is exempt when it comes to getting the public finances in order.

We have already taken action to reduce welfare bills by £18 billion by the end of this Parliament, and with continuing economic uncertainty we will have to find further savings.

But from day one we have resisted an approach which focuses solely on the amount of money to be saved.

The solution, I believe, lies in structural change – leading to a complete shift in the welfare culture in this country.

We are bringing spending back under control.

But instead of simply top-slicing the budget, we are focused on tackling the demand for welfare…

… changing the incentives in the system so that it acts as a springboard rather than a trap, rewarding those who move into work…

… and redesigning the system in a way that restores fiscal stability whilst restoring lives at the same time.

Journey to independence

This Government will always stand by its promise to protect the most vulnerable and provide support for those whose sickness or disability puts them in difficulty.

Nevertheless, my belief is that where they are able, those in the welfare system should be on a journey. It should be taking people somewhere, helping them move from dependence to independence.

So if you are able to work the system should make work worthwhile and should both support and encourage you.

What it should not do is tug you in the wrong direction, to a place where you receive so much in benefits that a return to work is unaffordable.

If you are sick but able to work in time the system should support you, stay with you as your condition changes or improves, and make sure you can take the opportunities to work when you are able.

What it should not do is consign you to a life on benefits, never check on your condition, assuming that you are better off languishing there indefinitely – as has been the case for the 1 million people on incapacity benefits for a decade or more, many unseen for the whole duration.

To achieve this journey requires an internal and external cultural change – whereby the welfare system supports people in need, but not to remain in need.

Early action

Midway through this Parliament, we have already taken action to remove stumbling blocks on people’s way to independence.

Let me give you just a few examples.

First the changes we are making to cap Housing Benefit.

Under the system we inherited, in certain cases where families were living in areas with incredibly high rents, it was actually possible for them to claim over £100,000 a year for help with housing costs.

Think about what this means for someone who is considering taking a job.

There’s a good chance they won’t, because they will fear losing their home as their Housing Benefit is tapered away.

Unable to pay their rent from a salary, they cannot take that positive step.

That is why we have limited the amount of Housing Benefit that a household can receive…

… a change which means families face the same choices about where they live and what they can afford, regardless of whether they are on benefits or in work.

Take our reforms to incapacity benefits.

We are reassessing everyone, at a rate of 11,000 claimants per week.

This is about staying with those who cannot work at the moment – regularly checking whether their condition has changed, worsened or improved.

And again, for those who can, it is about moving back towards work, and an independent life beyond the state.

Work Programme

In many cases this process requires us to address the factors that cause people to be in difficulty in the first place.

When you are dealing with people who are a long way from the workplace, who lack skills or the work habit… who are homeless or recently released from prison… you need a system that addresses these barriers in order to get them work-ready.

That is what we are doing with the Work Programme.

We have tasked the best organisations in the voluntary and private sectors to get people into employment, and then to help keep them there for up to 2 years.

The Work Programme is already helping some 700,000 people – and is due to support 3.3 million over the lifetime of the contract.

Results

Without a doubt, there are no quick fixes to get people back to work – particularly in difficult economic times.

But whilst the overall economic outlook is still unsure, the labour market is holding up better than many might have expected.

Nationally, we have seen 4 consecutive quarters of positive job growth – up 212,000 this quarter alone – and 3 consecutive quarters of falling unemployment.

There are now more people overall – and more women – in work than ever before…

… and the latest migration data shows that over the past 2 years a majority of the increase has come from UK nationals.

What’s more, we are seeing some positive signs that our reforms are having an effect.

There are now 170,000 fewer people claiming the main out of work benefits than when this Government entered office – driven by falling numbers on incapacity and lone parent benefits.

This is important. It means even though we’ve had four years of difficult economic times, we no longer let people just drift away from the labour market.

Let’s contrast this with what has happened in America.

There the unemployment rate has been similar – last month it fell to 7.8%, just below the UK figure of 7.9%.

But since the recession, the inactivity rate in America has risen by 2 percentage points, that’s 2% of the working age population giving up on work.

In the UK, despite the recession, and despite more young people staying on longer to study, the inactivity rate is close to the lowest in a generation.

The biggest demotivating factor

Despite these promising signs, there is still more to do.

For if we are to build a new journey, we have to recognise a simple fact.

Not everyone is starting from the same place.

There is no point assuming – for example – that everyone understands the intrinsic benefits of work, the feelings of self-worth, or the opportunity to build self-esteem.

For someone from a family or peer group where no one has ever held work, the pressure to conform is enormous, underscored by the notion that taking a job is a mug’s game.

Thus, across generations and throughout communities, worklessness has become ingrained into everyday life.

Take somewhere like the London Borough of Hackney, which has a high number of people claiming Jobseeker’s Allowance – almost 10 thousand people in just one district.

Yet in September alone, Jobcentre Plus took some 8,000 new vacancies in Hackney and the neighbouring boroughs.

Overall, there were over 40 thousand new vacancies across London, and across the UK there are almost half a million unfilled vacancies at any one time – many in low skilled jobs.

So as well as providing people with support to get back to work, it is vital to tackle the biggest demotivating factor that many people face…

… the fact that the complexity of the system and the way it is set up creates the clear perception that work simply does not pay.

Under the current mess of benefits and tax credits, people on low wages face losing up to 96 pence in every pound they earn as they increase their hours in work.

In other words for every extra pound they earn, 4 pence goes in their pocket and the rest goes back to government in tax and benefit withdrawals.

It is this factor which can stop someone’s journey back to work in its tracks.

Universal Credit

Changing this is what Universal Credit is all about.

From 2013, it will replace the main out of work benefits and tax credits with single, simple payment withdrawn at a clear and consistent rate.

By removing the cliff edges in the current system which mean it’s worthwhile working either 16 hours, 24 hours, 30 hours or not at all…

… Universal Credit will make work pay – at each and every hour.

80% of financial gains will go to those in the bottom 40% of the income distribution, lifting some 900,000 adults and children out of poverty.

Rebalancing the system

Importantly, our guiding principle in designing the new system is that it should be set around the majority.

Over 75% of people in work are paid monthly in arrears.

Over 78% of working age benefit claimants use the internet now.

And over 71% of those receiving housing benefit in the private sector already take responsibility for paying their own rent.

That is why as a default, Universal Credit will be paid monthly, online, and directly to claimants themselves.

We are rebalancing the system so that it caters to the needs and expectations of the mainstream, and making it a seamless transition into work – meaning Universal Credit will be simpler both to use and to administer.

But more than that, because we are no longer going by the lowest common denominator, Universal Credit will enable us to identify the most vulnerable people much more quickly than now.

For the minority who cannot budget, cannot pay their debts, or are struggling to manage…

… instead of maintaining them on benefits or waiting for them to crash out of work…

…. we should be doing more to address the root cause of this hardship – whether it be financial illiteracy, addiction, mental illness, or another problem.

Using interventions targeted and coordinated to restore stability to those who have been left behind, Universal Credit offers an opportunity to help these individuals rejoin the rest of society.

A new contract

Underpinning this improved support is conditionality.

By this I mean the set of obligations that claimants must meet in return for benefit – too often confused, poorly communicated and inconsistently applied in the current regime.

Under Universal Credit we are changing this, requiring everyone to sign up to a claimant commitment as a condition of entitlement to benefit.

Just as those in work have obligations to their employer, much like a contract, this commitment will clearly set out claimants’ responsibilities to the taxpayer.

Those who can work but are unemployed will be expected to engage with us, treating their search for work as a full-time job.

If someone fails to do so without good reason, the commitment will also spell out the robust set of sanctions they face – losing their benefit for 3 months for the first offence, 6 months for the second and 3 years for the third.

This marks the renewal of personal responsibility within the welfare system, just as for those in work.

Clarity that will lead the claimant to commitment or to conditionality.

By ending the something for nothing entrapment we can make a meaningful, sustainable change to people’s lives…

…and one that is likely to be more affordable in the long term, as we put individuals on the path to independence and reduce the churn in the system.

Pensions

As in welfare, so too in my other area of responsibility. We are plotting a journey in our pensions system as well.

Here we are looking to set people on the road to a decent and sustainable retirement.

The solution here is to get people saving – and to get them started early.

That is why we have introduced auto enrolment, helping up to 9 million people into a workplace pension scheme – making saving the norm.

But that still leaves us with the problem of the means test, which acts as a disincentive to saving.

So the second thing we are doing is pushing ahead with plans to radically simplify the State Pension system – creating a ‘single tier’ pension set above the level of the means test, so that if you contribute, you will see the rewards.

Universal Credit and the single tier pension are two sides of the same coin – ensuring that it pays, first to work and then it pays to save.

Positive action which will change lives.

Going further

In all this, we take our lead from Beveridge.

His guiding belief, that a “revolutionary moment in the world’s history is a time for revolutions, not for patching” is as true now as it was in the 1940s.

All too often, Government’s response to social breakdown has been a classic case of “patching” – a case of handing money out… containing problems and limiting the damage… but supporting – even reinforcing – dysfunctional behaviour.

This has to change, and is beginning to.

Yet if we are committed to a radical overhaul, there is scope to scrutinise the existing system further still, driving out perverse incentives.

First, you have to ask which bits of the system are most important in changing lives.

And you have to look at which parts of the system promote positive behaviours, and which are actually promoting destructive ones.

Should families expect never ending amounts of money for every child… when working households must make tough choices about what they can afford?

Is it right that young people should be able to move directly from school to a life on housing benefit, without finding a job first… when so many of their peers live at home, working hard to save up for a flat?

As Beveridge said: “The insured persons should not feel that income [from the state] can come from a bottomless purse.”

Especially so, when the economy isn’t growing as we had hoped, the public finances remain under pressure and the social outcomes have been so poor.

So these kind of questions need to be asked as we develop this theme.

Government spending

Yet there is one final piece to the puzzle.

I have covered a cultural change in society at large, and cultural change in the welfare system.

But we must also achieve a shift in the culture of government spending.

We have to reject the old tendency to lavish money on programmes in the hope that they will succeed.

The history of such programmes is of great hope followed by embarrassing failure… with taxpayers carrying the risk when they failed.

Instead of focussing solely on money going in, we must open up a whole new dimension – one focussed solely on the impact that spending has.

Every pound for life change.

That means changing not just how much we spend, but how we spend it.

Work Programme

So let me return to the example of the Government’s Work Programme, where we have been pioneering the use of payment by results.

We do that by putting the cost of helping people back to work onto the 18 Prime Providers who compete to deliver the Work Programme in different parts of the country.

They raise the money to deliver the programme alongside their subcontractors…

… we then pay them when they deliver the results – with the biggest payouts of up to £14,000 for supporting the hardest to help into work, and sustaining them there.

Because we are paying for results we will only pay for what works, reducing the risk on the taxpayer…

… and making sure each pound is having a transformative impact on someone’s life.

Early intervention

A payment by results system works best when the timescales for success are short and the metrics relatively straightforward.

But across Government, we are prioritising early intervention – getting to the root of social problems before they arise, rather than waiting to pick up the pieces.

Whether in welfare, health, education or family policy, we are focusing our attention and spending on improving life chances.

Take an example in my own Department, where we are acting on Dame Carol Black and David Frost’s Sickness Absence Review…

… preventing workers from dropping out of the labour market altogether when they become sick, rather than trying to catch them in the benefits system once they’ve fallen.

In doing so, we will reap the benefits further down the line – alleviating the social problems which so are often more difficult to tackle once they become entrenched.

But because these are dynamic interventions, the impact is trickier to measure and more difficult to forecast.

So beyond payment by results, this makes it vital to establish a measurable quality to programmes that deliver over a longer period…

… whilst unlocking new streams of funding.

Social investment

In particular, we are making good progress in opening up the social investment market.

I see this as a huge and exciting opportunity to get much more private money working in pursuit of the social good.

Historically it has been assumed that people could either be ‘good citizens’ and put their money into charitable works, but without expecting anything in return…

…or they could be ‘profit maximisers’, who invest their money in commercial ventures and have to forget about the social consequences.

Social investment is a way of uniting the two – it is about saying to investors:

‘You can use your money to have a positive impact on society, and you can make a return.’

We are leading the field in putting this idea into practice.

Of the 7 Social Impact Bonds established in the UK, 6 of them are being delivered by the Department for Work and Pensions…

… with government money working in partnership with businesses and charities.

This is the model being piloted in Peterborough, where investors are funding charities to run rehabilitation programmes with prisoners.

If reoffending falls by 7.5%, the investors receive a return paid for out of the reduced costs of social breakdown.

Just last week the Prime Minister announced his intention to roll out an outcome-based approach across the probation and rehabilitation services, making payment by results the norm.

But to replicate the success of social bonds elsewhere, we need programmes that have a real chance of seeing a return.

They need to be proven to be effective.

That’s why we’re testing a variety of cutting edge programmes through our £30 million Innovation Fund, so practitioners can develop a proof of concept – in turn making it easier to access alternative funding streams.

And it’s why we are establishing the Early Intervention Foundation which will accredit programmes of work and provide a rigorous assessment of their likely social returns.

Huge potential

There is still more to do to grow the market – with researchers and academics playing a crucial role in developing evidence-based policy.

But if we can get it right, I believe social investment has huge potential.

First, it has the potential to greatly increase the amount of funding available for social programmes by bringing in private investment money on top of that provided by Government or pure philanthropy alone.

Second, it brings a whole new level of discipline and rigour to how government delivers social programmes. Because the money follows the outcome, it therefore requires that spending has a demonstrable purpose – we must invest in proven programmes that change lives, rather than chasing a few media headlines.

But third – and perhaps most importantly – social investment could be a powerful tool for building a more cohesive society.

The gap between the top and bottom of society is in many cases larger than it has ever been.

We have a group of skilled professionals and wealth creators at the top of society who have little or no connection to those at the bottom.

Yet in so many cases what divides the two is little more than a different start in life.

I believe social investment gives us an opportunity to lock not just the wealth but also the skills of those at the top of society back into our most disadvantaged areas.

Imagine you create a social bond in a particular deprived neighbourhood. Investors buy into it and as with any investment, will want to see it flourish – taking an interest in that community where they would otherwise be totally detached.

At the same time, these wealth creators can have a dramatic effect on the communities themselves – showing those at the bottom that they have an opportunity to turn their own lives around and move up the social ladder.

Conclusion

Our failure to make each pound count has cost us again and again over the years.

Not only in terms of a financial cost – higher taxes, inflated welfare bills and lower productivity, as people sit on benefits long-term.

But also the social cost of a fundamentally divided Britain – one in which a section of society has been left behind.

We must no longer allow ourselves to accept that some people are written off.

Our reforms are about improving the life chances of the most disadvantaged – not changing people but restoring them.

Breaking the spirals of deprivation, and giving them the opportunity to take control of their own lives.

The prize for doing so could be immense.

It pays to work…

…. it pays to save…

… and spending is about outcomes not inputs.

Amounting to sound public finances and a modern economy, matched by a fairer and more unified society.

Below is the text of the speech made by Iain Duncan Smith, the Secretary of State for Work and Pensions, to the Leonard Steinberg Memorial Lecture on 9th May 2012.

Introduction

It’s a pleasure to be here to give the second Leonard Steinberg Memorial Lecture.

I knew Leonard personally. He was a remarkable man.

In his inaugural speech in the House of Lords, he described his life as follows:

“I was born in Belfast into a Jewish middle-class family. When I grew up … I joined the Ulster Unionist Party; when I emigrated to Manchester, I became a member of the Conservative Party…. Along the way, I became a bookmaker and an ardent Zionist. Therefore, [you] can well imagine the heavy burden that I have had to bear.”

Though said in a deadpan manner, it was true – Leonard was different in almost every way.

But instead of sitting back and saying that he couldn’t succeed in such an environment, with his background, it drove him on.

Against the odds – and even in the face of death threats – he became a successful businessman, a public-spirited citizen, and a great philanthropist – and I am proud to say my good friend.

Leonard embodied the principle that life is not what is given to you, but what you make of it and what you leave behind for others.

How we apply that principle in reforming our welfare system and renewing our society is the topic of my lecture tonight.

Cultural change

I note that this week marks the two year anniversary of the formation of the Coalition government.

I don’t intend to use this evening for an in depth analysis of that period.

But I do want to spend some time reflecting on the particular challenges which we face in my area of interest – the welfare system…

…as well as explaining how we are dealing with that challenge.

My lecture – you might be relieved to hear – will not be primarily a technical one.

The real purpose of this speech is to set out my mission in the job.

Put simply, what we need to achieve in the coming years is not political and technocratic welfare reform, but internal and external cultural change.

By this I mean cultural change both within society, and within government itself.

Beveridge

To explain what I mean let me start by taking you back to the early 1940s, when Beveridge was laying out his vision for the modern welfare state.

Beveridge was driven by a desire to slay the ‘five giants’ that he identified in society at the time: Want, disease, ignorance, squalor and idleness.

But he was also clear about the risks that were attached to this laudable cause.

He warned that:

“The danger of providing benefits, which are both adequate in amount and indefinite in duration, is that men as creatures who adapt themselves to circumstances, may settle down to them.”

And he was clear that the system should not be allowed to “stifle incentive, opportunity, or responsibility”.

In other words he was focussed on the kind of culture that the welfare system could underpin.

Would it be one that fostered a society where people took responsibility for themselves and their families, and treated welfare as a temporary safety net in times of need…

…or one that conditioned people to grow dependent on state support, and in turn treat it as a long-term crutch?

His fear was that if the balance was wrong it would lead to the creation of a semi-permanent underclass.

I wonder what he would think now…

Welfare dependency

Let me just give you a flavour of some of the figures we were confronted with when we came into office:

5 million people on out of work benefits

1 million there for a decade or more

1 in every 5 households with no one working

And almost 2 million children growing up in workless households

So this was the first cultural challenge we faced – entrenched and intergenerational worklessness and welfare dependency.

And before you protest that this was just a product of the recession, remember that there were over 4 million people on out of work benefits throughout the years of growth.

Under the previous Government employment rose by some 2.5 million, yet more than half of that was accounted for by foreign nationals.

And I’m not just talking about computer scientists or smart bankers – I’m referring to the low-skilled jobs.

To be clear I am not trying to make a point about immigration – rather the facts serve to remind us that we had a huge challenge with our workforce at home.

Put simply, it was a question of supply and demand.

Large numbers were on out of work benefits, yet many were unwilling or unable to take advantage of the job opportunities being created.

It became increasingly apparent that while we had a modern economy, transformed under Mrs Thatcher…

…the nature of one section of society was left lagging behind.

Broken welfare system

The problem was that while our economy was subject to a fundamental overhaul, our systems of social support received little more than a patch-up job.

It was an incredibly reactive process – a new challenge would emerge in the system and governments would respond by tweaking things…

…adding new rules, new supplements, even new benefits.

But it was all built on a creaking edifice, and the result was a system of monstrous complexity.

More than 30 different benefits, complicated by additions within each benefit.

This was then compounded by the fact that when an individual started work part time, they found it impossible to calculate if they would be better off or not.

Some of their benefits were withdrawn at 40% as they moved into work, some at 65%, some at 100%…

…some net, some gross…

…some were only available at 16 hours, some at 24, some at 30.

Feed all of that into a complicated computer system – because no normal person can calculate what it all means for their income – and you find that something extremely damaging happens…

People on low wages lose up to 96 pence in every pound they earn as they increase their hours in work.

In other words for every extra pound they earn, 4 pence goes in their pocket and the rest goes back to government in tax and benefit withdrawals.

So suddenly you have a system that is incomprehensible to those that use it, except for one thing that seems clear – it’s not worth the risk of working.

Debt and consumption

And so what did we find as a result?

Even in the decade before the recession, while growth was booming, jobs were being created, and welfare bills should have been falling, spending on working age welfare actually increased by some 35%.

And this wasn’t just about welfare – in healthcare, in crime, in education, Government paid out to manage and maintain social problems rather than tackling them at their root.

This then is the second cultural challenge I want to touch on tonight – understanding how we, as a society, got to a place where we were unable to pay our way, with an economy built on debt and consumption.

I think the problem lies, to a large extent, with the culture of government spending which has developed.

This is a culture marked by an obsession with inputs – with pouring money into social programmes – so that governments are seen to be doing something.

Of course big spending is attractive because it brings big media headlines.

But my concern is that no one asks what will come out at the other end – in other words what impact the spending will have on people’s lives.

Child poverty

Let me give you the example of the approach to child poverty which has predominated in recent years, which has frequently focussed on the task of moving people from just below the poverty line, to just above it.

Some £150 billion was spent on tax credits for families and children between 2004 and 2010, much of it in pursuit of this ambition.

Some people were indeed moved over the poverty line – and in government and amongst lobby groups that was seen as a cause for great celebration.

Yet I am concerned that these celebrations may have been premature.

Moving someone from one pound below the poverty line to one pound above it might be enough to hit a target.

But what about the people stuck at the very bottom?

There are people who weren’t even touched by this poverty drive – for example many of those trapped far below the line on less than 40% of the median income.

But – equally importantly – when you do lift someone above the 60% relative income line, do you really have any idea what impact it actually has on their life?

Do we have any idea what kind of sustainable change has been achieved?

Because if it hasn’t made a sustainable change you won’t be celebrating for long – the family you have moved over the line are liable to fall back again if you haven’t tackled the real reason they find themselves on a low income in the first place.

Let me give you the example of a family with seriously drug addicted parents – simply giving more money to the parents may do little more than feed their addiction, leaving them and their children locked into a cycle of poverty.

But invest the same money in targeting the root causes of poverty, intervene early, and you can make a more sustainable change…

…AND one that is likely to be more affordable in the long term, as you put people back on the path to independence and reduce the churn in the system.

But too often reductions in poverty have been achieved simply through out of work welfare transfers.

That is what I mean when I speak about inputs versus outcomes – we have become comfortable with the idea of measuring the money we put in, but without really caring to ask what that money achieves in terms of life change at the other end.

Saving

In many ways the problem I’ve touched on here is also relevant to our pension system.

Runaway government spending is a symptom of a wider problem – it is symptomatic of a society built on debt and consumption, rather than saving and investment.

We now know that some 7 million people in our country aren’t saving enough for their retirement.

Why?

Because saving simply isn’t seen to pay.

This is the problem we currently face with the means-test.

There are honest and hard-working people on low wages who work all their lives and pay in to the system, only to find that when they reach retirement their neighbour – who has never worked – can receive the same level of support through claiming for Pension Credit.

What kind of message does that send out?

It tells people on low incomes that it’s not worth saving – it’s not even worth working. Just sit back and wait for the government to pay out when you retire.

Over the years we seem to have become addicted to debt instead – in the lead-up to the recession we accumulated one of the highest rates of personal debt in the whole of Western Europe, around £1.3 trillion even before the recession started.

We embraced a culture of ‘live now, pay later’ and looked to future generations to pick up the bill.

The fact is that debt fuelled booms feel good while they last, but like all addictions the detox is long and painful.

The challenge

So we are now faced with a fundamental challenge.

Millions of people stuck out of work on benefits.

Millions not saving nearly enough for their retirement.

And politicians – of all hues – addicted to spending levels as a measurement of success, rather than life change as a measurement of success.

Three areas ripe for reform – but how do you reform when there is no money?

The answer – you change the way you reform.

Not just cheese-slicing, but recalibrating whole systems so that you change behaviours, and change the culture that allowed spending to get out of control in the first place.

This is absolutely critical, and I want to take a moment to explain why.

When welfare spending balloons – as it has done – the temptation for successive governments has been to squeeze it back down again.

But – rather like a balloon – when you squeeze it at one end it will tend to grow at the other.

So whilst savings must be made, they must also be sustainable.

Otherwise, once the public finances are back in order, and the economy grows again, so the bidding war starts once more.

Lobby groups put pressure on government to spend more.

Government in turn dip its hands into all of your pockets to buy media headlines, and the vicious cycle continues.

Welfare Reform

Structural change – leading to cultural change – is the key to this dilemma.

In other words you have to tackle the demand itself, changing the effects of welfare by changing the incentives in the system.

Let me explain what I mean by this.

My belief is that everyone in the welfare system should be on a journey – it should be taking them somewhere, helping them move from dependence to independence.

So if you are looking for work the system should make work worthwhile and it should both support and encourage you.

If you are a lone parent the system should support you with your caring responsibilities while your child is young, but it should also keep you in touch with the world of work and ensure at the earliest that you move back to the world of work.

If you are sick but able to work in time the system should support you, stay with you as your condition improves and make sure you can take the opportunities to work when you are able.

What we will not do is put anyone on benefits and then forget about them, as was so frequently the case for those on Incapacity Benefits.

But if a journey for people is our purpose, we have to recognise that our current welfare system is not fit to provide it.

That’s why we are redesigning it almost from scratch – making the journey more attractive, smoother, quicker, more supportive.

And we will do so in a way that brings welfare spending back under control….

….whilst changing lives at the same time.

In other words we reduce the effective demand on the system by changing people’s incentives.

In the words of Beveridge, now is “a time for revolutions, not for patching”.

Universal Credit

But if we are to build a new journey, we have to recognise a simple fact.

Not everyone is starting from the same place.

There is no point assuming – for example – that everyone understands the intrinsic benefits of work…

…the feelings of self-worth, or the opportunity to build self-esteem.

If you are dealing with someone from a family where no one has ever held work, or no one in their circle of peers has ever held work, there is no point in simply lecturing them about the moral purpose of work, or in just wielding a bigger and bigger stick.

Politicians have tried this tactic over and over again – and to limited effect.

What you must tackle is the biggest demotivating factor that many people face – the fact that the complexity of the system and the way it is set up creates the clear perception that work simply does not pay.

Thus, after generations in key communities, worklessness has become ingrained into everyday life.

The cultural pressure to conform with this lifestyle is enormous, underscored by the easy perception that taking a job is a mug’s game.

It is this factor which can stop someone’s journey back to work in its tracks.

Changing this is what the Universal Credit and the Work Programme are all about.

Universal Credit is a new system we are introducing from next year, which will replace all work-related benefits and tax credits with a single, simple, payment.

It will be withdrawn at a single, constant rate, so that people know exactly how much better off they will be for each extra hour they work.

And this rate will be significantly lower than the current average, meaning that work will pay for everyone, and at each and every hour.

This requires investment up front – we are spending some £2 billion to get it right.**

But if we do so, and start reaping the effects of cultural change, it will save government huge amounts down the line, as workless households become working households.

Work Programme

But Universal Credit alone is not enough.

When you are dealing with people who are a long way from the workplace, who do not have many skills, and do not have the work habit, you need to provide a system that supports them and helps them to get work-ready.

That’s what we are doing with the Work Programme, and we have asked some of the best organisations in the private and voluntary sectors to deliver it for us.

They are tasked with getting people back to work, and then helping to keep them there.

They are given complete freedom to deliver support – I don’t tell them how to do it, and nor does the Minister for Employment.

This is about trusting that these organisations are best placed to know what works.

Universal Credit and the Work Programme are two sides of the same coin.

Either without the other would not have the same impact.

Together, they will become formidable tools for taking people on this journey.

Of course we need that warning of benefits being removed if some of the unemployed don’t try, but imagine how much more effective that becomes when the majority are motivated to succeed.

Housing Benefit

And what about the other areas where we are making savings?

Again – the journey is key.

Let me give you a couple of examples.

We are making savings in Housing Benefit, but this is in part about removing a major stumbling block as people try to move back to work.

Under the system we inherited some people on Housing Benefit were living in areas with incredibly high rents – it was actually possible for families to claim over £100,000 a year for help with housing costs in certain cases.

Think about what this means for someone who is considering taking a job.

There’s a good chance they won’t, because they will fear losing their home as their Housing Benefit is tapered away – they cannot take that positive step.

That is why we have capped the amount of Housing Benefit that a household can receive.

Incapacity Benefit

And take our reforms to Incapacity Benefit.

Again, this is about moving people who can work back towards work…

…but it is also about staying with those who cannot work at the moment – not parking them for years without being seen, as under the previous system.

Pension reform

And we are plotting out a journey in our pensions system as well – except here we are looking to set people on a journey to a decent and sustainable retirement, whilst also reducing the pressure on the public purse.

The solution here is to get people saving – and to get them started early.

The first battle is to make saving the norm – that’s why we are pushing ahead with plans to automatically enrol all of those without pension coverage into pension schemes.

But that still leaves us with the problem of the means test that I mentioned earlier.

So the second thing we are doing is pushing ahead with plans to radically simplify the State Pension system – creating a ‘single tier’ pension which is set above the level of the means-test, so that people know that it makes sense to save.

Cultural change

This is cultural change._ _

The renewal of a welfare system that is seen as a means of temporary support – the beginning of a journey back to independence.

As Leonard once said:

”Our culture should allow us to make choices, not to be told what to do.”

Government spending

Yet there is one final piece to the puzzle.

I have covered what I call external cultural change, change in society at large.

But we must also achieve an internal cultural shift – changing the culture of government spending.

And it is here that I think we still have much work left to do.

We have to reject the old focus on inputs…

…the old mantra which says that ‘more spending equals good, less spending equals cuts…which equals bad’…

…and open up a whole new dimension – one focussed solely on the impact that spending has on people’s lives.

Every pound for life change.

That means changing not just how much we spend, but how we spend it.

Work Programme

So let me return to the example of the Government’s Work Programme, where we have been pioneering the use of payment by results.

While supporting someone into work obviously has a cost attached, you find that cost is quickly outweighed by the reductions you can make to the welfare bill when you get someone back into work and paying tax.

The trick is to use these future savings to pay for the Work Programme now.

We do that by putting the onus on the 18 Prime Providers who compete to deliver the Work Programme in different parts of the country.

They raise the money to deliver the programme alongside their subcontractors – we then pay them when they deliver the results.

That means first, getting people back into work.

But from day one we’ve been clear that getting people into work – on its own – isn’t enough.

If people do not have ‘the work habit’ – in other words they are not used to the workplace, or convinced that working is right for them – the risk is that they will soon fall out of employment again.

So the providers get the biggest payouts when they keep someone in work for 6 months, one year, 18 months, or up to two years in some cases.

In so doing we remove the risk from the taxpayer, and we make sure that every pound spent is only being paid out because it has a positive impact on people’s lives.

Social investment

A payment by results system works best when the timescales for success are short and the metrics relatively straightforward.

But in addition to Payment by Results there are other areas as well.

In particular, we are really trying to open up the social investment market.

I see this as a huge opportunity to get much more private money working in pursuit of the social good.

Historically it has been assumed that people could either be ‘good citizens’ and put their money into charitable works, but without expecting anything in return…

…or they could be ‘profit maximisers’, who invest their money in commercial ventures and have to forget about the social consequences.

Social investment is a way of uniting the two – it is about saying to investors:

‘You can use your money to have a positive impact on society, AND you can make a return.’

But to get this investment you need to have programmes that are tested and accredited.

That then allows you to create a social bond that people can invest money in.

That is why we have we have agreed to establish an independent foundation that will accredit programmes of work and provide a rigorous assessment of their likely social returns.

It’s why we’re testing a variety of cutting edge programmes through our Innovation Fund, which will help build the evidence base around social investment models.

And it’s why the Government has launched Big Society Capital, capitalised with £600 million, and tasked it with the sole mission of growing the social investment market.

Huge potential

This market may still be in its infancy, but I believe it has huge potential.

First, it has the potential to greatly increase the amount of funding available for social programmes by bringing in private investment money.

Second, it brings a whole new level of discipline and rigour.

Too often in the past good, proven programmes have been introduced by Government but haven’t worked.

This isn’t necessarily due to a problem with the programme itself – rather it is because as the programme has trickled through the system bits have been added or subtracted, modified and changed, so that in many cases the programme has been neutered.

Why?

Because when Government care more about inputs than outcomes it doesn’t have much interest in whether the programme actually works – once it is underway the nature of the programme itself becomes largely irrelevant.

But if the money follows the outcome – as it does with payment by results, or with social investment – we can bring a whole new level of fidelity to the way that civil servants, local authorities, and government at large do social programmes.

It is my personal belief that if we can truly grow the social investment market it will mark the single biggest change to the culture of spending in Government.

Conclusion

So the prize could be enormous if we get all of this right.

Cultural reform – of society, and of government – in a way that restores effectiveness in public spending, and restores the idea of mobility in our welfare system.

In other words it restores the idea that no matter how hard things get for you we will be there with you to help you on an upward path.

But we’ve got to lock this process in – as with the process of making savings that I spoke about earlier, it has to be done in a sustainable way or the problems will pop back up again just a few years down the line.

That means we need to change the incentives in the system.

In welfare that means understanding that work has to be seen to pay, and people have to know that there is support available for them.

In pensions it means understanding that saving has to be seen to pay, and it has to be easy for people to save.

And in government spending it means making the money follow the outcome, so that it is no longer possible to fiddle around with quality programmes or not see them through.

Through this process, and through the tool of social investment, I think we can achieve something else as well.

We can start to lock those at the top of society back into to our most disadvantaged families and communities at the bottom.

We can get our biggest and best business-people bringing their time and their skills to some of society’s most intractable social problems.

I hope and believe that as both a great entrepreneur and a great philanthropist this is an agenda that Leonard would have supported.

He had an instinctive sense that with wealth comes responsibility – and he invested a remarkable amount of time, effort and money in giving back to the community.

Ironically, perhaps, it has taken difficult times to create a driver for change.

When the economy was growing it was just too easy to say ‘not now, but later’.

For after all, this does involve very tough choices.

As we try to reshape our economy, and revitalise and refloat the entrepreneurial spirit that has historically characterised the citizens of this global trading nation, we must accept that we will fail unless we can lock all in society to the benefits of this change.

We must no longer allow ourselves to accept that some in society are beyond our reach.

As our economy moves into the 21st Century, these welfare reforms are about ensuring that a previously disconnected section of society gets there at the same time.

Below is the text of a speech made by the Work and Pensions Secretary, Iain Duncan Smith, at the Institute of Education in London on 27th November 2012.

Introduction

It is a pleasure to be here today – at a conference which I am pleased has ranged far wider than just the Government perspective on ending gang and youth violence.

From grassroots charities… to community leaders… and innovative police initiatives…

…  it has long been clear to me that making a real difference to gang-impacted areas requires an expertise that lies beyond Whitehall.

At the Centre for Social Justice, an organisation I set up in 2004, our report ‘Dying to Belong’ showed how far successive government interventions had failed – allowing gangs to become entrenched in some of our most disadvantaged neighbourhoods.

The riots

Even before the recession, with poor social mobility and income inequality the worst for a generation…

… benefit dependency, dysfunctional families, debt, crime, and drugs became the norm for whole communities.

Whilst there was some awareness of these high and rising levels of social breakdown, the majority of people remained unaware of the true nature of life on our poorest estates.

Occasionally a terrible incident would make it onto the front pages…

… but because they were small in number, people could turn away from the reality.

Even politicians considered gangs a second order issue.

Yet by failing to deal with it, we were storing up trouble further down the line.

In August 2011, the inner city came to call – and the violence we saw on our streets provided a moment of clarity for all of us.

The riots were a wake-up call, revealing all too vividly the deeper problems that we as a society had chosen to ignore.

A cause and a symptom

In the aftermath, the Prime Minister rightly called for a report into Britain’s street gangs.

The riots showed that in many inner city areas, gangs dominate – in London, at least one in five of those convicted was known to be part of a gang.

Even where they are small in number, gangs can have a disproportionately negative impact on their local area – bringing with them crime, drug abuse and pulling others around them into their destructive cycle.

But gangs are not just a cause of social breakdown – they are also an important symptom.

The majority of rioters were under 24.

Most of these young people had poor academic records.

Nine out of ten were known to the police and a third had been in prison.

70% of those arrested came from the 30% most deprived areas.

So whilst we must be tough on the instigators of violence, we cannot simply arrest our way out of the problem.

Making a real difference to Britain’s gang culture requires us to tackle the problem at its source…

… addressing the educational and social failures, which all too often mean children from broken homes and the back of the classroom falling into the clutches of gangs.

A new approach

This principle underpinned the Government’s Ending Gang and Youth Violence Report, published in November last year – which established a new cross-Government approach.

Focussed on the 29 local areas facing the most challenging situations…

… the report made clear that alongside intensive police action and enforcement to end violence and bring perpetrators to justice…

… we must match this with an offer of support to exit gang life, and an equally intensive prevention strategy.

The key here is early intervention: as well as offering a way out, it is vital to do all we can to stop people from joining gangs in the first place.

Putting the structures in place

A year after embarking on this new strategy, it is right that we consider our progress.

That is why today, the Government is publishing a paper outlining what has been achieved in the last 12 months.

To start, what this shows is that although we’re not completely there yet…

…. we are making progress in putting the right structures in place to end gang and youth violence.

A multi-agency approach

Importantly, instead of a disconnected, siloed approach…

… with different Departments and agencies all focussing on their own narrow brief, but no one seeing the whole picture…

… we are now pushing ahead with a co-ordinated, multi-agency approach.

This is led by a frontline team delivering peer support to each gang-impacted area – drawing together the expertise of around 70 independent advisers, from health and education, to employment and welfare, safeguarding and community engagement.

Using a standard definition, the Association of Chief Police Officers has now mapped gangs across the country.

And with my Department driving improvements in data and knowledge sharing, different organisations are now working together to better identify and address gang-related issues.

There is still more to do to strengthen local partnerships – and the recently elected police and crime commissioners will need to play a central role…

… joining up with community leaders and voluntary organisations to develop effective local solutions.

To do this, they will need a robust evidence base – and over the next year, we will be doing more to develop and share best practice around what works.

Forging a positive future

What we already know is that the greatest gains stand to be made when policies are focussed on preventing gang and youth violence, rather than waiting to pick up the pieces.

Take the fact that boys assessed by medical practitioners at the age of 3 as being ‘at risk’ had two and a half times as many criminal convictions by age 21, as those deemed not to be at risk.

So whether it be investing £30 million in relationship support, ensuring children have stable families and positive role models in their early years…

… funding over 360,000 apprentices last year alone and raising the participation age, to keep pupils engaged in structured education and off the streets…

… across Government we are working hard to close off the pathways that lead young people to gang life in the first place.

To take just one example, consider the impact of our £30 million Innovation Fund – which has now backed 10 social impact bonds…

… supporting around 17,000 of our most vulnerable young people over a 3 year period.

With a remit that extends to those aged 14 and 15, the Fund enables providers to intervene even earlier in a young person’s life…

… and in the second tranche of projects launched last month, two are specifically focused on supporting those at risk of involvement in gangs…

… including both a prevention programme focused on reducing knife crime, and workshops which expose the reality of prison and the impact it has on young people’s prospects.

These are cutting edge solutions – but by giving providers the opportunity to develop a proof of concept, proven programmes can be rolled out locally or nationally.

Overall, current projects are expected to improve the educational and employment outcomes for up to 28,000 young people – helping them forge a positive future, away from the negative influences of gang membership.

Full and sustainable rehabilitation

This last point is crucial.

All our interventions must translate into meaningful outcomes – transforming the lives of people most in need and entrenched in disadvantage.

As I have said, early intervention is one side of the coin, improving the life chances of would-be gang members.

The other is rehabilitation – prioritising full and sustainable recovery and providing a second chance for those whose lives do go off track.

The rioters who were convicted received an average sentence of just under 17 months – almost exactly the length of time that has now passed since the riots themselves.

As individuals are released from prison, the One Year On report outlines the crucial steps we have taken to rehabilitate ex-offenders into the community – rather than letting them fall back into a life of gangs and crime.

Evidence shows that being in employment is vital, reducing the risk of re-offending by between a third and a half.

That is why in collaboration with the Ministry of Justice, my Department is setting offenders on a journey back to work before they leave prison.

Claims for Jobseeker’s Allowance, which has a requirement to actively seek work at its heart, can now start to be processed prior to release…

… and we have introduced a new provision in the Work Programme so that prison leavers can receive tailored support to get them work-ready, find a job and remain there for a sustained period – from the first day they are out.

What’s more, through piloting a new approach to joint commissioning in 2 areas across England and Wales, we are paying providers for the results they achieve both in terms of employment outcomes and reducing re-offending.

In all this, because we are paying by results, we will only pay for what works – ensuing that every pound spent is a pound that leads to life change.

Get someone free of violence… out of gang life… and into work…

…and you help them find a foothold in society again – and stay there.

Long-term commitment

This is just a snapshot of some of the work now underway to tackle gangs and youth violence.

One year on, I believe we are on the right path.

Now we must consolidate that progress, working collaboratively across and beyond Government to achieve more.

For whilst this summer saw a welcome contrast to that of 2011…

… the scenes of Jubilee street parties and Olympic celebrations should not eclipse the continuing severity and complexity of the problem we still face.

A lasting legacy will not be achieved through a knee-jerk response to the riots.

Rather, if we are to transform the lives of our most disadvantaged young people, it will require a long-term commitment.

Conclusion

As well as progress to date, the One Year On report outlines our next steps –signalling that further action is needed to drive support on the ground and momentum across Government.

It is my mission to keep gang and youth violence at the top of the Coalition’s agenda, over the next year and beyond.

Today we reiterate our commitment to end gang and youth violence.

We owe it to young people in communities across the country not to let our gaze drop…

… or let them fall back into forgotten shadows…

… but to deliver on that promise and break the destructive cycle of gang life that can ruin so many lives.