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Below is the text of the speech made by Lord Freud to the Local Government Association on 12th December 2013.

Good morning, it’s a pleasure to be here.

First of all I want to thank the LGA for their help to ensure that local support services will be a firm part of Universal Credit.

I hope you have all seen the latest update on the Local Support Service Framework (LSSF) that was published last week.

It is the product of very close working between DWP and local government and lays the groundwork for our future work in partnership.

I will touch on the LSSF in more detail later on in my speech, but first I want to take a moment to reflect on Universal Credit (UC).

Universal Credit is no less than a revolution in our benefits system. Where successive governments have applied patches and tweaks, we are bringing in an overhaul. And it is long overdue.

The benefits system we have today was designed to reflect society in the mid-20th century.

It pays little regard to the way that society has changed, from the changing roles of women in the workplace, and the increasing importance of part-time work, to the overall flexibility of the modern labour force.

The idea behind Universal credit – and I am delighted to say we are already seeing this idea bear fruit in the pathfinder areas – is to create a much simpler and more flexible system that makes work pay.

Universal Credit successfully started rolling out in April of this year – 6 months ahead of schedule – in the Greater Manchester area.

We now have live service in 7 areas across the country, and this will grow to 10 areas by spring 2014, giving Universal Credit a national footprint.

And last week we set out the next steps for Universal Credit which build on our firm commitment to expand this programme in a safe and controlled manner.

Too many government – and private sector – projects fail because of a big bang approach. Governments in the past and across the world have built systems, announced a launch, and watched as the wheels fell off.

We have been clear that Universal Credit will break that mould and progress safely and securely.

As I said, by spring, Universal Credit will have live service in 10 areas. From next summer we will progressively start to take claims for Universal Credit from couples and, in the autumn, from families.

Once safely tested in the 10 live Universal Credit areas, we will also expand the roll-out to cover more of the north-west of England.

These steps continue our progressive approach – test, learn, implement – as we deliver this programme.

Our current planning assumption is that the Universal Credit service will be fully available in each part of Great Britain during 2016, having closed down new claims to the benefits it replaced – including working age Housing Benefit; with the majority of the remaining legacy caseload moving to Universal Credit during 2016 and 2017.

I would like to reassure you again that we will maintain the level of funding required to administer housing benefit in 2014/15.

Clearly last week’s announcement of our rollout plans will mean we’ll need to take a close look, with LGA colleagues, at 2015/16 funding.

We’ll need to make sure we take account of the position for those who’ve gone live with Universal Credit, and those who are yet to do so

We will also use the progressive expansion of Universal Credit over the next few years to carefully test how Universal Credit works in practice.

There will be three aspects to this testing.

First: we will look at how staff and claimants interact with the Universal Credit policy and systems on the ground. We are already getting some of this learning in the pathfinder:

86% felt the advice and support they were offered by their adviser matched their personal needs and circumstances

92% said they were being encouraged to find work or to increase the amount they are working

2/3rds agreed it provided better financial incentives to work.

Second: we will look to do more rigorous econometric testing to show the effect that UC has on our key outcome measure – increasing employment levels.

 

And third: we will test how Universal Credit works for and interacts with the most vulnerable groups in our society, and how local support services can work effectively.

 

We already have some evidence to suggest that many claimants will adapt well to the new system.

 

Evaluation from the Pathfinder – which mainly involves more straight-forward jobseekers at present – shows:

 

90% of claims are online

78% of those getting monthly payments were confident they could budget over the month

But while we expect that many people should be able to handle the changes well – we must ensure that help is there for those who can’t, or need support at first.

 

And that is where the relationship between DWP and local authorities is so important.

 

One of the areas where we have worked incredibly closely with local authorities is on the Local Support Service Framework. We published the first version in February this year and just last week we published an updated document – the Local Support Service: update and trialling plan.

 

This sets out how we can work together over the course of the next year to test and trial the arrangements and processes needed to make local support service work.

We want to work closely with you to test different arrangements for partnership working, financial management and the effective delivery of front line services.

We will soon come forward with more details of how you can get involved in this testing and trialling work and I hope many of you will take up that opportunity.

But the trialling and testing doesn’t just begin with the publication of the LSSF. As many of you know there is already much good work going on.

Useful testing and trialling has begun with the benefit cap, where we are seeing how councils can link with Jobcentre Plus and partners to give the right support.

Some of the innovative approaches have really impressed me.

In Croydon, Jobcentre Plus staff have been working with council staff. Joint teams based in the council offices are helping residents together.

This working together means that claimants are no longer pushed from pillar to post – but receive the help they need in once place.

And take the Digital Deal: I visited one of our pilot sites last month, A2Dominion, a housing association in Queens Park. I was very pleased with their work to get residents not only online, but confident and comfortable in doing so.

It is this kind of co-operation – that puts the claimant at the centre of the experience – which I am keen to replicate across the whole Universal Credit landscape.

It is a far better use of resources – and it leads to far better results.

We have also seen interesting examples from the local authority led pilots.

For example: Birmingham City Council wanted to move to a digital by default service for rent management as well as address problems with a number of new tenants who were defaulting on their rent and subsequently losing their tenancy.

They have reviewed the tenant’s journey, introduced a new digital log book, and identified how to nudge and change people’s behaviour.

This has led to both a significant reduction in the level of arrears among new tenants – approximately a 17% reduction at 12 weeks – and administrative savings of £61,000 by publishing online rather than in print.

And I was pleased to hear that in North Dorset Council the job clubs they have set up as part of the local authority led pilots have been a success.

Unemployment in the area has fallen by 13% and they are convinced the job clubs have had a major impact in this.

So, we have seen some really interesting lessons from these pilots already, but there is more I am keen to learn as we work on the evaluations.

In particular I want to get a more concrete picture of what Local Authorities have found works well and – crucially – what they have found doesn’t work so well in providing people with support.

And we are also seeing interesting lessons from the Direct Payment Demonstration Projects.

The Direct Payment Demonstration Projects revealed that many landlords just don’t know their tenants as well as they could.

Direct payments have opened the door not just to help with managing rent – but also to wider social problems that were out of sight.

Housing associations and councils have also been clear about the need for extra tenant support and data sharing. These are areas we are looking at right now.

The Direct Payment Demonstration Projects are coming to an end very shortly, but I’m pleased to say that more than half of the organisations involved have decided to leave their tenants on direct payment, and at least one of the landlords has decided to move all of their working age tenants onto a direct payment arrangement.

Getting used to direct payments is crucial in preparing claimants for a seamless transition into work and will allow landlords an opportunity to increase their rent collection from this group of claimants in a phased and managed way.

It makes a lot of sense, therefore, for local authorities and social landlords to consider encouraging those who will not need support to move onto Housing Benefit direct payments ahead of Universal Credit.

Before I finish, I would like to touch on the announcement made in last week’s Autumn Statement about the move to a Single Fraud Investigation Service.

The Single Fraud Investigation Service will be introduced as a single organisation within the Fraud and Error Services Team in DWP with implementation taking place in a phased approach from October 2014 – March 2016.

This positive next step builds on the great work done by the local authority, DWP, and HMRC pilot sites and will deliver a nationally flexible fraud investigation service covering the totality of welfare benefit fraud, including Housing Benefit and Tax Credits.

We will also work closely with local government, as part of a joint working group, to ensure that we continue to maintain close relationships and share data where permissible, on cases of joint interest, for example Tenancy Fraud.

In addition DCLG and DWP have agreed a £16.6m funding package to support local authorities in England to help local government’s fight against fraud and protect taxpayers’ money.

The newly appointed minister at DCLG, Baroness Stowell, gave a speech on Tuesday setting out further details on this. Similar discussions have taken place between DWP and the devolved administrations

As we step into 2014, the hard work of the last year will continue.

I want you to know we are keen to maintain the strong relationship that we have with local authorities and all the organisations we’ve been working with, and for you to build and maintain partnerships in your communities.

If you want to be involved in testing and trialling to prepare for Universal Credit then don’t hesitate to start activities in your area, or to let us know that you want to take part.

This trialling and testing is absolutely vital to the delivery of welfare reform, and with your input we can make sure that we continue to roll out Universal Credit in a safe and controlled manner.

Below is the text of the speech made by the Work and Pensions Minister, Lord Freud, on 2nd October 2013.

Good morning, it’s a pleasure to be here.

When I spoke to you in this same town a year ago, I gave an overview of the changes that were set to come in during 2013 and spoke about the crucial role for local authorities in delivering welfare reform.

It’s been quite a year. The hard work of many of the people here today has been instrumental in enabling the introduction of genuinely significant reforms: Universal Credit, the benefit cap, and Personal Independence Payment to name but a few.

I want to use my time today to remind you why we are bringing these changes in, to update you on their progress, and, wherever I can, to look ahead to the future.

Let me start with the most significant of those changes I mentioned – the introduction of Universal Credit. On the 29 April of this year, the first ever claim to Universal Credit was made in Ashton Under Lyne.

Since then thousands of payments have been made, and thousands more will be made as progressive national roll out begins later this month.

To illustrate why Universal Credit is so significant, I want to reflect for a moment on the history of the area we are in now.

This area is, of course, no stranger to great change. Credited with being the home of the industrial revolution, it was at the heart of a transformation that had hugely positive consequences, but that also threw up a host of new social challenges.

Beveridge’s five giant evils of disease, ignorance, squalor, idleness and want were in part a product of this new industrial age. And from their identification, of course, came the birth of the modern welfare state.

But just as government was putting the finishing touches to Beveridge’s vision in the mid-20th Century, it was already finding itself behind the curve.

Postwar society was already changing – and with gathering speed.

Women began entering the workforce in much greater numbers. Full-time, ‘jobs for life’ became a thing of the past, while part-time, flexible work became the norm for many.

And the result? We found that a welfare system built to deal with 1940’s society was no longer able to deliver the support that people needed in a modern, flexible labour market.

For many people, taking work became almost a waste of time because of the way their benefits were withdrawn. That was if they could understand the horrendous complexity of the system in the first place.

Successive governments recognised elements of this challenge, and introduced individual ‘fixes’ to try to deal with it.

But often these fixes created as many problems as they solved.

Tax Credits are a good example: a laudable principle – making work pay – failed to really deliver in practice because it was bolted onto the pre-existing system, making things incredibly complex.

Universal Credit is different. It is based on a ‘first principles’ approach to the welfare system, a fundamental overhaul rather than another tweak or fix.

It creates a simple system, one that makes work pay at all hours and – most crucially – one that is flexible and responsive to a modern labour force.

Employers themselves are recognising that universal credit will bring much needed flexibility. Let me read you a quote from a Recruitment Hub Manager at B&Q:

One of our employees, Vicky, who has caring responsibilities, has until now only been able to work 16 hours a week due to how her benefits would have been negatively affected if she had accepted more hours offered by B&Q. With the introduction of Universal Credit she’ll have the opportunity to flex up her hours either on an adhoc or permanent basis and earn more without losing all of her Universal Credit.

And here is Phil Eckersley, Managing Director of ‘Home Instead Senior Care’ in Wigan:

Universal Credit will have a direct positive effect on my business. It will enable jobseekers and employees to work as much as they wish around their family and dependents’ commitments.

Of course such a fundamental change cannot be introduced overnight. We have been really clear about our commitment to introducing Universal Credit in a safe and controlled manner.

That’s why we started with a Pathfinder approach from earlier this year. And that’s why later this month we will begin the progressive national roll-out of Universal Credit as we expand to a further six Jobcentres.

We are also making significant progress in rolling out the wider elements which are critical to driving cultural change.

For example the new claimant commitment – which more firmly sets out claimants’ responsibilities – will be rolled out nationally from October, and we are already starting to roll out improved digital services across Jobcentre Plus.

So momentum is building, and this is an exciting time.

But I am also acutely aware that if Universal Credit is to work, it must work for the most vulnerable people.

I am absolutely determined that when more vulnerable claimants come onto Universal Credit we are ready to provide them with the support that they need.

That is why the Local Support Services Framework is so important. It is about how we – working with local authorities – can ensure that we are ready to deal with the additional or growing support needs that come from the introduction of Universal Credit.

To do this, we are putting a really strong emphasis on local partnerships between Jobcentre Plus district managers, local authorities and housing and charity sector providers.

We will be publishing an update to the Framework shortly, which will include information on testing and trialling. The testing and trialling will include aspects of the financial model and incentive structure, as well as exploring use of the European Social Fund as a potential funding stream.

We will also be testing the development of Personal Budgeting Support initiatives. This trialling is so important because it allows us to include lessons learned into the next iteration of the framework.

The updated Framework will also provide an update on key points of progress and agreement since the publication of the Framework in February. We then plan to issue a more comprehensive version of the Framework in autumn 2014, to inform local authority budgeting timetables for 2015 to 2016.

As many of you will be aware, the local authority led pilots are already testing elements of this framework, by introducing support services designed specifically to best suit local needs.

For example I’ve heard about how Lewisham Council in South London has developed a structured triage approach to identify vulnerable people who may require additional support with the transition to Universal Credit.

Claimants are contacted over the phone to discuss their skills and experience across the financial, digital, housing and employment spheres.

Scores are then assigned to the claimants answers. If they are considered ‘vulnerable’ a further support appointment will be triggered, where claimants are provided with tailored support plans and referred for specialist help where needed.

But when we talk about vulnerable claimants, I am aware that there are some concerns about the introduction of Direct Payments.

We must not lose sight of why this change is so important though. A driving principle behind Universal Credit is that the transition between being out of work and in work should be straightforward; people should not be scared of taking work.

Monthly housing costs paid directly to claimants are a key step to breaking down that barrier, as they reflect the way that the large majority of people are paid in work.

The Direct Payments Demonstration Projects are showing us what support people will need to make the transition to Direct Payments and what safeguards will need to be in place.

Nonetheless, we are alive to the concerns that some have had. As a result, we have developed a package of safeguards to protect landlords, including alternative payment arrangements for those with the greatest need and an automatic trigger point should claimants accrue arrears of up to two months’ rent.

We are also working on an early warning trigger should one month’s worth of rent accrue through persistent underpayment.

This gives us the optimum balance between empowering claimants to take control of their finances and minimising unnecessary risk for landlords.

It is still early days, of course, but initial results from the Demonstration Projects are encouraging. Figures from May 2013 show that the average rent collection rate is 94%.

I am keen that, as we move forward with this, we will continue to work with landlords in particular on preparing people for these changes. As part of this I hope that we will see some people moving on to Direct Payments before they move on to Universal Credit, so that they take that additional step towards work readiness early on.

Another of the big changes we have seen in the last year is the introduction of the benefit cap – which has now been rolled-out across the UK.

The introduction of the benefit cap has been a great example of how government and local authorities can work together to deliver reform. For this, I would like to offer a candid and genuine thank you to local authority staff.

The implementation of the cap highlights the positives of a progressive roll-out. It was introduced in April 2013 in four local authorities; then in two tranches over the summer and has now been successfully rolled out across the country.

The implementation approach was agreed with the Local Authority Association Steering Group. We agreed that lessons learned from phased rollout should influence the national approach. It did and we therefore agreed to manage delivery over ten weeks in two tranches.

We also gave local authorities low volumes in the first week so they could check all systems and processes worked; and we supported them through best practise events attended by hundreds of local authority staff. It’s been a steady and ultimately successful approach.

And we continue to work together to deliver the changes this policy is intended to create. For example I have been to Croydon where the local authority and DWP work side by side in the same building offering employment, housing and budgeting support.

It is public service at its best; working together to change lives for the better.

It is worth noting that since claimants were notified of the benefit cap in April 2012 over 15,000 claimants identified as living in potentially capped households have moved into work.

Indeed, research findings show that, of those aware that they were affected by the benefit cap, almost half took action in response, with the large majority of them either looking for work or undertaking job-related activities.

Like I said, we mustn’t lose sight of why these reforms are so important and I think these early results show the real significance of this policy.

And to continue the theme of cross government working, let me also update you on the progress of the Single Fraud Investigation Service pilots.

This is another example of smart working across central and local government to fully integrate policies and procedures to deliver a single service that investigates the totality of welfare fraud. Four pilots went live last November, with several more to follow this year.

Several colleagues have commended the working relationships and the sharing of expertise that has enabled the pilots to operate well.

This collaborative working led to the first prosecution of a case dealt with by the SFIS pilot earlier this year. On the 18th June a woman from Hillingdon was successfully convicted of fraudulently receiving an overpayment of over £13,000.

However, although the pilots have demonstrated the real positives of partnership working they have also identified some of the limitations of the current approach.

For example there have been clear challenges where people have been working across multiple locations, under different managers and with different terms and conditions.

These findings have informed the next stage of the process, which will explore how best SFIS should move forward as an integrated organisation.

But let me assure you that as we take this work forward we will continue to fully engage with local government representatives, local authorities, HMRC and our key stakeholders at every step of the way.

This is a period of great change for all of our people and we want to work closely with you to minimise the impacts that any transition might have.

As you will all be aware we have also introduced the removal of the spare room subsidy this year. I recognise the hard work that all local authorities are undertaking to deliver this important policy.

As with all our reforms, we are gathering evidence, learning and sharing best practice. We recently responded to concerns from the sector by increasing in-year funding for local authorities by £35 million to help support those affected to navigate the transition to the new arrangements.

That includes a £20 million contingency fund, which will provide extra support to local authorities who can demonstrate they are supporting their tenants to make the long term positive changes we’re all looking for.

I have been heartened by many of the innovative solutions I’ve seen and urge you all to continue this crucial work.

So, it has been a challenging year, but a very significant one.

We have introduced a number of far-reaching social reforms, based firmly on the principles of incrementalism, testing and learning, and partnership working.

And these will continue to be our watchwords in the months and years ahead.

It is my firm belief that it is only through the application of these principles that will we be successful in achieving our ultimate aim – the delivery of a welfare state fit for today’s society.

And I look forward to continuing to work with you on making that a reality.

Below is the text of a speech made by Lord Freud on 28th January 2013.

I am very pleased to be with you today – and for the opportunity to update you all on our vision for Universal Credit and on the progress of our wider welfare reforms.

But first let me set the context for Universal Credit.

Universal Credit will simplify the benefit system and tackle welfare dependency by making work pay.

It will reward people who go back to work by ensuring they are better off in work than on benefits. In fact, around 300,000 people will move into work as a result of Universal Credit. Three million families will be better off by around £168 per month.

The majority – 75 per cent – will come from the bottom two fifths of the income scale and transitional protection means no-one loses out by moving over to the new system.

As well as improving financial incentives, Universal Credit will offer seamless support for people making the transition into work, making it easier to understand the effect on their income and bringing an end to an absurd situation where a claimant’s benefit stops as soon as they start work.

There will be an early roll out of Universal Credit (the Pathfinder) in April 2013 in the North West to test the new system with local authorities, employers and claimants in a live environment. This will be a gradual process to ensure we get it right.

The programme will roll-out nationally from October 2013. It will be introduced in stages – as is right and appropriate for such a large programme.

We will pay Universal Credit monthly to reflect the fact that 75% of people in work are paid that way. The system will be designed around the patterns of working life, but we will make sure people who may struggle, don’t fall through the cracks.

Universal Credit is being designed as an online service, where people can make a claim and report changes just as they do with online banking – for many people this will be more convenient.

Digital services are already an integral part everyday life. Around 78 per cent of working age benefit claimants already use the internet – 48 per cent of those say they log on every day – many to search for jobs online.

But we know not everyone will be able to use online services. And so we are making sure that there will still be face to face and telephone support in place – the important difference is that this support will be geared towards helping people to use the online services in the future.

There is no doubt in my mind that Universal Credit will dramatically change the lives of millions of people in this country for the better by helping them to become financially and digitally able.

The new system will mean that a claimant’s experience of receiving Universal Credit will be brought into line with the world of work.

This is a huge change from the outdated and overburdened system we currently have and we will need to take the time to do it properly and put in the proper resources.

That’s why the work we are doing in partnership with the local authority associations on a local support services framework is so important. The framework will ensure effective local partnerships are put in place to help claimants budget and get online.

Since last summer we have been testing the type of support that we may need through twelve Local Authority-led Pilots. In addition, from April four local authorities Oldham, Wigan Warrington and Tameside will take the lead in supporting claimants in the Pathfinder areas of Greater Manchester and Cheshire. These authorities have already been highly proactive ahead of the pathfinder going live in April. They are currently setting up training courses for claimants who need help getting online, and installing computers into community centres and working with housing associations (in Wigan) to extend online accessibility for local residents.

We are also looking at how banks and credit unions can offer suitable financial products. For example, budgeting accounts (sometimes knows as “jam jar” accounts) so that claimants can budget and put by sums of money each month to pay their rent and household bills.

Around 4.2 million DWP claimants already have a bank account. However, historically some people on a low income have experienced difficulties in accessing and using banking products, often coming up against disproportionate penalties charges.

For Universal Credit we want to ensure as a minimum that claimants have access to an account such as a Basic Bank Account with standing order and direct debit facilities, which are safe and secure.

Alongside new banking products we will ensure vulnerable claimants such as people with debt problems, or those with poor numeracy skills are given practical support at the onset of their claim.

In practice this will mean that someone with debts may be referred to a debt advisory service for budgeting advice and someone who is not able to navigate the web, will be offered face to face or telephone support to help them make a claim for Universal Credit.

These bespoke services will be led through Local Authorities and other local organisations. As a result we expect many vulnerable claimants to become both financially responsible and digitally able. This will open up a wealth of new opportunities because of improved computer skills, such as new jobs through online job searches, better buying power and discounted utility bills through better banking facilities and access to reputable credit.

These are the key interconnecting features that will ensure a smooth and successful transition onto Universal Credit.

However, we recognise that there will always be some hard cases. Where this is the case vulnerable claimants could be made an exception to the payment rules for a period of time. Budgeting support will also be made available to support these individuals so that they can make a successful transition over time to the Universal Credit standard monthly payment.

If this is the case we will consider three levels of interventions.

Firstly we will look at a claimant’s ability to pay housing costs – in full and on time. Secondly we will consider whether monthly payments are suitable. And finally we will look at whether it’s appropriate for a split payment to be made to that household.

It will not however necessarily be the case that all three interventions will be put in place at any one time – that will depend on each person’s individual circumstances.

Much of our rules around alternative payment arrangements will fall from the work we are already doing in the six demonstration projects areas across England, Scotland and Wales to test the support needed for people to make rent payments direct, and to ensure the financial position of landlords is protected.

Paying housing costs direct is an integral part of Universal Credit and an important way of helping people to manage their own finances and become more independent.

But I know there is some concern that the switch may cause a ‘mass’ of claimants to fall into arrears at the onset. But that’s not going to be the case. The fact is that claimant transition will be gradual over a four year period. There will be no big bang effect and we do not expect landlords to suffer sudden losses of income.

Early findings from the demonstration projects show the majority of people are meeting their rent payments in full and on time. Over the first four months, 6,220 social tenants were paid their housing benefit directly and rent collection rates stood at 92%.

We will continue to test different rent arrears “trigger” levels so if a tenant falls behind on their rent, payment will switch back direct to the landlord and additional support will be offered to the tenant.

Of course Universal Credit is not the only reform we are making.

Last year marked major milestones in reforming Britain’s welfare system, and 2013 will be no different.

This year is about making reform a reality.

And we are on track to do so:

Universal Credit, starting with a pathfinder – in April

Personal Independence Payment also starting to roll out from April

The implementation of the Benefit Cap – from April

Localising elements of the Social Fund – from April.

To name just a few of the programmes the Government is implementing.

This change cannot come soon enough.

Below is the text of the speech made by Lord Freud in Edinburgh, Scotland, on 6th December 2011.

My session this morning is on the welfare revolution.

And it really is a revolution. There is an awful lot going on at the moment.

The Work Programme is up and running, helping long term unemployed people find sustainable work.

The Sickness Absence Review was published a couple of weeks ago and we are working hard on the Government’s response.

Disabled people’s benefits are being reformed to make them fairer, more accurate and easier to tailor to individual need.

But today, I don’t want to talk about any of that.

Today, I want to focus on what’s at the heart of the welfare revolution – the Universal Credit – which we plan to introduce from October 2013.

This is a new income replacement benefit that will support people both in and out of work.

It will replace the complex array of benefits currently paid to people with little or no income with just one payment.

It will be simpler to claim, easier to understand and administer and more effective and responsive than its predecessors.

We are working on a real time information system that will mean we are able to find out how much people are earning and readjust their Universal Credit payment accordingly. This is better for people whose earnings fluctuate and will help to reduce fraud.

Most importantly of all people will know what they are entitled to.

We will withdraw Universal Credit at a steady rate as people start to earn more money.

This means if someone takes a job or increases the hours they work they will be able to work out exactly how it will affect their benefits – and see for themselves that they will be better off in work.

Today’s welfare system is a complicated mixture of benefits that have been added together, piled one on the other in a piecemeal way, as successive governments have sought to address different needs.

It hasn’t been improved so much as extended and stretched beyond any relevance to its original intention.

And what we’ve ended up with is unintended consequences, rules so complex that the civil servants administering them struggle to understand them and people trapped in welfare dependency are unable to find a way out of the system and get back on their feet.

This is not what Beveridge intended.

The introduction of Universal Credit will remove the rules and regulations that prevent people from getting back into work quickly.

It will take the welfare state back to first principles.

We want a welfare system that provides financial support for those unable to work – that goes without saying.

But for those who can work we want a system that encourages a return to employment as quickly as possible.

That’s how welfare support should work.

But today’s system barely works at all.

Let me take you through some of the vagaries of the current system.

The current Jobseeker’s Allowance system means you need to work 16 hours or more to come off benefit and see a real increase in your income.

However, for those remaining on benefit and working less than 16 hours, anything they earn over £5 if they are a single person, slightly more if they are a lone parent or disabled, will result in their benefit being reduced pound for pound.

This means someone over 25 can’t work for even one full hour per week at minimum wage without seeing an instantaneous fall in benefits.

If someone does find work for more than 16 hours per week but it is low paid they may be entitled to tax credits.

But they’d need to end their benefit claim and submit a new claim for tax credits.

The benefits system and the tax credit system don’t interact with each other.

So people trying to leave benefits find their benefit income stops instantly but there can be a long wait before tax credit payments start.

This gap in household income can be catastrophic for family finances.

It encourages people either to retreat back into the benefits system or worse, never try to leave.

Universal Credit deals with this issue.

The tax credit and benefit systems are brought together so there’s no need to move between different systems.

When someone does take a job the Universal Credit payment is tapered off at a steady rate so there’s no sudden loss of benefits.

There’s no catastrophic drop of income.

And there’s no 16 hour cliff edge, the Universal Credit will relate to the actual amount someone earns not disappear at an arbitrary number of hours.

The 16 hour rule has also had an impact on childcare support.

Under the old rules working parents could not claim help with registered childcare unless they worked more than 16 hours per week.

For lone parents in particular this made it particularly difficult to start to move into work.

Universal Credit deals with this issue.

We want to remove these barriers so parents can begin a gradual return to work.

Therefore, under Universal Credit, support for the costs of childcare will be available to all lone parents and couples, where both members are in work, regardless of the number of hours they work.

It will mean that for the first time around 80,000 extra families will be eligible to receive support through childcare.

Similarly, the rigidity of the present system makes any form of flexible working, whilst reliant on state support virtually impossible.

The current system is too clunky and slow to respond to changes in hours and incomes.

This means unemployed people have been unable to take work unless the employer can guarantee a minimum number of hours.

This rules out large numbers of agency jobs or casual work. It has made our unemployed population less flexible than the migrant workers who are filling those vacancies.

It is part of the reason why the number of people on out of work benefits remains around the five million mark.

Universal Credit deals with this issue.

Payments will be based on real time earnings.

So, people can work varying hours and still be confident of a minimum level of income.

The current system infantilises people.

It takes budgeting powers away from people by paying their rent and some of their bills for them.

Benefits are paid weekly or fortnightly, whilst most employees receive a monthly salary.

Benefits are paid to individuals where as most families manage their budget as a household.

This means the whole experience of claiming benefits has become completely removed from the experience of receiving a wage.

This encourages dependency because people literally do not know how they will cope without the support of the state.

Under Universal Credit the default position will be a single, monthly, household payment, wherever possible.

This means benefit claimants will have to manage their own finances – their full finances – so when they do find work it’s easier to leave the safety of the welfare system.

We will provide budgeting support for those who need it. This is a real opportunity to really change people’s lives by giving them the tools they need to take control of their finances.

That’s what the welfare revolution is all about – that’s the final goal – to bring an end to long-term benefit dependency and begin a cultural transformation.

Now I do have one more thing I want to talk to you about today – Support for Mortgage Interest payments.

These are payments made towards the interest on benefit claimants’ eligible home loans.

We think these payments should only be short term, to help people out when they fall upon hard times, so they don’t lose their homes.

The current system of SMI payments does not encourage people to get on top of their own finances.

It is also not sustainable. Even with today’s low interest rates it costs government £400million a year.

We want to recover some of the SMI money so we can reinvest it in helping more people.

For new claimants we are looking at options for recouping that money either when a house is sold or by levying a charge on the property for long term claims.

Today we have published a call for evidence seeking views on a number of options for retrieving some of these funds. We are also reviewing other aspects of our help for home owners.

The call for evidence closes in February next year and we are keen to hear your views.

All I have done today is mention a few small areas where our welfare reforms are going to change things for the better.

And these examples are replicated again and again as we bring coherence to a system that has been inadequate for too long.

But these reforms aren’t about designing a nice, sensible system.

They are about people.

They are about freeing people to get back into work.

Our welfare reforms are about transforming lives.

And that’s why they are worthy of the term welfare revolution.

Below is the text of the speech made by Lord Freud in London on 5th July 2011.

The stark message from today’s report is that we simply have too many unskilled people, not enough intermediate skilled people, and increasingly need very highly skilled people.

For a country coming out of recession this is a wake up call.

We are seeing slow and steady recovery, and the type and range of skills we will need to maintain growth is changing.

But this is not just about having skills for their own sake.

We know that people who leave school with no qualifications are over three times more likely to be out of work than people with a degree.

And there are wider benefits to having skilled people in work.

Some researchers estimate that a one percentage point reduction in the proportion of working age people with no qualifications would provide a net social benefit of between £32 and £87 million from reduced property crime in Britain.

But, as this report makes clear, skills training must be related to the reality of employment.

I was disturbed to read the findings of Professor Alison Wolf’s study into vocational qualifications published just a few months ago.

She found that among 16 and 17 year olds between a quarter and a third are in, or moving in and out of, vocational provision which offers no clear progression into employment.

We’ve developed vocational training that does not lead to a vocation.

We are teaching skills that are neither use nor ornament whilst at the same time employers are crying out for better skilled candidates.

This is madness.

We must ensure the skills system is geared towards the needs of employers.

But having the right skills is just one part of the picture.

As this report has found, for entry level jobs, having the right attitude to work is just as important, if not more so, than even basic skills.

Whilst the scope of today’s report is much wider than young people – looking, as it does, at all potential entry level candidates – it made me think of the Wolf report and our failure to properly equip the young with the skills they need in the real world.

I think, as a society, we have let young people down by not preparing them for life beyond education.

But worse than that, we have stood by as they have been sold a lie.

We have allowed reality television to make them an empty promise of overnight success.

Saturday night talent shows make ten second celebrities of ordinary people.

This is not harmless viewing; implicit in this programming is the notion that you can get something for nothing.

That if you wait around long enough your true talents will be discovered and fame and fortune will be yours.

It is time for these reality shows to get a reality check.

The rise of the cheap, temporary celebrity has eroded people’s responsibility to support themselves.

We have a triple whammy of failure for young people in Britain today.

The education system does not prepare them for the world of work.

The benefits system encourages inactivity.

And celebrity culture tells them it’s all going to be fine, that their moment in the sun is just an audition away.

It is small wonder that we have well over a million** **16-24 year olds who are not in full-time education or employment.

The real challenge of the CSJ’s report is how to restore employability in the unemployed.

The report quotes one employer who summarised employability using the acronym PRIDE:

– Professionalism

– Reliability

– Interest

– Determination

– Enthusiasm

How do we restore the principles of PRIDE in our young people and more generally in the long term unemployed?

We in Government hold some, but by no means all, of the levers for change.

As the CSJ report rightly points out family, peer groups and wider society also have an enormous impact on aspirations and expectations.

This is as much about culture change as it is about Government reforms in education or welfare.

Government is tackling these issues head on.

We have accepted Professor Wolf’s recommendations to improve the system of vocational education for 14-19 year olds.

And we are committed to raising the age of participation in education or training to 18 by 2015.

We are also committed to integrating employment and skills – making the real world of work the focus for skills training.

We will improve basic skills like literacy and numeracy by providing a full subsidy for basic skills training in England for everyone aged over 19 years old, regardless of benefit status.

We will also fully fund training for people on active benefits to address skills gaps, working with individuals and employers to ensure training is tailored to their needs.

And all training will be accredited meaning over time credits from completed courses will add up to full formal qualifications.

We are empowering Jobcentre Plus to work more closely with local employers, colleges and private providers to help ensure that flexible and responsive provision is delivered to meet the needs of employers and communities.

One of the most important aspects of this is work is ensuring they understand the local labour market and are able to respond accordingly.

Frontline services are being encouraged to operate much more strategically and have been granted the power to tailor support to the individual at the right time for them, rather than at specific points in time.

Additionally, Jobcentre Plus is now able to use data about current and emerging vacancies to identify future skills needs.

District managers will then work with local training providers to develop short courses designed to meet those needs.

In addition, from August this year we will give Jobcentre Plus advisers the power to require some benefit claimants to attend training if they are clearly missing specific skills which would help them to get a job.

We have increased the funding for apprenticeships to over £1.4bn this year, enough to train 360,000 apprentices, delivering real opportunities to progress across a range of industries.

Apprenticeships are an excellent way of building capacity for the future and ensuring young people in particular are able to move into fulfilling and sustainable careers.

For long term unemployed people welfare reforms will provide a much more responsive benefits system and personalised back to work support.

Universal Credit will deliver a real time tax and benefits system, making it much easier for unemployed people to take short term, flexible jobs like those offered at entry level.

At the same time the new Work Programme will provide tailored support for people finding it difficult to find work.

This support is being delivered by private providers who are paid by results.

The emphasis is on sustainable employment with providers earning more money the longer they support someone to stay in work – up to £13,700 over two years in some of the hardest to help cases.

We have not dictated to providers how they should provide support so that they are free to use whatever methods they know work and to develop innovative new ways to improve existing methods of support.

However, we know from this report and our own experience that often providers choose to develop effective relationships with employers so that they are able to more accurately match the right candidate to the right job.

And the emphasis on sustainable employment means that providers will be incentivised to offer some form of in-work support.

This could reduce the risk to employers of hiring some of the harder to help, long term unemployed as there will be some level of consistent support available to the new employee.

There are a number of further steps Government is taking to tackle this issue.

For example, over the summer we hope to launch the new sector based work academies.

These are sector specific packages of training and work experience with a guaranteed interview at the end.

They are focused in sectors that have high volumes of vacancies – often at entry level – and included accredited qualifications.

Government is providing practical solutions, we are pulling all the levers we can but it must be a combined effort.

We need employers to work with us to ensure training actually provides the skills they need.

We need training providers and employers to work closely to design and deliver training and work experience packages.

We need educational reform so young people are able to gain qualifications that are worth something to both students and potential employers.

But most of all we need to restore PRIDE in our young people and long term unemployed, that’s about societal change and is a task we all share.

Below is the text of the speech made by Lord Freud to the Institute of Revenues Rating and Valuation in London on 28th September 2010.

Introduction

Thank you for inviting me along to talk to you today.

And I must say – your timing is excellent.

The Government is currently putting a great deal of effort into initiatives that should have a positive impact on the kind of work that IRRV members do every day.

Specifically – our new ideas about how we tackle fraud and error across the benefits system.

But before I get into the detail, I just wanted to put some of our thinking in this area into context.

Creaking system

The Coalition was founded on the fundamental principles of freedom, fairness and responsibility.

Those principles have prompted some really radical thinking right across government – and nowhere more so than on welfare.

The 21st Century Welfare Paper we published in July sets out a whole new approach to welfare.

The reforms will:

– help people who could work to make the journey back into employment through the new Work Programme

– make sure work pays – even for the poorest – with our options for Universal Credit and a simple taper system for withdrawing benefits

– move us toward a far less complex, more dynamic benefit system will make it easier for people to calculate how much better off they will be in work

– and just as importantly, the welfare reforms will create a simpler system that will slash administration costs, as well as reducing the opportunities for fraud and error.

Complexity

Running this creaking system currently costs the taxpayer about £3.5 billion per year across DWP, while fraud and error costs another £5 billion, including the tax credits system.

Moving toward a simpler welfare system will help us deliver support far more efficiently.

And with HMRC making progress on their consultation to use real-time data under PAYE II, we have a tremendous opportunity to really attack the numbers on fraud and error.

Differentiate

Some of you may be sitting there thinking, “I have heard all this before”. But this is a real step-change in our whole approach to welfare and it is crucial that we make the most of this opportunity – especially at a time when the Government is facing up to the challenge of a massive fiscal deficit.

However, I also think it is important to differentiate exactly who we – as a government – have in our sights.

First off, this is certainly not about targeting the poor.

Quite the contrary.

As this Government recently made clear, we are determined to clamp down across the whole spectrum of fraud – whether that is tax evasion at the top end, VAT fraud, benefit fraud or anything else.

Given the pressure on the public purse, we simply have to make every penny count – and that includes going after the cheats at every level.

For DWP, it means targeting the criminals and gangs who actively set out to defraud the system, as well as the individuals who deliberately deceive us to get money they are not entitled to.

It is not about punishing those who are simply baffled by the vast complexity of the system and get it wrong.

This is an important distinction, because through our plans for Universal Credits, we are doing our utmost to create a simpler, fairer welfare system that is easier for people to use.

And the really good news is that a system that is easier to navigate will not only save time and administration costs – it will also make it far easier to differentiate error from fraud.

Today, this is often a grey area, given the genuine complexity that exists in the system.

But as our welfare reforms take hold, this grey area will shrink dramatically.

Through a simpler Universal Credit system, the gap between fraud and error becomes very sharply defined indeed.

At that point, if it is not a clear error, it will be classified as fraud. It is that simple.

We will clamp down hard on anyone who makes an active choice to defraud the system:

– criminal gangs

– identity fraudsters

– or people who make a conscious choice not to alert us to a change of circumstances for extended periods, because under a simpler system we will have far higher expectations that people tell us the truth.

Strategy

For anyone in these groups, we simply must have effective enforcement, because benefit fraud is not a victimless crime – in effect, they are stealing money from the poor and vulnerable who need it most.

Which brings me to the next part of my speech today – how we are setting out a wider strategy to tackle benefit fraud.

From my visits around DWP, I have witnessed first-hand the dedication and professionalism of our staff – from those who process benefits right through to the investigators chasing down the fraudsters.

I know these same high standards are shared by our local authority colleagues. But one thing we know for sure is that criminals are always testing the system for weaknesses and coming up with new scams.

That means that we have a responsibility to keep stepping up our game too.

That is why we are working with partners inside and outside government to make sure we stay one step ahead of the criminals.

In DWP, we have split the challenge across 5 fronts:

– prevention

– detection

– correction

– punishment

– and deterrence

There are specific plans being developed to tackle each of these areas and I’ll touch on a few of these today.

Five Strategic Areas

On Prevention, for example, I want to see closer cooperation with the private sector and credit reference agencies to harness the best data analysis possible.

I also want us to take advantage of new technology to get accurate, real-time data analysis at the point of claim. This will make it far easier to spot the tell-tale patterns of fraud.

Or as one expert recently referred to it – tracking the “muddy footprints” of the professional fraudster.

I believe it is only a matter of time before we get really effective at targeting the criminals and gangs who perpetrate major scams.

Making better use of tools and techniques such as these will also help us tackle identity fraud – something that I have a close personal interest in, having been targeted myself recently.

On the second strategic priority – Detection- I want to make sure that Government bodies such as DWP, HMRC, and Local Authorities maintain their long track record of effective cooperation.

Not just sharing data more effectively, but reinforcing our joint investigative capabilities as well.

On Correction, I want to make sure that we get back what we’re owed – in particular by making sure we’re making full use of all the tools available so that we can target the assets of the criminal gangs.

That brings me on to the subject of Punishment. This is another area where we are planning to pile on the pressure:

– by introducing wide-ranging penalties for low-value fraud

– by securing swifter and tougher punishments so that cheating is just not worth the risk

– and setting out strong, punitive sanctions for organised criminals – and that includes:

– wholesale asset stripping under the Proceeds of Crime Act

– banning these people from accessing any benefits at all for as long as we can

– and in the case of international gangs, making sure that we use our full powers to deport the guilty parties.

Finally, Deterrence. Here, I want to make sure that criminals get the message that Benefit Fraud is a crime that just doesn’t pay.

We will advertise that fact with a clear message that says:

– we will find you

– we will seize criminal assets

– we will make sure that there is no place to hide.

International

That message extends to international gangs as well.

Other countries face the same scams targeting their welfare systems, so we will work closely with our international partners to develop practical counter-measures and effective cross-border enforcement.

In the meantime, I am determined that we continue to reinforce our defences against fraud so that the UK comes a long, long way down the list of countries targeted by organised gangs.

Conclusion

You can expect to hear more about some of plans to boost our defences in the very near future when our new Fraud Strategy is published.

In the meantime, I hope that I have made the point loud and clear that we are absolutely determined to clamp down on the fraudsters, the serial cheats and the criminal gangs.

No-one should underestimate our determination to take on the criminals.

And no-one should think for a moment it is going to get any easier to get away with it:

– with a simpler welfare system, we will drive better value for the taxpayer

– with less complexity, we will be able to find the fraudsters far more easily

– and with a comprehensive and coherent fraud and error strategy in place, we have all the tools we need to make sure that we keep the criminals on the back foot.

It’s an exciting time for us.

And as we develop these ideas in the future, I hope that you will work with central government and other agencies to make sure that we keep making life a lot less comfortable for the cheats in future.

Thank you.