Tag: 2013

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.

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.