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  • Iain Duncan Smith – 2015 Speech on Work and Disability

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    Below is the text of the speech made by Iain Duncan Smith, the Secretary of State for Work and Pensions, on 24 August 2015 at an event held by Barclays and Reform.

    Today, I want to set out where our reforms of the last 5 years have taken us – and what I see as my priorities for the next 5.

    Let me start with the last Parliament.

    It was clear from the situation we inherited in 2010, that something had gone very wrong in this country.

    We had a welfare system where a life on benefits paid more than having a job.

    That wasn’t fair to the hardworking taxpayers who paid for it – and it wasn’t fair to the people who were trapped in a system with no hope for a brighter future.

    We lived in a country where:

    • nearly one in 5 households had no one working
    • the number of households where no one had ever worked had nearly doubled
    • 1.4 million people had been on benefits for most of the previous decade
    • and where close to half of all households in the social rented sector had no one in work

    This bleak picture was the reality just 5 years ago.

    Welfare spending had gone up 60% and the benefits system cost every household an extra £3,000 a year.

    Spending on tax credits increased by 335%.

    That’s £23 billion.

    Of course money has a role to play, but greater and greater handouts were not actually extending opportunity – they weren’t transforming lives – and they failed to improve people’s life chances.

    Government spending was poorly targeted and there was a focus on inputs rather than outcomes.

    The result was a country where worklessness had become engrained.

    A life without work, for many, had become ‘the norm’.

    It was taking root in families and starting to pass through the generations.

    This was a national scandal – and above all, a personal tragedy for each and every person and their family not in work.

    The sickness benefit culture in this country, I believe, is in dire need of reform – so that will be my focus in the coming months.

    And I want to be clear about the principles that will drive action as we move forward.

    Principles driving reform

    I have said many times that I believe work is the best route out of poverty.

    It provides purpose, responsibility, and role models for children.

    As a one nation government, we believe everyone in the country should have the chance to benefit from the security and sense of purpose that comes with being in work.

    That is why our guiding principle has been to place work at the heart of everything we do in our reforms.

    Getting people into work is more than just earning a salary and certainly more than balancing the public purse.

    These matter, of course, but they are not the primary reasons.

    For culturally and socially, work is the spine that runs through a stable society.

    We could not have continued with the situation we were left in 2010.

    Significant numbers of people saw work as something completely alien to them and their families.

    For many, work was something they simply didn’t do, and never had.

    It was something other people did.

    Many had fallen into a life of dependency.

    This is damaging for society.

    A dependent society is one that’s:

    • more likely to suffer crime
    • more likely to be ill
    • more likely to call on the health service
    • and more likely to increase the cost to the criminal justice system

    But critically, families where no-one works, lose their sense of self-worth.

    Children grow up without the aspiration to achieve and they become almost certain to repeat the difficult lives of their parents – following a path from dependency to despondency.

    I want those who remain trapped and isolated on welfare to move from dependence to independence.

    That is real social justice – giving people the power to decide their own lives – not live a life dictated by others.

    That’s why we are helping people back to work and to stay in work.

    Let’s take the Work Programme.

    The Work Programme is, I believe, the most successful back to work programme we’ve ever seen.

    By March this year:

    • over 1 million people – or 70% of all referrals – had spent some time off benefit
    • and over 430,000 people had moved into lasting employment

    Jobcentres are also now working in a more flexible way, providing that longer term support.

    And we are rolling out Universal Credit and our Fit for Work service – something I will return to later.

    But we can see the change that has been made since 2010:

    • nearly 2 million more people are in work
    • the number of workless households has reached a record low – down over 670,000
    • and the workless households rate in the social rented sector is also at its lowest on record

    But we know that we must not stop there.

    We need to be relentless in our efforts to get more people into work and off welfare.

    But work is more than just salaries, tax, numbers and statistics – it is what shapes us and helps us develop.

    In short, it is about self-esteem, self-confidence and self-worth.

    Work is good for health

    Yet there is one more area which we haven’t focused on enough – how work is also good for your health.

    Growing evidence over the last decade has shown work can keep people healthy as well as help promote recovery if someone falls ill.

    By contrast, there is a strong link between those not in work and poor health.

    So, it is right that we look at how the system supports people who are sick and helps them into work.

    Let me be clear – a decent society should always recognise that some people are unable to work because of physical or mental ill health – or both.

    It is right that we protect these most vulnerable people in our society.

    And that support is there.

    For despite the scaremongering, it is worth reflecting on the fact that we in this country spend more on sick and disabled people than the Organisation for Economic Co-operation and Development (OECD) average.

    To put that in perspective – and according to the OECD, the UK spends more on incapacity than France, Germany, or Japan.

    However, we are also ensuring that the resources are in place to support people into work.

    I’m proud that we are providing significant new funding for additional support to help claimants into work – £60 million in 2017 rising to an additional £100 million a year by 2020.

    We are seeing a continued rise in the number of disabled people getting into work.

    The latest figures show a rise of more than 200,000 disabled people who are now in work compared to the same time last year.

    That’s now over 3 million disabled people who are in employment.

    Yet, this is only the beginning.

    For we know there remains a gap between the employment rate of disabled and non-disabled people.

    We want to ensure everyone has the opportunity to transform their lives for the better by getting into work.

    That’s why, as part of our one nation approach, we have committed to halving this gap.

    On current figures, that means getting 1 million more disabled people into work.

    I want to be clear – this employment gap isn’t because of a lack of aspiration on the part of those receiving benefits – in fact, the majority want to work or stay in work, but I believe this gap exists because of 2 factors:

    First, some employers are reluctant to employ people with disabilities.

    That is why I have set up the Disability Confident campaign.

    This shows employers that the reality is quite different from the perception – in fact, that once employed, people with disabilities are in the vast majority of cases more productive than others.

    Second, the poor quality of support they receive leads too many sick and disabled people languishing in a life without work, when work is actually possible for them.

    Challenge to employers

    It is this support that I want to turn to now.

    I want to look at the support people receive right from the start when they first get sick – which can very often be from their employer.

    Too many businesses do not pay any attention to the health condition of an employee who has fallen ill – or make any attempt to understand what the problem is.

    The employee goes to their doctor, and after a short assessment, their doctor signs them off work.

    Too often, even early on, no one at work maintains regular contact with them.

    And after successive sick notes, their original condition then gets worse.

    An opportunity to keep the prospect of a return to work within sight is lost.

    Instead, they move onto sick pay, and then at some point are left to cascade onto sickness benefit.

    This has become a damaging cycle which affects everyone.

    Instead, employers need to recognise the importance of staying in touch with their staff when they get sick – and of providing early support to someone to stay in work or get back to work.

    This makes sense for 3 important reasons.

    First, it makes sense for businesses who invest a lot of money in their staff, not to lose that investment through illness and absence that could be avoided.

    Second, it makes sense for society by stopping people falling onto expensive sickness benefits and then into long term worklessness – we know each month a person is on sickness benefits, they become progressively less likely ever to work again.

    And third, perhaps most importantly of all, it makes sense to ensure that a fellow human being isn’t written off with all the negative consequences that follow for them and their families.

    Some companies understand this.

    They realise the benefits of investing in staff health and wellbeing – they have come to see that it improves productivity and reduces the costs of sickness absence.

    In these organisations, employees who fall sick:

    • will experience regular and direct communication;
    • they will receive a work-focussed health assessment to overcome any obstacles to a return to work – and review what work they can do and what support they need to do it
    • together with the employer, they also will agree a plan of action with timescales to support a return to work, taking into account their health condition and any workplace adjustments

    At every step, there is tailored support and a realistic expectation on both sides of a return to work.

    Importantly, and where possible, that vital link with work is not lost.

    Sadly, this is however, by no means common practice.

    Other countries do this better than us – and it’s something that both the private and public sector in Britain need to get much better at.

    Fit for Work service

    We know the personal and professional empowerment that is possible if the right support is provided at the right time.

    But employers can’t do it alone.

    GPs are also vital in this process.

    They need to see the health benefits for their patients of early support and a return to work.

    The good news is that now businesses and GPs will be able to use the new Fit for Work service that is being rolled out by us.

    So, instead of asking, ‘How sick are you?’ – the new service asks, ‘What help can we give you now that will help and keep you close to your job?’

    Sophisticated early support can have a positive effect on both health and employability.

    We are also working with the Department of Health so that GPs routinely send people to Fit for Work to get their Return to Work Plan.

    In fact, all GP practices in England have been sent a letter asking them to do just that.

    Focus on mental health

    I do want to take a moment to look at what is one of the biggest causes of work absence in the UK.

    One in 6 people have a common mental health condition – and you’re much more likely to fall out of work if you do.

    In fact, almost 1 in 4 people on Jobseeker’s Allowance has a mental health condition.

    The vast majority are related to anxiety and depression, which we know are treatable conditions – and the sooner someone gets treatment, the better.

    And we know the longer you are out of work, the more chance you have of worsening mental health, even if the original reason for your ill health was a physical one.

    So, every day matters.

    That is why our Fit for Work service includes professional experts skilled in helping people with mental health conditions.

    That is why this government is investing in psychological treatment services which are helping thousands of people return to work from a period of sickness absence.

    And that is why we are also investing and testing new ways of joining up health and employment services to improve access to treatment and support.

    Universal Credit

    So, I see the Fit for Work service as the first line of defence when someone falls sick – helping employers and GPs to step in early.

    But even when someone is out of work, it is critical that we have a modern and flexible benefit system that supports them – keeps them close to the labour market wherever possible.

    That’s what is so important about Universal Credit.

    The roll out is well under way – half of all jobcentres are now using Universal Credit.

    However, there is a tendency for people to focus on Universal Credit’s technical innovation.

    Today, I want to explain just how transformative Universal Credit is in a human sense.

    Under tax credits, once someone claims, they lose any human interface with the jobcentre.

    Under Universal Credit, people can expect early and continued support about what work they can do and what support they need to do it, until they leave the benefits system.

    As a result, work coaches will spend time working with claimants focussing them on what they need to do and how the system can help them progress.

    It is that human interface with the adviser – who through Universal Credit – will work on their plan and help motivate them and support their return to independence.

    Moreover, with Employment and Support Allowance (ESA) becoming part of Universal Credit – it is that access and human interface which opens the way for us to re-think the relationship between sickness benefits and work.

    Case for further reform – ESA and the Work Capability Assessment

    I spoke earlier about what good employers do when one of their staff goes off sick:

    • they keep in touch on a regular basis
    • through a clear action plan, they look at the obstacles that may be preventing a return to work and do everything they can to remove them

    However, what happens to a claimant on Employment and Support Allowance is very different.

    Under the existing system, there is a limited opportunity to work with the jobcentre.

    Instead, they receive an assessment of their condition that focuses on what they can’t do rather than on what they can do.

    That assessment will force them into a binary category saying they can be expected to work or they can’t.

    So it’s not surprising that over the last 2 decades, the number of people on sickness benefits has stayed at around 2.5 million.

    While the number of people on unemployment-related benefit has nearly halved since 2010, a fall of around 700,000 – the number of sickness benefit claimants has fallen by 88,000.

    The design of ESA as a short term benefit, where the vast majority of people are helped to return to work, simply hasn’t materialised in reality.

    ESA may have been designed with the right intentions, but at its heart lay a fundamental flaw.

    It is a system that decides that you are either capable of work or you are not.

    Two absolutes equating to one perverse incentive – a person has to be incapable of all work or available for all work.

    Surely, this needs to change.

    In the world beyond ESA, things are rarely that simplistic.

    Someone may be able to do some work for some hours, days or weeks, but not what they were doing previously.

    As ESA becomes part of Universal Credit, the 2 approaches seem at odds.

    We need to look at the system and in particular the assessment we use forESA.

    The more personalised approach under Universal Credit sits alongside a Work Capability Assessment, which sets the wrong incentives.

    That’s why I want to look at changing the system so that it comes into line with the positive functioning of Universal Credit.

    A system that is better geared towards helping people prepare for work they may be capable of, rather than parking them forever beyond work.

    We need a system focussed on what a claimant can do and the support they’ll need – and not just on what they can’t do.

    Conclusion

    So, whether it’s through Fit for Work, Universal Credit or an improved assessment – the more that people feel there’s someone with them, helping them get over the hurdles back to work and to stay in work – the more likely their lives will change for the better.

    I want to place people at the heart of the system, and make the system work around them, rather than the other way round.

    It was this back-to-front approach that we inherited – a system that people crashed into, and struggled to figure out.

    We are giving everyone in this country the chance of a better life – the chance to fulfil their potential.

    That is surely something we can all support.

    As part of our one nation approach, we are committed to continuing to reform the system – so that it travels with people through every step of their journey from dependence to independence.

    When we achieve that, we will finally have a welfare system fit for the 21st century – a welfare system that focuses on those most in need, and helps ensure that, people who can, become independent from the state and live better, more fulfilled lives.

     

  • Iain Duncan Smith – 2015 Speech on Social Investment

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    Below is the text of the speech made by Iain Duncan Smith, the Secretary of State for Work and Pensions, on 19 March 2015 at the Cabinet Office in London.

     

    It is a pleasure to be here.

    Represented in this room are all of Whitehall’s largest departments, alongside local government, businesses, charities and many others.

    Indeed today’s conference is all about bringing together individuals with the influence and expertise to tackle Britain’s most damaging social problems. Asking how we can do better and do more, when it comes to bringing life change to those most in need.

    Meaningful change

    Yet even to start with this question gets us straight to the point of social investment – for how often have we heard the refrain: “Government ought to do something”.

    Too often in the past, this has been the classic and irresistible invitation to politicians to take action.

    Money is found, a programme is invented and – well, that’s the point. Doing something has seldom been the same as solving something.

    Despite good intentions, it cannot be enough to pour money into social programmes, but with too little care for results the other end.

    No – what matters most is the impact our actions have in transforming people’s prospects, restoring security, hope and independence so that all in our society have a chance to prosper.

    As you delve into the detail today, I would ask that you hold this thought: that social investment holds the promise of another way. Not spending money and hoping for the best, but instead securing a return on investment whereby every pound we spend goes on meaningful change, making a measurable difference to people’s lives.

    Return on investment

    This is the latent potential of social investment which, to my mind, stands to make perhaps the single most significant difference to how we fund and deliver social services in years to come. Transforming what has historically been government’s role: to pick up the pieces of social breakdown – through our welfare, health, justice systems, and so on.

    All of us here shoulder that responsibility, and all of us know that it comes at a cost.

    Take for example supporting a child in care – estimated to cost £60,000 a year.

    The cost of keeping a first-time young offender in jail – over £20,000.

    The cost of someone sitting on jobseeking benefits for a year – £10,000.

    £90,000 – for just one life that goes off course.

    So we have always known the price of failure. The question is, can we value change?

    Social return

    Imagine if we were to realise that positive change comes with a real value as well – as individuals become productive members of society, moving from dependence on the state to independence.

    Whether it is helping someone into work, off the streets, through rehabilitation, into adoption, any one of these outcomes, and countless others, comes with a clear social return. But also a financial one, as we pay out less in costly remedial interventions.

    Herein lies the key to social investment, in turn transforming the whole culture of public spending.

    Harnessing social investment, any of us – from central government and councils, to social enterprises and charities – can stop paying for process of tackling social problems and start focussing instead on the results that we achieve.

    World leader

    Over the last 5 years, the UK has become a world leader in putting these principles into practice.

    Having established the G8 Social Investment Taskforce, now others from across the globe – America, Germany, Canada, France and more – are looking to us for leadership and innovation.

    One game-changer has been Big Society Capital, the world’s first financial institution dedicated to impact investment. Together with the first Social Stock Exchange established in London.

    We have also introduced the world’s first tax relief on social investment – which could generate up to nearly £500 million over the next 5 years.

    All of this has put the UK in the lead in terms of infrastructure: on the one hand, leveraging private money to support burgeoning social enterprises and social entrepreneurs and on the other, helping new start-ups and ventures to build their capacity and become investment-ready.

    As a result, the UK’s social investment market is now one of the fastest-growing in the world.

    Social impact bonds

    But perhaps the one area where the UK has made most progress of all is in the government’s development of social impact bonds.

    This works on the basis of government monetising the value of a given positive outcome, and underwriting the return – creating a bond into which others invest.

    If the programme delivers the outcomes, investors see a return, whilst government pays not for the process of tackling the problem, but for success at the other end.

    Having pooled £70 million across government to fund these outcomes, the Coalition has now established more social impact bonds than the rest of the world put together – moving from one operational bond to 31.

    Take for example, the 10 projects financed by my Department’s £30 million Innovation Fund, which I set up 4 years ago.

    This has proved the concept with cutting-edge programmes such as knife crime prevention and remedial education, to improve the prospects of our most disadvantaged young people.

    Already, we are seeing these bonds develop a meaningful track record, could be replicated on a national or even international basis.

    The Innovation Fund has generated 16,000 positive educational and employment outcomes for young people.

    So too, the rough sleeping bond in London which has reduced rough sleeping by 30%.

    And in the original Peterborough prison bond, for the first thousand short sentence prisoners, reoffending was reduced by 8.4%.

    Youth Engagement Fund

    It is off the back of this success that we have established a new £16 million Youth Engagement Fund, helping a further 8,000 young people by preventing the scarring and entrenched problems that come with falling out of school or work altogether.

    Today, I am very pleased to announce the 4 successful bidders, who will be taking forward new social impact bonds:

    • Unlocking Potential in Greater Merseyside
    • Prevista in London
    • Futureshapers in Sheffield
    • Teens and Toddlers Youth Engagement in Greater Manchester

    These projects are the first centrally-funded bonds that have also sought a local contribution to outcomes – in this case, from councils and schools – a starting point for the collaboration and co-commissioning that local government has been leading through community budgets.

    Together with projects catalysed through the government’s £20 million Social Outcomes Fund, today this brings us to a total of 7 new social impact bonds, reaching over 18,000 disadvantaged people.

    From assisting those with mental illness into work, supporting people with long-term health conditions, and helping children in care – 3 of the newest projects are focussed on some of Britain’s most vulnerable individuals of all.

    Proving the effectiveness of social impact bonds in tackling the most pressing and complex social problems that we face.

    Industrial scale

    Now, the challenge remains for government to scale up social investment – harnessing it in the design, commissioning, and delivery of many more of our social services.

    In doing so, the first step is to build an evidence base – creating certainty around the return for investors.

    That is why the government has developed a whole network of centres, such as the Early Intervention Foundation, which now assess, accredit and advise on what works.

    And it is why I am pleased that we are doing more to measure the impact of different interventions – building on the pioneering work of New Philanthropy Capital in developing in a DataLab with the Ministry of Justice – now testing the same concept with the Department for Work and Pensions, for an employment DataLab too.

    By opening up much more of the government’s data to providers, charities and social ventures, all of us can better understand the outcomes of what we do on the frontline – proving its effectiveness.

    Yet, if we are serious about exponential growth in social investment, then I believe what is really needed is a multi-million or even billion pound government commitment – creating a far greater social impact fund to pay for proven outcomes.

    It is this that would take social impact bonds to an industrial scale.

    Fidelity guarantee

    With it, that money brings rigour, discipline and innovation – historically the preserve of the private sector – brought to bear on our most complex social challenges.

    Yet even more than that, the social investment model also bring what I call the ‘fidelity guarantee’: an assurance that what you pay for ‘does exactly what it says on the tin’.

    This value of this guarantee cannot be underestimated.

    For it stops what has so often been the downfall of social programmes in the past – that in implementing a programme that is proven to work, it ends up being modified – tinkered with, to the extent that the programme you started with, isn’t actually delivered.

    With social impact bond, on the other hand, if the project ends up being changed, no results mean no pay-out.

    By design, then, social investment stands to save money historically wasted on underperforming projects, by ensuring that what works is delivered properly.

    But what’s more, social investment shores up government finances because the whole premise is of a return, linked to a given outcome.

    Every pound for life change – that is the opportunity of a lifetime.

    The first trillion

    Without doubt, there is still much more to do if we are to realise the full benefit of what remains a nascent market.

    Our ambition must be pitched higher, aiming to catalyse the next wave of social investment.

    Not just a more effective use of taxpayers’ money, but actually growing the money available for social programmes beyond government or philanthropy alone.

    This is about unleashing investment from businesses, trust funds, entrepreneurs and more – groups who might never before have seen themselves as part of the solution for social change.

    Take the fact that UK asset managers look after around £3 trillion.

    Of this and other private funds, the G8 Social Investment Taskforce has already identified the ‘first trillion’ of potential investment money.

    £1 trillion – that’s what it cost to deliver our health and education systems for the last 5 years.

    It’s 135 times the estimated rise in costs for local public services over the next 5 years.

    So far from thinking that budget pressures and rising costs are insurmountable, just think what that money could mean on the ground – how many people it could help, how many lives it could transform.

    As I look around and see so many faces from local government, I say this is true particularly for councils.

    As we look to the future, social investment could mean the end of going cap in hand to central government, reliant on uncertain short-term grants.

    Thus it is vital that we bring social investment into the mainstream – making it the norm for corporate social responsibility in the private sector, for asset managers, investment banks, and many more, getting sustainable funding flowing to where it will have the most impact.

    Reuniting society

    If we can get this right, I believe the effect social investment could have is dramatic – not just in fiscal terms, but in terms of our society as well.

    For too long, a disparity has prevailed between the top and bottom of our society.

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

    Yet through social investment we have an opportunity to lock not just wealth back into our most disadvantaged areas – but something else as well.

    Just imagine a social enterprise working in a particular deprived neighbourhood – be it in London or Birmingham, Glasgow or Leeds.

    Investors buy into it and as with any investment, will want to see it flourish.

    Because they are risking their money – money that could otherwise be reaping a return elsewhere – those investors will want to see that social programme succeed, taking an interest in that community where they would otherwise be totally detached, brought back into contact with our most disadvantaged individuals and families, for mutual benefit.

    For too often what is lacking in these areas is not just money, but hope and aspiration – the belief that the cycle of poverty can be broken.

    Thus these wealth creators could have a powerful influence on the communities themselves, a human interface between 2 polarised worlds, and 2 groups often separated by only a different start in life.

    Bringing success to the doorstep of failure and 2 ends of our society closer together – reuniting the City, and the inner city.

    Conclusion

    Now is the time to seize this opportunity.

    Above all, it lies in the hands of all of you here today.

    For this is not an agenda about politics or politicians.

    Rather, the complete opposite is true.

    Politics aside, the future of social investment lies with local authorities, commissioners and policy-makers. With a real chance for you to drive innovation, encourage entrepreneurship and invest intelligently.

    For in straightened times, and faced with tight budgets, all of us need to find new ways of tackling social problems, answering a call to action in the years to come.

    Social investment offers a way forward, ensuring that each and every pound we spend has a demonstrable purpose – transforming the lives of people now and the chances of future generations.

    Restoring our finances, as we are compelled to do – but most of all, restoring cohesion to our society, and restoring hope and aspiration to those on the margins – at the same time, restoring lives.