The 'Benefits Trap' and Benefits Reform

Last October, I wrote in this column about the growing number of local people who come to see me at my weekly surgeries, to talk to me about the welfare and benefit system. Nine months on, the story remains the same.

Time and time again I hear from honest, hard-working people who are desperate to get back into full-time employment, only to find that the benefits system actually punishes them for their efforts. Others are careful and prudent savers who have put aside a little money in case of hard times, and find that this disqualifies them from the very help they so desperately need.

The ‘benefits trap’ is one of the cruellest and most morally indefensible aspects of modern Britain. Instead of a system which gently helps people back up onto their own two feet, we have a confusing mess of different tax credits, allowances and payments which nobody, including the civil service, actually understands, is ruinously expensive, and seems only good for keeping people dependent on the state indefinitely.

We cannot go on like this, and I am glad that the Chancellor has given the Work and Pensions Secretary, Iain Duncan Smith, the breathing space he needs to radically reform and simplify our benefits system. However, for all that releasing people from the benefits trap is the right thing to do and will create huge savings in the long term, we have to accept that this is going to cost money in the short term.

When I sat on the Environment, Food and Rural affairs Committee in the last Parliament, we published a report that found that Winter Fuel Payments cost the Government £2.7 billion, yet only 12 per cent of the people to whom the payments were made were actually in fuel poverty.

By removing the payments from those on higher tax bands- those earning more than £37,000 a year- we could free up about £250 million a year, money that could be concentrated on implementing the kinds of schemes we need to fix the benefits system, and on giving help to those most in need. We could save even more if we removed child benefit payments from higher rate taxpayers.

The exact measures decided upon by Ministers will be announced in the autumn. But I hope that in another nine months’ time, when I look back on writing these words, people will finally have the fair and supportive benefits system that they deserve.