An overview of Welfare Reform

On Friday I spoke at the agm of Advice NI and took the opportunity to provide an overview of welfare reform.  This is a complex area and I welcomed the opportunity to provide an overview of where we are in the process.

Welfare Reform – Getting it Right for Northern Ireland

Good Morning – may I begin by firstly thanking Bob Stronge for the opportunity to address your Annual General Meeting today. Unfortunately I am not able to stay for the rest of the event due to other diary commitments in Londonderry.

The theme for your meeting today is Welfare Reform – Getting if Right for Northern Ireland, which of course is very relevant given that the Coalition Government’s proposals for Welfare Reform set out in the Welfare Reform Bill are currently being considered by the Assembly. You will be aware that the passage of this important legislation through the Assembly has been delayed pending the outcome of an Ad Hoc Committee of the Assembly’s considerations on whether the Bill complies with its equality requirements. I have absolute confidence that the normal legislative process would have afforded the opportunity for full and proper consideration of the Bill on all fronts. It is regrettable that others within the Assembly lacked that confidence and chose instead to invoke a process that will cause delay resulting in real challenges down the line, not least the potentially substantial financial costs that may be incurred.

It is important the Ad-hoc Committee moves forward quickly and that it reports to the Assembly as soon as possible thereby minimising any potential financial and operational consequences for Northern Ireland.

As Minister for the Department with primary responsibility for Welfare Reform I am on record for candidly outlining my reservations around aspects of the Bill and I will outline some of these later. I am not simply accepting the Coalition Government’s proposals but questioning and challenging these proposals where I feel it important within the Northern Ireland context.

I remain committed to securing the best deal for the people of Northern Ireland and will continue to show leadership by working with the Executive Sub-Committee on Welfare Reform and, with Assembly colleagues to explore possibilities. I will not shy away from the difficult decisions but seek to highlight areas of concern and work with others to mitigate against the worst impacts indeed I have already secured flexibilities on payment arrangements for Northern Ireland customers.

I am aware that many of the organisations represented here today have made submissions to the Social Development Committee on the Welfare Reform Bill. The Committee has asked my Department to comment on a range of issues within the Bill and I hope we will be able to respond in the near future. A key role for a politician is to shape legislation before the Assembly and I am committed to executing that role working with the people of Northern Ireland to ensure we have a Welfare Reform Bill that is right for the people of Northern Ireland.

In my recent speech to the Assembly I outlined the four principles that underpin Welfare Reform:

- To protect the vulnerable;

- To get people back to work;

- To develop a system which is fair; and

- To encourage personal and social responsibility.

I believe these four principles are equally applicable to building communities and our approach to housing as they are to reforming the social welfare system.

Before setting out how my policies will help us get it right in implementing Welfare Reform in Northern Ireland, I want to highlight some of the significant challenges which we will have to overcome.

As a region, we have the highest levels of economic inactivity in the United Kingdom; there are over 120,000 households in Northern Ireland in which there is no-one working and there are over 60,000 children live in households where there is no adult working. There is clear evidence which shows that where there is no adult working in a family, their income levels are heavily skewed towards the bottom of the scale of income distribution. Six out of ten families in the bottom quintile and 93% of families in the bottom two quintiles are families where there is no one working.

We also know that some of our communities have large numbers of economically inactive people. Research over a number of years has demonstrated the clear links between those who are financially dependent on benefits and the incidence of broader social problems. As a consequence, in many of our communities we not only have the blight of poverty but higher levels of ill health; lower educational attainment rates and higher crime rates. Addressing these issues will not be easy and sustainable improvement will only be achieved through collaboration in developing and implementing long term cross cutting solutions.

The challenges we face are not only about tackling poverty but also in providing assurances to our fellow citizens that we are successfully getting the resources to the people who most need support. In a recent Omnibus study carried out by my department involving over 1100 people in Northern Ireland, only 9% of respondents believe that the current welfare system is working properly. Over 50% of the respondents felt that there are too many people or the wrong people are receiving benefits from the welfare system whilst 31% felt that benefit customers who need financial support were not receiving the right level of support.

I believe these results indicate the scale of the challenges we all have in building a shared understanding in Northern Ireland about what we are trying to achieve through Welfare Reform, to acknowledge that there are some negative aspects and agree to work together to mitigate the impact of these in order to ensure that The Welfare Reform changes in Northern Ireland delivers real benefits for our people.

As Minister for Social Development, I have responsibility for urban regeneration and community development in addition to housing, social security benefits, pensions and child maintenance. We are the Department that is directly involved in helping people and communities improve their lives through everything we do.

We invest £70million on an annual basis in urban regeneration and community development, and pay over £5 billion in benefits each year and this year spent £ 364m on housing across Northern Ireland. Through this work, my Department touches the lives of every person in Northern Ireland.

In implementing reform my Department stands by its commitment to protect the most vulnerable and provide support for those whose sickness or disability puts them in difficulty. I want to ensure there is financial support for people who have short term emergency needs to meet general living expenses for day to day living or for housing needs. That is why as part of Welfare Reform I am introducing the new Discretionary Support Policy underpinned by the new Discretionary Support Scheme and increased funding for Discretionary Housing Fund.

If you are sick then the welfare system will continue to support you. If you are sick but have a likelihood of a recovery, the welfare system should support you, stay with you as your condition changes or improves and make sure you can take the opportunities to work when you are able.

What it should not do is consign you to a life on benefits, never check on your condition and allow you to languish there indefinitely – as has been the case for over 33,000 people in Northern Ireland who have been on incapacity benefit for more than 10 years

It is my belief that where they are able, those receiving support from the welfare system should be helped to move from dependence to independence. So whilst you need support you will receive it but if you are able to work, we should make it financially worthwhile and should both support and encourage you. What it should not do is to trap you in a place where you receive so much in benefits that a return to work is unaffordable.

In October I announced that I had reached agreement on flexibilities in the way Universal Credit can be paid in Northern Ireland. I started the discussions with Lord Freud because I had listened to the representations made to me by many of you and others and I was convinced that we needed to make changes to how Universal Credit was being designed in order to protect the most vulnerable in our society.

Having secured this flexibility officials in my Department have now started to develop the guidance and criteria to be used in making decisions around Universal Credit payment arrangements. The focus of this work is on ensuring vulnerable people are able to receive payment in a way which meets their needs. Additionally my Department is looking at the access channels for claiming Universal Credit to ensure we maximise the way our customers can access our services.

For someone from a family where no one has ever worked, there can be pressure to conform to a life on benefits as a preferable alternative to the “mug’s game” of work. It is regrettable that across generations and throughout communities, worklessness has for some people become ingrained into everyday life and those affected are losing out on the benefits associated with being in work. So together, we have to change systems, behaviours and attitudes and we have to change fast without leaving the most vulnerable behind.

We need to change the incentives in the welfare system so that they act as a springboard rather than a trap, rewarding those who move into work and redesigning the system in a way that restores fiscal stability while restoring lives at the same time.

We also need to change perceptions which will require changes in the attitudes and behaviours of those both in and outside of the social welfare system. We need to be able to demonstrate that the welfare system is seen to properly support people in need but also not to trap people in need. If we are to build a new welfare system, we have to realise that not everyone is starting from the same place. Not everyone understands the benefits of work, the feelings of self worth or the opportunity to build self-esteem.

Welfare Reform is necessary and will bring much that is positive, but, I do not underestimate the challenges we will face to manage the transition.

One aspect of the reform programme on which I do have significant concerns relates to Personal Independence Payment and the proposed managed migration of the 113,000 working age customers currently receiving Disability Living Allowance.

I have previously set out some of my concerns publicly that this aspect of PIP is driven primarily by the need to save money. I would re-iterate today my concern that this migration could have a real negative impact in some of our most deprived communities at a time of economic hardship. I have asked my officials to develop an understanding of the potential impact on the most deprived areas and I do believe there is a case for delay in the migration aspect of PIP to at least allow for economic conditions to improve.

This does not take away from the fact that the Disability Living Allowance benefit is no longer fit for

purpose which drives perverse behaviours and does not ensure that the available financial support is getting to the right people. People with a disability deserve to have the same type of conversation that we are intending to have with other benefit claimants to maximise their potential whilst ensuring that the right level of financial support is available.

In the area of Housing also I have concerns. One key change to Housing Benefit affecting social sector tenants due to be introduced in April 2013 is the under-occupation measure. It is important that everyone has access to an affordable home, be that in the private rented sector or the social housing sector, under a tenancy they can sustain. Many individuals will be impacted and I believe our response needs to be tailored.

I have asked social landlords to consider whether there are opportunities to bring forward smaller sized accommodation. I have also increased the discretionary housing payments fund and will change the legislation to allow such payments to be made to all social housing tenants. Increased advice and support will also be made available. My priority remains doing all I can to prevent evictions and tenants being made homeless and I have asked social landlords to ensure, as far as is possible, that all options are explored to prevent social tenants from being evicted from their homes.

So let me turn to the question that I get asked most, how do you reform when there are no jobs? Gone are the days when governments could buy their way out of a problem – or create jobs for people using public funds.

Many families are trapped on the current benefit system because we have made the system so complex and have built it to a point where working families and individuals to not know if they are worse or better off in work. Removing these structural traps is what Universal Credit is all about.

From April 2014, it will replace the main out of work benefits and tax credits with single, simple payment withdrawn at a clear and consistent rate. By removing cliff edges in the current system which means it will always be worthwhile working at 16 hours, 24 hours or 30 hours. Universal Credit will make work pay – at each and every hour.

Those organisations represented here today, and the many others not represented, have an important role getting it right in Northern Ireland by working in partnership with my department. I know my officials in the Social Security Agency have started a dialogue with the Northern Ireland Advice Services Consortium seeking your ideas on how the Advice Sector can make a positive contribution implementing Welfare Reform in Northern Ireland. Everyone in this room has a role to play, working in partnership to help people make decisions which will improve their lives. I look forward to hearing about the progress which is being made on that work.

Universal Credit will also include an element to support childcare costs for working parents. Those working even a few hours will be able to claim this support rather than those just working over 16 hours as in the current Tax Credit system.

We estimate that Universal Credit will lift around 34,000 individuals out of poverty, including 10,000 children and 24,000 adults and will bring £110 million additional money into Northern Ireland. We have to make that work; and we have to get people back to work.

Welfare Reform is not the only reform which I am bringing forward to help get it right for Northern Ireland.

In October, I also launched the consultation on the first ever housing strategy for Northern Ireland to begin the long term transformation of housing here. I envisage housing playing a key role in regeneration and I have outlined in the strategy proposals for significant structural change within the housing system in Northern Ireland.

We propose to make more effective use of existing social housing stock, undertake a fundamental review of how we allocate social housing, improve the way we support people to live independently and do more to prevent homelessness.

Public spending on housing will create jobs, apprenticeships and training places for our young people, all of which will help ensure we develop our skills base for the longer term.

Housing can play a more significant role in helping to shape those of our communities stigmatised by blight, deprivation and a dwindling population. We will develop new ways of helping people in such communities to re-shape their areas to make them a place where people want to live again. This will include bringing more empty homes back into use and also challenging social housing landlords to support their economically inactive tenants of working age into work or training.

I am committed to tackling disadvantage and building strong and vibrant communities across Northern Ireland and so I give a high priority to building capacity and looking at measures which will mitigate the negative impacts on individuals, their families, households and communities.

The work of my department is about making society function better – providing the physical and financial support and tools to help turn lives around. We are about empowering people and their communities and not about telling them what to do.

I accept that the Bill is far from perfect, but we must build our capacity to deal with it. I hope that as part of the scrutiny process we will identify changes that will not have significant costs but can address some of the shortcomings of the Bill and will deliver better welfare system for the people of Northern Ireland.

So let us focus on building capacity and resilience, let us ensure that we protect the most vulnerable and let us work as a collective to mitigate the worst aspects of the planned changes and deliver the best possible welfare services for the people of Northern Ireland.

Thank you.