THE BIGGEST shake-up in the British welfare state in 60 years has been announced, but the Conservative/Liberal Democrat alliance has backed away from plans to cut housing benefits for those unemployed for more a year.
Launching the measures, prime minister David Cameron said it would encourage people to get off benefits, because taking work would “always pay” unlike the present situation in which many can end up worse off if they accept low-paid jobs.
Promising a “new culture of responsibility”, Mr Cameron said: “We say: we will look after the most vulnerable and needy. We will make the system simple. We will make work pay. We’ll help those who want to work find work.
“In return we expect people to take their responsibilities seriously too. To look for work. To take work. To contribute where they can.”
The existing patchwork of multiple benefits will be replaced over time by a universal credit, along with new rules for the disabled, while any family on benefits will be limited to getting no more than £26,000 a year – the average working wage.
Tougher rules to combat fraud, which currently costs the British taxpayer £5.2 billion, will be introduced, while anyone found to have broken them will be denied all benefits.
The new system will be £2.6 billion more expensive than the existing arrangements when it is fully in force by 2017 – an official estimate which is actually £1 billion higher than a prediction made recently by the independent think tank, Institute of Fiscal Studies.
However, the department of work and pensions claimed that this would be offset by a £2 billion reduction in the cost of fraud and mistakes, while the treasury believes that further savings can be made once more people are encouraged into accepting full, or part-time work.
The focus of opposition to the changes centred on plans to deny benefits, including tax credits, to all families and individuals who try to make claims after 2017 if they have more than £16,000 in savings.
Ian Mulheirn of the Social Market Foundation said the universal credit would send out “all the wrong signals” by punishing “working families trying to save for the future, such as those trying to get a foot on the property ladder”.
The decision to scrap the plans to cut housing benefits by 10 per cent for those unemployed for more than a year came after negotiations between work and pensions secretary Iain Duncan Smith and Liberal Democrat deputy prime minister Nick Clegg.
The 10 per cent cut was included by chancellor of the exchequer, George Osborne, in his emergency budget last June, but it was clear from the off that it was not supported by Mr Duncan Smith.
Meanwhile, the government has been forced into a humiliating retreat from plans to sell, or lease, hundreds of thousands of publicly owned forests after 500,000 people signed a petition opposing the plans and Conservative MPs, facing a backlash from voters in their constituencies, mounted opposition.
Following Mr Cameron’s declaration in the Commons on Wednesday that he was not happy with the plans, environment secretary Caroline Spelman was forced to appear before MPs yesterday to say: “We got this one wrong. In this case, we got it wrong, we listened and we are going to take a fresh approach.”
Faced with jeers from Labour MPs and with little support from Tories, Ms Spelman said an independent panel was now to be established to offer recommendations on the future of British forests and the role of the Forestry Commission, which currently manages all State-owned woodlands.
Criticising Ms Spelman, Labour MP Mary Creagh said 500,000 people had rejected her bid to make them a “once-in-a-lifetime offer for something that they already collectively own”, adding: “She is probably the only Cabinet minister in living memory to have the Socialist Workers’ Party and the National Trust united in opposition to her plans.”
Prior to yesterday’s climb-down, the environment secretary had already suspended, but not cancelled, a decision to sell off 15 per cent of the forests – the maximum that she could put on the market without parliamentary approval.
Claiming a “massive victory”, the World Wildlife Fund’s Colin Butfield said: “A massive tide of public support has forced a welcome scrapping of the Government’s controversial and unpopular plans to sell or lease off much of the UK’s forests.”