Tag Archives: earnings disregard

When is a job, not a job? Understanding the new “16 hour” benefit trap

When Iain Duncan Smith launched his vision of the welfare state, at the heart, was a fundamental commitment to tackle the benefit trap. He grasp the nettle and explained in clear terms how our confusing and complicated benefit system traps people – making people financial worse off if they returned to work. One of his key objectives was to get rid of the “16 hour rule” (if you work for under 16 hours a week while on benefits then for many claimants you can only keep £5 of your earnings and then every other £1 you earn is deducted from your benefit). Most people who try to work for under 16 hours a week are worse off – IDS took this on board and launched his plan (Universal Credit) for a new system that would enable people to get back into work as soon as possible even if this was only for a few hours a week – giving people a real chance to start working again without being financial worse off.

It is going to be years before the current benefit trap is destroyed by the Universal Credit reforms but just as IDS and his team start dismantling the current trap, it appears that a new and just as effective, barrier to taking up part-time work opportunities could be built and this has just as many teeth and is just as nasty…..

Next month the new Work Programme will be launched. People who are unemployed will be automatically be referred to the programme and will be offering training and support to find work. If people refuse to comply with the plan that their Work Programme provider has developed they will be subject to a range of sanctions including benefit being suspended. Activities include training courses, work placements and a range of other types of support to help people overcome barriers to employment. As anyone has tried to combine “complying” with the benefit rules and trying to work part-time or volunteering will tell you – the attitude of your employment advisor is key to whether you can make a success of part-time work, while also increasing your skills or accessing other types of support. Sometimes trying to “complying” with your welfare to work advisor means trying to be in two places at once – attending a compulsory course and going to work.

Over the last few months I have been meeting with providers of employment support to talk about the how part-time jobs in communities provides a real stepping stone back into employment – the providers have been incredible supportive and recognise how valuable such jobs could be to the people they work with…However, they have all highlighted a tension within the Work Programme – the definition of getting someone into work i.e. “getting a job” is a job of 16 hours or more a week.  The provider only gets paid for all their work if someone gets a job of at least 16 hours…. anything less isn’t counted as a “job-outcome’ for DWP – so the pressure is on the providers and people receiving benefits to make it to over 16 hours employment….

DWP have been very clear that it is up to Work Programme providers to decide the best way to get people into work. So, the real power over whether people can take up job opportunities of less then 16 hours now shifts to the Work Programme providers. Will they be able to ensure we don’t build a new barrier to work or will we see the building of a new trap that means you risk benefit sanctions and a whole lot of hassle if you take a job of less then 16 hours while on the Work Programme ?

Benefits reform – will it fail David Cameron’s Big Society Challenge?

David Cameron has always been clear that that Building the Big Societyisn’t just the responsibility of one or two government departments” but  the “responsibility of  all government departments” . As we have been finishing off our response to the government’s plans for benefits reform  (21st Century Welfare). We have focused on a fundemental area that the consultation fails to mention, yet David Cameron has made a top priority for the government – the importance of communities in developing local solutions. The single largest element of government spend in most deprived communities is the billions it spends in benefit and welfare to work costs. So we have asked Iain Duncan Smith how he will ensure that the millions of pounds spent is an investment in local communities and supports David Cameron’s vision of a  Big Society?

 In order to recognise the importance of local communities in welfare reform we are proposing an eighth principle to guide welfare reform (Q5 of the consultation document)

 Individual claimants live in communities. Welfare policy should harness the power of communities to support the individual’s transition into work and welfare spend should be an investment in local communities as well as individuals.

 The Community Allowance offers a practical and affordable way to unlock the potential of communities to create new jobs, support individuals back into work and transform communities.

 The Community Allowance would create new jobs by enabling community organisations to pay local unemployed people to do part time, sessional or short-term work that strengthens their neighbourhood. The unemployed person would be able to keep these earnings on top of benefits, making work pay and providing a stepping stone to employment.

The Community Allowance

  • Is a package of training, work and personal support delivered very locally by trusted community organisations, with strong track records of working with the hardest to reach.
  • Gets people back into work, gaining experience and employability in a supportive environment.
  • Enables community organisations to develop local solutions and jobs which directly improve and regenerate their communities.

The proposed changes to earning disregards and tapers have the potential to enable the Community Allowance approach to be available to everyone on benefits and to every community. Our approach would create some of the jobs required to enable people to take their first important steps back into work.

There are two ways that the Community Allowance could make a significant contribution quickly and affordably, prior to wholesale reform:

  • An immediate option – we are already in discussions with potential Prime Contractors to offer the Community Allowance through the Work Programme for Incapacity and ESA claimants using existing disregards. However, due to the proposed reassessment of Incapacity Benefit claimants we would need to work with DWP to ensure a level of certainty which would allow delivery;

 

  • An “in the meantime” option – if the current financial constraints mean that more generous universals earning disregards are seen as unaffordable, we recommend that a Community Earnings Allowance/Disregard is created as a first step towards comprehensive reform. This would recognise the additional social and economic impact achieved through creating stepping-stone jobs that also contribute directly to stronger communities.

We are aiming to to submit our response to the Consultation in a weeks time and I would really welcome your thoughts on our eighth principle and the challenges facing Iain Duncan Smith.

Best wishes

Louise

PS I am on annual leave until Monday 27th September

Dynamic Meetings and Benefit Blogging

On Monday I met with Deven Ghelani (Centre for Social Justice) and Chris Goulden (Joseph Rowntree Foundation), to talk about the Community Allowance and the Dynamic Benefits report. For years the CREATE Consortium has campaigned against the benefit trap and for a community solution to unemployment.  The current benefit system acts a trap – stopping people from working and creating serious financial penalties for anyone on benefits who takes on a job for under 16 hours (you earn a pound….you lose a pound). The Dynamic Benefits report from Ian Duncan Smith’s think tank – sets out a new approach – recognising the need to let people take up work opportunities for under 16 hours without making people worse off. The main objection to these plans has historically come from the Treasury and if you believe the reports in the papers the argument is still ongoing….

However, at Monday’s meeting I decided to be optimistic: IDS is going to win the argument on earning disregards – so that people can take up part-time jobs or flexible job opportunities – without risking being unable to buy food or pay the rent because our benefit system is so broken.

As we talked about the current consultation on Welfare Reform – 21st Century Welfare, I raised the importance of the links between people and the places they live. If we don’t recognise the high concentrations of unemployment and what this does to local communities, we miss out on an important part of the problem and the solution. We need to make sure that the current consultation on benefits and decisions on The Work Programme take into account the importance of understanding the “community dimension” and seeks to involve local people and communities in shaping one of the largest areas of Government spending – benefits and employment support programmes.

So how do we make sure that the people with the most knowledge of the benefit system and employment support – the people with direct experience are involved? We are going to be working with Oxfam to highlight people’s real experiences and we are also looking for people who are interested in becoming a benefit blogger – if you want to know more email me at L.winterburn@dta.org.uk

And for those people who like responding to consultations please remember the Community Allowance in your submission

Best wishes

Louise

From Black Boxes to Big Society

Over the last few weeks I haven’t had chance to update my blog – like most people working in community or welfare to work organisations, I have been racing to keep up with the pace of change. I thought I would use this blog to give you a whistle-stop tour of the latest developments….  

The Work Programme

All innovation within the delivery of welfare to work services is now expected to come from within The Work Programme. Providers have been told they can adapt a “Black Box” approach to delivery. Over the last few weeks I have been talking to providers such as SERCO, about their “Black Box” and the potential contribution the Community Allowance could make. The initial response has been very positive with providers keen to hear more about how they can work with local community organisations to offer new jobs, integrated with wraparound training and support. We are keen to explore the potential for this joint working and to identify the right partners to work with.

The Welfare Reform Bill

I have just started working on our response to the consultation paper and will be sharing it with you soon. The proposals on earning disregards (the ability to work while on benefits and keep earnings below a ceiling) are still vague – no figures yet – but they have the potential to enable the Community Allowance to be offered to everyone on benefits. Finally, we may see the end of the 16 hours rule and the bizarre situation we have now that effectively bars people from taking any work under 16 hours. The proposed approach to tapering the earning disregards also mirrors the Community Allowance’s approach of progressively increasing the number of hours people work – protecting people as they start to work.

Big Society

The Community Allowance approach was developed from the first hand experience of local community organisations. A simple but powerful tool that makes a productive link between the most substantial public spending in poor neigbourhoods (billions in welfare payments) and the abilities of those neigbourhoods to liberate themselves from poverty and poor services. The Community Allowance gives communities new resources and ways of working, enabling them to develop local solutions to improve and regenerate their communities. All the jobs created by the Community Allowance are the ones that are fundamental to making and sustaining communities – the caring, sharing, supportive, cleaning, greening, keeping-safe, checking-over, sorting-out, neigbourhood managing, wardens, lollipop ladies, befriending, youth work, sports and social health living, conflict-resolving and care-taking roles.

I have written to Ministers and senior civil servants about the Community Allowance. We have been very fortunate that Ministers have also heard about the Community Allowance directly from a number of our supporters including the DTA and ACEVO. We are planning a number of events over the next few months to raise awareness and support for the Community Allowance from fringe meetings at the Party Conferences to working with our 100’s of supporters. We are also working closely with OXFAM, who have adopted the Community Allowance as a key campaign against poverty.

I have recently updated our website to reflect the changes being planned by the government – so if you haven’t visited our site for a while – please have a look and let me know what you think.

If you are interested in hearing more about our work, please do not hesitate to contact me

Best wishes

Louise

IDS is Smiling in his dream job, will he help us create more dream jobs?

The Independent On Sunday claims that Iain Duncan Smith has the broadest smile in Downing Street this week, having started his dream job of Work and Pensions Secretary. We see his appointment as a real boost for the Community Allowance campaign. His work in developing the Centre for Social Justice and its role in highlighting the benefits trap highlight many areas of  real agreement on the problems with the benefit system and what needs to be changed. The Centre for Social Justice’s report on benefits – Dynamic Benefits: Towards Welfare that Works, also give us some idea of  the approach that IDS may take in the coming months and we have found some things to smile about too.

We have argued strongly that the benefit system should provide a step up for people and not act as a trap. Yet many recent discussions of welfare reform have been dominated by plans to increase compulsion and threats to withdraw benefits for non-compliance. We have demonstrated time and time again that it is the benefit system that is at fault not the people claiming benefits (see this short film if you would like to hear more). The Centre for Social Justice have also concluded  “For many, the answer to unsustainable welfare bills is to introduce ever tighter rules for receipt of benefits, and to cut generosity for some claimants. However, this approach has never worked. it is not the particular levels and conditions that are at fault, but the structure of the system itself.”

We have also long campaigned for the role of part-time work to be recognised as a positive and valuable opportunity for people currently claiming benefits. We have asked for changes to be made to the earning disregard to enable people to take on part-time jobs and actually be better off. The Dynamic Benefits Report recognises the importance of part-time work and how the current system prevents people taking up job opportunities “For many carers, a low-hours job is all they can take on; and for others an entry-level job represents a stepping stone to higher-earning employment. yet, virtually all initial efforts to work are penalized“. The report recommends a radical change to the earning disregard to support people to take up part-time work.

The Independant on Sunday article also concluded that raising the earning disregard and allowing people to work part-time was a “no-brainer” but was concerned there would be no demand by employers for people who were on benefits. We know that part of the answer lies within local communities where we can offer  part-time jobs with training and support but also make a real difference to the local community – by ensuring the jobs have a local benefit, making a real difference to local community and to the tax payer  – as every £1 spent on the Community Allowance results in £10 worth of social value being created.  We estimated that at least 80 part-time jobs could be created in every neighbourhood through a Community Allowance – providing stepping stones on the pathway to work for thousands of benefits claimants across the country. Over 100 local community organisations have signed up to support the Community Allowance. Over 70 organisations have expressed an interest in being involved in piloted the Community Allowance in their local communities. The Dynamic Benefit Report also recognised the core role that the voluntary sector and local communities can play.

Last week Oxfam thrown its weight behind the campaign for the Community Allowance. We are now writing to IDS to ask for a meeting, hoping his understand of the benefit trap and what can be achieve by local communities will finally enable the benefit system to provide a step up for people and places. To find our more about the Community Allowance  and add your support to the campaign please visit our website at http://www.communityallowance.org/

A tale of two cities

On my way from a meeting at the Institute of Fiscal Studies to the Department of Work and Pensions yesterday, I picked up a copy of the Evening Standard on the tube. The headline rang ‘The Dispossessed’: London is a shameful tale of two cities. In the richest capital in Europe almost half our children live below the poverty line.

It was refreshing to see a mainstream media outfit deal with the issue of poverty in London. This is something one of the CREATE Consortium’s members, Community Links, has been blogging about recently.

Reading Joe Murphy’s How politics turned its back on the dispossessed, was particularly interesting given the conversation I had just had with the Institute of Fiscal Studies’ Mike Brewer. We were discussing the difference in attitude that both politicians and the public have towards benefits payments and tax credits. Both are tax payer’s money and yet benefits are seen as a drain on the public purse, something to be minimised at all costs, while tax credits are seen as a positive intervention.

It left me wondering from a campaigning point of view what we could do to change this attitude. It goes to the heart of why there is a need for a Community Allowance. If you are on Job Seekers Allowance and try to work for under 16 hours a week you have penny for penny taken away; the earnings disregard still being only £5 a week – less than an hours work on the minimum wage, unchanged since 1988! Yet if you take a job of 16 hours, tax credits protect your income and you are better off in work.

What kind of message does this send to people who want to get themselves out of poverty by taking some part time work? Why did the Government decide that 16 hours is good but 8 hours is bad? It’s an illogical distinction, only made logical by the pervsersity of the difference between the benefits system and tax credits. It has to change.

Interestingly, I am noticing that there seems to be a growing understanding of the necessity of this change, across the political spectrum. This marked change in attitude has come about in the last two years through a wealth of campaigning about the earnings disregard and influential reports such as the Centre for Social Justices’ Dynamic Benefits.

On Saturday I was on a panel with Tim Loughton MP (of Tower Block of Commons fame)  Shadow Minister for Children, at the Conservative Party Spring Forum. He seemed to get it. So did Terry Rooney MP, Chair of the DWP Select Committee, who I met yesterday after I’d been to the DWP.

The question is, what are politicians going to do about it? In a new era of austerity and public spending cuts, how do we tackle poverty? We think the Community Allowance is part of the answer to that question. For a change in the benefits regulations you get a win-win-win: for the person on benefits, earning a bit of money and gaining real work experience, for the community having socially valuable work done locally and for the tax payer every £1 spent on a Community Allowance would create £10.20 worth of social value.

We’re still waiting to hear from DWP about whether we can pilot the Community Allowance. The pace of the discussions in response to our Right to Bid proposal originally submitted in January 2009 is making us question the depth and sincerity of their commitment to pilot it in the 2008 White Paper. We’ll be blogging soon about what we’re thinking of doing next and how you can get involved.

Guest blog from Julia Unwin – CEO Joseph Rowntree Foundation

There are two very different public policy issues that currently cry out for resolution, and the Community Allowance provides the start of an answer to both.

The first is the appalling and risky under-funding of community based organisations. All community based organisations rely on the unpaid work of members and volunteers, sacrificing large amounts of time to try and make their communities better places. But without some funding for organisation and co-ordination, the strain can simply be too much. What is more, organisations without any paid leadership can find it difficult to find the time, or the energy, to do those essential things that enable community groups to grow and develop.  Funding has always been tight for community organisations: there is nothing new there, but as we face major spending cuts, the fragile hold that some community groups currently have on local authority funding may be even further eroded.  Voluntary effort may be the engine of community organisations, but frequently the lack of any paid staff means that the engine stalls.

And the second problem crying out for resolution and response is the way in which people living in poverty are helped to move into paid work. Research by JRF and others has shown that the complexity of the benefits system does put off many people from trying paid work because of the instability this can introduce into their household budgets – stability being more important for some than the extra income from employment. The Institute for Fiscal Studies and Gingerbread did a study for JRF modelling different ways of approaching ‘mini-jobs’ (of less than 16hrs per week) in the welfare system and concluded that a bigger disregard of earned income would have beneficial impacts on employment for lone parents. Other research funded by JRF, carried out by the Centre for Research in Social Policy, into the standard that most people think is needed highlights how far below adequacy some people on benefits can fall, especially if they do not have children living with them.

The Community Allowance provides the start of a solution to both these problems. It allows community organisations to offer employment to some people, and so provide the fixed commitment that they need so urgently, and it allows the individuals the opportunity to try out new work, and get remunerated for doing so.

And it is now more urgently needed than ever. The Welfare to Work reforms for Flexible New Deal will inevitably focus on those closest to the labour market, at least initially. The Community Allowance is aimed at helping people get into work who would probably not benefit from immediate help from the Welfare to Work providers, even the third sector ones.  This much more grassroots-led approach can complement, but not replace, the other approaches.

In my view it will do this in two distinct and innovative ways.

First, many people who do go into work from benefits at present risk swapping one form of poverty for another.  The Community Allowance will alleviate this to some extent by providing a safety net of benefits whilst people who have been out of the labour market for some time can get used to doing paid work.

Second, local community and other organisations who could employ people doing useful mini-jobs at present have difficulty recruiting people because of the disincentives in the benefits system.

The Community Allowance helps the individuals doing the work, the organisations who are getting the work done, as well as the community organisations which need the work done. The costs are small and the benefits significant, both to the individuals and to the organisations with which they work.

Julia Unwin CBE

Chief Executive, Joseph Rowntree Foundation