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Friday, July 30, 2010

Simplification is the key

Proposals by Iain Duncan Smith to sweep away Britain's complex system of benefits and replace them with a single payment to claimants have to be a significant and radical step forward. In fact it very much reflects an old Liberal Policy of working towards a citizens' income. I hope that the moderating and expert influence of Lib Dem pensions minister, Steve Webb is reflected in the final proposals.

Of course the devil will be in the detail and we have yet to see what that is. However, what we know so far is that the proposals seek to streamline and simplify payments, as well as improve incentives for the unemployed to swap life on benefits for work.

The Secretary of State for Work and Pensions is suggesting that the 51 benefits currently available to the unemployed, as well as income-related benefits for the low-paid, will be replaced with a single benefit covering all people of working age. It will also incorporate the cash currently paid out under Gordon Brown's flagship tax credits scheme, which would effectively be abolished.

The Independent says that payments will take into account claimants' circumstances, such as numbers of children and housing needs, and could be adjusted monthly using new computer software being developed by the Government.

At this stage the Government are just seeking to get a discussion going, though I predict that this will rapidly descend into a slanging match once Labour get their teeth into it. However, anybody who is serious about proper reform that seeks to make the system easier to access and which will not penalise those who wish to return to work will welcome this debate.

It is a sobering thought that the present system is so complex that even those administering it do not fully understand it. Although the bureaucracy around benefits has been cut since the 1990s, civil servants are still currently working from 14 instruction manuals containing 9,000 pages.
It is essential that the coalition makes sure that a basic Post Office bank account is firmly in place. One of the (many) early faults of the New Tax Credit scheme was that Labour refused to make cash payments under it, but had made no plans for those who had no bank account.
as someone who once worked, briefly, in the benefits system, I can attest that the whole is for too complex, ever-changing and inconsistently applied. it demosntartes years of tinkering by govts too afraid to grasp the nettle.

A single system would save far more in administration costs and erroneous/incorrectly applied payments than most may think. It would also allow for more funding for fraud detection, which must be good news for those funding the system (ie us).
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