Iain Duncan Smith spoke at The Work Foundation this morning, as part of our Bottom Ten Million research programme. He’s spent the last year revamping the benefits system and introducing a simplified, Universal Credit. Many have welcomed this. It was clear that the system needed simplification, and Universal Credit builds on the consensus that it’s important to make work pay. But there have also been complaints: a national system may work very differently across the country, and the impact on incentives is not as clear as sometimes portrayed.
Who takes the Credit?
30 June 2011
The discussion in the media has focused on the winners and the losers. Some groups inevitably lose from benefits changes. In this case they range from single parents to those on middle incomes. Yet simplification has two big, under-reported benefits.
First, for those seeking to enter work it should be clearer what they gain or lose. This helps people avoid the benefits traps which might not exist in the equations, but persist in people’s minds when they don’t understand a complex system. If the Universal Credit is to be successful, it needs to be easy to explain in Job Centre Plus, and it looks like its going to be a lot easier than the old system (if still not exactly simple).
But second, it may also keep politicians honest. In the past, budget announcements on benefits have tended to be confusing and complicated to explain. Duncan Smith argued that the complexity of the system made it hard to assess what budgets were doing to those at the bottom end of the labour market, but that a simpler system will make it easier to assess this impact.
Past governments have tended to tinker, adding complexity to the system to reflect a complex labour market. These reforms at least start to address that complexity. But if government benefits from an opaque system, it’ll be interesting to see how long they stick with a simple one.