Headlines: September 22nd, 2009

The Child Poverty Action Group has criticised the Dynamic Benefits report claiming it has a narrow focus on redesigning the benefits system around employment and that it underplays barriers to work outside the system.

The report proposes a shake-up of the benefits system to boost the incomes of the lowest paid by nearly £5bn. It wants to replace the current 51 benefits with just two and to subsidise those moving into low-paid work. The plan outlined in the report would move 600,000 households off welfare and into work.

The Child Poverty Action Group argues that this focus on redesign of the benefit system to boost employment downplays the fact that it is also there to protect everyone in times of ill health, disability or when there is a need to prioritise caring responsibilities.

External barriers to moving people from benefit to work need to be tackled, as well as the system itself, if any real progress is to be made. The greatest barrier to getting people into work at the moment is the lack of jobs. This month unemployment jumped to its highest level since mid-1995, pushing the jobless rate in Britain up to nearly 8%. The jobless total rose by 210,000 in the three months to July, taking the total to 2.47 million. In its latest employment outlook report, the OECD predicted that the jobless rate across the world’s 30 richest countries could come close to hitting 10% by the end of 2010.

Lack of affordable childcare is another substantial barrier to work. According to the DayCare Trust, the cost of a nursery place ranges between £126 and £375 per week. The typical cost of a full-time under-two’s nursery place is £152. In inner London the cost may be much more.

Lack of flexibility is also a problem. Low-income parents face significant challenges in combining employment and child-rearing responsibilities. Parents with low-wage jobs often lack the flexibility they need at work to manage family responsibilities. For example, many of these workers do not have control over their work schedules. Also low-wage jobs tend to offer few benefits such as sick or annual leave.

The charity does however welcome proposals in the report to increase the ‘income disregard’ and the introduction of a more gradual removal of benefit when people’s incomes rise.