Two new reports have suggested that billions of pounds paid out in benefits could be used to transform communities which have been hit hardest by the recession. The CREATE Consortium wants to see a Community Allowance within the benefit system and in its report, the New Economics Foundation says such an allowance could bring a ten-fold return to communities.

CREATE says a Community Allowance would help community organisations to pay local people, who are on benefits, for any work that strengthens their neighbourhoods. Those payments would not disrupt their benefits. The report features a series of essays by writers with different political opinions but each discussing the value of the Community Allowance. The Consortium believes that, as well as transforming spending on benefits into an investment in individuals, the Allowance would tackle social problems, including crime, lack of community cohesion, isolation and poor health.

In its report the New Economics Foundation, a think tank working to improve quality of life through innovative solutions to economic, environmental and social issues, uses a Social Return on Investment analysis of the proposed allowance. It argues that every pound invested would create more than ten pounds worth of social value.

Jess Steele, who chairs the CREATE Consortium, said: “The Community Allowance helps individuals make progress to become more independent, gets the work that needs doing in poor neighbourhoods done by the people best placed to do it and channels the energy and trust of civil society towards using welfare spending as an investment in social change rather than a net that traps people in poverty and dependency.”