UK work incentives proposed

Listen to this article

00:00
00:00

A guarantee that anyone who moves into work after six months on benefit will be at least £40 a week better off was launched on Tuesday by Yvette Cooper, the work and pensions secretary.

At the same time she proposed changes to housing benefit aimed at cutting some of the highest rents that the state pays for out-of-work people, along with measures to make it easier for people to move into work without worrying about the immediate impact that will have on their rent payments.

Publishing an employment white paper and housing benefit review, Ms Cooper confirmed the government’s promise of a job guarantee, training or work experience after six months unemployment for anyone aged under 18 to 24. Some 100,000 posts will be made available, including police community support officers, work in the NHS and probation service, and constructing a national cycle network.

With unemployment 400,000 below expectations at the time of this year’s Budget, the billions of savings that are likely in benefit expenditure over the next few years can be used to reduce the deficit and invest in public services, Mr Cooper said.

Of the £400m ($650m, €447m) of measures detailed on Tuesday, £300m is being spent on youth unemployment with the aim of getting it to fall by the second half of next year, the work and pensions secretary said.

She added: “Because we believe that work is the best way out of poverty ... we will guarantee that people will be better off in a job than on benefits.”

In an admission that this is not always the case, Ms Cooper said there would be a new “better off in work guarantee” that made sure individuals were at least £40 a week better off in a job.

Changes to housing benefit put out for consultation will allow people to keep their current level of housing benefit for three months as they start work. The “in work” level of housing benefit will also be fixed for 6 months so that people can work more hours, or take promotion, without having to tell the government about changes in circumstance.

The government is proposing to reverse some earlier changes to housing benefit so that the top 5-10 per cent of rents in an area can be excluded when calculating housing benefit entitlements. At the same time it is considering setting rents for smaller areas so that, for example, rents paid in Tower Hamlets or Hackney are not distorted by those for executive Docklands apartments.

“In some areas,” the government said, “housing benefit can support customers to live in accommodation that many people in work cannot afford. This makes it harder to come off housing benefit when they move in to work”.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.