British government begins an overhaul of welfare system
LONDON — The British government on Thursday introduced legislation meant to simplify and reduce the cost of the country’s welfare system, saying that it wanted to change a culture in which welfare recipients risked losing income if they found jobs.
Calling his proposals “the most ambitious, fundamental and radical changes to the welfare system since it began,” after World War II, Prime Minister David Cameron said in a speech here that they were based on a simple idea: “Never again will work be the wrong financial choice.”
He added: “This bill is not an exercise in accounting. It’s about changing our culture.”
The measure, the Welfare Reform Bill, would among other things merge a number of existing benefits — including those for unemployment, known as job seeker’s allowance, and housing — into a single universal benefit, and set a limit of about $42,000 that any one family could receive in a year.
It would also bring tax changes to let welfare recipients keep more of their income when they found jobs; lower caps on housing benefits; make it harder for workers to qualify for disability allowance; and remove benefits for up to three years from those refusing to work.
The bill would also eliminate child benefit payments — sums paid annually to single parents or couples with children, regardless of income — for higher-income parents and couples.
But facing anger from housing advocates, the government backpedaled on an plan to automatically reduce housing benefits 10 percent for people who had been out of work for a year or more. The plans require Parliament’s approval to become law and are likely to be refined further.
Cameron said that when the Conservative-Liberal Democrat coalition government took office last spring, one in four adults of working age was unemployed, and welfare cost the country $145 billion a year — about one-seventh of total government expenditures. The new proposals, he said, would save nearly $9 billion over the next four years.
The plans come at an awkward time, during a recession and beside other initiatives to overhaul the health care system and reduce the size of the state.
Overhaul of welfare, some experts say, usually happens in boom times, when jobs are abundant and getting people back to work is easier. Britain, on the other hand, is just starting to feel the pain from cuts of up to 25 percent in most government departments. With unemployment already high, the cuts are predicted to leave several hundred thousand more people out of work.
But Cameron said that in the boom times, “with millions of new jobs created,” there were still about 5 million people drawing unemployment benefits. “Between 1997 and 2008, more than 40 percent of the increase in employment was accounted for by migrant workers from abroad,” he said.
Advocates for the disabled and the homeless criticized the plans, as did some union officials.