Magazine article Public Finance

Welfare Reforms Aim to Save £7Bn

Magazine article Public Finance

Welfare Reforms Aim to Save £7Bn

Article excerpt

Ministers expect to save £7bn from the overhaul of welfare systems announced this week - cash that they believe could be reinvested directly back into services.

Welfare reform minister Jim Murphy said that the DWP estimates the saving from getting people off incapacity benefit and into work at £8,000 per claimant.

The government aims to get 1 million of the UK's 2.7 million IB claimants into work to help boost productivity and personal incomes and reduce costs.

DWP officials confirmed that meant that the department had produced a 'soft target' to cut at least £7bn - and up to £8bn - from the welfare bill.

Launching the Welfare Reform Bill, Murphy said: 'Each person who leaves benefits generates over £8,000 in savings to be reinvested in public services.'

A DWP spokeswoman later added: 'It is possible that the Treasury could ask for some of those savings to be reinvested elsewhere [in government], but the DWP would be seeking a large level of welfare-related reinvestment.'

Work and Pensions secretary John Button and Murphy revealed their proposals in a parliamentary Bill published on July 4.

It firmed up Hutton's plan to replace IB with a two-tier system of payments: an employment support allowance for claimants capable of working and a higher-rate payment for people with long-term disabilities for whom a return to work was difficult. …

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