Will Welfare Gamble Work? ANALYSIS
Byline: James Chapman Political Editor
IAIN DUNCAN SMITH has toiled for years on his plan to 'make work pay'. Rather than sulking after being ejected as Tory leader in 003, he began an intensive study of Britain's welfare system and how other countries do things differently.
what he found shocked and appalled him. Generation after generation was languishing on welfare, and being offered little or no incentive by the state to improve their lives by seeking employment.
A single mother working 16 hours a week, for example, would lose 96p in every extra pound she earned by taking on more work because a bewildering array of benefits would be sharply withdrawn.
Millions were stuck in a 'benefits trap', Mr Duncan Smith concluded, and simply calculated it wasn't worth their while working harder - or at all.
Last year Mr Duncan Smith, pictured below, published a blueprint for the most radical reform since the foundation of the welfare state in the 194 Beveridge report.
It suggested scrapping 51 different benefits and tax credits and rolling them up into two simple payments - a work credit and a life credit. The work credit, integrating jobseeker's allowance and income support, would go to those taking part in welfare-towork schemes, while the life credit, absorbing housing benefit, working tax credit and child tax credit, would be reserved for those with low or no earnings.
Crucially, those moving from benefits to work would be guaranteed to keep a fixed proportion - perhaps 50p in every [pounds sterling]1 - of their extra income. The scheme would require around [pounds sterling]3billion in upfront investment, but quickly deliver massive savings. …