Barber: Encourage labour market growth so that people can find work again
Government plans to move to a fairer and simpler benefits system will be undermined if they are accompanied by deep cuts to hard-pressed middle income families, the TUC has warned in its submission to the Government consultation on welfare reform.
The TUC submission to the Department for Work and Pensions consultation 21st Century Welfare welcomes the Government's aim to ensure that all benefit claimants who move into work are better off financially and supports moves towards a simplification of the benefits system.
But the TUC submission argues that Government plans for benefit reform ignore the main reason why people fail to move off benefits - namely a lack of jobs. Recent Government figures show that the number of Jobcentre Plus vacancies has fallen to under 470,000 (the lowest level since the recession ended) and there are more than five unemployed people for every vacancy.
The TUC submission disputes the assertion that social security costs are 'spiralling out of control' and says that the Government's own consultation document acknowledges that rising housing costs and an ageing population are behind the increase.
TUC analysis shows that the combined cost of incapacity benefit and Jobseekers Allowance (JSA) is only around 6 per cent of total benefit spending, compared to the state pension which represents nearly 45 per cent of spending.
If the Government is serious about cutting the benefits bill by tens of billions of pounds, it will have to find significant savings from tax credits paid to middle-income families or reductions in the state pension bill, says the submission.
While its proposed universal credit system may be slightly more generous for some of the poorest households, current Government plans imply significant tax credit cuts for middle earners.
TUC General Secretary Brendan Barber said: "The Government's laudable aim for a fairer benefits system will be fatally undermined if it's accompanied by sharp cuts for hard-pressed middle income families.
"The costings for the Government's welfare reform plans are based on a recovering labour market. But with its jobs strategy so far limited to mass public sector job losses and cutting off investment to private industry, it's hard to see where these new jobs will come from.
"Despite the tough talk about feckless scroungers, incapacity benefit and JSA represents a tiny proportion of total benefits spending.
"If the Government wants to save tens of billions of pounds it will have to choose between dipping deep into the pockets of middle-income families by cutting tax credits or increasing pensioner poverty by reducing the state pension.
"The best way to reduce the benefits bill is to encourage labour market growth so that people can find work again."