LETTER: Flaws in means-tested benefits

From Mr James McCormick

Sir: The announcement by the Department of Social Security that one in three households is now in receipt of a means-tested benefit should focus attention on the driving forces that have caused this ("Tories preside over rising benefit culture", 9 August).

Neither Alan Duncan, MP, nor the Secretary of State for Social Security, Peter Lilley, appear to have analysed adequately why the UK has reached this position. Reduced benefits for the unemployed, favoured by Mr Duncan, are likely to push some off the register entirely and others into petty crime.

The Jobseekers Allowance will reduce entitlement to unemployment benefit, with the likely result of pushing thousands of those currently on insurance benefits onto means-tested income support six months earlier. By forcing modest savings to be run down, it will also impose a disincentive to save.

Mr Lilley poses the stark choice between removing means-tested benefits and making them universal. The question we ask is what purpose such benefits do serve and ought to serve. The inquiry of the Social Justice Commission pointed to the flaws in the benefits system. Hundreds of thousands of people remain trapped on income support because it is more secure compared to low-paid jobs.

Unemployed homebuyers have to find jobs paying enough to cover the mortgage or stay on income support. By building bridges back to the labour market - by making income support more flexible and by introducing a tapered mortgage benefit - savings could quickly be achieved through lower unemployment.

In the longer term, a modernised social insurance system, acknowledging changes in the labour market is the best way to reduce means testing.

Yours sincerely,

James McCormick

Research Fellow

Institute for Public Policy

Research (IPPR)

London, WC2

10 August