Labour's plans for reforming the social security system – and controlling the benefits bill – have been set out by the party's leader, Ed Miliband MP. Under a 'one nation plan for social security reform', he said a Labour government would copy the coalition's policy of capping the 'structural' benefits budget during its first three years in office. The benefits system could not be exempt, he argued, from the budget discipline needed in all areas as a result of the economic situation Labour would inherit.
- The benefits system is in need of reform. It has become a substitute for good employment and decent jobs – a role it was never designed to perform.
- People’s faith in social security has also been shaken by some people 'appearing to get something for nothing' while others get no reward for many years of contributions. It is a fundamental Labour value that people who can work have a responsibility to do so.
- The way to reform the system is by 'overcoming worklessness, rewarding work and tackling low pay, investing in the future and recognising contribution'.
- Labour will introduce a limit on how long anyone capable of work can stay unemployed. Every young person who has been out of work for more than a year (and every older person after two years) will be offered a private sector job of at least 25 hours a week, on at least the minimum wage, funded by a tax on bankers’ bonuses. Anyone who refuses will risk losing their benefits.
- Contribution-based unemployment benefits such as jobseekers allowance will be reviewed. Higher levels of benefit could be given to those who have worked and paid national insurance for longer, but with eligibility restricted to those with five years of contributions instead of two currently.
- The previous Labour Government was too slow to act on the rising numbers of people on incapacity benefits. On the other hand the current system of work tests is unfair and degrading. The tests will be properly focused on identifying each disabled person's skills and supporting them to find suitable work.
- Local councils will be given power to negotiate rents with private landlords in an attempt to reduce housing benefit bills. But in the longer term the only solution is to build more houses.
- A new Labour government will impose a three-year cap on 'structural' spending on benefits. It will also continue with a cap on the total amount of benefit paid to individual households.
- Child benefit for families with one person earning over £50,000 per year (removed by the coalition government) will not be reinstated. The winter fuel allowance will be taken away from the richest pensioners.
The shadow Chancellor of the Exchequer, Ed Balls MP, subsequently said in a television interview that pensions would be included in the benefits expenditure subject to a cap. But he later 'clarified' this by saying Labour continued to support the existing 'triple lock' arrangement under which the state pension rises each year in line with the highest of average earnings, inflation, or 2.5 per cent.
Source: Speech by Ed Miliband MP (Leader of Labour Party), 6 June 2013
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