Welfare reform plans backed by business groups

Business groups have backed the government’s new welfare reform plans which signal an increased role for private sector and voluntary providers.

Work and pensions secretary James Purnell has announced the Welfare Reform Green Paper, which aims to boost the number of people in work and reduce the estimated 2.6 million people claiming incapacity benefit.

Incapacity benefit and income support will be scrapped to create a more streamlined system by 2013 based on just two working-age benefits – the Employment and Support Allowance, for those who have a medical condition which prevents them from working, and Jobseekers’ Allowance, for everyone who is able to work.

Everyone currently on incapacity benefit and new claimants will be examined by a doctor and be assessed on what they can do, not on what they can’t. People with severe disabilities will get increased amounts. The rest who qualify for the benefit will be placed in a “work” category and receive extra back-to-work support.

People unemployed for over two years and those abusing the system could be forced to take part in community work. People will have to train to get their job skills and drug users would be required to seek treatment or could lose their benefits.

John Cridland, CBI deputy director-general, said the proposals represented a welcome cultural shift which could help firms recruit more from local communities. “Businesses are keen to explore the new recruitment pool and for benefit expenditure to fall, but they must not be burdened – much will depend on the government,” he said.

“Taking on staff with limited recent work experience and often complex personal problems is not straightforward, and support is needed both for employer and applicant. The scheme must deliver candidates who are ready for sustainable employment,” Cridland added.

EEF head of employment policy, David Yeandle, said: “The government should be applauded for grasping the nettle of welfare reform and introducing proposals to help increase the supply of people available for work and take people off benefits. In particular, reforms to the medical certificate system could make a significant difference to enabling employees to return to work.”

But the TUC said the new reforms were “a mistake”. General secretary Brendan Barber said: “There are already sufficient sanctions to deal with benefit claimants who cheat the system, and all the evidence shows that the vast majority of the jobless want to work.”

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