Iain Duncan Smith issues stark benefits system warning

Iain Duncan Smith claims the benefits system is on the verge of collapse. Photograph: Anthony Devlin/PA Wire/Press Association Images

The benefits system is on the verge of collapse, the work and pensions secretary, Iain Duncan Smith, said today.

Launching a consultation on cutting the welfare budget and increasing incentives to work, he said the complex system meant “dramatic amounts” of money was being wasted in overpayments.

Duncan Smith blamed many of the problems on the tax credit system introduced by Gordon Brown when he was chancellor.

Duncan Smith told the Today programme on BBC Radio 4: “The first thing that happened when I walked through the doors of the Department for Work and Pensions was my officials said to us ‘for goodness’ sake, let’s get on and reform this because we spend so much money holding together this complex system which is really, really on the verge of breaking down. Every day we worry that we simply will have a system breakdown and we will lose people as a result’.”

Duncan Smith revealed claimants might receive different levels of benefit depending on where they live. “We want to talk to people from different areas to see whether or not they think they would prefer to see that.”

Duncan Smith, who claims the present system has risen in costs by £60bn over the past 10 years, is expected to float three possible schemes in his announcement today.

Options to be published will include combining elements of the current income-related benefits and tax credit systems, bringing out-of-work and in-work support together in a single system and supplementing monthly household earnings through credit payments reflecting circumstances such as children, housing and disability.

Officials from Duncan Smith’s department have pointed to a report this week from the HM Revenue & Customs (HMRC) highlighting a new PAYE system that would make it easier to adjust tax credits and benefit payments on time as income changes, rather than annually as is the case with work credits, or when a recipient notifies the HMRC of a change in income.

The tax credit system would no longer be based on annual updates of an individual’s income.

Department for Work and Pensions officials say the change would put tax credit payments into line with the standards the public expect from banks, and will allow flexibility so that people can be assured of the right support even if they take on temporary work.

Source : guardian-Politics
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