Memo for the new Secretary of State for Work and Pensions: five things he can do to reduce poverty

1st Apr 2016

Stephen Crabb has made a positive start by reversing cuts to support for disabled people. Chris Goulden explores what else he should be focussing on in his first months as the new Secretary of State for Work and Pensions.

In the UK today, more than half of those in poverty live in a household with at least one person in work. Finding a job remains the best route out of poverty but for many people working, even full time, is not enough. To achieve the Government’s pledge of an all-out assault on poverty, people must be helped to increase their income or the cost of essentials must come down. In his new role at the Department for Work and Pensions (DWP), Stephen Crabb is central to its success.

His first act of reversing cuts to Personal Independence Payment (PIP) is the right thing to do. JRF research has shown that over a third of disabled people, at least four million, are living in poverty. This measure of poverty also does not account for the higher costs people with disabilities face – our figures suggest there is at least a missing million people in poverty in the figures.

The Government must provide a strong safety net for people who find themselves in need of support, but the strength and success of the welfare system is also key to making sure that work pays. The National Living Wage will help some to increase their incomes, but in-work benefits like Tax Credits and the Work Allowance, which will replace these under Universal Credit, are still a vital part of topping up household incomes.

To build a welfare system which will help to reduce poverty, JRF evidence shows that the Secretary of State should:

  1. Reboot Universal Credit. Cuts to the Work Allowance – the amount people can earn before their support is withdrawn – should be reversed and increased over time to ensure taking a job always pays.
  2. Revisit the pension triple lock. Projections show that child poverty will rise by 400,000 over the next five years, while pensioner poverty continues to fall. The Secretary of State, working with the Chancellor, needs to make sure that resources are used fairly and efficiently, so that no generation is locked into poverty.
  3. Support Living Rents, which would peg social rents to local earning levels and enable social landlords to build more genuinely affordable homes. More people are being pushed into the bottom end of the private rented sector. The rocketing cost of private renting is driving up the Housing Benefit bill. Encouraging the Department for Communities and Local Government to adopt Living Rents would refocus this money and reduce Housing Benefit bills in the future.
  4. Focus on creating better jobs, not just more jobs. This could be done partly through measures to boost productivity and increase pay. The Secretary of State, working with his colleagues in the Department for Business, Innovation and Skills, should also encourage employers in the retail and hospitality sectors to improve the whole package they offer to low paid employees.
  5. Reshape welfare to work programmes so that they are geared towards helping people to increase their earnings as well as enter employment. Four in five low paid employees fail to fully escape low paid work ten years later, and DWP has a major role to play in changing this.

Tackling the high levels of UK poverty requires a comprehensive approach that involves different government departments, employers and communities working together. The new Secretary of State for Work and Pensions has a major role to play in leading government progress on solving poverty.