Birmingham City Council has welcomed proposals in the Government’s Consultation Paper, ‘21st Century Welfare’ to reform in work benefits in order to make work pay better, after findings from one of its own unemployment support programme were published.
The council’s two-year package, using Working Neighbourhoods Fund money, sees those living in Birmingham’s priority areas (places of high unemployment) that return to jobs given financial support for up to 12 weeks after starting new posts to help them through the transition into the world of work.
A total of 1,204 citizens have benefited from the Discretionary Housing Payments scheme, with a total of £319,301 paid out to them. Of those to receive assistance, 91 per cent were still in work after 13 weeks, while 77 per cent retained jobs for at least six months.
Of those to access the funding, 64 per cent had families, meaning 1,418 children have indirectly benefited from the help on offer. Young people under the age of 25 have made up 15 per cent of the total beneficiaries.
However between the launch of the £2.26million scheme in February 2009 and the end of June 2010, it has become apparent that the average payment made to each claimant who found work was much lower than anticipated.
Instead of people getting benefit support of approximately £1,000 as was predicted, the average has been around £265 – essentially because the payment of other work benefits, such as tax credits means that many claimants quickly lose their entitlement to Housing Benefit.
This meant that people would receive more money with one hand but have most of it immediately withdrawn by losing other benefits, meaning that they are only marginally better off (and in a few cases actually worse off) by going out to work.
Such matters are now subject to government proposals contained in its consultation paper ‘21st Century Welfare’.
Cllr Randal Brew, Cabinet Member for Finance at Birmingham City Council, said: “When we set up the scheme we believed it could remove a barrier to work for some people.
“Financial difficulties can lead to employment not being sustained, especially when people have been workless for a long period and have few financial reserves, which means it can seem impossible to cope with the ‘in hand’ period before the first payday in a new job.
“The purpose of our scheme has been to help to increase employment and reduce poverty – and feedback shows it has achieved success.
“However, the early stages of this scheme unearthed some trends and patterns that clearly show there needs to be some thought about how such payments, and the benefits system as a whole, can be refined to make work the most attractive option for people who are unemployed.
“We were therefore very pleased to see that these very points are now under active consideration by government as part of their welfare reform programme.
“Given the strains on the public purse, we feel this is exactly the sort of scheme that the Government should be looking at when undertaking any review of the benefits system to make it more effective and sustainable for the future.”
ENDS
Notes to editors
1. Discretionary Housing Payments – Local Authorities currently have a power to pay individuals or groups of individuals any amount above their normal entitlement to Housing Benefit/Council Tax Benefit up to the limit of their full rent or Council Tax.
2. Each year the council receives a relatively small subsidy allocation, currently £686,000, from the Department for Work and Pensions for this purpose. This money is fully committed supporting other priorities, notably the prevention of homelessness, family breakdown and maintenance of vulnerable adults in the community. The council has long had a policy of maximising spending in this area, not least because any surplus has to be refunded to the Department for Work and Pensions. In the last two years the council has spent over 99 per cent of this budget on these priorities.
3. The council does however, have the authority to spend up to two and half times the subsidy allocation but has to support any additional expenditure from local or other funds – such as the Working Neighbourhoods Fund.
For further information contact Kris Kowalewski on 0121 303 3621
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