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Chapter 1: What major reform of the Job Seekers' Allowance is being proposed?
Earlier this month, the government announced it was considering a major reform of the Job Seekers' Allowance. Consultation is now underway on the establishment of a new working age payment which would replace and merge existing allowances. If implemented, this would be a major overhaul of the social welfare system.
To get an overview of what's been proposed and the impact it might have, I'm joined by Social Policy Officer with the Irish Congress of Trade Unions, Laura Bamberg. Laura, good morning to you.
Chapter 2: What is the new working age payment and how will it change existing allowances?
Good morning, David.
Thanks so much for joining us. Just explain to us, if you would, Laura, what the system is at present and what this proposed change might involve.
Okay, so there is a commitment in the programme for government that within this term of government, so over the next three and a half years, the Department of Social Protection will introduce a new payment called a working age payment. So that has been decided. What has not been decided is what that payment will look like. So that is the consultation that's happening at the moment.
The department are proposing one form that this new payment could take. And as you mentioned, the proposal is to replace the job seekers allowance and potentially also the work in family payment. So listeners probably aren't as familiar with the work and family payment.
Chapter 3: What are the implications of merging existing payments into the new system?
It was up to recently called the family income supplement. And that's a payment that's made to working poor families. So if you're a PAYE worker with children and your wage is below a set amount of money for your family size, this payment will give you 60% of the difference between your wage and that threshold. And that's currently paid to 56,000 families.
And the requirement on that is that you have to work at least 19 hours a week or 38 hours over the course of a fortnight. Now, the other main payment that's being proposed that this new working age payment would replace is the job seekers allowance. And that'd be more familiar to listeners. Maybe some know it under its older name, unemployment assistance.
And people, when they think of people either have a job or they haven't a job, they're employed or they're unemployed. But job seekers allowance is paid to people that have no work, but also people that have some work, they're working part time, but they're looking for and available for part time employment.
So the idea is that this working age payment would potentially replace the existing non-contributory means-tested job seekers allowance paid to people who are underemployed, the partial job seekers allowance, which is paid to people who are underemployed, part-time but looking for full-time hours, and the working family payment.
Right. And I mean, what's the change designed to achieve? Because it does sound like it's quite an extensive change.
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Chapter 4: How will the proposed changes simplify the social welfare system?
It is. So if we go ahead with this proposal, there are a couple of stated reasons for doing this. The first one is really to simplify the system for people, because with each payment comes its own sets of rules and requirements. So, for example, the work and family payment, you have to work a minimum number of hours to be eligible for the partial job seekers benefit.
If you work more than three days a week, you're ineligible. So this work and family payment would simplify the system. And in simplifying it, the idea would be that it would improve take up because the feeling is lots of people aren't taking up their entitlement anymore. to these payments because it's so complex. And also that it would remove anomalies.
So you can have two people working the same hours, earning the same amount of money, having the same circumstances, same number of children, but depending on what payment they're on, they're getting different amounts of money. So it would remove those anomalies. But the main reason, the main reason for this is to make work pay. So that's the big flagship reason.
And how they're going to do that is the new rules would encourage part-time workers to work more hours, but it would also remove obstacles for employers. They'd give them more flexibility around changing shift rotas. They wouldn't be tied to that. You can't give somebody... hours beyond three days. Otherwise, they lose all of their entitlements.
Is there an argument that by using the welfare system to give payments to people who are in jobs but very badly paid, is there an argument that this, in effect, is the state subsidising badly paid jobs?
Yeah, that would be the main concern for unions, that this... could potentially amount to a wage subsidy for, as you said, those precarious, insecure jobs. Now, there is a balancing point, a sweet spot, where you have to help people, especially people that have been outside of the labour market, for a long time to dip their toe in.
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Chapter 5: What are the potential benefits and drawbacks of the new working age payment?
They might be coming to the workforce with no experience or it's a long time since they have had experience. So enabling them to work a short amount of time to get those jobs probably in rural areas where there isn't a lot of job opportunities, there could be that there is only part time hours available. So it's definitely to find that sweet spot where you're facilitating people
into full-time, permanent, good employment, but also at the same time ensuring that, as you said, not risking that the public purse is subsidising these bad jobs.
You mentioned there's a public consultation process underway. I presume you'll be making a submission or it will be making a submission. I mean, how important is it that members of the public take part as well?
Yeah, so a lot of people listening in this morning will think, you know, reform of the welfare state, it doesn't impact them. They're part of the 2.8 million people who either have a job or have a business to go to today. But the thing about this payment is it's very easy in the next downturn when it comes. I don't know when it'll come, but it will come.
It's called an economic cycle for a reason. And it's very easy then to find yourself out of work or out of business for more than nine months when your entitlement to a contributory payment ends. So you and yours are likely to find yourself reliant on this working age payment. So you have more skin in the game in this situation. than you realise. Now, this is only a very early days consultation.
It's really a temperature test. Do you think that this is the way that we should design this new payment that's already committed to delivering? The real interest will come when we get the design details, what the payment levels will be set at, the rules around it.
Because if we choose to go down this road, we are following a path that the UK and Northern Ireland have gone down with universal credit. And because the rules and regulations around universal credit are so bad, it's no exaggeration to say it has dismantled the British welfare system and plundered millions into poverty and hardship.
So it's going to be, it's really important that opposition parties, members of the public and those that represent workers people on welfare, but also those of us who represent people, workers, pay close attention to the design details of this new scheme.
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Chapter 6: How does the proposed payment compare to the UK's universal credit system?
And I mean, you're very critical there of the British system. Is that because of the nature of universal credit or is it the way it's been implemented in Britain?
Yeah, so universal credit is doing what potentially this credit or this work and family payment will do. It will replace and merge legacy old payments into one. But it was definitely around the rules. So people might be familiar with the two child limit. So families received a top up for the first two children. But if they had a third and subsequent child, they don't receive extra money.
It is also paid a month in arrears. So you had to wait five weeks for a first payment, which meant people were getting into debt. We've seen a lot of food banks. Now, arguably, we have late mover advantage. We've seen how bad a job the UK made of it. And so we can ensure that we don't make those same mistakes again.
But that's, as I said, it'll be really important for everybody to pay close attention that we don't find ourselves either going down this path now or leaving us exposed that when, you know, a different government with different ideology come into government, that it is open to manipulation and harsher rules and having those consequences that the UK is currently going through.
Okay, so keep a close eye on how the scheme is designed. Just finally, Laura, I mean, is this something that you welcome if those details are satisfactory whenever they're finally unveiled?
Well, look, it's hard to be on here this morning and saying, you know, we're opposed to simplifying the system and improving take up and removing anomalies and making work pay. But again, if you go back and look at 12 years ago when universal credit was being rolled out, they're exactly the same reasons that, you know, it was the same language that has been used.
But the real, it's often used, the devil is in the details, but in this case, it will definitely be around what will the minimum income threshold be set at, ensuring that those rates aren't frozen over time, that they increase with inflation, that they increase as wages increase, and getting those safeguards built into the system.
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Chapter 7: What are the next steps in the public consultation process for this reform?
So in moving to this, it will be ensuring that we don't build in hostages to fortune at another time. But we'll definitely enter this. We'll hold our endorsement at the moment until we see the full details. But we will be going into this with an open mind, but not saying that we have yet to be convinced that there is the need for such radical reform.
people currently saying that they're underemployed according to the figures last week. This change is only going to be beneficial to at most 20,000 because the vast, vast majority of those 130 aren't eligible for the payment because because of means testing. And it's means testing based on all of the income going into the household, not just what you, the worker, are earning.
OK, Laura Bambrick, Social Policy Officer with the Irish Congress of Trade Unions. Thank you very much indeed for joining us this morning.