Working Families response to 21st Century Welfare

WORKING FAMILIES RESPONSE TO THE CONSULTATION PAPER    21^ST CENTURY WELFARE

Introduction

Working Families is the UK’s leading work life balance charity.  We provide a free legal helpline for disadvantaged parents and carers who need advice about their employment rights and benefits.  We support a network of 2000 parents of disabled children who work or wish to work.  We understand the difficulties our callers face in moving into work, and the challenges of making work pay when childcare costs are high.

We support the aims of simplifying the benefits system and know from our callers that navigating a whole range of agencies and completing numerous forms deters many disadvantaged families from claiming their entitlements.  We welcome a review of benefit withdrawal rates to ensure that working is fairly rewarded by an increase in income.

However, we do not endorse the view that families on benefits should be subject to sanctions and that obligations on parents should increase. Parents who would prefer to look after their own children should not be forced into low paid jobs that simply cover the cost of someone else caring for their child. It is disappointing that the consultation paper makes little reference to childcare costs as one of the major disincentives for parents to work.

We welcome the goal of strengthening families but we know families need time together as well as adequate income to thrive.  We question whether further incentives to encourage families to increase the amount of work they do will result in families substituting income with time poverty. The issue of what is “enough” work for a family is important and we suggest that benefit reform should be considered alongside both family friendly employment law and child welfare goals.

Working Families is a member of both End Child Poverty and the Every Disabled Child Matters coalitions.   We focus in this response to the consultation paper on two issues:  family-shaped jobs and childcare.

2          What aspects of the current system lead to the widely held view that work does not pay?

Callers to Working Families’ helpline demonstrate that for many families, low income work is unappealing.  While most families will be better off in work, the difference is often marginal once childcare and transport costs are taken into account.  The Joseph Rowntree Foundation supports the view that the cost of childcare regularly makes low-paid work financially unviable, even for those parents receiving the childcare element of Working Tax Credit (WTC)[1].  Other families, particularly those offered work in unsocial hours or at weekends, or those caring for disabled children may not be able to find any suitable childcare.  Families are reluctant to sacrifice their time with their children for a small increase in income.  Too many employers offer parents low wage jobs with little prospect of advancement and little flexibility over their hours in work, to the detriment of family life.

3          To what extent is complexity deterring some people from moving into work?

Many parents remain in fear of tax credits overpayments and do not understand how their awards are calculated.   For example, there is little understanding of how childcare costs can contribute to an award, or why parents only receive help with 80 per cent of the costs of childcare.  Parents and carers are concerned about the interaction of tax credits with housing benefit and find budgeting for the loss of passported benefits like free school meals difficult.

5          Has the Government identified the right set of principles to use to guide reform?

While we support the view that, for most people, work is the best route out of poverty, we do not support the principle that families should always be incentivised to increase the amount of work they do.  Some parents, particularly those of disabled children, find working full time impossible and need both flexibility and part time hours to accommodate their caring responsibilities.  Strong families need to be able to balance their working hours with their time together, and there is a growing body of evidence to show positive child and family outcomes from engaged and active parenting.  We also know from our research[2] that long and inflexible hours have a negative impact on family health and wellbeing.

Work needs to be appropriate for the family circumstances.  Many low paid jobs are not offered flexibly and some employers are unwilling to accommodate parents’ requests to spend time with their children.  For example, many parents in full time work struggle when their children are ill and employers will not allow them time off; those on part time work may find it possible to make up their hours at another time.  

When employers ask parents to increase their hours in work, or even simply to change their pattern of work, this has a knock-on effect on their childcare arrangements.  It is not always possible for parents to increase their hours, or make changes that employers think necessary because there is no childcare available.  An enforced change of hours can mean a parent has to leave work.  It is vital that reforms to benefit policy are considered in tandem with family friendly employment policy and that the supply of jobs suitable for families is increased.

Current high levels of childcare costs act as a disincentive to progress in work.  For example a parent on average wages of £26,000 pro rata encounters a disincentive to increase working hours at the same level of pay once childcare costs reach around £40 per child per day:

Figures based on a lone parent with two children aged 2 and 3 working 16 or 35 hours as of July 2010.

We are concerned about the emphasis on automated processes without a further principle of improving the support and advice given by benefits staff.  While some families will benefit from a self-service approach this will need to be backed by much clearer explanations about how awards are determined. 

Families for whom English is not their first language, disabled people and vulnerable groups may find an automated system difficult.  Particular attention should be given to the needs of vulnerable groups offering a personal response as well as an automated one to ensure that all groups are equally able to access the benefits to which they are entitled.
 

6          Would an approach along the lines of the models set out in Chapter 3 improve work incentives?  What other approaches should Government consider?

We find the idea of a universal credit appealing in terms of its simplicity.  However, we do not think that the childcare element of tax credits would fit easily within the model and suggest that a separate consultation on supporting families with childcare costs is needed.  We are also keen to see Child Benefit continue as a separate universal benefit and believe that it should continue to provide families with help with the costs of bringing up children, regardless of their work status or means.

The issue of simplification should be seen from the claimant’s perspective rather than focus on the delivery mechanism.  A single claim form is more important than a single benefit.  Once a claimant has given all the necessary information, the onus should be on the provider to deliver the right benefits.  A difficulty with the current system is that advice from Jobcentre Plus staff is sometimes inadequate and claimants are wrongly advised that they are not entitled to certain benefits.   Such poor advice can have a profound impact on vulnerable claimants.

7 and 8           Do you think we should increase the obligations on benefit claimants who can work to take the steps necessary to seek and enter work?  Do you think that we should have a system of conditionality which aims to maximise the amount of work a person does, consistent with their personal circumstances?

The issue of determining “when a person is deemed to be doing enough work such that we would stop applying work-related conditions to their benefit” is an important one.  Who would decide what is “enough” work for a family?  We welcome the ability of lone parents to be able to restrict their hours of work for childcare reasons, but believe this should also extend to couple families.

We do not support the current system of conditionality and believe it to be unnecessary punitive in circumstances where the search for jobs may be futile.  Although many families need jobs that are part time or flexible hours, few jobs are advertised on this basis.  The right to request flexible working is only available to an employee who has been with an employer for 26 weeks and it does not help parents or carers seeking to enter work.  As stated above, many parents have difficulty finding childcare, particularly if they work unsocial hours or if their child is disabled or has special needs.  Without childcare, parents know that they cannot take on work, and without work they cannot afford the upfront charges that many childcare providers demand.

Insisting that parents seek work or see their benefits cut is unjust when jobs are scarce and those that are available may be inappropriate for their personal circumstances.  Sanctions are inappropriate for families including children:  children should not be made poorer because their parents have not met work conditions.

A greater emphasis should be placed on supporting parents into part time jobs.  Employers should be encouraged to consider whether a job could be advertised on a part time or flexible basis and public sector employers should lead the way, only reverting to full time advertising if there is a strong business case to do so.

Working Families

September 2010