Government Responses to Wealth Inequalities

1. Government Responses to Wealth Inequalities Strategies Aimed at Targeting Wealth Inequalities

2. Responses • The UK Government provides a range of benefits through the Department for Work and Pensions (DPW.) • The aim is to get as many people as possible from Welfare to Work.

3. Labour’s Views • Aim: to move as many claimants as possible into employment through the following strategies: • Social Inclusion: help those excluded from work to get a job and come off benefits. • What is social exclusion? • Income Differential: Increased the difference between income from work & benefits to make moving from welfare into work is more attractive.

4. Poverty • Tony Blair made tackling poverty – in particular child poverty – one of the Government’s main targets. • Aim: to halve child poverty by 2010 and eradicate it entirely by 2020 • Child poverty did reduce but the target was met • Wealth inequalities actually increased under Labour

5. Strategies • Jobcentre Plus • Jobseekers Allowance • The New Deal • National Minimum Wage • Working Tax Credit • Child Tax Credit • Skillseekers • Modern Apprenticeships Tick any of these strategies you have already heard of

6. Jobcentre Plus • Helps unemployed people claim the correct benefit they are entitled to and find suitable employment. • Benefit for people of working age out of work is called Jobseekers Allowance (age 25+ receive £65.45 per week.) • Not normally paid to people 16/17 years old • Why not?

7. The Flexible New Deal • “New Deal is a key part of the Government’s strategy to get people back to work. It gives people on benefits the help and support they need to look for work, including training and job preparation.” (DWP) • New Labour introduced the New Deal in 1998 to reduce unemployment and improve job opportunities for those who had been claiming benefits for at least 6 months.

8. New Deal Programmes • New Deal for Young People (18-24) • New Deal 25+ • New Deal 50+ • New Deal for Lone Parents • New Deal for Disabled People New Deal is part of the Labour Government’s ‘Welfare to Work Strategy.’

9. Procedure • Unemployed person is given a personal advisor who works with the individual throughout the programme. The personal advisor assesses the person’s needs and helps them get back into employment.

10. Role of Personal Advisor • Help with job applications and CVs • Interview techniques • Development of necessary skills • Arrange work experience with an employer or voluntary organisation (e.g. charity shop) • Help with training for a specific job

11. After the New Deal • The Flexible New Deal has been scrapped and will come to an end this summer • In its place: the single Work Programme • Same aim – welfare to work • What is new: longer to work with people, greater flexibility in support programmes, more incentives for employers to work with the groups which are hardest to help

12. National Minimum Wage (NMW) • The Labour Government introduced the NMW in 1999 to ensure workers were given a decent hourly rate and to make work for unemployed people more attractive than being on benefits. • It is illegal to pay less than: • £5.93 - the main rate for workers aged 21 and over  • £4.92 - the 18-20 rate • £3.64 - the 16-17 rate for workers above school leaving age but under 18 • £2.50 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

13. Impact of NMW • It can be argued that the NMW has reduced the wealth gap by helping people move from benefits to work. • Those who previously relied on benefits may have been encouraged to find jobs because their pay made up for lost benefits. This had been a problem particularly for lone parents who also had to pay for childcare.

14. However… • Some employers continue to ignore the law and pay employers below the legal requirement. These employers claim that paying the minimum wage would result in staff redundancies or even the collapse of their business. • Some Unions argue that the amount is still too low and that it should be closer to £6.50 per hour and that 16-21yr olds should receive the same amount for the same job.

15. Working Tax Credit (WTC) • This was introduced by the Labour Government • This benefit is not only for people with children but also for non-parents who go to work rather than relying on state benefits. • WTC allows working people on low incomes to pay less tax on their wages and so retain more of their income. • Families on WTC are also eligible for Childcare Tax Credit (up to 70% of childcare costs.)

16. Child Tax Credit • Paid to all families with children (regardless if employed or not.) • Payable to couples with combined income of up to £58K (2005), although those whose income is close to this amount will only get a minimum amount. • It is targeted on households with children to reduce levels of child poverty in the UK.

17. Skillseekers • Programme applies to 16-18 year olds. • Young people gain skills and experience. • Skillseekers work towards Scottish or National Vocational Qualifications and can work through them at their own pace.

18. Modern Apprenticeships • Targeted at 16-24 year olds. • Work-based training leading to a qualification. • Apprentices work with an employer over a period of time (sometimes up to 3-4 years.) • Young person may be kept on at the end of their training. • Most popular apprenticeships are Construction, Engineering, Business Administration etc.

19. Helping the Elderly • Pensions Credit – introduced in 2003 and aims to help pensioners on lower incomes and reduce poverty amongst the elderly. • Everyone over 75 gets a free TV licence. • Winter Fuel Payment – one off annual payment of £250 to help elderly people with the cost of heating during the winter time. • State Pension is currently £97.65 per week (single person) & £156.15p/wk (couple.)

20. Other Benefits for Low Paid • Free prescription charges (National Govt) • Free eye tests and glasses (National Govt) • Free dental care (National Govt) • For children, pensioners and low paid • Housing benefit (Local Govt) • Council tax benefit (Local Govt) • Free School Meals (Local Govt) • Clothing Vouchers (Local Govt)

21. Coalition government and welfare reform • Plan to replace complicated system of benefits and tax credits with a “universal credit” • Aim to get 1.5 million Britons back into work • Greater obligation on JSA claimants to find work – under proposals claimants face losing the benefit for up to 3 years • £400 p/w cap on housing benefit from April 2011 • Reassessment of IB claimants