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Benefit Dependency

Volume 516: debated on Monday 18 October 2010

11. What recent assessment his Department has made of the effects on levels of benefit dependency of wage levels. (17491)

We have not yet made an assessment of the direct impact of wage levels on benefit dependency, but we firmly believe that work must pay. Within the current system, we have the anomaly that some individuals can keep as little as 4p in an extra pound earned if they move up the income scale, and a small number of individuals receive more than £26,000 a year in benefits—a substantial amount when compared to the incomes of most working households. That cannot be right, and that is why we are bringing forward radical welfare reform proposals to ensure that work pays.

I thank the Minister for his response. I hope that he agrees that the national minimum wage gave a massive lift to many working people throughout the UK, and it is now time to move on and progress to a decent living wage. When wages are low, it is no surprise that benefits are often worth more than work. In my view, that is not a problem for benefits, but whatever the problem I hope he agrees that the solution is a fair day’s pay for a fair day’s work.

Clearly, as an Administration we would like employers to move people up the income scale, and for there to be wealth in the country to enable our businesses to do that. Of course, they have big challenges to overcome after the past few years and all the economic problems that were created under the previous Government, but I share the hon. Gentleman’s aspiration. I would like people to move up the income scale, but above all else, we want to ensure that, in all circumstances, work pays. That is why we are introducing the universal credit and the changes that we are making. There should never be a point at which somebody says, “It’s not worth my while going back to work.”