British minister's plan to revamp system running into fierce opposition
By Jonathan Eyal, Europe Correspondent
LONDON: Mr Iain Duncan Smith, the minister in charge of Britain's pensions and social security payments, is a man in a hurry.
Although he got his job only a few months ago, he has already threatened to resign twice, angered by opposition from colleagues to plans for a radical overhaul of Britain's welfare system.
Mr Duncan Smith appears to have won this skirmish: His reform proposals will be unveiled next month, and they will affect all British government handouts, from allowances to the disabled to child welfare and pension payments.
But the bigger battle with the millions of ordinary Britons who rely on welfare support and the armies of bureaucrats who run the schemes is only beginning. And it's guaranteed to be bloody.
The size and complexity of Britain's welfare structure remains mind-boggling. Overall, it spends around £192 billion (S$397 billion) a year on welfare.
The Department for Work and Pensions - Mr Duncan Smith's empire - administers 27 different types of benefits; other British ministries and local authorities operate a similar number of schemes yet again.
One of the reasons the system is so complex is that, although most of Britain's welfare and social security benefits were introduced between the 1940s and 1960s, some have their roots well in the Depression years after World War I.
Politicians did not help either. Since inventing new welfare benefits is a vote-winner, successive governments added fresh layers of entitlements.
There is also the familiar problem of every welfare state: regardless of how fast a country's economy grows, some people will always be poor, because poverty is ultimately a relative concept.
So, a welfare system meant to 'eradicate the scourge of poverty' - as its inventors claimed - keeps growing despite the fact that, by definition, it can never achieve this objective.
What is more, the system is wasteful and open to fraud, stifles any sense of personal responsibility and creates a national culture of dependency on the state.
Most examples of waste stem from the curious British obsession with distributing some payments to all citizens, regardless of actual needs.
This is the case with benefits paid to any family with children under the age of 16, assistance with paying winter fuel bills, or the provision of free public transport for anyone aged over 60. Since the number of individual payments is huge, the amounts tend to be small. So, perversely, those who need the money most don't get the right assistance, while those who don't need often forget that they are being paid.
Fraud is also inevitable in a welfare structure which regularly distributes payments to no less than 15 per cent of the working population, in addition to those retired or disabled. False claimants run little risk of being caught, partly because this requires serious investigations, but also because of the sheer volume of work: 19 million payments are processed by the Department of Work and Pensions each year. According to current estimates, £5.2 billion worth of these claims are fraudulent.
And then, there is the so-called 'benefits trap', which is probably the biggest failure of the concept. Because many of those who draw jobless benefits are badly educated, their only hope of employment is in poorly paid jobs. But the salaries on offer in such positions can be lower than the social security benefits. Unsurprisingly, most of these people choose to stay at home, watching daytime television.
Either way, a system which was designed to help those who are temporarily without work ends up creating a class of permanently unemployed.
Yet reform is easier said than done.
One option is to withdraw unemployment support only gradually; this could encourage people to accept low-paid positions, in the knowledge that they would still be entitled to some government money. But that's very expensive, and a nightmare to administer.
A second approach would be to introduce 'means tests' for universal benefits; only those who are too poor or needy would get government support. The snag here is that the introduction of tests is political dynamite.
And then, there is always the option of reducing welfare payments altogether. The Conservative-led government has already tightened housing benefit payments, and told lone parents that they must seek work once their youngest child starts school.
Faced with the biggest crisis in government finances in decades, Mr Duncan Smith has opted for streamlining the entire welfare structure into just a number of major schemes, while waging 'war' against fraudsters.
But the Treasury, which holds all the purse strings, is opposing the plans. The reason for this curious twist: paradoxically, because the system is dysfunctional, it's also so complicated that it deters some from claiming what they are due.
Non-governmental organisations estimate that up to £16 billion of benefits which could be disbursed never leave the state coffers. So, a newly streamlined welfare project which makes entitlements easier to understand could leave taxpayers with a heftier bill because more people may be encouraged to claim.
For the moment, there is a compromise: Mr Duncan Smith was given £2.5 billion in extra funds, on the condition that his department will start producing £10 billion worth of savings by 2014.
It will be a tall order. And Mr Duncan Smith is still careful to skirt around one fundamental issue: whether the welfare system should be a social enabler by helping people to help themselves, or whether it should continue with just administering pain-killers to the country's social ills.
That, as always, remains a matter left to future generations to decide.
The size and complexity of Britain's welfare structure remains mind-boggling. Overall, it spends around £192 billion (S$397 billion) a year on welfare.
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