Lowering the Barriers to Work in Britain

Alan Marsh

This paper looks at the relationship between social security benefits and people’s incentives to get and keep paid work, including the use of in-work income-tested benefits to improve work incentives, particularly the recent effects of Family Credit.

I examine the question of whether the use of in-work benefits really improves incentives to work and raise family living standards, or only perpetuates benefit dependence among the lowest-paid and creates new disincentives. These questions are examined using evidence from the Programme of Research Into Low Income Families (PRILIF) to suggest what scope may remain to strengthen such incentives, particularly in response to new family forms and rapid changes in the nature of paid work.

The research shows that income packaging through in-work benefits can be made to work if the welfare agency administering them has sufficient resources and commitment.

There remains the paradox that any such system both helps the people who claim the benefits and underscores a deepening social division. Countering this means working towards a unified system of work-friendly benefits tapered from the least to the most work, and from the least to the most need, and yet retains the distinction between being unemployed and having a paid job.