Labour policy report calls for radical reform of welfare state

http://www.theguardian.com/politics/2014/jun/15/labour-reform-welfare-benefits-culture

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Plans for a radical overhaul of the welfare state, including a return to the principle that benefits should be linked more closely to contributions, will be part of a major policy report for the Labour party this week.

The Condition of Britain study by the IPPR thinktank, to be launched by Ed Miliband on Thursday, will also contain proposals to devolve large amounts of power and funding out of Whitehall, including the control of housing benefit to councils, in order to stimulate innovative housing policies and more housebuilding. The project was set up in February 2013 as part of Labour's policy review to consider how institutions and policies need to respond to today's needs – including more childcare and better care for the elderly – within the confines of tight budgets and inevitable further cuts.

A key theme is expected to be that early intervention at every stage of life can prevent society having to continue "paying for the costs of failure". The report will argue that a stronger society can be built on the three "pillars" of shared power, contribution (through changes to the national insurance system) and strong institutions. While some proposals, such as a plan to freeze child benefit to fund a network of children's centres, are likely to be rejected by Miliband, many of its central ideas will be considered by the party's national policy forum in July.

The report is expected to look at whether benefit payments can be linked more closely to levels of contributions through changes to the national insurance system. Senior figures believe that Labour must counter the impression that it supports a "something for nothing" benefits system by looking at radical change.

Writing on theguardian.com, the chair of the policy review, Jon Cruddas, suggests that such ideas could form a major part of Labour's manifesto at the 2015 general election.

Looking ahead to the report's publication, Cruddas says: "It sets out three broad strategies for social renewal: spread power and responsibility to build democracy and strengthen society; foster contribution and reciprocity to re-establish a sense of fairness and justice; and strengthen our shared institutions to help tackle social problems for good. These establish the foundations on which we can build a competitive wealth-creating economy."

The report will contain proposals for a one-off levy of £450m on Britain's £180bn consumer credit industry which the IPPR says could create enough affordable lenders to take on Britain's legal loan sharks. It says that, as well as a new legal cap on the total cost of credit, Britain needs a new generation of not-for-profit lenders with enough capital to compete with firms like Wonga, Quick Quid and Payday Express.

The IPPR launch will be followed later in the summer by Andrew Adonis's growth review, which will focus on developing the economic potential of cities. Richard Leese, the leader of Manchester city council, will then publish work by his local government innovation taskforce setting out plans to redistribute power across England and reform public services so that they can be tailored better to meet local needs.