Benefits that work

The Department for Work and Pensions spends nearly £3 billion on Jobseeker’s allowance and over £8 billion on Income Support every year. For many deprived areas spending on benefits payments and welfare to work programmes is the largest public investment they receive. In reality this investment may fail to get to the root of the problems that exist in these neighbourhoods.

The benefits system often compounds the challenge of tackling long-term unemployment. It is complex and riddled with perverse incentives. It does not fit well with the flexibility of today’s UK labour market, where many of the jobs involve part-time, temporary or irregular hours. Complying with the requirements of benefits can create a burden instead of supporting people to find employment.

Low income neighbourhoods have the most pressing need for activities to improve them. They also have the most workless adults. This report sets out an analysis of a new policy proposal – The Community Allowance – which aims to make a constructive link between public spending on benefits and work for the development of local neighbourhoods.

The Community Allowance would allow community organisations to employ people out of work to develop the areas they live in. There is nothing particularly new about work schemes. What makes the Community Allowance original is that it secures the benefits and an additional income for people. It allows them to concentrate their efforts on moving towards employment instead of meeting the requirements of their benefits. By working through community organisations, the Community Allowance would ensure that the work and the support it provides would be tailored to the needs of the long-term unemployed.

The research presented in this report is based on principles of Social Return on Investment (SROI). This is a measurement approach that helps organisations to demonstrate and understand the social, environmental and economic value that they are creating. It is informed by real people’s experiences, and the things that make a difference to the lives of those directly involved and affected. The end result is an economic model that represents change in terms of social value, challenging decision-making that relies solely on economic or financial returns.