The Future State of Welfare with John Humphrys

Seventy years ago,

a document of monumental importance sparked a social revolution.

It gave birth to the welfare state

and to what has become a massive benefits bill.

That bill's gone up in the last ten years by nearly £60 billion.

Its critics say the welfare state is in crisis.

Two and a half million people who are on incapacity benefits

in the whole of the UK?

Unbelievable.

The politicians promise, or threaten, that change is coming.

Today we launched the most ambitious, fundamental

and radical changes to the welfare system since it began.

For radical reforms read big savings.

billions of pounds will have to be cut,

millions of people will be affected.

For this programme I've been talking to the people with the most to lose.

Some people haven't worked in their life, they don't know what a job is.

Would you work for the minimum wage?

No, I wouldn't. I'd be working for nothing.

People on incapacity benefit.

You're just there for them to be able to tick a box.

The long-term unemployed.

I don't want to be going out to work for 40 hours and missing my kids.

People on housing benefit.

Lone parents.

Are they prepared for the harsher future ahead?

I can't get a job so I'm sitting in the house depressed.

You don't realise the impact having a child in your life does to you.

I want to find out if Britain really is ready

for the future state of welfare.

Here's one way the benefit system has changed in my lifetime.

This is where I was brought up, Splott in Cardiff.

Poor, working class district.

Respectable poor, I suppose you'd say.

This, incidentally, is the house where I was born,

and in those days, a long time ago of course, in those days,

everybody, if they could, was expected to work.

And they did, we knew only one family

where the father did not work,

never had a job, and he was regarded as a pariah.

It was a mark of shame.

Like most other kids we were expected to help out.

When my father had no work he sent me around streets

posting leaflets through people's doors.

It wasn't unusual.

Today one in four of the working age people in this area

is on some form of benefit.

Hello.

My sister was Mrs Neet who lived next door to you.

Ah, well, yes, I remember her, of course!

I think I'm the only one left here now.

Will you remember I wonder...

There was a chap who lived in that house over there,

-and he never worked.

-That's right.

But the fact that he didn't work, we used to think,

my parents thought was shocking!

-Cos he never got a job.

-That's right.

-And that's changed hasn't it?

Oh, yes, definitely it's changed.

But do you think that pride in working has changed?

It's gone, yeah.

If they can get money without working, they will.

I called on one family living just up the street where I was born,

who live on benefits.

Pat Dale is a single mother of seven children.

She hasn't worked in 20 years.

I spoke to her with one of her daughters, Chanel,

also a mother living on benefits.

And they say it doesn't pay them to work.

Some people haven't worked in their life. They don't know what a job is.

None of your family have worked, have they?

And the reason why there's no jobs for us,

is because £5.50, minimum wage,

and this is what it is, that's why there's no job for us.

Would you work for the minimum wage?

No, I wouldn't, the reason why I wouldn't work for the minimum wage

is if I did right, get £5.50, that means I would lose

my rent benefits, do you know, I'd be working for nothing.

And what other benefits do you get?

Erm, child tax credit... All together...

Child tax credit and child benefit you get.

Yeah, first child £20, second child just £13.

So, why's the first child 20 and him 13?

They're still both the same age,

one's 13, one's 14, so why?

What do you say to politicians

who say that the welfare state is too generous?

Give us a bit more, erm, chance. Do you know what I mean?

Would you work from eight till seven for £5 an hour?

I think it's disgusting.

Honestly, it's really, really disgusting.

A lot of people will be shocked, appalled,

by what Pat Dale has to say.

Shocked in the same way my parents were shocked by our neighbour

who never had a job.

But, obviously she sees herself as a victim. And maybe she's right?

A victim of the benefit system,

the benefits culture that we have created over the decades.

How else can you explain

so many people in this neighbourhood out of work?

Splott is not like the Welsh Valleys a few miles away which were ravaged

when the mines disappeared.

It's in the centre of the city of Cardiff.

Are there really no jobs here, the capital city of Wales?

I went to the nearest job centre to try to find out.

So let's see what's on offer today in Cardiff.

Cleaner, carers, meter reader, sales assistant, telesales agent,

kitchen porter and so on and so on and so on.

In fact, in September there were more than 1,600 jobs

advertised in Cardiff.

There will always be jobs that are more appealing than others,

but what we try to do here is try to encourage people

to see the benefit in any of the jobs.

And that even working at a fairly low paid level,

getting yourself back into work

is very beneficial for you and the family.

And it's often a stepping stone to something a lot better.

Isn't the big difference now

that if you didn't have a job it was a matter of shame?

Has what used to be a stigma - a very, very clear stigma - gone?

-The stigma of not working.

-The stigma of not working?

"He's on the dole - shock!"

There is undoubtedly less of a stigma,

I don't think anyone would argue with that.

And let's face it, benefits became fairly easy to access...

Too easy.

In some cases, yes. People then found themselves on benefits

and didn't see themselves getting back into work.

And that's a situation that's built up over the years.

We're not here to force you to into full-time work,

whilst you're on employment support allowance.

-Some positions are quite short-term, a week or two.

-Absolutely.

Owen Oakley is trying to get back to work after ten years of living on incapacity benefit.

To build your confidence, get you back into the routine of work.

Do you mind if I just have a quick chat with you Owen?

Yeah, that's fine.

How do people react to you being out of work? Do you think they think,

"He's lazy, can't get out of bed in the morning".

Not in my experience because a lot of my friends know I'm hardworking.

I've got friends that have been on benefits all their lives.

Some of them are just used to living like that.

They want to go on and have made a career out of not having a career.

I know families like that as well.

Why do you think they do it then?

I don't know. I suppose it's an easy lifestyle for some

if you don't want to work.

All right, well, thanks for coming in today.

There are now more than 800,000 people in this country

who have been out of work for more than a year.

It's all a long way from the initial vision

on which the benefit system was founded.

Sir William Beveridge working in the quiet of University College,

of which he is master, has produced a social document

of revolutionary importance.

So this is it, The Beveridge Report, or to give it its proper title,

Social Insurance and Allied Services.

A pretty mundane title for a report that Beveridge himself

said would create a revolution, as indeed it did.

You get an idea of the sense of priorities

from the hand-written notes

he made before the report came out. Here we are.

Social insurance - that's the important word -

is insurance against four contingencies

and at the top of the list was unemployment,

because of industrial accident,

disease, whatever, old age, maternity and death.

He wanted a form of insurance.

So you paid something in and the State gave you something in return.

It was a deal.

It was a contract, and as a result of that contract

you would slay the five evil giants of society.

Want, disease, ignorance,

squalor and idleness.

NEWSREEL: 'There must be no mass unemployment.

'The giant evil of only yesterday.'

Ironic isn't it, that 70 years after the report was published

the principle charge against the welfare state

is that it helps to create idleness.

Exactly the opposite, exactly the opposite of what Beveridge intended.

But is that a charge that stands in an area like this,

the North East of England?

One in ten are out of work here,

the highest unemployment rate in the country.

You might think the reason for that is simple - no jobs.

But talk to the Mayor of Middlesbrough, Ray Mallon,

you get a very different explanation.

When you look at Middlesbrough, out of the 88,000 working population,

18,000 people are on some form of benefit.

18,000 people out of an 88,000 working population on benefits,

that's a big issue.

At the moment you've got a large cohort of people

not even applying for jobs.

This just isn't on.

It is almost a lack of hope, it's almost a lack of engagement,

that the state have looked after us and they'll continue to do it.

You have only to drive around an estate like this,

just up the road from Middlesbrough, to see what he means.

It's just after 2pm and there are an awful lot of young men

wandering around the place, standing in their doorways.

Obviously not at work. Obviously don't have jobs.

I've tried to talk to many of them. We've knocked on doors

to talk to them, and nobody wants to talk.

I did eventually find a couple prepared to talk to me.

Steve Brown and Paula Mort live with their three children

entirely on benefits.

If you include their rent,

they collect more than £1,600 a month from the State.

Do you think that a sort of attitude develops

in an area, on an estate maybe, in a certain area,

-that says, well...

-There is no jobs so...

-..so living on benefits is an acceptable lifestyle?

-Yeah, yeah.

See, before I take a job,

you have to sit down with them and work it out,

whether it's acceptable to go to work or not.

When you say acceptable, acceptable in what way?

Whether it'll be worth your while.

Whether it's worth your while to go to work.

Right. Why might it not be then?

Because I might go to work for 40 hours

and then dumped with £30 or £20,

after I've paid out all the bills.

And what about you, Paula? Why are you not working at the moment?

I've got a two-year-old little boy so I've been looking after him but...

But you've got Steve, and your mother.

-Yeah. The money's not good enough to go to work.

-Well, that's it.

That's the problem with me - I want to work

but I can't afford minimum wage.

You don't think working's better than not working,

whatever the financial outcome?

No, no, not at all, no. I just don't see...

I mean, I don't want to be going out to work for 40 hours

and missing my kids

if I'm only going to receive a few quid extra for it.

Do you understand? I'm missing my kids growing up.

I can't see how the minimum wage is good enough.

That's all. When..

But a lot of people do work for the minimum wage.

Well, the way it worked out for me, like I say,

it was just not worth going to work for it.

So what Steve Brown has done is make a straightforward calculation.

Go out to work for very little extra or stay home and enjoy his children.

He's chosen the later.

And that presents politicians with a massive dilemma.

The problem comes when the state tries to distinguish

between those people who can't work and those who don't want to work.

Between, what would have been referred to in Beveridge's time -

highly controversial language these days,

the deserving and undeserving poor.

Here we are girls.

Let's have a look and see what we've got.

What's come up so far today.

There's a domestic cleaner in Middlesbrough

and must be reliable due to do general domestic cleaning.

We can check that out for you.

I went to a job club in Middlesbrough.

-Hello.

-Hello.

-Hiya.

So you are both looking for work.

Definitely, carer, cleaner, anything you name it.

-Minimum wage?

-Yeah. 16 hours minimum.

-16 hours minimum.

-Yeah.

-And what you can't find anything?

No. It's like, "Oh, yeah, I'll give you a number."

But they never get in touch with me. They just blank me.

So what about you? How old are you?

-I'm 20.

-Are you prepared to work in lower paid jobs?

I am willing to work anywhere as long as it is a job

and it gets me out the house.

And how many of your friends are in this same situation?

Oh, quite a few of them.

I have done 60 applications in the space of a year

and none of them have replied.

They have not replied?

60 in a year and nobody's bothered to reply to you.

So the future is not looking terribly promising.

It is just hard. Very hard.

We will get there. We have to. We will just keep plodding on.

Shop floor assistant. It's the national minimum wage.

It is very hard not to feel sorry for people in that situation.

They have been trying and in some cases trying for a very long time.

Some of them have been out of work for a very long time.

And it is tempting of course to say,

"Well, try a bit harder, you will get something in the end."

But the longer it goes on,

the greater their sense of disillusionment

and the greater their sense of failure.

Numbers of workless households,

where work has never been experienced in that house,

has doubled since 1997.

Gavin Poole runs the think tank The Centre For Social Justice,

which was set up by the former Tory leader,

now Welfare Secretary, Iain Duncan Smith,

who asked it to suggest ways of reforming the benefit system.

I think there's something wrong with a system

that enables part of the population who could work to choose the option

to live on benefits, and we think that's wrong.

A lot of people are trapped on benefits,

they're worse off by going into work,

and that simply is not, that's not right.

You're saying, therefore, cut benefits?

All of the work that we looked at,

we didn't make a call on whether the benefits were too high or low.

But by definition they're too high

if you're saying that work doesn't pay?

No, by definition what we're saying is there's a complexity

around what benefits are being paid.

Why shouldn't you be saying,

"Make 'em work because it's better for them?"

An awful lot of people would agree.

As soon as you start going down the road,

"We'll force them, we'll make them,"

-I think that's quite a strong, strong line.

-Why? Why?

I think the whole argument around enforced...

OK, so what happens if they refuse to co-operate?

We know there's sanctions, there's already sanctions in place,

which is to encourage, that is to make.

But it makes it sound like, "You are to work, you are to work."

And actually what we say is you need to support...

That's exactly the point I'm making.

..you need to support, encourage, you need to mentor.

And if that doesn't work?

Then sanctions are applied. So I think...

So sooner or later you get to the situation where you make them?

You get to a point where that happens.

More sanctions, eh? Is that where we're heading?

Well, one way of making people work is to pay them so little in benefits

they literally can't afford not to.

Which is why some Eastern Europeans come here.

Amongst them, a couple of Polish workers I met on the south coast.

If you're out of work and on benefits in Poland,

what do you get? What sort of income do you have?

What you get is nothing, really,

it's not enough to survive.

You can just live for the one week, but not more.

You cannot get the house benefit, er, house from the council.

Nothing like that.

If you get your month's benefits,

-you can only live for one week on it?

-About, yeah.

It's definitely not enough to pay your rent.

It's like getting £150 a month.

Oh, really? Whereas here you might get £150 a week.

Exactly.

Why do you think it is that there are so many young men

in this country who are living off benefits rather than in work?

I think definitely the Government is...

-Too generous.

-..too generous, compared to ours back in Poland.

So there we are.

A perfectly simple answer

to the problem of how you get people off benefits and into work.

You cut the benefits.

You give them almost nothing to live on, as happens in Poland.

But do we really want to do that sort of thing?

Do we really want to force people into work

by giving them absolutely no alternative?

Well, many British politicians bent on welfare reform

have looked for inspiration

to one place where they did exactly that in the late '90s.

Like us, the United States faced a rising welfare bill.

Politicians feared that a sense of entitlement

was producing a dependency culture, and public attitudes were hardening.

So much so that Bill Clinton himself

swore to "end welfare as we know it."

And at the heart of the American proposition is one simple principal.

If you want welfare benefits, you have to work for them.

And so began what's been called America's welfare revolution.

I went to see the man responsible for implementing these reforms,

called Workfare, here in New York City,

the welfare commissioner, Robert Doar.

Commissioner, paint a picture if you would,

of why it was necessary in this city

to introduce some kind of Workfare scheme.

What was going wrong?

Well, I think our system had developed a sense of entitlement

in people that came to the government seeking assistance,

that they would do something without having to do anything,

or do some cash benefit without them having to do anything in return.

The benefits of receiving a benefit without working

were greater than the benefits of going to work.

So you've been saying to people, in essence,

"Work, do your job, whatever the job may be,

"or you lose your benefit, that's it."

We said, "You need to go to work, we expect you to go to work.

"If you don't go to work, we're going to talk to you about why you're not working.

"We're always going to have something for you to do."

So how's it working out?

If you want benefits in New York City,

you have to come to a place like this job centre.

And you don't get the benefit

unless you can prove that you've actually started job hunting.

Yeah, how are you?

Here I met one of the architects of the scheme, Professor Larry Mead.

-Larry.

-John, great to see you.

-Good to see you.

-Good to see you.

Now this what we would call a job centre.

-You'd call it a job centre, as well?

-Correct. Yes, we do.

But a rather different job centre from the sort that I'm used to.

The most important thing is that a new applicant for aid

would be faced very quickly with an expectation about looking for a job.

So they don't... The very first, effectively, the very first thing

they say to them is, "You've got to find a job"?

Yes. Yes. You're expected to look for a job

even while your application for aid is being considered,

rather than later.

So right up front, you face a work requirement.

You have to work as a condition of aid.

-It's a heck of a change, isn't it?

-Yes, it is.

-In a short space of time, it's been turned on its head.

-Correct.

Elaine Hewitt, the job centre manager, showed me around.

Applicants come back here to talk about what their situation is.

-Helping them to find a job?

-Right.

And that's what... The essence of this operation

-is to help people find work.

-Right.

And what if people say, "I don't want that job." Flat out, "No"?

Eventually, what happens to that person?

Then they're failing to co-operate with our guidelines,

and then that results in a denial.

Meaning, in practical terms?

Meaning no more assistance.

-No more assistance?

-Yeah, no more assistance.

Do people often say, "Well, hold on a minute,

"it is my right, my entitlement, to have this benefit"?

Well, you know what, they used to say that, back in the days.

Right now, I don't really hear that anymore.

-Really?

-Yeah.

It may seem, indeed it is, a pretty tough approach.

But one claimant I spoke to obviously had no resentment.

-You'd been working...

-Yes.

-..for a long time.

-You'd paid your taxes.

-That's right.

-You're a good citizen.

-I would think so.

Then, through no fault of your own, you lost your job,

because the firm was downsizing.

That's right, that's right.

Didn't you feel that you had an entitlement

to benefit from the city, from the state?

I didn't see it that way, I didn't feel that way.

I felt that, I'm down now and the system's helping me,

and with respect to getting out of the public assistance,

if worst came to worst, if I had to take three, four jobs, I would do it.

When these workfare reforms were introduced across the country,

they had a dramatic effect.

In one state, the number of people on welfare dropped by more than 80%.

Here in New York, it was a more modest but still pretty hefty 26%.

And the reforms caught the eye of some politicians back in Britain,

earning Professor Mead an invitation to Downing Street last June,

as the coalition Government

began considering its own plans for welfare reform.

To what extent are your fingerprints on the measures

that are now being proposed in Britain?

I think if they're on it, it's in connection with this basic idea

that there should be a work obligation connected to aid,

so we should not have entitlement.

We should not give people money simply because they're low income.

We should expect that they work in return for aid.

I do think that's the idea which I claim ownership of,

and I which I think has had some influence.

But ultimately the American welfare revolution happened

because the public were demanding change.

The question for politicians in this country

is whether the British public wants something similar to happen.

We asked the polling organisation Ipsos Mori

to conduct some research for us.

'I talked to the chief executive Ben Page about the results.'

Ben, what's the thing that most leaps out at you?

What do they think of the welfare state?

I think it shows that the British public's belief in the welfare state

and the principals behind it is absolutely rock solid.

We put a number of statements to a sample of British voters.

This first:

"It's important to have a benefits system

"to provide a safety net for anyone that needs it."

With that, a massive 92% were in agreement.

Only 4% disagreed.

Only four people in 100 would disagree with the idea

that we need some sort of safety net and minimum standard.

-You don't get bigger than that.

-92% agreement.

There are very few things that more people would agree with

in this country, so that's very clear.

But dig a little deeper and you get a very different response.

We put this statement to our sample:

"The benefit system is working effectively at present in Britain."

Well, only 23% of people agreed with that.

63% thought that it wasn't working effectively.

So how is the Government going to reform our system

and cut the welfare budget?

David Cameron says by £5.5 billion.

Well, one of the first things they've done

is target the long-term unemployed.

And what they're doing under the new work programme,

as they did in America,

is to attach extra conditions to getting benefits.

For many, in effect, that means going back to school.

So up here you have these basic skills classrooms.

And when you say classrooms, you're actually literally teaching people?

-Yeah.

-For how long would that go on?

-It's 104 weeks.

-Two years?

-Yeah.

You can have a look at these.

Take these with you. This will give every single one of you

an insight into barriers to employment opportunities.

The Government hopes that using private companies

to run centres like these and paying them by results

will give them the best chance

of cutting the number of long-term unemployed.

OK, some people just don't want to work.

Some people think they're better off on benefits.

I can assure you, you're not better off on benefits.

Some of you have motivational issues and confidence issues.

What we try and do is to try and get you to see

how working can benefit your life,

how working can enhance your life at the same time.

OK? It can. Trouble!

It's one thing to prepare people for work,

make them, help them want to work.

But if the jobs aren't there?

There are jobs out there.

I think it was in April this year, there was nearly half a million jobs.

I have never found it where we're struggling to actually get jobs.

They won't always map exactly to the people that are looking for them.

It's working with people,

for them to be realistic with their expectations.

Presumably, you're all looking for work?

-ALL:

-Yeah.

I've been out of work for two years. I've got three children

and a mortgage that I can't pay at the moment.

It's got to the stage where you don't get rejection letters at all,

it's just, "If you don't hear from us

"within a couple of weeks, assume you haven't been selected."

I'm no longer classed as unemployed, I'm on a training course,

and it's the Government manipulating figures

to make the unemployment figures look better than they are.

Overcome barriers...

Here, they have lessons in literacy, numeracy, even motivation.

But you might raise an eyebrow

at some of the other things they have to do.

We got people to design a cupcake.

We just got a lot of the little tiny fairy cakes

and we got all the icing and the different decorating materials,

little tiny icing balls and things, and then someone won.

We got a little cup, a picture and a voucher.

These are grown up men and women we're talking about here.

-Yeah, yeah.

-They've been through ten, 12 years of education.

You're sure that what you're doing isn't treating them like children?

No. It's about people feeling that they have a value,

and that people care about what they do.

The main problem we've got at the moment

is that the system is treating everybody exactly the same,

rather than taking into account individual circumstances.

To class everyone from every background as needing that same...

um, that same type of education.

So you feel slightly patronised by it?

-It's just crazy.

-You have so many people coming in at one time.

So that's why sometimes it feels like you're all being put into one category,

because, really and truly, there's not enough hours in the day

and there's not enough staff to deal with the whole situation.

But behind all this, you see that simple idea.

If someone is getting money from the State,

there should be more conditions attached, or else.

They don't have any choice,

if they don't come to you, they'll lose benefits?

Yeah, if they don't come to us for the 30 hours on the timesheets,

and they don't participate and we dismiss them,

they lose their benefits.

So, back to our poll,

and we put this statement to our cross-section of voters:

"There are some groups of people who claim benefits

"and who should have the benefits cut."

76% agreed with that. Only 9% disagreed.

So, who should have their benefits cut?

Well, there were more than two million people claiming

what was called incapacity benefit.

But the Government reckons many, if not most of them,

may not be entitled to it.

In Tower Hamlets in London, I met Dr Sharon Fisher.

Many of her patients have been claiming that benefit.

When you look at the total figures of people on incapacity benefit...

-Yes.

-..what do you think of that?

Unbelievable.

Two-and-a-half million people who are on incapacity benefits

in the whole of the UK?

Unbelievable.

I do think there's exploitation of the benefits system,

and I tell patients,

I think it's not in your best interests to be off sick.

And how do they react to that?

Sometimes patients are adamant they need time off,

that the previous doctor has signed them off,

or that they've been off for a very long time

and "What's different now?

"Why aren't you giving me my time off?"

As a clinician, I know that the longer the patient is off sick,

the longer or the lower the chance of ever returning to work.

So, you find that rather depressing?

It's sad. Yes, it's very sad.

Sad for the people involved and sad for society?

Absolutely.

So your local doctor no longer has the final say.

More stringent tests have been brought in to flush out

people claiming on health grounds when they shouldn't be.

For some, that's just a correction of a previous political fudge

that led to the incapacity bill rocketing up

over the past couple of decades.

What we started to do 20, 25 years ago

is hide very large numbers of unemployed people

on incapacity benefits.

The Government at the time was happy for that to happen

because it hid the scale of unemployment

and the individuals were happy to go on incapacity benefit

rather than jobseeker's allowance,

because in most circumstances they were better off doing so.

Better off by around 25%,

and that's the money the Government's trying to cut.

Figures show three quarters of new claimants who've been tested

were deemed not to merit the benefit at all.

Every week, 11,000 people

attend centres similar to the one behind me here

to go through that assessment.

Makes common sense, you might think.

Why should people get the benefit if they're not entitled to it?

But it's political dynamite.

You can imagine the headlines if it goes wrong.

We made several requests to see this process in action,

but all of them were denied.

So I went off to West London

to meet someone who's been through the system, Yvonne Power.

Hello, pleased to meet you. How are you?

-Hello, very nice to meet you.

-Come in.

She's far from happy with the treatment that she received.

I was very, very ill. I had projectile vomiting,

I couldn't eat, dizziness. I was just completely exhausted

and I haven't been able to go back to work, obviously, since.

I've recently had a diagnosis of chronic fatigue syndrome/ME.

So, you went for an assessment. What happened then?

I scored nil points. Nil points!

-Out of a...?

-15, 15 is what you need to get, and I scored nil.

Right. Were you surprised at that?

I was extremely surprised, extremely shocked and surprised,

and obviously very distressed, as well, because,

um, how was I going to live, financially,

when they were telling me that I wasn't actually entitled to it?

So you launched an appeal?

My appeal was successful. I didn't even have to attend the tribunal.

So you have to be tested now, you have to be assessed,

-every six months to see whether you can work?

-Yeah.

Why isn't that fair?

Well, it isn't fair because my,

my disability, hasn't changed in any way.

But it might, I mean, you might wake up next week

or next month and you know...

I think that the system at the moment and the way that,

um, you're dealt with is just very badly designed.

You are just there for them to be able to tick a box.

So back to our sample of voters. What do they think about this?

Here is a statement we put to them:

"We need stricter tests

"to ensure people claiming incapacity benefit

"because of sickness or disability are genuinely unable to work".

84% of people agreed with that only 10% disagreed.

But if the Government's worried about sickness benefits,

it's more worried about another benefit costing three times as much.

David Cameron says little has shocked him more

since he came into office, than the bill for housing benefit.

We inherited a system that cost £20 billion a year.

We've been paying people to live in some of the most

expensive areas in London, the UK, the world.

And this is exactly the kind of place he's on about.

Islington in London.

Some of the priciest housing in the country.

But there's not much social housing here,

so the State pays huge amounts

to private landlords to accommodate people on benefit.

Which is why the Government's now capping it

up to a maximum £1,600 a month.

The councillor responsible for housing here says it's unreasonable.

Because the caps

the Government has imposed have been so draconian,

somewhere like here they'll have a huge effect,

creating a big gap between the rent people are expected to pay

and the caps, which means a lot of families will have to move,

and a lot will have to move out of Islington and even London.

But looking at some of these houses which would cost

at least £2 million.

And many of them, not just in this square,

but other squares in Islington, will be lived in by people,

maybe in some cases, living entirely on benefits.

You don't think there's any resentment from people,

whether it's Islington or anywhere else,

having to pay taxes to enable people on lower incomes than themselves,

to live in houses that they themselves can't afford?

Part of the problem in Islington is that if

you are on a low income and you have a family,

the only way you can properly afford to live here

with stability, is through genuinely affordable housing.

That comes back to, we should have more council housing,

more social housing somewhere.

When there isn't that social or council housing available,

people do then get pushed into the private end of the sector,

where some rent is covered by benefits.

The benefits bill racks up.

In this age of age of austerity should the taxpayer

really have to pick up such a large bill

to keep London supplied with low paid workers?

We asked Islington Council to give us an example of the sort

of people they fear will be driven from the borough.

Ah, hello. There you all are.

-My name is Eduardo.

-Eduardo, hello.

'Eduardo Celleri is originally from Ecuador.

'Then he moved to Spain where he became a Spanish citizen.'

-I'm Isaac.

-And how old are you?

-Nine.

-You are nine? And do you like living here?

-Yeah.

'The family moved here 18 months ago and were eligible for UK benefits.'

That's my family.

This is your family? A very handsome family it is too.

Family, yes.

Now, you are a mechanical engineer,

but you could not get work as a mechanical engineer here, could you?

'But working as a cleaner means he's got a low income

'and a four-bedroom flat in Islington doesn't come cheap.

'So, the State pays out a large amount to subsidise this family.'

How much is the rent on this apartment, on this flat?

£2,300.

This flat costs £2,300 a month? What do you get in benefit?

Child Benefit and Working Tax Credit and housing.

Right, most of the rent is covered by the Housing Benefit.

How would you manage if the Housing Benefit were to be cut?

There are some people who believe,

including many politicians, of course,

that because you are a foreigner, because you are not British,

you should not receive benefits from the State.

Have you ever thought of moving out of London to a cheaper town?

You meet a family like that and it raises

so many big important questions.

Obviously a lovely family, you can't possibly not warm to them.

Incredibly hard working,

decent people doing the very best they can for their children.

Their children ambitious too, working hard to learn English,

doing all the things that you'd expect and hope that they would do.

And one day, no doubt about it,

if they stay, they'll be a great asset to this country.

What country would not want to have them as its citizens?

But at the moment, they are costing a lot in welfare benefits.

Housing Benefit alone about £2,000 a month.

And the big question you have to ask at the end of it all is,

is this what the Welfare State is for?

Here's another statement Ipsos Mori put to our cross section

of the electorate in our poll.

More than half agreed with that, 57%.

29% disagreed.

The last group the Government have targeted is one

Sir William Beveridge would never have envisaged

when he mapped out who should receive benefit all those years ago.

In his day, single mothers were rare.

Today, well, they're not.

I spoke to Professor Paul Gregg at Bristol University.

We are now in a situation where the support of a child

in terms of the cash payments received

is broadly equivalent to that for an adult.

Whereas, roll-back 20 years, you would have got about

one third that support for a child.

Where we have increased generosity greatly is the support of children,

and this was an attempt to reduce child poverty.

The other side of this kind of argument, if you like,

is that the very creation of that kind of safety net encourages people

to perhaps exist on welfare payments longer than they otherwise would do.

So, governments wanted to help poor children,

they ended up giving their mothers an incentive not to work.

Here in Knowsley, in Merseyside,

the number of one-parent families is nearly twice the national average.

This is a support group that helps young mothers who don't have a job.

The government wants to get 300,000 more lone parents

looking for work by making them find it earlier,

not when your child's seven, but five.

They leave school with no education

and they've got no aspirations.

Some young women may fall pregnant and think that's something,

someone to love.

-It's not "may", it's "do".

-"Do", yeah.

-A very large number do that.

But the fact is, if they're not married,

if they don't have somebody in the family who's earning an income,

from the State's point of view, they can represent an enormous burden,

if that's the right word, on the Welfare State, on the tax payer.

Perhaps, for the rest of their lives, that's possible?

-Because they...

-It's really difficult.

..they want to bring the children up.

I think every woman is an individual.

Every woman's got their own story, got their own background.

I couldn't judge any woman for whatever decision

that they decided to make on either going back to work

or being a full-time mum.

But these girls all want to get a job, they all want to,

that's why they're here every day.

So what we're going to do,

we're going to start off talking about stress in our eyes.

It's clear that for these mothers,

the high rate of benefits is acting as a disincentive.

My mum's worked all her life,

she has to go and pay for tablets at the doctors and the dentist and that.

Whereas, there's me, who gets me rent paid for,

I don't pay for nothing in the doctors,

I pay nothing in the dentist and sometimes it makes me angry.

What is the point in working? If that's how it's going to be?

But I do want to go and work.

But this is what I'm saying, it's not that you don't want a job,

it's the barriers that are in front of you getting that job.

Like your child care.

Even if I went to work, half my wages anyway would go on childcare.

I'm not saying I don't want a job,

but it wouldn't pay for my childcare and rent,

and 'leccy and gas and shopping.

You don't want to get your wages and go "Oh, it's gone".

We get called for these interviews,

they threaten to stop your benefits,

and you go and there's nothing that works around you,

you can't get your childcare paid, or you'll find a job where

you have to be somewhere for eight o'clock, it takes an hour to get to.

And there's no childcare places that can take your child

at seven o'clock, do you know what I mean?

It's not fair getting your child up at half five in the morning.

Getting them out the house and stuff like that.

And then you struggle and paying to go to work,

having to pay towards your childcare and if the job

doesn't pay good enough to support all that.

It's like you go to work for nothing, isn't it?

You feel like people are looking at you and judging you?

Yeah, like I just bum everything off the social and I can't be bothered.

It's one of them things, you say,

"I would never get pregnant, I'd do this if I got pregnant",

but it's not easy when you are there, in that situation, you know?

To just say oh, I'd go and get rid of a baby.

I was young, put it that way.

Obviously you don't realise the impact of having

a child in your life does to you.

-You lack confidence when you've had a baby, don't you?

-Yeah.

Your body is not the same, you don't feel the same.

So, you are not just going to go out...

People who are critical of the Welfare State

and there are plenty of them, will say actually

what you should be doing is saying in effect "Pull yourself together!

"Get out there and make something of yourself".

But we do, but we don't say it like we are in the army.

I would never say to one woman,

"Right, it's time you got up and got a job and did this".

Our young people who are born today are our future.

And if they are going to grow up on benefits

they still deserve the same rights as anybody else.

It's not their fault that their parents are on benefits, is it?

If we didn't have benefits what would happen to these children?

That's the dilemma.

Politicians want to cut the welfare bill.

But how much pain are they prepared to inflict?

They asked that question in the United States

and the answer was, rather a lot.

I spoke to deputy Commissioner Lisa Fitzpatrick.

Here you are in New York City, saying,

"You got to work, you got to get out there and work."

Let's assume that a young woman applies for welfare.

She's just had a baby, she has no job, she needs money,

she says "I don't want to work.

"I want to stay home and look after my baby". What then?

She can keep claiming the benefits?

No. In our process, during the application stage,

if somebody refuses to work,

then they could be rejected, the application could be rejected.

The application for welfare?

The application could be rejected

if she is not otherwise exempt from the work requirements.

-Then her application would be rejected.

-What if she has no money?

How does she... She has got to feed her child.

She may be able to get food stamps and medical assistance,

through a separate determination process,

but for cash assistance, we have a work first motto

and we expect everyone to use and accept work as a first opportunity.

Right.

And there are some really troubling aspects to this hard line approach.

If Workfare really is working, as its supporters claim,

then they have to be able to prove two things.

One, that poverty is falling.

And that's because people who were on benefits are now in jobs.

They may not be massively better off but they are certainly no worse off.

And the other thing they have to prove is that it's not a quick fix.

And that it works not only when the economy is booming and there are

jobs for all but when it's struggling as it is at the moment.

And if that's the case, if it really is working,

how do you explain the existence,

in the middle of New York, of a place like this?

And a queue like this?

This soup kitchen and food pantry is a charity that doles out food

to New Yorkers who've fallen on hard times.

-Anything on here is two points.

-OK.

Financially, things have gotten dire and you have to make ends meet

and thank God that, uh, we have places like this.

And these are obviously much cheaper here than... these are free?

Well, these are free.

How cheap can you get, if not for free?

Soup kitchens like these have become an integral part of the American

welfare system according to Aine Duggan one of the directors here.

We, in Britain, have unemployment. We don't have soup kitchens.

You don't have soup kitchens,

you also haven't encountered the atrocity of welfare reform yet.

But you might.

The atrocity of welfare reform?

Welfare reform is one of those interesting debates in the US.

I think the beauty for the rest of the Western World

is that we are able to now look at the American System

and see what actually happened and whether or not it was a success.

And what we are seeing is that in the wake of this recession,

that safety net has literally buckled and given way under the need

among families, particularly families with children.

But if you talk to, as I have just been doing,

to City Hall here in New York,

they say the system is working, poverty is falling.

If you take a myopic approach to it, it was a very successful initiative.

One of the things we did here in the United States was

we just looked at the near term, um, successes.

And so right after welfare reform was implemented,

we were able to say things like

"There's a higher number of, single mothers with children

"earning because they're back at work".

However, we have an unemployment rate that is practically double

what it was at the beginning of the recession.

In New York City, 1.5 million people living in poverty.

So, in reality, what is happening is that we took welfare reform

and we've used it as an excuse to cut and cut and cut.

And to push more and more families out of the welfare system.

This recession has certainly sent more and more families

to soup kitchens and food pantries.

It's also left people like Yvonne Fitzner and Sharon Tetrault,

both middle aged professional women, wondering quite literally

how they will survive now they have lost their jobs.

When did your payments run out?

March 2010.

-So, more than a year now?

-More than a year now. Right?

How have you been coping?

Um, doing whatever I can to survive.

You wind up selling personal possessions,

whether it's jewellery or furniture.

My television was sold. I no longer have cable TV.

My dining table and chairs are gone.

I am sleeping on the floor of my kitchen.

I can't imagine how I am going to pay my rent or my phone.

Uh, I'm really, I'm scared. I'm just hoping for a miracle.

You keep after yourself to keep your spirits up even though many times they drop.

I go to, um, soup kitchens now.

Seven days a week a different church offers dinner.

-You don't know what to do?

-I don't know what I'll do.

There is no net, it's just full of holes.

If you don't protect the safety net,

you're next, you're next, you're next.

There's no doubt people are suffering

as a result of welfare cutbacks.

One estimate says that 40% of recipients of the Workfare scheme

have fallen through the safety net.

How can Professor Mead possibly justify that?

There is a problem here, isn't there, the hard facts.

How many people stay in work?

How many people go on to do better jobs?

About 60% were employed, that is, they took jobs.

The other 40% did not

and there is debate about whether they are worse off or not.

They are not working and not on welfare.

But it's clear that overall,

the economic effects of welfare reform are positive.

-But are they? Are they?

-Yes.

The evidence seems not to be there.

What you don't know is how many people go on to do better jobs.

Well, we don't know over a long period of time.

But we know over about 18 months after the initial reform.

If you work, chances are, you get out of poverty within a couple of years.

You don't know whether they continue to work after 18 months.

No, and the reason they don't continue work is often

the reason they went on welfare.

Namely they are not organised enough to work consistently.

So, if you're a British Politician bent on serious reform of

the Welfare State and you've come here to America

to see what they've done,

what lessons do you take back with you?

Well, what you learn very quickly indeed is that Workfare is not

the magic bullet that so many people thought it was just a few years ago.

But something has changed. Attitudes have changed.

There is a growing realisation that if you want a welfare benefit,

you have to work, one way or the other, in return for it.

And it's that sort of attitude change that might be starting here.

I came here to City Gateway in Tower Hamlets,

a charity where they work with young people on benefits,

who are trying to get into work or onto an apprenticeship.

Anyone else who'd like to have a chat about what sort of career

they are gearing themselves up towards? Cameron, do you want to?

I want to start college and start work after that.

Anybody else who is feeling brave?

Be successful at my apprenticeship, keep the placement.

-What about you? Are you ambitious?

-I am, yeah.

For six months I was at home,

then I realised, no, this ain't the right way to life.

So, I joined City Gateway and, yeah, this is what I want to do now.

These young people volunteered to be here.

What's driving many is

they don't want to be like their parents. They want to work.

Can I just ask about your parents?

Because one of the problems with people being,

younger people being out of work,

is partly because their parents themselves are not in work.

There isn't that sort of tradition of working in the family.

How many of you people,

how many of your parents are in work, in proper jobs at the moment?

Oh, my God!

So, mostly your parents are not in work? Yeah.

My mum's on maternity leave at the moment.

So she isn't actually working.

And your father?

-He don't work, he never has worked.

-He never has worked?

No, that's his life preference.

If that's how he wants to live,

let him live like that, but I am here to live my own life.

They think training doesn't get you nowhere.

Your parents think training doesn't get you anywhere?

You didn't look at your parents and think,

they don't work, so I guess I don't need to work?

Nah, I want to do something with my life.

I tell them, I want to change my life.

-So you look at them and think I want to be different from them?

-Yeah.

Well, good luck to you.

You, you don't want to?

It's encouraging that these young people who had the worst possible

start in life appear not to have the sense of entitlement

that you might expect of people in their circumstances.

But the hard reality is that they seem to be the exception.

That sense of entitlement has grown and the public doesn't like it.

And politicians respond to the public mood.

In the many years I've been reporting on politics,

one way or the other, in this country,

I don't think I've ever seen quite such a strong consensus at

the top of the political parties on both sides of the political divide.

That something must be done to reform the benefit system.

You know what your values are,

but they are not the values being rewarded in our benefit system.

Welfare began as a lifeline,

but for too many it's become a way of life.

We can never protect and renew it if people believe it's just not fair.

Generation after generation in the cycle of dependency

and we are determined to break it.

So what is the future Welfare State for this country?

Another Welfare revolution?

Well, maybe, and this one if it does gather momentum,

will edge us back towards the original Beveridge vision.

And that would mean that the age of entitlement has ended.

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