Benefit rules have ‘trapped thousands in illegal work’
Work and pensions secretary James Purnell has heard how rules designed to encourage people into work are trapping thousands in the cash-in-hand economy.
Current and former claimants told him how they had ended up working illegally just to make ends meet. Ministers are now being urged to amend the welfare reform bill to help people on benefits move into legitimate work.
A coalition of more than 50 organisations led by East London-based Community Links wants the government to scrap rules which, it says, force thousands of people to work without declaring their earnings.
'Every morning we see a queue of people wanting our advice services who are struggling with the sort of issues we are talking about today,’ said David Robinson, Community Links’ co-founder.
The campaign, Need Not Greed, is calling on ministers to create stronger incentives for claimants to move into formal work by scrapping rules that stop benefit entitlement when someone works more than 16 hours a week.
It says these changes could be made during the welfare reform bill’s committee stage in the next few weeks. It also wants more generous earnings disregards, which have not changed since 1988.
At present benefit is deducted once a claimant earns more than £5 a week – less than one hour’s work at the minimum wage.
The coalition, which includes Oxfam and the TUC, is also calling for more generous housing benefit entitlements and support for ‘transition’ projects designed to help people move from informal into legitimate work.
Terry Owens, founder of the business support agency InBiz, which has helped nearly 24,000 people into self-employment, said he wanted the informal economy decriminalised.
‘At least 40% of the people we work with are working to some degree in the informal economy. For me this is a totally natural phenomenon – it’s the way people get business ideas and develop them. They do it from their hobbies or from skills they are asked to use.’
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