Oxfam is today (Wed) calling for a range of measures to help the millions of people in the UK who are stuck in the benefits trap.

Oxfam's report, Struggling with the System, says the common misconception that all people on benefits are scroungers simply isn't true and the system itself is playing a huge part in holding back those who want to find employment.

The report follows Chancellor George Osborne's announcement that his Budget would "reward work and protect the most vulnerable in society". Yet last week's Budget featured a number of stealth cuts in benefits, regardless of whether there are any jobs available, and without steps to make sure that work pays enough to live on.

Oxfam Scotland's UK Poverty Programme Co-ordinator, Jim Boyle said:

"Our welfare system is broken and needs radical reform. Making sure that work pays means asking whether jobs are available rather than just decreasing vital social protection.

"We need a welfare system that is fit for purpose and fit for the reality of 21st Century Britain. A system that does not punish those who can't work, and that actively helps people who can move into jobs.

"We want the government to commit to a new system that is fast, flexible, and above all one that is fair."

The benefits system was designed for a time when people could easily move into a secure 'job for life', but this simply does not reflect the reality of today's job market. Insecure, part-time and badly paid work is not giving people enough of an incentive to move into employment, since many wouldn't earn enough to make leaving benefits and taking up work a rational choice. As it stands, those taking low-paid part time work lose nearly a pound of benefits for every pound they earn.

To address these problems, Oxfam wants to see a reform of the system that makes sure:

* Work is seen as an incentive, not a punishment. People should be allowed to keep more income from paid work before their benefits are taken away. Anyone coming off benefits should be able to keep 45 pence in every pound they earn, until they can earn more from work than benefits.

* Everyone has enough money to live on, whether they are in or out of work. The amount of money people get in benefits should rise in line with whichever is the highest from: average earnings, current prices or inflation, which is how pensions are calculated. If this had been in place since 1997 it would mean an extra £15 a week for those on jobseekers allowance.

* The system becomes less complex, frustrating and dehumanising for those who have to make a claim. Navigating the benefits system is a nightmare and people often struggle to get what they are entitled to. Nobody should have to resort to loan sharks or credit cards to pay their bills because of a gap in income between benefits and work.

* Lets people on benefits get paid for community work. Thousands of people on benefits do unpaid work in their communities. Paying them the minimum wage to do so would make this a crucial stepping-stone back into employment and help them to build skills and confidence.

* Treats everyone as individuals, rather than having a 'one size fits all' approach. The current system does not take into account peoples different needs, such as caring responsibilities or child care. Family benefits should be paid in two equal halves, to make sure women - who are usually responsible for feeding the family - get a fair share.

The think tank Reform will today host Work & Pensions Secretary Iain Duncan Smith and the Government's Poverty Advisor, Frank Field, in a debate about the future directions of welfare reform.