The Bank of England wants us to make sure the ship has lifeboats in case of need. It hasn’t asked us to man them.

The Bank of England has offered us a range of scenarios, anticipating potential outcomes from different types of Brexit, based on a long series of assumptions.  These, for example, are possible eventualities relating to unemployment:

Jacob Rees Mogg has been complaining about the ‘wild inaccuracies’ of previous Treasury forecasts.  That’s quite irrelevant.  A projection is a conditional statement, saying what will happen subject to certain assumptions; a scenario is an alternative possible future; a prediction is a statement about what will happen.  Projections and scenarios are not predictions.  Putting lifeboats on passenger ships is not based on a prediction about what is going to happen; it’s a preparation for a particular scenario.  It doesn’t mean the ship is sinking.  Mind, in this case it might be.

Some remarkable graphics from the World Bank

The World Bank has published a series of graphics outlining progress on the Sustainable Development Goals. I’m hopeful that this example will display properly on your systems and that you’ll be able to see what I’m seeing.  Click on the arrow in the centre to see the animation.

Among the many other insights, the graphs show that in many places boys are more likely to suffer malnutrition than girls, and that cash transfers – including unconditional cash transfers and pensions – are the most likely form of social protection to benefit the poorest.

Poverty and social security

I went today to a seminar for early career researchers, most of whom are working on issues related to social security.  That is, of course, a terrible idea; I spent most of my career trying to interest people in social security issues, and look what happened to me.

Adrian Sinfield, who reflected about the changing situation in Scotland, gave one of the presentations,  He was very kind about a book I wrote more than 25 years ago, Poverty and Social Security: concepts and principles.  However, as I’ve explained to Adrian, I’ve had some reason to think again about that book, and I wonder if I didn’t make a strategic error in writing it.   If we want a social security that treats people with respect and dignity, it’s important that people should see it as a part of everyday life, not as provision for the poor, or even a safety net for exceptional  circumstances.  It’s not necessarily a good idea either to focus a discussion of social security on its effects on poverty, or conversely to identify poverty with the receipt of social security benefits.   The discourse has shifted since, and discussions of social security tend to be hijacked by discussions of employment; that is even less appropriate.

Takeup is falling among private renters

The new figures for takeup of means-tested benefits show an interesting trend.  Takeup is falling, and the initial impression given is that there has been a slow, marginal fall in in takeup overall.  However, the fall is not the same across the board.  The takeup that has most clearly fallen relates to the housing costs of private tenants.  It seems unlikely that this is driven by increasing ignorance about benefits, and that tends to suggest that something is happening in the private rented market – most likely, that landlords are restricting access for claimants.

The Brexit agreement is not great, but it’s all we’re going to get.

The Brexit agreement is  largely a pragmatic document which tries to steady the ship, rather than a major breakthrough in any direction.  Fisheries, for example, are not resolved – they’re simply put into abeyance before  for the next round.  The whole document looks like a draft, with loads of white space around sections – when a Labour spokesman talked yesterday about it being 600 pages and ‘tightly spaced’, it was clear he’d not even looked at it, because he couldn’t have said that if he had.

Some elements in it are disappointing, but to my mind the sections which most prompt concern almost certainly reflect the negotiating position of the British Government.  I’d point in particular to

  • Article 15(1), which gives people a right of residence only after they’ve been in athe host country for five years.  That is an abdication of responsibility both by the EU (which guaranteed movement as a fundamental right) and the UK (which made the same guarantee to its own citizens).
  • Article 92(5) and Protocol IV.7, which bind the UK not to offer state aid to business; and
  • Protocols V.17 and 18, which void elements of contracts which have non-commercial justification, a principle used to negate local minimum wages and agreements with labour unions.

It’s also important to note what’s not there: protection for the rights of citizens who might reasonably expect to live and work abroad but have the misfortune to be domiciled in their home country  at the moment, cross-border families in the same situations, or derogations from EU law relating to internal management of the British economy.

These are not, I know, the issues that most excite our politicians.  I’m sure someone will notice that the protocol with Northern Ireland stresses the importance of  access to the UK for goods from the province (pp 304 and 313), but not vice-versa.  It’s possible that the whole agreement will founder on that.

The agreement could have been better.  It would have been better if the government had thought through its position at the start; if it had consulted with interest groups, rather than keeping negotiations secret; and if it had used EU law to hold the EU to its treaty obligations.  It probably would not, however, look a lot different from the document we have now.  Ultimately I expect Parliament to fold, but even if we were to go through another election any commitment to implement the referendum decision as it stands will end up looking something like this.

Brexit should be stopped, but I’m not convinced that the way to do it is by a second referendum.

Brexit should be stopped.  We can debate what the duties of a government are, but I’m fairly sure that it doesn’t include a direction to drive the bus over the edge of a cliff.

However, I’m not convinced that the way to do this is by another referendum.  That would imply that if the referendum was to confirm the original decision, we should abide by the majority’s decision, and I do not accept that we should.

There were three obvious problems with the referendum in 2016, and all of those problems are still there.  The first problem was that several million people were directly and immediately barred from voting.   Those people included British citizens living in Europe, and European citizens living in Britain. There is no possible revision to the electorate which will not lead to one side or another crying ‘foul’.

The second problem was, as we now know, the combination of illegality and downright lies that characterised the campaign to Leave.  There is no reason to suppose that the next campaign would be any cleaner.

The third problem would be true of any referendum.  It is democratic to encourage people to express their views, and we have a convention that decisions are decided by majority rule.  However, it is not democratic for any majority, ever, to deny rights to minorities.  We should not tolerate a situation where half the population votes to extinguish the rights of the other half – and that, in effect, is what has happened.

When the government accepted the brief to negotiate exit from the European Union, their first responsibility – and the first responsibility of EU authorities on the other side – was to defend the fundamental rights of citizens.  Both sides have a clear, unequivocal, treaty-based legal obligation to safeguard individual rights.  Both sides have failed to do so.

The Work and Pensions Committee is critical of sanctions

The House of Commons Work and Pensions Committee has reported critically on the sanctions regime.  The Committee recommends that

  • sanctions should stop for people who do not have capacity for work
  • there should not be in-work sanctions on UC until the system is fully operational
  • deductions should not be more than the benefit
  • there should be clear rules about what is a good reason for non-compliance
  • there should be warnings before the first sanction, and
  • families with young children should not have more than 20% of benefit deducted.

They accept that “Sanctions must be a last resort and claimants should be able to challenge the decision before it is imposed.”  That alone would make a marked difference to current practice.

This could have gone further. The DWP has no evidence about the effects of sanctions in most cases, and the Committee asks them to get some.  That looks like a recipe for delay, because there’s no shortage of other evidence. Looking over the recommendations, the Committee clearly sees no good reason to sanction people who have no prospect or reason to go to work instead – and that is the vast majority of people who depend on ‘working age’ benefits.

Additional note, 24th November:  Michael Adler has posted a detailed summary and critique of the Committee’s report.

The Budget doesn’t do much for benefits

The main story in the Budget is about Universal Credit, but the measures taken fall rather short of what would be needed to save the benefit.  The  Work Allowances are increased for some, but not for people without children – a high proportion of current claimants, because they went on the system first – and one of the main effects of cutting the Work Allowance has been that they have little reason to remain in contact with the scheme as income fluctuates.    Most of the administrative problems are untouched, and a slightly slower rollout (still continuing, but slowing by a few months) is not going to make much difference to them.

The other part of the Great Plan, which is less noticeable, is a declaration of the intention to continue with the abolition of Housing Benefit by moving to a Housing Credit within the Pension Credit system.  This provision was set up rather a long time ago, in 2011 – I have to admit I’d forgotten about it – and it will take a long time, now planned for late 2023, to be fully implemented.  At the time the government suggested, bizarrely, that combining Housing Benefit into Pension Credit should improve takeup.  It will probably have the opposite effect.  Housing Benefit is more effectively accessed than PC; that’s probably true because social landlords steer their tenants towards an application, and they won’t be able to do the same with Pension Credit.

There’s another issue besides.  We’ve seen in Universal Credit that the effect of transferring Housing Benefit back to the DWP has been to create confusion: DWP officers don’t necessarily know about housing (for example, what a tenancy is) or what they need to do.  (We had the same problem in reverse when the DHSS initially transferred responsibility for rent to local authorities in 1982.)  Killing off Housing Benefit will also finally kill off the expertise of local departments that learned the hard way how to make the system operate despite its arcane rules.

ScotPHP: Scotland can use benefit and tax powers to improve people’s health

I missed it when it came out at the beginning of this month, but an interesting report from  the Scottish Public Health Observatory has been trying to identify the possible impact of new benefit policies in Scotland on the health of the population.  The figures are complex, but the basic principle behind them is reasonably straightforward.  Their argument is built on the case that higher income leads to fewer deaths and less health inequality.  Effectively, then, their report is an assessment of the potential distributive impact of different policies in Scotland.  Critically, however, the distributive impact they are considering is not the distribution for individuals or households, but for deprived areas.

Part of their summary is a fairly confusing graph, which seems to suggest that the best method by far would be to increase means-tested benefits by 50%.  The comparison being made, however, is with other policies with very different sizes and shapes – for example, increasing takeup by 1% (a very marginal increase, costing little) or introducing Citizens Basic Income and abolishing all other benefits (a very major change, costing a great deal).  The details about what’s covered and what’s not are sketchy, and the figures are, of course, indicative rather than certain.  The core of the message is this:

increasing means-tested benefits by 50% is modelled to have the biggest effect on reducing premature mortality (5% prevented) and narrowing inequalities in premature mortality (-8%). The results also suggest that the real Living Wage, Local Income Tax and increasing devolved benefits by 50% would be good policies for reducing premature mortality (~2% prevented for each). The two illustrative CBI schemes are also likely to be effective at narrowing health inequalities (-4% for CBI, and -6% for CBI Plus).

In the supplementary papers, Table 2a, it’s possible to find a statement of costs per outcome.  This also needs to be treated with caution, because the costs of CBI cannot be introduced in part; but the best value for money, in the sense of effect for each pound spent,  comes from CBI , improving DLA and PIP, increasing takeup and increasing basic means-tested benefits.  The powers of the Scottish Parliament don’t cover all these options, but they do include powers to improve disability benefits and to increase takeup.  There’s a case to consider, but there has to be a major reservation: at the level of individuals and households, there would be losers among those who are poorest.

The Economist still likes the idea of Universal Credit

The Economist this week describes Universal Credit as a good idea, badly done.  We can agree at least on the second part.   Here are three justifications they offer for thinking it’s a good idea.

“Streamlining benefits into one monthly payment will eventually make the system easier to deliver.” 

Combining six benefits into one doesn’t actually streamline anything.  Universal Credit ‘brings together’ a range of benefits, but unemployed people are still subject to rules on unemployment benefits, sick people are still subject to rules on sickness (and work conditionality, too!), the housing components are still subject to all the rules on housing benefit, and so on.  Lumping everything together in one mass makes for one, highly complicated benefit.  It also  adds one potentially catastrophic complication: actions which lead to the revision of entitlement in one component (such as changes in household details, or the application of conditionality) can lead, catastrophically, to an interruption or cessation of entitlement.

“It removes perverse incentives whereby somebody moving from welfare to work can lose about as much in benefits as they earn.”

There is a slight mitigation of the ‘poverty trap’, because the interaction of Housing Benefit and Tax Credits are removed for some; but since the taper is 63%, further deductions are made from salary for National Insurance and tax, and the system doesn’t include Council Tax rebates, the  marginal rate of deduction is typically 70-74%, and can be more.

“Allowing people to make a single application for all their benefits should improve take-up, and so reduce poverty.” 

Requiring people to negotiate a complex system, with limited flexibility about application details, has caused major problems in access – check, for example, this blog entry on the NAO report in July – and that can be expected to appear in takeup figures in due course.

It seems, however, that the myth that Universal Credit was sound in principle refuses to lie down and die, despite being shot, stabbed, buried, set on fire and otherwise subject to refutation.   When the scheme was first mooted in October 2010, I wrote that it was over-simplified, impractical and couldn’t achieve what the government claimed it would achieve.  If government sets up a scheme that can’t possibly work, it shouldn’t be surprising that it will make a mess when it’s  put into practice.