Evidence to the Welsh Affairs Committee on Universal Basic Income

I gave oral evidence to the Welsh Affairs Committee at a session on November 3rd, and have only just got round to reading the transcript, which is here. I made three important reservations about Universal Basic Income: the distributive impact, especially if it was to be funded by closing down existing benefits; the impossibility of defining a level that would be ‘adequate’; and the many other purposes that benefits have.

There are two points in the transcript at which the MPs misconstrued what I was saying, and while the format of the session wouldn’t allow me to go off on a tangent to explain, I can clarify the points here.

Q116 was not addressed to me – it was answered by Jonathan Williams.  Q117 was, and Geraint Davies MP seems to have taken me to mean that people should be forced to work. I can’t see where he got that from, which makes it difficult to answer; I said no such thing, and wouldn’t.  I did say that conditionality does not work and was counter-productive.

In Q143, Robin Millar MP thought I was arguing to ‘tweak’ the system. This, at least, is an understandable misapprehension; I should have been clearer. I have argued, here and elsewhere, to break up big benefits into smaller ones.  However, I don’t think that’s a ‘tweak’ – it would be a fundamental reform.  See, for example, my blog on How to abolish Universal Credit.  The rationale for redesigning the system about simpler,  smaller benefits with common pay-days is that then ‘income packages’ – the money people finish with – can be adapted to their needs without massive intrusion or putting everyone on the same conveyor belt.

 

Universal Credit never fails to confuse

A research report from the IPR at Bath University began by trying to examine the impact of the £20 uplift on claimants, but hit a snag; many claimants haven’t a clue about how the uplift works, or even if they were receiving it. “Of the 56 participants, less than half said they were aware of the uplift (25/56); over half (31/56) were either not aware (28/56), or not sure (3/56).”

I didn’t even notice to be honest … because it doesn’t say that on the statement I don’t think … because his wage … can be different every
month, I never really know what we’re going to get UC, it doesn’t stay the same …

This shouldn’t come as a surprise.  Over time I’ve reported a catalogue of problems with the design of the benefit, and this one comes up repeatedly. More than ten years ago, I was complaining that “It can be hard for claimants to know whether they are entitled, how much they are entitled to and – just as important – when they should stop receiving the benefit.” The same point has been made by an All-Party Parliamentary Group.  The IPR report concludes:

We hesitate to call these effects ‘unintended’ or ‘design flaws’ because, in the main, they reflect how UC is intended to work.

“Experts by experience”?

A group of ‘experts by experience’ have developed a series of proposals for the reform of social security.  I’ve just been listening to their presentations.  They claim that

“Commissioners as Experts by Experience cut through organisational and interest group silos and fragmented debates about poverty, instead providing a holistic perspective, with an ability to focus on fundamental core issues and anchored in lived experience of the system.”

I don’t think that’s borne out in practice.  The Commisson’s principles, asking for dignity, respect and adequate benefits, are unexceptionable.  The point which set the alarm bells ringing for me, however, was the proposal to replace PIP with a different benefit to meet the costs of disability. If we look now at the rules for PIP, or at the previous rules for DLA, we should be able to see that the assessment is not an assessment of costs; that the levels of benefit are not related to the costs, but to the severity of the disability; and that another service which does consider the costs, as part of the social care system, has a different reach and scope to these  benefits.  The idea that PIP was meant to meet extra costs largely began with the introduction of DLA, 1993-94.   But the benefits it was based on – Attendance Allowance and Mobility Allowance  – weren’t there to meet extra costs.  Attendance Allowance, despite the name, was always a benefit for severe disability rather than attendance as such, and it was explicitly introduced (in 1970) to supplement the depressed incomes that people with disabilities had to suffer over the long term.   That’s an important principle, that we shouldn’t lose sight of.

When people claim to be ‘experts by experience’, it seems to chime with a lot of the ideas that have informed participation and diversity in the development of policy.  The central claim, which I have  no problem with, is that people with disabilities have expertise relating to their own disability.  That squares with one of the core propositions that has guided social care policy in recent years: Nothing about me, without me.  There’s an influential literature about user participation in policy-making.  Over the years, I’ve done a certain amount of work, as a researcher and policy analyst, based on the principle of empowerment.   A lot of qualitative research consists of listening and recording what people say, and I’ve mentored groups of people in poverty undertaking participative research projects, so that they can do as much.  That’s less a matter of expertise than of attitude: valuing what people say, treating it seriously, conveying people’s feelings and experiences in their own words.   

The claim to be ‘experts by experience’, however, goes some way further than that.  The group  which has formed these proposals had drawn on a combination of people with disabilities and community activists.  The idea that they are “expert” appears to stake a claim that people with  personal experience  have an expert’s general understanding of people with different personal experiences from theirs.  And there, with regret, I must beg to differ. There are three evident problems.  The first is that a group of this kind can’t conceivably represent the range and diversity of experiences out there.  Most benefits go to pensioners: this is a group which is largely of working age. Most unemployment is transitional. Most people with disabilities don’t identify themselves as disabled: they’re ‘managing’, or ‘not really disabled’, or disabled ‘sometimes’. The claim to ‘expertise’ dispenses with the need to cover the range of experience.

Second, activists are different.  This is well-known in political research, where the views of activists are always a bit more pronounced than the mainstream – that’s why they’re activists.  Activists in social security are more likely to be long-term recipients, from which it follows that they’re also in situations that change less rapidly than many others, in more unpredictable and precarious situations.

Third, the kind of ‘expertise’ that people develop is typically formed in relation to current policies and politics.  Claimants’ understanding of the arcane systems they’re being asked to comply with are conditioned by the current shape of benefits.  Very few people will know or remember that there were once earnings-related Unemployment Benefits, or higher rates of Invalidity Benefit for people who suffered disability at an earlier age, or a One Parent Benefit, or a Non Contributory Invalidity Pension; this kind of option disappears from view.

We need, of course, to take the voices of claimants seriously.  They have a right to be heard, and information we can’t obtain without engaging them.  Calling them “experts by experience”, however, is not the way either to get the greatest level of participation, or to get to the meat of a policy.

Academic freedom: where do we draw the line?

Currently there are two prominent controversies relating to ‘academic freedom’.  One is the case of Kathleen Stock, who has written a book that is critical of the concept of ‘gender identity’.   Professor Stock has been the subject of threats and anonymous vilification, and has been disowned by her university’s union.  The other is the case of David Miller, who has not just used his teaching position to declare that there is a Jewish conspiracy to dominate the world, but has accused Jewish students in his university of taking part in it and being the pawns of a malign foreign power.

I think these two cases are rather different.  Miller’s embrace of conspiracy theory is odiously racist, but there are lots of objectionable positions that people take in British universities – among them, people who will happily argue for eugenics, racial inferiority, and survival of the fittest. The academic advocates for letting Covid rip have contributed to the deaths of more people than they could have if they’d gone into a lecture theatre firing a sub-machine gun.   If Professor  Miller had stopped at conspiracy theory,  I doubt that much would have happened.   The line he crossed was to level an accusation at a group of students within his university who should be “directly targeted”.  Miller claims, probably correctly, that this is not unlawful: defamation only becomes unlawful when it relates to identifiable individuals within a group.  But academic freedom is not unlimited, any more than any other sort of freedom.  It cannot be legitimate to threaten or invite people to attack those  who are subject to your authority: that is an abuse of power.

Kathleen Stock’s position is very different.  She has been accused of ‘transphobia’ for daring to take a different view from other people.  The statement from her local union branch comments that “Public discourses regularly devalue the lives of trans and nonbinary people, and appeals to both employment rights and academic freedom are often instrumentalised.”  Maybe so, but that has nothing to do with Kathleen Stock. I have read her book, Material Girls, and I did not see anything there which might suggest that trans people do not have the right to live their own lives in their own way .  She writes, on the contrary:

Trans people are trans people. We should get over it.  They deserve to be safe, to be visible throughout society without shame or stigma, and to have exactly the life opportunities non-trans people do.  Their transness makes no difference to any of this.  What trans people don’t deserve, however, is to be publicly represented in philosophical terms that make no sense.

Her main objections are to subjective claims to a gender identity, and from there to men who wish to occupy the same spaces as women.   (I think she dismisses the  social construction of gender rather too easily, and tends to conflate it with subjective self-identification – but so do her opponents.  Law, finance, culture and language are also socially constructed; that doesn’t mean they are subjective. Nor is gender.)  There is a discussion to be had, and if we cannot accommodate that discussion in reasoned terms, we will all be the poorer.

Poverty in Scotland 2021: a report from the JRF

I was listening today to a seminar for Challenge Poverty Week, covering the latest report from the Joseph Rowntree Foundation on Poverty in Scotland . The report identifies six main ‘priority groups’ which put children at a greater risk of poverty.  The groups are

  • families with children under 1
  • larger households
  • single parents
  • people in minority ethnic groups
  • families with a disabled person, and
  • workless families.

There are no great surprises in that.  I think, from memory, that this pretty much reflects the findings of the Royal Commission on the Distribution of Income and Wealth in the 1970s, with a substitution: pensioners don’t feature, leargely because this is about child poverty, but the position of minority ethnic groups has been recognised.

The next question, however, is what to make of the information. Shona Robison, for the Scottish Government, clearly thought that a focus on these priority groups was the way to break the ‘cycle’ of poverty.  She suggested that the government would be offering ‘bespoke’ responses to families in this position and recommended better paid work as the way out.

There are problems with that.  The place to start, perhaps, is with the statement that these people are at greater risk.  Yes, the risk is higher, but that doesn’t mean either that all these people are poor (the highest proportions are those in minority groups, and people who are disabled) or that people are trapped in poverty.  Low-income poverty is a position that many people pass through.  Very young children are important, because women’s capacity to earn is impaired.  Worklessness is important, but work is no guarantee of coming out of low income.  Precarious work is widespread, and part of the problem.

The other main problem relates to the assumption that people and families can be targeted on an individual basis.  Poverty is a moving target, and most attempts to deal with it by targeting are doomed to failure: people’s incomes fluctuate, their household status changes, they do whatever they can to improve their situation.  What we need is not a set of individualised responses, but a reliable, predictable foundation of the benefits and services that make it possible for people to secure their position.

Is the government replacing its £6bn cut in Universal Credit with a £1bn reduction in the taper?

It’s being proposed, apparently, that the way to compensate for cutting Universal Credit by £20 a week is to reduce the taper from 63% to 60%.  This is, from the point of view of claimants, a very small concession.  It would mean that, if they earn £200pw, they would be able to retain all of £6pw in UC, or potentially less than £4 pw lif they’re then subject to tax, National Insurance or loss of Council Tax Reduction.

This very marginal change will cost, according to government sources, will cost £1bn, in place of the £6bn that the current uplift is costing. The second of these figures makes some kind of sense.  There are currently about 5.8 million claimants of UC, and at £1040 per year the cost would come to just over £6bn.  But the first figure is one I can’t untangle at all, and the scrappy information available on the DWP’s Stat-Xplore site doesn’t help much.

I’ll start with a previously published figure, one which I have to admit I’d simply let pass without even noticing it. It was a claim, when the taper came down from 65% to 63%, that the cost would be £700m. On that basis, each percentage point on the taper costs the government £350m or so.  From that, it seems to follow that pulling down the taper by another 3% would cost  over £1bn.

When I start to think about it, however, that crude calculation doesn’t look as if it can be right. On current estimates (a forecast for this year) there are 2.3 million people  working and receiving UC. Cutting the taper for someone who is already earns £10 pw would allow them to keep an extra 30p in benefit. (If they’re not working, and have no other additional income, they wouldn’t get anything extra.)  To cost £1bn, the average income of people who are working and claiming benefit would have to have an income in the region of £300 pw – more or less, a full time minimum wage – and that would bring them all to the point of paying tax and National Insurance, which would claw back more than a quarter of the apparent benefit.  Are all the working people who get UC on at least a full time minimum wage?  Perhaps others can find the data to support this, but I can’t tell.

The situation is more complicated,  because the rules are complicated.  The work allowances (which aren’t actually ‘allowances’, but let’s not go there) are only there for families with  children, who might well use them, and people with limited capacity, who probably won’t.  There’s a difference in the allowances between people who rent and people who don’t. For higher total incomes, there’s a benefit cap.  It’s hard, then, even to say how many UC claimants are directly subject to the taper, or what their total income will be. The tally will certainly include single persons in employment, and it will probably include low-income families who are buying  a house, but I haven’t been able to extract figures that give me a sensible size for either group.  What I think I can say, at least, is that there isn’t a firm, clear constituent group who will certainly benefit from this concession.

It would be possible, and distributively fairer, not to reduce the taper, but to increase the work allowance, ideally making it available (as it used to be) to people without children. That would give a limited but determinate benefit to anyone  who works while on UC.  A government that was better disposed towards people on low incomes might be more inclined to retain the £20 uplift; but then, a government that was better disposed wouldn’t have introduced this nightmarishly complex system in the first place.

Keir Starmer’s vision is lukewarm about principles

In a pamphlet published by the Fabian Society, Keir Starmer lays out a series of policies and priorities.  There are brief – very brief – genuflections in the direction of child and pensioner poverty, though the only policy I can see that is related to either is the fleeting suggestion that there has to be a reduction in poverty-related lack of educational attainment.   On benefits, Starmer offers us this:

We would replace universal credit and reimagine our social security system to ensure that work pays. We want low-paid people to keep more of the money they earn, so that having enough money to raise a family isn’t the
preserve of the better-off.

Apart from replacing Universal Credit, that looks a lot like some standard Conservative pledges: make work pay and cut taxes.    On the first, there’s a simple problem: making work pay is done by making work pay, not by changing benefit systems.  On the second, while it’s true that low earners have important problems, the central issue is not  about money deducted from earnings.  For low earners, the most obvious problems are income security, the costs of housing and child care.  However, most people on benefits are not earners.  They’re pensioners, they’re sick, they’re full-time carers, or they’re unemployed.   Politicians in both major parties have fixated on the relationship of benefits to the labour market; it’s only a small part of what benefits do.

If Starmer’s priorities are not about well-being, or poverty, what are they about?  What he has to say about public services looks like this:

we must face the future. That means a new settlement between government, business and working people. It means completely rethinking where power lies in our country – driving it out of the sclerotic and wasteful parts of a centralized system and into the hands of people and communities across the land. It means banishing the culture that unthinkingly accepts public services not keeping up with the sort of advances we have come to expect in the private sector.

In what respect are our public services inferior to the private sector – apart from funding?  Who thinks our NHS is wasteful – seriously? How can it be acceptable to focus on “government, business and working people” – the corporatism of the 1970s – when a quarter of the population are not part of any of it?    There is nothing in this pamphlet I could relate to disability or the dispossessed.

This is not an argument for Labour’s former regime – I’ve previously commented that the 2017 manifesto  was ‘pretty feeble stuff’ and the 2019 manifesto was mainly reactive.   Labour may not have lost its way completely, but the lack of an agenda for public services, well-being or disadvantage doesn’t help to dispel the impression.

At the risk of being doggedly unfashionable, let me go back to Anthony Crosland in The Future of Socialism. Socialism was, Crosland explained, ‘a set of values, or aspirations, which socialists wish to see embodied in the organisation of society.’  Those values included empowerment, the  progressive removal of disadvantage, and mutual responsibility: the ‘Liberty, Equality and Fraternity’ of the classic left.   Many modern-day socialists would want to add the core principles of democracy and human rights.  The Labour Party is a party of values, or it is nothing.

 

 

A utopian vision of money for everyone

One of the Zoom sessions I went to today was fuelled by optimism about a most unlikely scenario: the idea that the United Nations should provide people around the world with a universal basic income.  The advocates were arguing that the money could be raised to pay everyone $30 a month, and that it should be.   Their position paper can be read here.

I don’t want to dismiss this as a thoroughly bad idea.  In the course of the last 20 years or so, many countries have been introducing cash support for their populations, that support can make a huge difference to people’s lives, and the support doesn’t have to be conditional. The case is well made in a short book by Hanlon and others, Just give money to the poor (2010), and reinforced by the experience of small area provision in India and Kenya.  (These experiences don’t translate well into a case for the same policy in developed countries, where BI proposals are often being developed in terms that will not improve the incomes of many poor people, and may make some worse off.)

Nor do I see the proposal as being intrinsically unaffordable.  It would call for redistribution from richer countries, but that already happens in the form of Oversesas Development Assistance.  Asking the UN to take it on seems like a long shot, but the UN is at least an appropriate forum for discussion: the UN’s Guiding principles on extreme poverty and human rights marks out their interest in the area.

The core problems are somewhat different.  The first question to ask is obvious: is this the greatest priority? People in developing countries need money, but many of them are poorly integrated into any formal economy where the money can best be spent. Other contenders for support might be health care, education, water, and sanitation – all of which are essential to welfare, but probably better delivered without depending on private, commercial markets.-

The second problem is logistic.  How does one distribute money to seven billion people – or even to four billion?  I raised the point on the forum, and the answer came back: mobile money wallets.  For which people need first to have access to electronic devices, and the means of powering them, and local providers need to have the means to process the payments.   It’s not much of an argument to say this has been done in small communities.  Implementation changes with scale.

Advocates for Basic Income are not all utopians, but the curse of Basic Income schemes has been a common failure to think through how things can practically be done, and what the rules should be.  Who gets the money? Do they have to claim? How is the money paid? How are children to be treated? How can we ensure that the money is used by the person it’s intended for? What happens when someone dies?  These are the sort of details that experiments in BI ought to have engaged with and sorted long ago – not all the nonsense about incentives and behaviour change.

Shortages were predicted.

The shortages that have followed Brexit are no surprise; we knew they were coming.

The most basic principle of international trade, ‘comparative advantage’, depends on the idea that people and countries can be better off if they specialise in the things they do best.   The European Union was founded on that basis.   Specialisation also increases mutual dependency, and that is a good thing; it makes war more difficult.  However, it can also have negative consequences.  As countries and regions build on their strengths, there will be a certain amount of disruption – what free market economists like to call ‘creative destruction’.  The European  funds – the Regional Fund and the Social Fund – were designed to compensate and offer some protection to the people and areas which would be displaced as local industries focused more on local strengths, and moved away from those activities where it made more sense for that work to be done somewhere else.

It was clear, for a long time before Britain joined the EU, that a range of Britain’s longest-established industries – coal, textiles and heavy engineering – had largely ceased to be sustainable as competitors entered the field.  When Britain joined the EU, there was further displacement in a wide range of other areas, such as agriculture, car production and electronics.  Conversely, the British economy came to depend increasingly on fields of activity where the UK was relatively successful – areas such as  finance, scientific research, education and culture.

Currently, there are shortages in a wide range of areas.  Some are obvious, and should have been predicted, like the shortages of HGV drivers or agricultural workers; some less so, such as the shortage of phials for medical samples or building materials.  Our expertise in theatre or banking  was never going to be an effective substitute. What was evident from the outset was that there was always going to be a wide range of activities which the British economy no longer had the capacity to do, and would have to import until a home-grown industry could develop – if it ever does, because there are things that can always be done more effectively somewhere else. It’s built in to the nature of international trade.

 

More money for residential care? The system needs reform first.

There’s a debate raging about how to pay more for ‘social care’, but it’s mainly a debate about how to pay for the largest cost, which is the price of residential care.  A year in residential care can easily cost £40-50,000. It’s residential care that is most likely to eat up all a persons’s savings, along with the value of their house.

Unfortunately, the finance of residential care has been based in a deeply exploitative model, and the conduct of a few of the largest providers, while legal, is open to question in terms of the use of funds, the stability of the operation, and the quality of the service provided.  I’d recommend a critical report from 2016 by Burns and others, called Where does the money go?  They explain how a complex series of financial transactions have been used to milk the system of money, and most of it finishes in tax havens.  Operational companies, which actually provide the care, are separated from property companies, which charge them rent.  The operational companies are loaded with debt at excessive rates of interest, paid to finance companies.  Management services are subcontracted to other companies within the group.  And so it goes on.  The authors comment:

Putting more money in to the system via higher weekly payments per bed will not produce a robust and sustainable care home sector when the financialised providers are so adept at taking money out.