Author: Paul Spicker

The Resolution Foundation loses sight of what Universal Credit is really like

I listened on Monday to a discussion at the Resolution Foundation of a new report, In Credit.  The participants seemed on the whole convinced by the proposition that UC has simplified the system, that the process of digitisation has worked well (especially in the pandemic) and that the central issues now concerned the adequacy of the benefits rather than the design of the system.  At the same time, reports from other organisations  point to serious structural problems with the benefit.  An outstanding report from CPAG  goes methodically through the processes of claiming, decision making, official communications and failures in the management of disputes. And research from Bath University’s Institute for Policy Research  criticises the rigidity of the assessment system and the drastic volatility and unpredictability of the income that is being provided.  “Monthly fluctuations in UC were ubiquitous, frequent and sometimes very large. ”

Someone has to have got this wrong, and in my view, it’s the Resolution Foundation.  They acknowledge that there were ‘teething problems’ at the outset.  It’s much worse than that.  The early years were a complete disaster, which is why the programme had to be ‘reset’ and massively overspent, but the system failed then, and has failed ever since, to meet any of its declared objectives.   I’m not going to go through everything I’ve said about this on this blog, but here are a few salient points.

The declared aims of Universal Credit have shifted frequently over time, but in general they were claimed to be:

  • the simplification of the system
  • reducing fraud and error,
  • reducing worklessness, and
  • improving work incentives.

Other objectives have included:

  • reducing the cost of the welfare system
  • rewarding work and encouraging personal responsibility
  • reducing poverty
  • smoothing transitions in and out of work
  • improved efficiency through automation
  • personalising benefits through a tailored response.

Every one of those objectives has been a failure. I’ve previously presented evidence about each of them. There have been critical reports from the House of Commons, the House of Lords and the National Audit Office, and specific rebuttals of the positive spin put on them by the DWP.

The main thing to add since I made that argument  has been the question of how things changed with the pandemic.  According to the Resolution Foundation report, “the system garnered praise during the pandemic for its ability to cope with a huge increase in claimant numbers with minimal delays.”  I seem to remember something different.  The first thing  is that the social security system had  coped before with massive increases in claimant numbers.  The second point is that in the early stages of the pandemic, the system didn’t cope: it locked up. Here’s a reminder.

When UC eventually did catch up, it was at the cost of substantial delay, uncertainy, error and fraud.

So – how has UC fared?  It has failed to simplify. Its digitisation has been  clumsy and inappropriate to claimants’ circumstances.  As for ‘incentives’, the policy-makers have lost sight of the main purposes of the benefits system, which have little  do with work.  And, in the process, we have lost sight  of the need for a basic benefit that can at least ensure that people are not malnourished,  destitute or in despair.

Defining hate crimes

The Hate Crime and Public Order (Scotland) Act 2021 has attracted a great deal of criticism, much of it missing the point.  The Act does three things.  It consolidates existing laws about hate crimes, while abolishing the ancient offence of blasphemy.  Second, it extends protection from “threatening or abusive” behaviour to a number of protected characteristics, including religion, gender identity, age and disability.  (Race and sexuality were already protected under previous legislation.) Third, it takes the idea of public order into the private sphere: in a world where people can send messages to thousands from the comfort of their living room sofa, the old definitions of public space don’t work any more.

The Act has some clear defects.  The most obvious, following  Joanne Rowling’s furious exchanges with online trolls, is its failure to protect women from abuse.  Only slightly less obvious is the question of reasonableness: the police have already been inundated with thousands of complaints that presumably seem reasonable to the complainers but not to people who don’t share their world view.  (There is some reason to believe, too, that many of those complaints are vexatious – aimed at making a political point, rather than offering evidence of threat.)  A third is that the offence of ‘stirring up’ hatred relates specifically to groups: threatening or abusing an individual person on the basis of their character or identity is left to previous legislation.

Another problem, which is regrettably intrinsic to the subject, is that threats are often delivered obliquely.  Holocaust denial has been a common route; the world ruled by shapeshifting lizards less common, but nevertheless a cause for concern.  The idea that it’s somehow acceptable to go to a random kosher delicatessen and ask about conduct of the Israeli  Defence Force comes close.  That’s not, however, a reason not to legislate – it’s proof that protection is needed.

Some of the criticisms, however, are illegitimate.  One is the idea that responding to threatening or abusive behaviour is beyond anyone’s competence.  Another is the argument that this is an infringement of ‘free speech’.  Freedom of speech is not a right to say whatever one pleases, and it never has been.  I’ve reviewed the arguments about this in a previous blog, so I won’t repeat it all here.  In UK law, common restraints on free speech have included laws about public order, libel, blasphemy, incitement and conspiracy. Whether speech is restricted or not depends on what is said, where and when.   Words can kill.

 

Trans: where both sides go wrong

As a social scientist, I’m approaching this topic with some trepidation.  There’s a lot of heat being generated on both sides and people are not just getting things wrong, they’re doing it at the top of their voices.

‘Gender’ and ‘sex’ are inter-related, but they’re not wholly equivalent.  We mainly use ‘sex’ to refer to biological males and females, while ‘gender’ refers, not just to physiology, but to a set of social facts.  It should be obvious enough what a ‘social fact’ is, but the debate has become muddied. We’re surrounded by social facts – things that are true because society is constructed to make them true.  Law, finance, morality and property ownership are all examples of social facts.  Gender is like that, too.  It’s based on a complex and extensive set of norms, developed through a well-established process of socialisation – education, upbringing, shared perceptions and socially defined norms.

The Scottish Goverment got itself in an awful muddle when it assumed that ‘gender’ is subjective and that ‘identity’ is something we choose.  Social facts aren’t subjective – they’re social.  You can present yourself however you please, but it won’t change the speed limit, the amount of money you have in your bank account  or your educational qualifications.  Nor will it change your gender.  That’s something that can only happen after a long, difficult process of re-socialisation, and some people are uncertain it can be done at all.

So, where do the protagonists go wrong?  On the gender-critical side, the protagonists have been driven to a point where they argue that it’s mainly about biology.  Kathleen Stock’s Material Girls is an example. Biology certainly plays a part, but Stock’s reductionism comes perilously close to a denial of gender roles.   I know there’s a school of thought in psychology that holds that everything we do is genetically determined – last week, for example, I came across a completely daft article that claimed that whether or not people have health insurance is down to their genes – but we need to understand that gender is highly socialised.  Take a simple example: in our society, men are more likely to interrupt women speaking than vice-versa.  This is not about biology. The point is that people raised as men have been socialised to behave in a different way to people raised as women.   And we might well note that some of the voices of trans women – people who’ve been raised as men – are still given to speaking over women.

On the other side of the argument, nominally pro-trans, there’s been a tendency to over-simplify in the opposite direction.  The most vocal advocates for trans  claim that ‘trans women are women’.  The underlying assumption seems to be that there are only two categories that matter, men and women.  That leads to the proposition that people who do not fit one binary category must be redefined in terms of its opposite – with the consequence that trans people are expected to perform gender-based roles that may be inconsistent with their circumstances or capacities.  There’s no space left along a wide spectrum, let alone an acceptance that quite a few people find themselves somewhere in the middle.

A valuable report for the Scottish Trans Alliance offers a different perspective.  It considers the experience of people who feel they fit neither category – people who are ‘non-binary’.   The respondents used a wide range of terms to describe their position, but more than 80% were concerned that their gender identity simply wasn’t valid.   The respondents expressed their discomfort about being pressed into the wrong categories: “I find that most services can just about cope with the idea that you are transgender … but being non-binary is still beyond a lot of people’s comprehension.”  Liberals should uphold the ‘dignity of difference’ – but the thing about being different is that people are different because  they’re not the same.   I suspect that, in time to come, the binary position that is being advocated by some activists will be seen as crude, reductionist and failing to represent diversity.

Note that I haven’t said anything about hate crime yet.  That’s for another blog.

 

 

 

Reparations for historical wrongs can’t be fair

I attended an online session recently in which some academics were making a principled argument for reparations for slavery and colonialism.  The argument is simple enough.  Both slavery and colonialism did terrible things.  People are still suffering as a result.  The countries that perpetrated those wrongs should pay reparations to redress the balance.

I understand why people want to make this argument.  There have been historical wrongs, and there is continuing disavantage as a result.  I also think that they are profoundly muddled.  There is no possible way for reparations to be done fairly.

My objections rest on four points of concern.  The first question to consider is remoteness.  Do people merit compensation for something that has been done, not to them, but to their ancestors?  To what extent are people responsible for the sins of their parents? Their grandparents? The seventh generation?  This isn’t some obscure philosophical point.  Jamaica has asked Britain to compensate them for slavery – which was substantially abolished in the colony in 1834 (some time after the 1807s abolition in Britain).  Many of the wrongs that have been done to indigenous peoples date from the long nineteenth century.  Some of them happened centuries ago.  African slavers sold their compatriots into slavery in the New World.  Should their descendants be paying compensation to their descendants in the USA?  Where does this end? Where do we draw the line?

Second: who is liable?  If the issue is viewed collectively, the implication is that anyone who has become part of the collective becomes liable for that collective’s past actions.  One of the characteristic features of colonial powers is that often they brought in people from the lands they had colonised.  That’s how populations  of people of South Asian or Afro-Caribbean descent developed in the UK, and Muslims in France or Russia.  If “Britain” is treated collectively for the purposes of reparations, those reparations will come, not from the concealed coffers of perpetrators, but from a population that according to the 2021 census includes fully a quarter of people who do not identify as ‘white’ and English, Scottish, Welsh,  Northern Irish or “British”. About one in six people were not born in the UK.  Should the Windrush generation, and those with a Caribbean heritage,  pay reparations to Jamaica?  Because that’s an inherent part of what Jamaica’s demands for reparations would entail.

The third problem concerns injustice.  Human history everywhere has been marred by oppression.   The East India Company, the Highland clearances, the Irish famine, the treatment of the poor, the dispossession of indigenous peoples, the pogroms, the wars, the genocides – there’s no end to it, and nowhere to stop. The ancestors of the vast majority of people, in almost any country you can name, have been the victims of oppression. It follows from that that any historic reparations will have to be made by or on behalf of the of people who have been the victims of oppression as well as people inheriting from the oppressors – and the inheritors of victims will be in the majority.  This isn’t a bit of “what aboutery”; if it was just that, a partial redress it could still help to correct some illegitimate disadvantage. The problem is much more fundamental.  There is hardly anywhere in the world where the current distribution has not been influenced by injustice, oppression,  exploitation or denial of rights: most of humanity have been treated badly for most of history.  No measures can be taken that are not also in effect measures taken against people whose ancestors have also been the victims of injustice.

Fourth, past wrongs are a poor guide to present injustices. Consider some of the large-scale forced migrations that have taken place in the course of the twentieth century: the partition of India, which displaced twenty million people and almost certainly led to a million deaths; the displacement and exchange of up to 20 million people in Germany, Poland and Ukraine in the period immediately following the Second World War; the mass expulsion and displacement of 1.6 million Greeks and Turks.  We tend to ignore much of this, although it is all relatively recent, either because it is considered less important than other historical wrongs (which should be a source of moral outrage), or  because so much has been done to improve the lives of their children and grandchildren.  If some groups are suffering injustice now, that is surely the responsibility of those who are responsible for addressing that injustice now – and that is a matter for contemporary governments, the people who have the power to redress that injustice now.  The alternative, of course, is to address one form of disadadvantage in the hope that it will reduce other related problems.  If so, what distinction should we draw between people who are the inheritors of historic injustice, people who are migrants from poor countries, and people who are poor now because of indequate incomes?  And what on earth makes us think that we have the knowledge, moral authority, competence or technical capacity to make such distinctions?

There are, then, four fundamental objections to the argument for reparations.

  • People can’t be held morally responsible for the actions of their distant ancestors, either individually or collectively.
  • We cannot fairly distinguish people who are liable from those who are not liable.
  • We cannot fairly take account of historical injustice, as opposed to injustice now.
  • We cannot unmake the history of the world.

There is every reason to argue that people who are treated badly should be treated better.   Wherever people are disadvantaged, there is a case to redress the balance, but that case is based in disadvantage now, not the ill-treatment of the past.  The world is as it is; what matters is what we do next.

 

 

Plunder: the scandal of private equity

A little over two years ago, I wrote a short piece on this blog about the dangerously precarious funding of residential care.  At the time, I didn’t realise how pervasive the financial model had become.  I’ve recently read an account from the USA by Brendan Ballou, called Plunder (PublicAffairs, New York, 2023), which discusses just these problems.  (Full disclosure – I was given a signed copy of the book, by way of the author’s sister. )  Private equity firms have developed a business model which battens on to, and ultimately destroys, profitable businesses – and, when they get the opportunity, privatised public services.  Examples in the UK include not just residential care, but the water companies, rail franchises, energy and health care.

The methods adopted by these companies include

  • Leveraged purchases: firms and assets are acquired by borrowed money, and it becomes the responsibility of the firm that has been taken over to repay the debt.
  • Further debt. Beyond the cost of purchase, firms are then put into further debt in order to increase the rate of return to the controlling financiers.
  • Leaseback.  The assets of firms are transferred to other companies and the firms are then required to pay rent in order to use the facilities they used to own.
  • Fee structures.  Firms are required to pay further liabilities for services provider by their purhaser, typically including fees for transactions, management, consultancy, ICT and payroll management
  • Tax avoidance.  The returns from this milking machine are diverted through tax havens. If they are submitted to taxation, it is done through the most advantageous tax regime, such as the limited taxes on capital gains rather than taxes on income.
  • Pension funds.  Some firms have raided their pension funds directly – it is a common element in bankruptcy proceedings – but it is also done by directing the  investments made by pension funds towards support for the firm.
  • Nested firms.  It has become common for firms to be owned by other firms.  These structures are opaque.  The effect of separating out each function within a business is to make it possible to cook the books, so that profits disappear through cross-charging.
  • Limited liability.  Many firms which have been drained through these procedures go bankrupt.  The construction of laws relating to bankruptcy and limited liability  mean that those responsible can avoid all liability to meet their debts or obligations.  make it legally possible for subordinate businesses to become bankrupt without leaving any liability to the parent firm.
  • Aggressive – and effective – lobbying.  Ballou makes the point that these firms have bought extensive influence without incurring the duties of transparency and reporting that public firms have to meet.

Most of the options that Ballou considers for reining this in are geared to the pecularities of the American legal system, such as anti-trust legislation; I think they have a very limited potential in the UK.   It seems to me that  we need to consider a number of changes in the law:

  • preventing beneficial owners from claiming limited liability for default.  If the subordinate firm goes bankrupt, the beneficial owner should either be fully liable or themselves go bankrupt.
  • taxing firms on turnover rather than profit.
  • equalising capital gains tax with the rates of income tax.
  • treating pension funds not as a liability, but as something in the unqualified ownership of the beneficiaries.  If you leave your shoes for repair and the repairer goes bankrupt, the repairer is a bailee, and you can get your shoes back. Beneficiaries have to be treated not as creditors but as owners, and the firm as a bailee of those beneficiaries.

I know this falls some way short of dealing with a major, endemic problem, one which has come to threaten not just the public services but, by Ballou’s account, the whole structure of the market economy.  I’d be grateful for further suggestions – I’d be happy to revise this blog, or to return to the subject with better ideas.

Universal Credit: the gift that keeps on taking away

I’ve been ploughing through a long, complex but very worthwhile report from CPAG, which examines the effect of the digital administration of Universal Credit  on the way that people experience the system.  It focuses on the scheme’s serious deficiencies in transparency, procedural fairness and lawfulness.

First, there are the problems relating to claims.  Thje system absolutely insists that people fill it in perfectly and in line with the expectations of administrators.  It can’t cope with incomplete information, such as people not having a bank account, and doesn’t have the options the process needs for people to get round the blocks.  Standard additions, exemptions and exceptions aren’t considered.  The system can’t manage backdating or claims made in advance (for example, for someone leaving care).

Second, there is the problem of decisions. The DWP has sailed ahead regardless of the notices it is supposed to give or the need to fix problems that come from clearly incorrect assessments.  The absurd pretensions of tracking income in ‘real time’ are still subject to wildly inconsistent arbitrary calculations based on calendar dates – the courts have repeatedly taken the DWP to task about this.  There are widespread problems  of claims being closed without due consideration, obstructing further action or the ability to revive and correct the details.

Third, there are the issues of communication: incomprehensible calculations, failure to inform people of their entitlements, and frequent failure to give the information required by law.

Fourth, there is the management of disputes.  The process for “mandatory reconsideration”, itself a deliberate obstacle to access to justice, is protected by stonewalling, where DWP officials refuse to register requests or let claimants ask for redress.

It seems all too clear that, nearly thirteen years after the scheme was adopted, the many deficiencies of the computer programme have still not been sorted, and the benefit continues to fail in many major respects.

 

 

This is not the way to develop social care

I was listening this morning to a thoroughly depressing discussion on social care.  A major part of the way the issue has been framed is, apparently, to encourage migration so that migrants can fill the roles that need to be provided.  The other was to point to the supposedly five and a half million people receiving ‘out of work’ benefits, a figure that includes, as far as I can tell, four million people who are either too sick to work, in work on low pay or who already have caring responsibilities, and demand that they provide social care on a minimum wage.  The underlying message seems to be that care is unskilled, and anyone can do it.

If we look at the way that social care is being provided, the picture is very mixed.  The delivery of services has been shaped to match the criteria of commercial markets: individuated services, priced distinctly by activity.  So we get tick-box lists of what needs to be done, masquerading as an assessment: dressing people, cutting their fingernails, brushing their teeth and so on.  Some of the activities are paid for, and counted as nursing care; others are based on reported needs  that, in their nature, are typically out of date.  I’ve argued, in How to Fix the Welfare State, for a different (and admittedly rather more expensive) approach: providing teams of professionals who are paid for blocks of time, rather than specifically costed activities, who within that time can identify and negotiate services with the people who receive them.  To do that, social care needs a professional structure – including training and qualification – and a pay structure that is commensurate with the skills that are required.  We have a long way to go before we get there.

In praise of the triple lock

The ‘triple lock’ is the name given to a commitment to maintain and improve the value of state pensions.  The table comes from a recent report by the Institute for Fiscal Studies.

Table 1. Triple lock indexation since its introduction

In the course of the last twelve years, this has meant that pensions have increased by a nominal 60%, while if they had only increased by inflation, they would be up 42%. Putting that  another way, pensions have risen by 12.7% over inflation (that is, 160/142), which in real terms is 1% a year.

One might suppose that ratcheting pensions up, however slowly, was a praiseworthy thing to do, but the principle has come under fire from those who claim that it represents an unsustainable commitment. The criticism has been fed by the IFS report, which argues that it creates ‘uncertainty’ about the future value of state pensions, and that if it is left in place till 2050, it will increase the value of the state Pension from about 25% of median earnings to something between 26% and 32%.

The first of these arguments is, frankly, codswallop.  The benefits  system is in a parlous state: the main ‘uncertainty’ it is creating is whether or not people will be able to eat.  Improving the value of the pension does not increase uncertainty; it reduces it.   If we are genuinely concerned about the narrower problem of how people plan their pensions for the future, the main ‘uncertainties’ come from the govenment’s eccentric reliance on means-testing and the desperate problem of paying for social care.

The second argument invites the obvious retort – so what?  A modest increase in the value of pensions, relative to the median wage, is surely a good thing.  The UK’s treatment of pensioners is, by international statndards, parsimonious.  Consider this graph from the OECD.  It puts the percentage of GDP spent on pensions in the UK at 5.1%.  The Office for Budget Responsibility, which works on a slightly different set of definitions and takes into account a few extra benefits,  estimates that this year, the percentage will be – try not to be too shocked – 5.3%.

https://data.oecd.org/socialexp/pension-spending.htm

The  State Pension provides, at best, a modest basic income.  The (somewhat limited) success of the triple lock is something to applaud, not to denigrate.  One might wish that the the same approach could be taken for the painfully inadequate benefits offered to people of working age.

A Human Rights Bill for Scotland: submission to a consultation

The Scottish government is consulting about the introduction of a Scottish bill to incorporate human rights law into Scottish legislation.  The exercise is somewhat limited by the terms of the devolution settlement, which largely reserves ‘equal opportunities’ to Westminster – it’s in schedule 5 of the Scotland Act 1998 , but there are other things that the Scottish Parliament could do.

I’ve responded to some of the questions, and I am duplicating my response in the passages that follow.

1 What are your views on our proposal to allow for dignity to be considered by courts in interpreting the rights in the Bill?

‘Dignity’ is subject to interpretation. Nordenfeldt, in an article on “The varieties of dignity” (Health Care Analysis, 12(2) 2004), identifies four different meanings: dignity as merit, as moral stature, as identity, and as human worth. Only the fourth of these is universal. The former Chief Rabbi, Jonathan Sachs, claimed a fifth: the ‘Dignity of Difference’, arguing for a view of dignity that was both collective and cultural.

The incorporation of the principle of ‘dignity’ is unlikely to have the legal effect that the Scottish Government desires. A recent judgment in the European Court of Human Rights upheld the right of a Roma woman to beg, on the basis that the right to beg was an expression of her dignity (ECHR 2021, Lacatas v Switzerland, 14065/15) – but the right to have enough resources not to beg was not protected.

3 What are your views on the types of international law, materials and mechanisms to be included within the proposed interpretative provision?

The Human Rights protected by international law are intended to establish a universal minimum. Equalities, social protection, economic rights, social rights, public sector duties and access to justice are not really part of that. They are, rather, rights of citizenship, going well beyond the limited aspirations of human rights.

Laws that focus specifically on Human Rights have had at most a limited effect on the operation of the law in the UK. According to solicitors Mishcon de Reya (Submission to IHRAR’s Call for Evidence, 2021), Human Rights were cited in 538 legal cases from 2000 to 2021: the courts made a Declaration of Incompatibility in only 39 of those cases, and 8 of those were overturned on appeal. (The main impacts in those very few cases have related to immigration and mental health issues.) The Scottish Government cannot rely on the incorporation of Human Rights law to address the broad range of problems identified in this consultation.

5 Are there any rights in the equality treaties which you think should be treated differently?

The Scottish Government is legally limited in what it can do for protected groups, because that would be liable to violate the reservations of the Scotland Act, but it can pursue equality more meaningfully by other routes. The Child Poverty Strategy is an example.

12 Given that the Human Rights Act 1998 is protected from modification under the Scotland Act 1998, how do you think we can best signal that the Human Rights Act (and civil and political rights) form a core pillar of human rights law in Scotland?

The Human Rights Act 1998 only committed governments and their successors to uphold the minimum standards established in international law. This is a floor, not a pillar.

15 How do you think we should define the groups to be protected by the equality provision?

The protected characteristics identified in the Equality Act 2010 leave gaps and ambiguities. The many gaps include, for example, national origin, locality, social class, accent, inequalities of birth, fortune and discrimination through favoritism. The Scottish Government may not have the competence to amend the Equality Act, but it can at least take action on these issues as they relate to the conduct of public policy in Scotland.

16 Do you agree or disagree that the use of ‘other status’ in the equality provision would sufficiently protect the rights of LGBTI and older people?

Disagree. Age, sexual orientation and gender reassignment are already protected in the Equality Act. It is difficult to see what difference further legal incorporation will make.

19 What is your view on who the duties in the Bill should apply to?

I support the principle that duties should apply to any body carrying out devolved public functions.

33 What are your views on our proposed approach to ‘standing’ under the Human Rights Bill?

The extension of ‘standing’ to permit persons with a ‘sufficient interest’ to initiate legal action is welcome. However, it still falls some way short of what is needed to protect economic, social and cultural rights.

In the USA, legal action takes two other forms not currently permissible in either England or Scotland:

● the use of class actions, extending beyond group litigation to people who are affected but not participants; and
● the presentation of a Brandeis brief, a rule of evidence which has been available in the USA for more than a century. The brief makes it possible for courts to consider non-legal submissions from social scientists, reviewing evidence of the overall economic or social impact of a case. Evidence in this form can be taken from amici curiae, persons or bodies not otherwise party to the action.

In so far as these are rules about due process in a court of law, introducing these measures would fall wholly within the competence of Scottish law-makers.

36. If you do not agree that existing judicial remedies are sufficient in delivering effective remedy for rightsholders, what additional remedies would help to do this?

There need to be routes permitting rapid, authoritative, low-cost access to legal redress. As things stand currently, judicial review of administrative action can only be granted when other measures have been explored and failed. This creates barriers to justice, and the process is simply too slow to protect people with limited resources. There have been rapid, urgent actions taken on behalf of some people, such as migrants facing illegal deportation, but there is no obvious equivalent route for people who have been left without money for food this week. For most, there is no effective way of  getting legal redress before the penalty, and the problems, have been suffered.

40 What are your views on our proposals for a Human Rights Scheme?

Impact assessments can act as a useful guide to administrative action, but in practice (for example, in relation to gender or the environment) there has been a tendency for some bodies to claim that there is nothing to consider when they have simply failed to see the implications. Assessments need to be reported, collated and subject to scrutiny in order to be effective in guiding practice.

 

For those who want to add their views, the full consultation, which closes on the 5th October, is available here.

 

 

 

 

Coping with inequalities in wealth

There has been some interest recently in wealth inequalities, for example in work by the Fairness Foundation.  Much of this focuses on the wealth of the very rich.  In recent correspondence, I’ve been struck by the extent to which others considering the issue have focused, not so much on the implications of inequalities in wealth, but on fair taxation and inequalities of income – problems relating to benefits and low wages.  I’m sceptical that either focus can address wealth inequalities in a meaningful way.

Any conceivable redistribution of income will not (by definition) touch the established holdings of people who hold assets as wealth – typically in the form of real property or financial products.  There may have been an argument in the 1950s and 60s for heavy taxation of income (the flow) to prevent the accumulation of wealth (the stock), but the genie is out of the bottle; the wealth has been already been accumulated. Income taxation now can slow further accumulation, but that does not begin to address the issue.

That may seem to some to constitute an argument for wealth taxes, such as property taxes, inheritance tax or taxes on capital transfer.  That makes sense in terms of fairness – subjecting wealthy to the same criteria as others – but it can only ever have a limited effect on the distribution of assets, because they are based on a proportion of wealth at best.

What we need to do, instead, is to reconsider how the problems created by unequal wealth might be addressed.  Wealth inequalities may have seemed harmless to Tony Blair, who said he was “intensely relaxed about people getting filthy rich”, but they have implications for people who don’t share in that wealth.  In particular, they create obstacles to access to land, housing and, to the extent that people have become rich by using their assets to extract money from people who aren’t rich, they make for problems relating to rent, poverty and debt.

I think there are two main directions to go in.  The first is to consider the problems, not of the rich few, but of the many poor – in these terms, those who do not have assets. More income will help deal with issues of poverty, debt and manutrition; and regulations to cover those circumstances, such as protection related to financial services or limiting the interest that any  creditor can receive,  would have direct benefits.  However, in important fields of life – especially rent and residential care  – the main beneficiaries of greater income support will be those who hold the assets on which those services are based.  Supporting income is not enough.

The second direction is to establish a base of assets that will be available to people regardless of their financial circumstances.When the National Health Service was introduced, it had a major effect on the resources available to the poor – an effect that is largely concealed by the way we choose to keep public accounts.  Part of this can be seen as an implicit income: everyone in Britain has, whether they use the service or not, a financial gain equivalent to the value of health insurance. Part, however, is the equivalent of a savings fund: the protection of assets that in other circumstances would be exhausted.  When people have access to social housing, libraries, museums and parks they have gained command over resources – if not quite as good as ownership, something pretty close.   And when those resources are withdrawn from people, they feel the loss.

A wide range of basic services could be treated in this way.  They include, for example, funeral plots, free transport, legal aid, university education, wi-fi, child care, basic banking services and mailboxes.  Provided publicly, these things allow people to act as if they had the assets themselves.  That would have a much great effect than any focus on the assets of billionaires.