Universal Credit isn’t working: the Lords Economic Affairs committee’s judgment on UC

The report on Universal Credit by the House of Lords Economic Affairs Committee will not come as a great surprise to anyone who’s been following the evidence.  (Except, perhaps, me: I submitted an evidence paper  myself in March, and in the wake of moving house, and major illness six weeks after that, I’d quite forgotten that I’d done it until I saw it quoted on page 12.)  The chair of the committee, Lord Forsyth, has suggested that the report approves of UC in its ‘concept’, but that there are problems with its design and its administration.  Given the questions that the committee raises about real-time information, digital access and fluctuating incomes, I think the criticisms go beyond that.  The problems they recognise also include a familiar litany of failures:  among them, the 5 week wait, unpredictable benefit streams(“impractical” and “fundamentally unfair”), conditionality, the two-child limit and inadequate levels of benefit.  Despite all that, the system is “not broken irredeemably”.

The initial request for evidence asked whether UC had achieved its objectives.  As the statement of objectives has frequently shifted for political expediency, it’s hard to say even what the current tests are, but the committee proposes a range of distinct principles: dignity, adequacy, providing a predictable income, flexibility, fairness, achievable ends and comprehensibility.  They suggest that there could be a two-week payment up front, a three month fixed level of payment, and that child support could be taken out of the system altogether – those all seem to me to be good ideas.   But the fundamental problems will remain:  a tapered benefit, an obsession with labour market issues when most claimants aren’t going to be in the labour market, and a reliance on information that can’t be supplied or managed.

The government’s misleading figures about poverty reflect a wider problem

The Prime Minister has been upbraided by the Office for Statistical Regulation (part of the UK Statistics Authority) for his assertion that child poverty is falling, when on all the tests used by the government the opposite is true.  I’m not greatly enamoured of those tests.  I’ve considered the case for the standard test of ‘relative’ poverty, 60% of the median income, in other work – it’s not bad, but we need to accept that it’s a pointer, not an authoritative measure. The claim that the figures for 2010/11 represent a test of ‘absolute poverty’ is particularly suspect.  Having said that, however, there’s no real excuse for blustering that poverty has been getting better, when your own figures say that’s not so.

This is part of a wider problem, and one we’ve seen increasingly in the course of the last few years.  The UK Statistics Authority was formed in the hope that it would be possible to maintain confidence in the integrity of official statistics.  In the course of the last ten years, however, we’ve seen a growing contempt for statistical evidence,  shown in the treatment of figures about crime, social security claims, incapacity, the management of coronavirus and more.  It’s done whenever departments publish figures that are not official, when the press is steered to have a go at popular targets like migration or benefit fraud, and when ministers just make stuff up. There is a cost to undermining public trust: it’s not just that some figures can’t be believed, but that everything becomes open to doubt.

The UNDP considers the case for a temporary Basic Income

In previous writing, I’ve expressed reservations  about the idea of a Universal Basic Income, but I’ve also noted that the key objections – the opportunity costs, and the distributive implications – may not apply in the same way in the current crisis.   The United Nations Development Programme has taken forward the idea of a temporary basic income, which might make provision for half the world’s population in 132 developing countries.  They examine three main options: a top-up income (which would be complex, difficult to administer and liable to be inconsistent); a BI which is different in different countries; or a uniform BI paid at a standard rate across the developing world.

None of the proposals would have the long-term effects that proponents and opponents of Basic Income claim would result from such a scheme – people should not be expected to to change their lives, give up work, enter education, start businesses or start a family just because a change in their immediate income is made for six months.  (I’ve doubts as to whether we’d see those effects fully realised in decades – after old age pensions were introduced in the UK, it took the best part of 60 years, two world wars and a health service before we could see the full effects on labour market participation.)    The primary case for offering something like a basic income is much simpler: to maintain enough demand for an economy to function, and to make sure that people in developing economies are included despite the crisis.

There are, however, major obstacles in the way.  Most proposals for Basic Income are so much concerned with the principles that they don’t get into the practical detail of how such a benefit can be delivered – for example, ID, banking, physical addresses or the lack of them,  responsibility for dependents and communications.  That is all challenging enough for a developed economy, and in a less developed one it is easy to see how the ship could hit the rocks.

Yet more failings of Universal Credit

“To govern”, Polly Toynbee writes, “is also to deliver”.  For anyone looking for further evidence of governmental incapacity and incompetence, Universal Credit is the gift that goes on giving.  A new report from the National Audit Office  focuses in the main on the problems facing new claimants, but on the way it points to a series of other issues.   The most immediate problems are

  • The effect of the 5-week delay before first payment.  57% of claimants seek advance payments, which means that their benefit is subsequently reduced to repay the advance; a further 22% delay claiming and incur debts as a result.  So, taken together, 80% of claimants face financial difficulties because the benefit is not designed to provide help when it is needed.
  • ‘Fraud and error’ – a figure which lumps together a load of different problems – is running at 10.5% of payments, almost a record for benefit payments.  Most of this, the NAO reports, is down to fraud by claimants;  we’re not told what type of fraud, but if so, UC is even more untypical of other benefits than it seemed to be at first.
  • The cost of implementing the benefit is increasing: the current estimate is £4.6 billion.

It’s worth reflecting on the last of these.  The Full Business Case for UC had claimed that UC would yield £24.5 bn in people choosing to work more, £10.5 bn in distributional improvements, whatever they are, and £9.1 billion in reduced fraud and error.   The ‘distributional benefits’ are unclear: UC has imposed a terrible cost on the people it has failed to serve, with most claimants suffering financial hardship and (despite some moderation) a ridiculously large number having benefits stopped in the name of discipline – nearly 90% of all  sanctions in 2019 were imposed as a penalty for missing appointments.  The last figure is obviously wrong, and in the wrong direction.  For the first, if there was ever any basis for the DWP’s claim that 200,000 more people would move into work – there probably isn’t – £4.6 billion would cost £23,000 for every one of these.  For the same price, the government could have created rather more than 200,000 useful jobs.

The administration of Universal Credit is judged to be irrational and unlawful

In an extraordinary judgment, the Court of Appeal have declared that an element of the assessment of Universal Credit is so irrational as to be unlawful.  Gareth Morgan has explained, at some length, how Universal Credit manages to take information about regular, predictable incomes and rent, and convert that into an irregular and unpredictable stream of income. The point of contention in this case is a small part of that, but the problem the court was looking at is pretty straightforward.  Banks do not operate on bank holidays and weekends, and the Universal Credit assessment ignores that.  That has meant, for people unlucky enough to have an assessment marked down for an awkward date, that regular income will be  counted as too high, or too low, and the amount they receive will fluctuate wildly.  The court was not impressed by the DWP’s arguments that changing the assessment in this case would be expensive or inconvenient.

“The Secretary of State for Work and Pensions’ refusal to put in place a solution to this very specific problem is so irrational that I have concluded that … no reasonable SSWP would have struck the balance in that way. “

How, we might reasonably ask, did the DWP get in this mess?  There have been three recurring problems.  First, Universal Credit was designed by people in a mental bunker, determined not to share, consult or engage people who understood how benefits work – including their own front-line staff.

Second, the system has been built around the capacity and convenience of the ICT, rather than the tasks that needed to be done.  The technology has never been capable of doing the sort of things that are needed to run a system properly – the failure of the verification system  is an illustration.  The process we now have in place is cumbersome, complex, slow, very expensive and difficult to change.  We did things faster, and cheaper, forty years ago.

Then there is the failure of the safeguard, which depends on the scrutiny of regulations by the independent Social Security Advisory Committee.  I’ve been critical in the past of the SSAC’s approval of policies and regulations that I cannot believe would stand the test of judicial review, such as mandatory reconsideration or the sanctions regime.  (Both policies violate the centuries-old principle of audi alteram partem, or natural justice: no legal penalty should be imposed without first giving the person sanctioned the opportunity to be heard.)  The problem is, I think, that the SSAC tries to reach decisions through consensus, and an insistence on compromise  is fundamentally inconsistent with the role of independent expert advisers in identifying specific issues that fall within their area of expertise.  Illegality should not be treated as being open to negotiation.  The bulk of the SSAC’s work is confidential, but in the light of this judgment they need now to review whether they had identified the fatal legal flaws in the regulations,  and if not why they failed to do so.

I’m not keen on Gareth Morgan’s proposed fix for the problem of dates, which is designed to tweak the assessment for the people affected while minimising disruption to the information that the DWP gathers.  By all means, let’s disrupt this. Real-time assessments are beyond our capacity to deliver; whole month assessments, delivered at the end of the same month, lead to radically unstable income streams; individual variations in payment arrangements lead to complexity and confusion.   I lean towards the French system, which is to use, as far as possible, retrospective information about means, and the same predictable, common dates for everyone: it makes a huge difference to the predictability and stability of income.

My private thanks to the NHS

I didn’t join the final ‘clap for the NHS’.  On that day, I had gone for blood tests in the early afternoon.  The medical practice is 45 minutes away from the nearest hospital and labs, so analysis took a little time, but I was called back to go directly to to Victoria Hospital, in Kirkcaldy, within two hours of seeing the GP.

The care I received was exemplary.  It had first to be confirmed that I did not have Covid-19.   After that, everything worked as it was supposed to.  The GP identified the problem and took the necessary steps to deal with it, at great speed.  There was a coordinated response from a range of different consultants and specialities,  supported by specialist services in Edinburgh and Southampton.  The nursing staff in particular were thoroughly professional, warm, polite and good-humoured.  What I owe them all is immeasurable.

Racism is about now, not the distant past

Boris Johnson has ‘announced’, if that’s no too grand a word for a bit of a burble in the pages of the Daily Telegraph, an inquiry into inequalities.  I’ve found it intensely depressing that a powerful moral argument about racism and police brutality has somehow been diverted into a discussion of public statues. The slave trader Edward Colston died in 1720, three hundred years ago.  The focus on people like him is a poor substitute for addressing the problems now.

The diversion from the real issues reflects, unfortunately, a failure among many people who think of themselves as anti-racist to focus on what matters.  The dominant narrative in the 1980s tried to link  the explanation for all racial problems in terms of a combination of slavery, colonialism and contemporary racism.  I hoped and thought the debates had moved on since then: it seems I was wrong. The same narrative makes sense only for particular ethnicities.  The narrative says a lot about the USA, and quite a lot about people who came to Britain from the Caribbean; but it overrides the experience of other disadvantaged groups, whose circumstances just  didn’t fit the same pattern.

The first set of issues concerns slavery.  The dehumanisation and brutality associated with slavery is often represented as something that is distinctive to colonialism, but it’s something that has been widely practised in a wide range of other circumstances.  In contemporary terms, the serfs and peasants of the middle ages were pretty much treated as slaves.  Various types of serfdom were practised in Europe over eight hundred years or more; serfs were still having to redeem themselves in Russia in the early 20th century .  Let me pick up, for instance, the example of the 1351 Statute of Labourers (one of the major causes of grievance in the peasants’ revolt, thirty years later) which stipulated that “every person, able in body and under the age of 60 years, not having enough to live upon, being required, shall be bound to serve him that doth require him, or else be committed to gaol until he shall find surety to serve.” This is not the same thing as a slave trade – land and property could not at that time be bought and sold.  But the staggering assumption at the root of this law was the assertion that everyone must have a master, and not having one constituted grounds for being taken and set to work. The lives of most people, in most places, were not their own.

Next, there is colonialism. A dogged Marxist might, I suppose, argue that it all boils down to money: empires work by extracting resources from one place and moving them to another.  However,  what money does depends on where it does it.  It seems painfully obvious that what colonialism or Empire meant in South America, India, Ireland, China and much of Africa was quite different.  The East India Company, a private concern, was based in trade leavened with piracy – it was not much like anything before or since. Slavery in the Spanish empire was characterised by degradation, inhuman treatment and chattel slavery, but it still didn’t look much like the system in the USA.  To my mind, the claim that any of this can be reduced to a common factor of ‘race’ disregards  the distinct history – and the pain – of people in the colonies and the conquered nations.

And then there is contemporary racism – what is happening now.  It’s clear enough that history plays a part in forming the condition and opportunities which shape the experience of disadvantage: the position of indigenous peoples, or the continued inequalities affecting people of Irish descent in the UK, are markers.  History matters, but it doesn’t matter that much. The kind of issue that should be exciting all our concern is not about a remote history. People who have some tenuous connection with foreign countries are being stripped of their rights.  The policy is, deliberately and explicitly, ‘hostile’.  Citizens are being expelled from their countries.    Migrants are left to drown.  People are being killed in the streets.

This is about the world as it is now, not as once it was.  This morning, David Lammy has been making a powerfully articulate case for government action about things that matter – among them,  policing, safeguarding people from minority groups and workplace discrimination.  We have loads of information, reports and recommendations for action.  Nothing is being done about them.

We have to make up for a gulf in educational provision

I wonder if we have forgotten what schooling is for. The system we have – or perhaps, had – is far from perfect, but for years teachers and schools have been arguing that missing school is enormously damaging to children as people, and parents have been subject to huge pressure (and often legal action) to ensure that not even a day is missed.

The things that children learn in school aren’t easily summed up in terms of bits of knowledge, or anything as mechanical as a national curriculum.  Education is all about development.  The point of insisting that every child comes to school is not because they will learn, on a given day in March or April, a particular thing that they must learn ; it is so that they can grow, build skills, change, and develop.

Our  public authorities seem, however, to be taking this in a very different spirit.  There’ll be supplementary programmes over the summer: children will be taught faster to catch up.  They will be processed through the system.  Those facing exams will be allocated grades regardless of what they might actually be achieving.  In The Wizard of Oz, the scarecrow may have no brain, but the wizard can offer him a certificate. This is not much better.

Pupils need to make up for lost time and opportunities – already somewhat more than a full term, and arguably rather more. That implies that the educational career of every schoolchild needs to be extended, probably by half a year at least.  We will need more teachers and more resources: we can do that.  But anything less will not be good enough.

The European Union and the new social policy

The Journal of European Social Policy has launched a blog, intending to consider some of the implications of the coronavirus pandemic for Europe.  The first entry is a dialogue between some leading scholars about the prospects for the EU, in what Frank Vandenbroucke calls an ‘existential moment’.  Unfortunately, the editors haven’t quite grasped yet two of the most basic principles of blogging: put the blog where people can find it, and keep things short. The link to the site is here , and as that link is 379 characters long, here is a shortened form to pass on: https://bit.ly/3eNzEge

The dialogue did set me  thinking about the role of the EU in this crisis, and that of course is its purpose.  I think it’s fair to say that the experience of Brexit has shifted my view of the EU, and the answers I might give to several key questions are different from those I would have given in the 1990s (my 1996 article on “Social Policy in a Federal Europe” is accessible here).

First: what is the EU?  25 years ago, I would have said that it was a set of political institutions aiming to establish common laws and principles across nations.  The EU had asserted ‘exclusive competence’ in a range of areas, and its member states had acceded to the general principle that some things were beyond their power or capacity.  Now, I would describe the EU as little more than an association of states, where every joint action, regardless of the nominal powers of the Union, has to be negotiated and is liable to be locked in limbo.

Second: what responsibility does the EU have to its citizens?  In the 1990s, the answer seemed clear: the EU had made a commitment to offer to each and every citizen of the Union a set of rights and statuses that were distinct from, and not dependent on, the actions of its member states.  That is what the European Charter of Fundamental Rights said.  It has become clear, from the process of Brexit, that this guarantee was worthless: the EU has simply abandoned its commitments to sixty million European citizens.    The Union, it seems, is nothing more than a club, and if a member state doesn’t wish to subscribe to the rules of the club, the citizens who live there can’t expect to have access to the facilities.

Third:  what does it mean to say the EU works on a principle of solidarity?  The idea of solidarity is central to the arguments made by the contributors to the JESP dialogue –  Bea Cantillon, for example, complains that “The lack of solidarity is a shameful mockery of all the great principles enshrined in the Treaties.”  The European view of solidarity was always, I think, more nuanced than this.  European solidarity would be built, not by the adoption of universal European rights and policies, but through the establishment of networks of mutual responsibility, both within and across national borders; generalisation happens slowly and incrementally.  In the context of the current crisis, however, Vandenbroucke argues, I think rightly, that the EU already has the powers it needs to act.

 In the current context, solidarity requires large-scale ‘disaster relief’. The European treaties not only make this possible, they even demand it: Art. 222 TFEU stipulate that the Union and its Member States shall act jointly in a spirit of solidarity if a Member State is the victim of a natural or man-made disaster; Art. 122 TFEU makes financial assistance to members states threatened with severe difficulties caused by natural disasters….

If this is not happening, it is only another mark of the unwillingness of the EU to accept direct responsibility for the welfare of its citizens.   The contributors to the dialogue are fearful that the EU may not survive this crisis, if it remains inactive.  If it does nothing, it may not deserve to survive.

 

Will the current crisis be the ‘making’ of Universal Credit?

A thoughtful blog by Fran Bennett asks whether Universal Credit will come into its own now that more than a million more people have claimed it.  She argues that the benefit has been changed in important respects as a result of the current crisis.   The biggest changes have been the extension of the benefit to cover self-employed people, the abandonment of work requirements, and the reluctant acknowledgement that the benefit is no longer primarily concerned with long term dependency on welfare – if it ever was.

Many of the complaints about Universal Credit focus on mean-spirited, ill-considered rules  rather than the essentials.  The benefit cap, the two child limit and the five-week wait for benefits are all high on the list. But the flaws in the benefit run much deeper.

The central failing of Universal Credit reflects a failure to appreciate that people cannot live on thin air.  Benefits have to provide for financial need; they have to secure essentials;  they have to allow people whose income is interrupted to meet essential commitments, such as housing costs or fuel bills, even if those commitments are higher than a person living on a minimal subsistence income would need.  Universal Credit does not secure even a minimal income.  In normal times, benefits have routinely been stopped arbitrarily. The rise of the food banks is not an accident of nature.    Even with all the changes that the government has made in the current crisis, there are some obvious problems.  People have to go without for weeks before they receive money.  If they  receive an ‘advance’ payment, it is treated as a debt which they must repay, guaranteeing that their future income will be inadequate.  Some people are excluded altogether.

The next set of problems relate to the benefit’s unpredictability.   Universal Credit adjusts to income, and income is intermittent.  The attempt to adjust benefits on a ‘whole month’ basis means that the amount of entitlement can be changed very shortly before its actual payment.  Unless people are completely destitute (and growing numbers of people are), they cannot reasonably be expected to know whether or not they will be entitled, how much benefit they should receive, and when they might cease to be entitled. It is a prescription for confusion.

The third, and possibly the most fundamental flaw in the scheme is its dizzying complexity.  It tries to deal with far to many disparate circumstances, and it does most of them badly.  The treatment of disability, divorce, chronic sickness, housing subsidies, low income and care have been rammed forcibly into a template that was intended to deal with a tiny number of people who were continuously unemployed for long periods.  It inflicts injustice on all of them.

Universal Credit has wrought disaster at every point of its development.   We cannot just stop delivering it, but we push it to the sidelines – putting more money into benefits that can offer a reasonable degree of social protection.  This one never will.