Author: Paul Spicker

People found fit for work

In February I reviewed the figures for ESA assessments. At that time, 1,023,000 people had been reassessed, and 622,000 (61%) had been found fit for work. However, many of those found fit for work, whose appeals had been heard, had appealed successfully. Today new figures have been published that put the numbers found fit for work at 34% of those reassessed. The DWP press release gives a slightly higher figure, for the last three months available.

This does not mean that the decisions are now all right, but it does mean that they are not as wildly off-beam as they were at this time last year.

Further note, November 7th: The Independent has run with a more negative view of these figures, pointing to the supposition that 75% of claimants may be able in time to return to work. That is not necessarily contentious; most people with mental illnesses, for example, can reasonably hope that their illness will not incapacitate them forever, and many people with disabling conditions would not like to suppose that they will never work again. The central criterion for receiving Employment and Support Allowance in the leigslation is that people are entitled when it is not reasonable to expect them to work now. What’s troubling about the way that the legislation is being implemented is that people are being subjected to work tests even when it’s accepted that those tests cannot be reasonably applied.

Disability, the undeserving poor and a game of space invaders

Another announcement about benefits policy is made by the Daily Telegraph, the third hostile proposal I’ve had occasion to post about in the last three days. This one comes from their Senior Political Correspondent, writing from Abu Dhabi (I’m not making this up). It is a proposal that drug addicts or alcoholics should have benefits suspended if they refuse treatment. “This would see alcoholics denied benefits unless they attended regular meetings at a support group such as Alcoholics Anonymous. Similarly, drug addicts would be denied payment if they refused to be treated.” Apparently, what is keeping addicts from giving up the drugs is that they have too much money.

The article continues: “The proposal, which is likely to be fought by campaigners, could be extended to people who claim benefits because they cannot work due to obesity or back pain.” What objections, one wonders, could campaigners have?

This is beginning to feel like a surreal game of Space Invaders; the aim is to stop the bombs landing, while correspondents from remote places drop their loads, faster and faster, until something finally gets through. If anyone is out there: the reason why people with disabilities need support from benefits is that it is difficult to manage with a serious illness and no income. A good reason why you should support them is that, in time to come, either you, or a member of your family, or someone you care about, will be ill or disabled, too. That might just be because of obesity, or mental illness, or back pain, or any of the hundreds of disorders that people suffer. There are good reasons, then, to defend the system; but in Space Invaders, the defenders always lose.

The proposal to limit Child Benefit to two children

This morning’s Daily Telegraph reports that the Treasury is considering limiting Child Benefit to two children. The Telegraph has been the conduit for a series of kites flown by government recently. The main purpose of speculating about policy changes – Norman Fowler, a former Conservative Secretary of State, used to do it with the Times – is to test the water, to see what people will put up with. This is the first attempt to put flesh on the bones of Iain Duncan Smith’s suggestion that large families should lose support, but it comes from outside his domain – Child Benefit is the responsibility of HMRC and the Treasury, not the DWP.

As ever, there are issues of principle and practice to consider. In principle, Child Benefit does four things:

  • It supports children in general;
  • it gives an income to women responsible for child care;
  • it supplements wages and other benefits, so that household income is adjusted for family size; and
  • it stands in place of a Child Tax Allowance, which it replaced.

The main effect of cutting benefits for larger families would have in three of these cases would be to limit the benefit, rather than to destroy it. There will still be a benefit, but it will be worth less. The aim that it negates is the principle of adjusting family income to the family’s size. Larger families are not going to say that the income they receive is intended for child number 2, and not for child number 3; what will happen is that all the family, and all the children, will have less, and that will happen regardless of whether people are in benefits or in work. In a nutshell, it will increase child poverty.

The issues of practice are more complex. Child Benefit works mainly because it is very simple. This reform looks simple on paper, but it adds a significant complication. People claim Child Benefit first for the oldest child. That claim runs till the child is too old, and it continues automatically until the youngest child is too old. If the benefit is paid only for the first two children, the claim will only be for the first two, and there will be no link to records for the younger children. Families will need to register a fresh claim for younger children – the ones HMRC will not know about – at the point where the oldest child reaches school leaving age. Fresh claims mean, inevitably, delay and non-takeup. It’s possible that this is an effect the government wants to produce – HMRC has been encouraging better-off families not to claim at all. If people don’t claim, they don’t cost.

Savings, however, will be limited. Only about a fifth of families have more than two children, and all of those will still be entitled to benefits for the first two. The cuts would, of course, affect the welfare of all the children in these families, but the actual savings would be about a sixth of the Child Benefit bill – far less than the government is aiming to cut from benefit. I am not sure exactly how much this would be, because from the previous £12-13 billion that Child Benefit costs, the government claims already to have taken steps to save £2.5 billion a year from the cut to higher earners. On paper, though, it seems unlikely to save more than about £1.5 billion. To put this in perspective, it’s worth about £2.50 a week on the pension. The effects of this saving would be disproportionate, however, because they will affect every person in a family with three or more children.

Official statistics and the DWP

I’ve commented more than once about the DWP’s use of stats, so it may be of interest to note a letter from the Chair of the UK Statistics Authority to the Secretary of State for Work and Pensions, occasioned by the previous statistics on Welfare to Work. Andrew Dilnot, UKSA Chair, writes:

we suggest that your Department’s approach to the publication of ad hoc statistical releases should be reviewed to ensure that all statistics which are likely to be regarded by Parliament as ‘official statistics’ are released in line with the Code of Practice for Official Statistics. We do appreciate that this is an area of uncertainty for both government departments and ourselves. The formal position is that Ministers decide whether statistical material should be treated as official statistics, not the Statistics Authority. However, the Authority has a statutory responsibility to advise Parliament on any concerns we have about the comprehensiveness of official statistics. I would be happy for Authority officials to work with DWP statisticians in finding a way forward that is mutually supportable.

I’ve also put a Freedom of Information request to the Department of Communities and Local Government to ask whether the decision of the Department not to publish statistics on Troubled Families before they were referred to and acted on has been reported as a breach of the Code of Practice.

Debt: a modest proposal

Kezia Dugdale writes in today’s Scotland on Sunday about “predatory legal loan sharks”. A typical rate of interest cited by one of the lenders (I’m not going to link to it and give them a free advert) is 1734% APR, which is close to what you get to if you charge 27.5% a month at compound interest. A monthly rate of 36.5% adds up to something close to the 4200% APR that Ms Dugdale cites. Someone who starts with a debt of £50 which is rolled forward for six months will have more than £300 to pay back. (I got the sum wrong on the first posted version, because I’d changed my mind about the example to use in different versions – the perils of blogging!)

Here, then, is a modest proposal for reform: that debts which cost more than a certain rate per month, inclusive of all other fees and charges, should cease to be enforceable by the courts. Let’s say, for the sake of argument, that the maximum APR should be 12% a month, or about 290% a year. That’s still very high – more than fifteen times what a credit card loan costs from a reputable company, and more than enough to justify a risky short term loan. It’s a straightforward calculation; all the court has to look at is the original amount and the date of application, and apply a standard formula. If the company goes to court, that and nothing more is what they should get.

There is a precedent for this; for decades, until 2007, gambling debts were not enforceable in court. It didn’t stop gambling. If the lenders don’t like it, they don’t have to make the loan. But at a potential 290% APR, does anyone think that lenders would be hard done by, or that they would stop trading?

An argument for free bus passes

Speaking of the Telegraph, the latest salvo in Iain Duncan Smith’s bombardment of the benefits system is directed at free bus passes and TV licences for pensioners. I’ve made general arguments for universal benefits before, but I’d like to add another reason for defending bus passes for pensioners. The structure of benefits for people with disabilities currently makes a distinction between people above and below the age of 65. Below the age of 65, Disability Living Allowance has two components: care, and mobility. Above the age of 65, there is only Attendance Allowance, which has no mobility component. In other words, support for mobility is substantially removed at the age of 65. The same distinction will continue to apply after the introduction of Personal Independence Payment.

From previouses censuses of disability, it’s possible to say that roughly two thirds of people with mobility difficulties are older people. We have two options. We can try to remove the kind of unfairness which means that someone who has a stroke at age 63 is treated much more favourably than someone who has a stroke at 66. There’s a very strong case case for doing that, but it would involve a complex, selective assessment of millions of people, and it could be staggeringly expensive. Or we can try more generally to offer practical support with mobility for a very large number of people. That is most effectively done with public transport. If we continue to suspend personalised support at 65, then from 65 up we have to offer generalised support. All right, it’s not ideal, and it’s not enough, but it has to be better than offering nothing.

Confusion about Child Benefit

The news that HMRC is sending letters to parents about Child Benefit has prompted a series of articles about the muddle and confusion that goes along with the process. On one hand, there seems to be popular support from opinion polls to the effect that richer people should not receive Child Benefit. (See e.g. the Daily Telegraph, 29th October.) On the other, there is confusion about inequity, how the rules will work, whether people are being asked not to claim, and so forth. The Institutes of Chartered Accountants think the whole thing is far too complicated. There is no contradiction here. The first statement is a question of principle; the second part concerns questions of practice. It is possible to make sure that richer people don’t benefit disproportionately by using the tax system, ‘clawing back’ the benefits. There is no possible arrangement for means-testing Child Benefit, or introducing special tax rules for one benefit on its own, that isn’t going to be complicated. “What I find so frightening”, Richard Titmuss once wrote, “is the extraordinary administrative naivety of those who argue in such terms for ‘selectivity’.” That same naivety is at root of the Treasury’s current problems.

Weekly rents and monthly benefits

In Housing Scotland magazine recently, I wrote that when Universal Credit is introduced, “RSLs (social landlords) who continue to use weekly rents will not be helping their tenants”. I’ve been asked if I could explain what I meant, so here is the point at greater length.

Under Universal Credit, people aren’t going to be paid benefit every week; they’re going to be paid by the calendar month. If their circumstances stay the same, they’re going to get the same benefit every calendar month. If the landlord charges rent weekly, there’ll be no connection between the benefit cheque and when the rent falls due. A weekly rent means that tenants pay four times a month in some months, and five times a month in others; but a tenant who has to pay rent five times in one month will have to pay it from the same benefit which is used for four times a month. In the same way, with fortnightly rents, there’ll normally be two fortnights a year which have to be paid as an extra out of one month’s benefit.

Because there won’t normally be direct payments, these are bills that people will have to pay themselves out of their monthly benefit. I think this is going to make budgeting really tough for tenants, but fortunately the problem is easily avoided. All an RSL has to do is to charge by the calendar month, which is what most private landlords do, and the problems disappear.

Implementing Universal Credit

A new report for the Joseph Rowntree Foundation, published today, raises questions about the implications of the introduction of Universal Credit. The report focuses on three main issues: simplification, work incentives and conditionality. The authors of the report, Amy Tarr and Dan Finn, raise particular concerns about the pace of change, the division of responsibility with local administrations and the impact of the procedures on claimants.

Julia Unwin of JRF still thinks the principle of Universal Credit is sound. I don’t share that view. The creation of a portmanteau, mean-tested benefit could never hope to achieve the claims that were being made for it, and the design of UC has managed to build in elements from a long series of administrative failures – detailed and frequent means tests, tapers, over-reliance on computers, unstable entitlements, recovery of innocent overpayments, claims that depend on other parties and so on. The lack of thought about its relationship to other benefits, which this report stresses, further undermines any claim it might make to simplify the system.

Official statistics and the 'neighbours from hell'

I have written today to the UK Statistics Authority to raise some questions about the government’s figures on “troubled families”. In December the Prime Minister explained:

Today, I want to talk about troubled families. Let me be clear what I mean by this phrase. Officialdom might call them ‘families with multiple disadvantages’. Some in the press might call them ‘neighbours from hell’. … We’ve always known that these families cost an extraordinary amount of money, but now we’ve come up the actual figures. Last year the state spent an estimated £9 billion on just 120,000 families – that is around £75,000 per family.

The same figures have been repeated in a series of government statements, including material from the Department of Communities and Local Government, the Home Office and the DWP.

The UK Statistics Authority exists to guarantee the integrity of official statistics in the UK. They have established a range of criteria for integrity, transparency and quality, but among other requirements they state that departments should

  • “Ensure that official statistics are produced according to scientific principles”
  • “Publish details of the methods adopted, including explanations of why particular choices were made.”
  • “Issue statistical reports separately from any other statement or comment about the figures and ensure that no statement or comment – based on prior knowledge – is issued to the press or published ahead of the publication of the statistics.”

That is not what’s happened here. “We’ve come up with the actual figures”, the PM’s statement says, and policy has been rolled out from that starting point. Some explanation of where the figure of 120,000 families come from appeared in a note from the Department of Education, though it was not publicized; there have been trenchant criticisms from Jonathan Portes and Ruth Levitas, on the basis that there is no connection between the indicators used to identify troubled families and the problems of crime and anti-social behaviour. The basis of the costings is still not publicly available. I’ve asked the Statistics Authority to consider whether there has been a breach of their Code of Practice.