Author: Paul Spicker

Statistics on take-up

The DWP is running a consultation about a proposal to stop publishing statistics about the take-up of income-tested benefits. I have responded to the consultation in these terms.

1. Do you use information from Income-related Benefits: Estimates of Take-up?

Yes. My book, How social security works (Policy Press, 2011), has a discussion of issues around takeup in chapter 13, and this series is part of that discussion.

2. What would be the effect of not having this information?

This information matters. First, it provides evidence on some of the key dynamics in the process of claiming. The knowledge, experience and understanding of those involved in benefits administration and advice depends on the quality of information which is produced. For example, the practice of the administration of Pensions Credit has been based in large part on the previous learning about claiming behaviour, rather than specific findings about Pensions Credit itself.

Second, takeup is one of the principal tests of effectiveness and efficiency. For example, if we do not know how Universal Credit take-up compares to that of earlier benefits, we will not know if Universal Credit is achieving its aims.

Third, takeup is also an indicator of effective demand. The responses to the previous consultation identified the benefits of the series as including policy development, estimating benefit expenditure and future benefit counts. The series under discussion has been largely stable for some time, but that stability should not be assumed to endure in an extensively reformed system. Without information about take-up, the government will not be able to predict either the expenditure or saving to be expected from a change in rules, and any projections relating to incentives to work would be unreliable.

Fourth, benefits interact. A failure to monitor the interaction of benefits (including the new Council Tax rebates) may compromise the evaluation of welfare reform.

3. Have you any other views or comments on the proposal to discontinue the statistics?

This particular series is restricted to a narrow class of benefits. There are various theoretical explanations for problems in access and takeup. They include factors such as ignorance, lack of knowledge about personal entitlement, uncertainty about personal circumstances, complexity and stigma; they have been explained in terms of thresholds, cost-benefit calculations and attitudes to benefits. Although most of the literature on the subject conventionally focuses on income-tested benefits, none of these arguments implies that the problems are distinctive and unique to these benefits as opposed to other income-tested benefits, or that they apply to income-tested benefits and not to other types of benefit. DWP research has previously considered issues in the takeup of Attendance Allowance and Disability Allowance; it will need to consider Personal Independence Payment too. HMRC issues figures for takeup for Tax Credits, which will need to be available for Universal Credit.

The assertion that scrapping the existing statistics would save the equivalent of two full time members of staff is surprising. A repeated procedure producing consistent figures over several years from established algorithms should not require the same level of staff input as a new procedure.

4. If you are not in favour of the main proposal, which if any of the options do you prefer and why?

None of the options proposed is appropriate. At a time of major reform, it becomes more important to know what is happening, not less important. Most of the benefits mentioned are due to be downgraded or replaced and neither the same range nor a reduced range is meaningful; the range must be expanded to consider the new benefits. Given the importance of the figures, this is an argument not to discontinue the series, but greatly to extend it.

Why refer to poverty as a proportion of median income?

This is the abstract of a paper I’ve just had published in the Journal of Poverty and Social Justice, vol 20(2) pp 163-176 – the paper is not online yet but I have received a paper copy, so it will appear shortly.

“The most widely used indicator of poverty refers to a threshold set at 60% of median income. This paper reviews the implications of this approach and the conceptual problems it raises. The threshold relates to inequality and ‘economic distance’ rather than need. Though it was initially intended to be simple and comprehensible, the indicator causes considerable confusion, and successive refinements, including adjustments for disposable income, housing costs and equivalence, have limited the accessibility and use of the figures. Referring to median earnings would be a simpler, more practical approach.”

Sickness while unemployed

The provisions in the new regulations for people who fall sick while they are unemployed are very restrictive. People are exempt from the requirement to be available for work for “a maximum of 14 consecutive days from the date (of sickness)” or “on no more than 2 such periods in any period of 12 months.” (UC Regulations s.90 (5a))

This is not equivalent to saying that a person could be sick for 28 days in any one year – though that would still be more restrictive than the conditions applying to people in employment who claim Statutory Sick Pay. It states that a person will cease to be available for work if that person is sick for any period of more than 14 days, or has three periods of sickness in a year, regardless of their length. Someone who is sick for longer is not entitled to benefit; the same is true if their partner is sick, because these rules apply to both members of a couple. So, a person sick for three bouts of three days in a year – less than the national average for British workers – could be denied benefit. A person who is unfortunate enough to contract a long-term illness which does not lead to long-term incapacity for work, such as diabetes or heart disease, could be subject to sanctions on that account.

It does seem to me that any restrictions of this sort should be set with reference to evidence – which I don’t have – and sanctions should only be applied at the upper end.

More on the Universal Credit Regulations

I’ve been spending more time with the new regulations; there are 496 pages of documents, and I don’t claim to have grasped all the implications. In my previous post I listed several points. Looking through the regulations again, I could see three more issues.

The first concerns the relationship of National Insurance benefits to Universal Credit. While Universal Credit is in payment, it will still be possible for one or both of a couple to claim contribution-based JSA or ESA under the old rules. Notes from the DWP explain that “whilst there are no policy changes the opportunity is being taken to simplify and tidy up the existing provisions.” As these benefits have different eligibility criteria, rules for application and different time-periods for payment, the combined effects are unpredictable, and the result is a hotch-potch.

The second concerns periodicity. Universal Credit is going to be paid monthly in arrears. However, qualifying conditions are generally expressed in days or weeks. The work capacity assessment and availability are subject to weekly earnings (37(2), 80(2), 86(1)); part time work is defined in hours per week (37(6), 80(3), 81); sanctions are expressed in days. Rent free weeks are still being averaged out across a year, so that most people in social housing will not get a rent allowance based on their actual rent.

The third is the extent of discretion. The words “reasonable” or “unreasonable” occur 45 times in the UC draft regulations and 17 times more in the payment regulations. It is difficult to see how this level of administrative discretion can be sustained without an adequate system for redress and appeal.

Housing Benefit – who claims?

I’ve twice this week heard the slightly confused claim that only one in eight people on Housing Benefit is unemployed. It’s true that Housing Benefit is not an “out of work” benefit; it works much more like Tax Credits (which were designed on similar principles). It’s also true that fairly few people in the system are formally unemployed. However, that doesn’t give us a good description of what actually happens

There are 5,005,000 claimants. The figures for February 2012 identify

1,175,000 claimants on Income Support – mainly people with disabilities and lone parents
659,000 on income-related JSA
371,000 on ESA
1,067,000 on Pension Credit, and
878,000 in employment.

From other figures (including the budget statistics) we know that there are 3,366,000 claimants of working age. If we take away those who are working, we are left with 2,488,000 people on the so-called “out of work” benefits. That includes, of course, far more people who are disabled or incapacitated than those who are jobless.

It helps to round out the figures, because the dates of the figures and the ways they are counted are not quite the same, but it comes to this. Five million people claim Housing Benefit. Half of them are people of working age who are not in the labour market; the other half are either pensioners or workers.

Renaming the Scottish Government

The Scottish Government has just been renamed … to become the Scottish Government. It seems that its official name was still the “Scottish Executive”, and that the legislation has just caught up with the practice.

The term “Scottish Government” is currently used without distinction to refer to the Scottish Government, the group of ministers in Parliament, and the Scottish Government, the executive civil service. These are different bodies, with different personnel, locations, roles and mandates; when I tell people that I have been in contact with the “Scottish Government”, I usually have to add several words of explanation to clarify what I am talking about. (I have just used the term “Scottish Government” here seven times. It begins to remind me of the Monty Python sketch where all the members of the Faculty of Philosophy are called Bruce, to avoid confusion.) As we now have a free label available, the “Scottish Executive”, is there any prospect that we could use it instead when we refer to the executive civil service?

Regional variations in benefits?

It was announced, over the weekend, that the Prime Minister would be arguing for regional variations in benefits; when the speech was made, that section was dropped. The basic argument for varying benefits is that people have different needs in different places, and that benefits have different relationships to the labour market. There is already some variation in practice, because rents are set at different levels. If benefits were set at a level to meet people’s subsistence needs, there could be an argument for regional benefits; that is why the proposition might seem to some to make sense. The stumbling block is that benefits are not actually related to subsistence needs – they drifted away from that model more than thirty years ago – and they are now being redesigned to work on a completely different principle.

Universal Credit is not supposed to give people a fixed amount of benefit; it gives them a level of income that varies partly with their circumstances, and partly with the amount of work they do. The benefit is supposed to give people a clear, predictable final income that increases as their earnings increase. People who earn more are supposed to finish with more money than others – that is the whole point. If there was a regional variation, they could finish with less. The effect of giving people different benefits in different places would be to make final income unpredictable, especially for people who move between jobs. And because the benefit is, at root, a tax credit, it would also imply different rates of taxation for people in different parts of the country. Neither of these consequences is indefensible, but they are certainly inconsistent with what the government says it is trying to do.

The people versus social security

The Prime Minister’s commitment to cut welfare benefits in the long term follows a poll that suggests that a substantial number of people think likewise. An article by Peter Kellner reports that “People are turning against welfare, other than help for the elderly and disabled.” The poll, reported by Peter Kellner of Yougov, appeared in Prospect Magazine in February.

Much of the response, though, reflects misinformation about the benefits system. The current debate is driven by three key beliefs: that

  • the critical problems in benefit relate to “out of work” benefits;
  • expenditure on welfare is growing because of increasing demands from people of working age; and
  • the nature of provision leads to long-term dependency, generation after generation.

The evidence shows a different story:

  • Two thirds of DWP expenditure goes to people over working age. Benefit expenditure tables are available at this link.
  • The growth in expenditure is mainly attributable to older people (see the Benefit Expenditure Tables) and the extension of tax credits to people in work, not to the growth of “out of work” benefits.
  • Long-term dependency for jobless people is exceedingly rare. Hardly any unemployed people in the country – fewer than one unemployed person in every thousand unemployed people – have been continuously unemployed for ten years. The main long term dependency is found instead in people with long term disabilities. See my blog on the length of claims or the DWP figures.

From the Department of Circumlocution

Following the publication of the draft Universal Credit Regulations, I have been looking at the rules defining couples. Under the new rules, couples are being required to claim jointly, and neither has any secrets from the other. Couples are defined in the Welfare Reform Act 2012, s.39, as follows:

    “(1) In this Part “couple” means—

  • (a) a man and woman who are married to each other and are members of the same household;
  • (b) a man and woman who are not married to each other but are living together as husband and wife;
  • (c) two people of the same sex who are civil partners of each other and are members of the same household;
  • (d) two people of the same sex who are not civil partners of each other but are living together as civil partners.

(2) For the purposes of this section, two people of the same sex are to be treated as living together as if they were civil partners if, and only if, they would be treated as living together as husband and wife were they of opposite sexes.”

I was intrigued by the description of people in same sex relationships as “living together as civil partners” when they are not civil partners. When the legislation governing civil partnership was introduced, the government went out of its way to emphasise that it was not a form of marriage. Civil partnership was deliberately defined in terms of public commitment, and strongly distinguished from marriage. Now we find it treated in the same terms as “living together as husband and wife”. Neither definition, of course, explains directly what this means.

Universal Credit Draft Regulations

The Universal Credit Draft Regulations have been published, and are available here. There are several hundred pages of regulations and explanatory notes, and it is going to take me some time to get a sense of just what the proposals mean. At a first glance, however, here are some of the issues.

  1. Young people under 18 are not normally included in the scheme. In England, there may be the expectation that they will be in school. In Scotland, the same will not be true, and a young person who moves into the world of work at the age of 16 will not normally be treated as entitled to work-related benefits.
  2. There seems to be a cliff-edge for owner-occupiers, who will lose housing support completely if they move into “paid work” of any kind.
  3. Where sanctions are applied, and hardship payments are made, the hardship payments are recoverable. Because the sanctions have been extended, potentially, for years, that implies that repayments will also be extended for years.

Benefits from other sources, such as local government benefits, seem to be excluded from consideration as either earned or unearned income; that suggests that they might be fully exempt.

There are some other points which are worth noting:

  • People who come off Universal Credit because of increases in income will go back onto automatically, without having to reclaim, if their income goes down again within six months.
  • Where a couple claims, both must expressly consent to the terms, or neither will be eligible. A sanction applied to one is applied to both, and the circumstances of one person in a couple will be open to the other.
  • Entitlement is being based on the calendar month. If rents are not brought into line – there is no reason why they should not be – the calculation of rent payments is going to be complex, and it will need to be recalculated month by month.
  • Payments to people without bank accounts will be available only by the Paypoint system; there is no obligation on banks to make accounts available.
  • There are several points where the government states there will be “no right of appeal”. This position is not sustainable in UK law; it means that appeals will go for judicial review of administrative action rather than through specified processes.

All these points are subject to further clarification, and some of them may not be realised in this form.

I’d be grateful if people who are aware of other issues could point them out.