Author: Paul Spicker

ESA assessments: new figures

Figures were released in March for the reassessment of ESA claims, and in April for new ESA claims. The reassessment figures show that over time, increasing numbers of people who formerly claimed Incapacity Benefit are being found as fit for work – 37%, when in the pilots it was 22%. The new claimant figures show that diminishing numbers of people are being found fit for work – 46% of claims, when in mid-2009 it was 67%. Those findings are consistent with each other – we should expect more people receiving benefit to be entitled than there are among people who claim – but both seem to show important shifts in practice over time.

The percentage of successful appeals also seems to be falling, down to 31% for new claims. As before, 9 out of 10 people who apply with neoplasms (cancer) and congenital or chromosomal disorders (e.g. Downs syndrome) are not fit to work, and 7 out of 10 in both groups go to the Support Group (for those with the greatest levels of incapacity).

Further note, 19th September: The government has announced that people undergoing chemotherapy or radiology for cancer will be exempt from the Work Capacity Assessment.

Saving for a rainy day

Why don’t public sector agencies have any savings to protect them against unforeseen events? The answer is, simply, because they’re not allowed to. If government agencies were able to decide for themselves when or what to spend, the Treasury would not be able to control public expenditure at any particular time. And public sector agencies aren’t allowed any slack, which is viewed as “waste”. They’re not generally permitted to transfer money between specified budgets, or across financial periods (a process known as “virement”). Danny Alexander, the Chief Secretary of the Treasury, has announced that the Treasury is winding down its contingency funding, and that government departments must now set aside 5% of their funding to meet contingencies. This presumably means that they must be prepared to reallocate budgets – which is equivalent to having no contingency funding at all. It also means that the capacity of every department to deal with major events is conditional on its own resources, rather than risks pooled across the sphere of government. Perhaps this is prudent housekeeping, but I can’t see how.

Personal Independence Payment

I have been looking at the consultation paper about Personal Independence Payment with some puzzlement.
The purpose of this reform was to replace the Disability Living Allowance, which the government thought was broken. This reform holds to the same basic structure as DLA – “care” and “mobility” components, and the denial of mobility support to older people unless their condition develops earlier. There is very little in the document which tries to deliver what the government claimed they could deliver – a personalised, sensitive and responsive benefit, administered through professionals. That is probably a good thing; it may make sense for physical support and care to be highly responsive, but people want and need support for income to be stable and reliable. There is also little in the reform that deals with the kinds of issues that have presented genuine problems, notably the response to mental disorders and conditions like multiple sclerosis that fluctuate frequently. That is not so good; people need the system to be consistent and predictable, and at present there is little prospect of either. As so often happens in benefit reform, it seems all too likely that the government will discover that their reforms have not had the effect they imagined, and they’ll have to come back for more.

JSA for the victims of domestic violence

With the winding down of Income Support, we are losing the main residual benefit that is available for people with very low income who don’t fit other pre-set categories. The DWP have announced a new rule, “easing” conditions for JSA claimants who have been victims of domestic violence. “Victims will be offered a period of support without worrying about looking for work.” This is very much to be welcomed, and I hope the precedent will be extended to others in catastrophic or unpredictable situations.

The impact of Work Experience

In February, I wrote to the UK Statistics Authority to express concern about some uncheckable claims being made about the benefits of work experience. The Minister for Employment, Chris Grayling MP, had published an open letter to Polly Toynbee on Politics Home, claiming that “a significant number of placements turn into jobs, with the employer getting to like the young person and keeping them on. … so far around half those doing placements have come off benefits very quickly afterwards.” In the Times on 24th February, he also claimed that “half those young people stop claiming benefits after taking part.” (p.32) This was referred to in BBC’s Question Time on 23rd February as evidence that the scheme was working well. The only evidence, however, was based on a first cohort of 1300 people on placement from January 2011 to March 2011, when by the time of the statement the scheme had been extended to more than 34,000 people.

The DWP has now published more data, this time covering 3490 people in the scheme from January to May 2011. It shows an increase in employment, by comparison with a group of non-participants, from 27% to 35%. There are two main reservations to make about the figure: that it still relates only to an early cohort, who may (or may not) have been easier to place than later cohorts, and that there is no explanation of what being “in employment” might mean in terms of hours or duration (the only test seems to be that the employer has sent a return to HMRC). It is also a lot less than the 50% originally claimed.

Liberty before liberalism

I am currently putting the finishing touches on a book considering the relationship between individualist thought and welfare policy. I’ve just attended two fascinating sessions given by Quentin Skinner, the intellectual historian, who explained what was, to me, a completely unfamiliar different way of understanding the idea of liberty. In Roman law, he explains, freedom was a status, not a course of action; the distinction between freedom and slavery rested not on individual choice, but on domination, dependency and subjection to arbitrary power. Within the neo-Roman or “Republican” model, people lose their freedom, not so much because they are interfered with by laws, but because they have a status which is subject to the decisions of others. There is, arguably, a lesson for contemporary welfare states in the construction of our social rights.

Welfare Reform in the Scottish Parliament

My submission to the consultation on the Welfare Reform (Further Provisions) Scotland Bill is here. The main point is technical, but in a nutshell the issue is that the Scottish Parliament, and Scottish local authorities, do not have the power to do things in relation to benefits that English local authorities can do. At present that means that when the Social Fund is abolished, the Scottish authorities will not be able legally to do what they need to do to protect people who are vulnerable.

Tax relief for charitable donation

The purpose of tax reliefs on charitable donations is intended, in part, to limit abusive tax avoidance, but there are points of principle to consider. Whenever tax relief is given, the state is foregoing the tax revenue it could otherwise claim; effectively, the charity is receiving money that would otherwise have gone to the government. Charities are already exempt from a range of taxes, particularly council tax and water rates. Charities which raise money by asking people to declare that they are are taxpayers are effectively seeking – and receving – government subsidy. The idea that this is “free” money is illusory.

The support of “philanthropy” by tax relief effectively means that people are able to give money to charities in lieu of giving it to government – a situation which puts individual preference in place of collective decision making. What a phalanx of very rich “philanthropists” are demanding is that they, not the government, should be able to determine how their tax liabilities are spent. The US Government accepts that demand, unreasonable as it is, and the US functions consistently with the federal government in deficit as a result. Most European governments would not tolerate it, and they should not.

Taxing businesses

In conventional economic theory, the costs of any tax on business will be transferred to the customers of that business. That implies that business taxes can only be used with caution, that they tend to distort markets, and that it makes more sense to raise money in other ways. Business taxation does, however, have another function, and that is to ensure equity between different taxpayers. Current concerns about Amazon are based in issues of fairness, not about the economic effects.

More generally, there is another side to business taxation. People who run businesses often have the option of treating revenue as either part of the income of the business, or as personal income. If business is lower than income tax, the incentive is to run costs through the business. If income tax was lower, the reverse would be true. The only equitable position would be if business taxes were set at the same rate as personal taxes. That would not quite be neutral, because business expenses can be offset against income in a way that personal expenses cannot be, but it would be fairer.

The cult of leadership

Two items on Friday morning hit a common, jarring note in rapid succession. The Metropolitan police have again been accused of insufficient activity to deal with racism; there was an immediate call for leadership. Mayors are being elected to serve English cities; they will provide leadership. ‘Leadership’ is not a solution to anything; the belief that it is has become part of our problems.

The first problem is that the idea misunderstands what public services do, and how they do it. People in public office are supposed to be public servants, not masters. The public services rely on a strong system of accountability – nothing is done that is not part of the “golden thread” – and everyone is responsible to others for their actions. The proposals for mayors are based in the inappropriate belief that what we need to settle our problems is someone who’s really in charge. Nonsense. Anyone who thinks they are “leading” their city should be kept on a leash.

The second problem is that what “leaders” are supposed to do is not what we need to have done. Leadership is commonly described in terms of motivation, influence, strategy and vision. We have bucketfuls of documents of this sort – all made by partnerships, not by leaders – but if they are valid, it is because they rest on participation, empowerment and diverse voices, not the vision of an elite group. Mayors will be advocates for an area, communicators between people and authority, and perhaps executives.

The third problem follows from the second: people are being appointed to senior office on the wrong criteria. They are being selected because they appear to have “leadership” qualities. We have seen a series of fiascoes where “leaders” and “leadership teams” have made visionary but ill-informed decisions – such as the NHS computer system. It might be better if people in senior positions were appointed for their competence, knowledge and skills.