The House of Commons Work and Pensions Committee has been reviewing the Project Assessment Reviews of Universal Credit, and their report was published yesterday. In a nutshell, the plans are gobbledegook, there is no evidence, but the DWP assures us it is on track and that things have greatly improved. The press coverage picks out some of the critical comments, but to my mind the report is remarkably restrained. The project was, and remains, years behind schedule. With billions spent, it still has not submitted its business case. The management documents that have found their way into the public domain substantially fail to relate to the task in hand – see John Slater’s comments on my blog. The Committee has had clear evidence that they were deliberately misled about previous progress. Universal Credit was, and is, a national scandal.
A large number of amendments to the Social Security Bill have been tabled by the Scottish Government, along with a smaller number from opposition parties. The Scottish Government amendments, which are more likely to pass, include:
- a duty to promote takeup
- provisions relating to aid and advocacy
- the constitution and operation of an independent Scottish Social Security Commission, which will scrutinise proposed regulations
- qualification of the provision to allow some benefits to be paid in kind, so that it will be dependent on the consent of the recipient
- clarification of rules for reconsideration (but not, regrettably, the two-stage mandatory reconsideration)
- not reclaiming overpayments from people innocently receiving them,
- rules about appeals, and
- uprating for inflation.
Other constructive amendments from opposition parties are less likely to pass, but they are constructive: they include, amongst other things:
- extension of the general principles to cover the relief of poverty and the protection of rights
- definition of the functions of the Scottish Social Security Agency
- reporting issues
- the power to create new benefits, and
- a duty to inform people about their entitlements.
This doesn’t deal with all the issues I’ve previously raised; I am still concerned about the adoption of the Mandatory Reconsideration, and the lack of reference to alienability or diversion of benefits – but the overpayments rules and the provision for detailed scrutiny are much better. It speaks well of the government that they have listened to many concerns, and of the opposition that the amendments are considered and show an evident desire to make the Bill better.
Tunisia is reported to be improving its social security system. They’ve aimed to offer a stable minimum income, comprehensive coverage and provision for decent housing. The amounts being offered are not large: an increase from 70 dinars a month (less than $29) to 150 dinars earlier this year and now 180 dinars (a bit under $74), a little extra (10 dinars) for each child in school, a fund for loans to house buyers, and exemption from fees for medical care (but I don’t know enough to say how that is actually going to work). The national GDP per capita now seems to be in the region of $10,800 (USD), so the benefits are not likely to be enough to live on. Having said that, the commitment to extended coverage is a big deal: Tunisia has previously been reported as having something on the region of 80% coverage, and the people not covered before included agricultural workers, domestic servants and unemployed people.
The extension of coverage in low to middle income countries in recent years has been remarkable. In a recent lecture, Minouche Shafik of LSE pointed to the rapid growth of a range of welfare measures across the developing world – more than 80 have social security pensions, more than 120 have some unconditional cash transfers. Around the world, she argues, the “state” is coming to mean a “welfare state”.
Martin Ravallion has put together several arguments against ‘straw men’ used to criticise Basic Income (he calls it BIG, for Basic Income Guarantee). The points he particularly tackles are assertions that
- BIG is too expensive
- There are better ways to eliminate poverty
- Targeting is good enough
- A BIG would destroy work incentives
- BIG diverts attention from health and education.
Most of his arguments are good ones. Expense is a matter of how we choose to organise ourselves; targeting doesn’t work; Basic Income is neutral about work incentives. However, not all the arguments are as strong.
The first problem is his assumption that BIG is there to eliminate poverty; most basic income schemes are providing a limited foundation income, not an adequate one. There are good arguments for considering what Basic Income can do for women, for example, which are about something else. Ravallion is also right to say that “A BIG should be among the options to be considered by any developing country in a package of antipoverty policies ” The situation in developed countries is different, in so far as Basic Income is seen as substituting for an existing benefits system. In the case of the UK Basic Income wouldn’t favour the poor – the effect of eliminating benefits would mean that the Basic Income would exclusively help people who do not currently receive benefits, most of whom are on higher incomes. Nearly all the schemes I’ve seen leave some poor people worse off.
The second problem is the assumption that what gets paid for education can be treated as part of the income package – it can’t be. The money spent on BI would have an opportunity cost (as he acknowledges); many of us would like more to be spent on other things (such as child care, disability benefits, public services, infrastructure, environmental protection) which either favour particular categories of recipient, or can’t be attributed as personal income.
Lots of the objections to Basic Income are ill-founded – there are other “straw men” he might have picked on. One is the argument that the whole thing is likely to be unexpectedly complicated. We know from the administration of universal, categorial benefits like Child benefit that it doesn’t need to be. A second, which overlaps with that, is the accusation that the idea is “untried” – it has been, just not comprehensively. The third is the argument that it would call for a penal rate of taxation. Taxation is done by convention, some countries have much higher rates of income than others, and income tax is not the only way that governments can raise funds.
Having said all this, there are bogus arguments and straw men being set up in favour of Basic Income, too. Among them are the arguments that
- We need Basic Income because there will be no work to do. There will always be more work to do, and presently we have major shortages of activities that we just aren’t ready to pay for – among them social care, the maintenance of the public environment, security, child care, and many others.
- There’s no harm in some people living off others. This is Philippe van Parijs’s argument for supporting ‘surfers’. It greatly underestimates the capacity for resentment and hostility – especially when people who deny the legitimacy of the community that is funding them use violence and intimidation to impose their values on others.
- We won’t need tax thresholds if there’s a Basic Income. Yes, we will. Taxing every penny people make threatens to become an administrative nightmare.
- We won’t need existing benefits if there’s a Basic Income. Yes, we will. Benefits don’t just provide people with a basic income. Among them are income smoothing, housing finance, economic management, support for special needs, and many others.
The “Experiments” that are being tried out won’t, and can’t, settle these issues. When old age pensions were introduced, it took more than sixty years before we could get a clear idea of the impact on how they had changed people’s lives. The Scottish experiments should reassure us about practicality, but I’m doubtful that they can tell us much about long-term shifts in behaviour.
A blog from LSE, and a recent article in the Times (behind a paywall), suggest that we should acknowledge that politicians have “good intentions”, even if the policies go wrong: Universal Credit is the model. There are certainly many people who accept the view that Universal Credit was intended to be simpler, more effective and capable of getting people into work. I’m sceptical that that captures the true intention. In 1994, Iain Duncan Smith made a case in the Daily Mail (13 April 1994) for a single, unified benefit in very different terms.
ODD, isn’t it, that as Britain’s standard of living has steadily improved, the number of people claiming State benefits has increased, rather than declined?
… The problem lies in the very way the system works. Far from merely providing people in need with a national minimum level of subsistence, it encourages dependency. … Vast sums of money are lavished on running something which is, inevitably, prone to abuse on a massive scale. What we need are fundamental changes – and soon. …
At present we make payments to the old, the sick and those with children, regardless of their financial situation. This nonsense means that a major part of the expenditure goes to help people who don’t need the money in the first place. … people become trapped, remaining dependent on the State rather than on their working abilities. No matter how much someone wants to work, a job is not a particularly attractive option if it means financial loss. What’s more, the system actively encourages people to change or disguise their lifestyles in order to maximise their benefit entitlement. Who can doubt, for example, that some of the mothers now claiming single-parent benefit are actually living with a partner more or less full-time? … It should make us all angry that while many deserving cases are failed by the system, the greedy and workshy profit from it.
So what can be done… ? … There should be just one, income-assessed benefit, with all the relevant factors taken into account to cater for the needs of the individual and his family. This should be administered by one body, instead of the multitude of offices, each handling one type of benefit, we have now. … The new benefit must also aim to make going back to work a more attractive option for the unemployed. The benefit should not be set too high and would need to be ‘tapered’ so that if people took jobs paying less than current benefits, they would not lose all their benefits immediately.
This is not, of course, the account famously given by IDS, as a New Statesman article showed, but the elements of Universal Credit were there long before his supposed ‘conversion’. The basic argument for what became Universal Credit was that it was going to save money, prevent abuse and discourage dependency – not that it would give people a more secure, predictable income when moving in and out of work.
I’ve pointed to many of the deficiencies in the design of Universal Credit, but the worst problems with Universal Credit are not there just because it is a clunky, means-tested benefit. There are two other aspects of the reforms which have created particular problems. The first was the assumption that benefits were aimed at people who ought to be working instead. Most benefits go to pensioners – something else that Duncan Smith disapproved of in his Mail article. Most of the rest of the benefits have no direct relationship to people who are not working – Tax Credits, disability benefits and housing benefits go to people in or out of work. Most of the rest after that were people who were not expected to work – single parents and people with incapacities, both the target of punitive and work-related action. And most people claiming as unemployed – about 80% – return to work in the course of a year regardless. Universal Credit was initially supposed to go to 7 or 8 million people (the target numbers have been falling); the primary target group for employment-related action was certainly less than half a million, if we include single parents and people on ESA, and less than 200,000 if we don’t. Redesigning policy around readiness to work – a process begun by the previous Labour government – is an imposition of the wrong policy on the wrong people.
The second problem has been the abandonment of the idea that no-one should be left completely destitute. Benefits are being stopped cold for a variety of reasons – sanctions, reappraisals, revisions and, unjustifiably, administrative transition to the new system. Some people have been driven to our “uplifting” food banks. Here are a few more outcomes to lift you up:
- Shoplifter became desperate and stole meat after her benefits were stopped
- Thief committed first offence in three years after her benefits were stopped
- Bridgnorth man with six inch knife hunted rabbits after losing benefits
- Mum died alone in her freezing home after her benefits were stopped
The Scottish Government has published draft regulations relating to ‘Funeral Expense Assistance’. They are a disappointment; the Government seems to see the purpose as being to replicate, to the greatest extent possible, the existing scheme of funeral payments, and that scheme largely fails in its objectives. Funeral payments fail to reach probably half of the people who should get them.
The core problem is that the benefit is simply too complex. The draft regulations have these objectives:
3 (2) Regulations 5 and 6 describe eligibility conditions relating to the applicant’s relationship to the
deceased person and multiple applications.
(3) Regulation 7 describes eligibility conditions relating to the applicant’s residence, the last
residence of the deceased person and the place where the funeral takes place.
(4) Regulations 8 and 9 describe eligibility conditions relating to the financial means of the applicant,
based on receipt of income related benefits, and of the estate of the deceased person.
There are too many moving parts for this ever to work. Look at this regulation:
5.—(1) To qualify for funeral expense assistance the applicant, or the partner of the applicant, must
have accepted responsibility for the expenses of the funeral, and the Scottish Ministers must
consider it to be reasonable for that responsibility to have been accepted.
(2) In determining whether it was reasonable to accept responsibility, the Scottish Ministers must
(a) whether someone other than the applicant, or the partner of the applicant, would be the
nearest relative of the deceased person in terms of section 65(3) to (6) (arrangements on
death of adult) of the Burial and Cremation (Scotland) Act 2016; and
(b) any other relevant circumstances that the applicant brings to their attention.
There are five elements in this process: the circumstances and resources of a claimant, the circumstances and resources of the deceased, the arrangements made for a funeral, the relationship between the claimant and the deceased and the situation of other relatives who might potentially pay instead. Of course it can’t work.
What else could the government have done? We already have public funerals for isolated cases where people have no resources. We could go for a much simpler, universal approach: remove local authority fees for lairs and cremations. The cost is certain and relatively predictable, and I don’t think we need to worry about abuse, fraud, incentives to die or stimulating take-up from undeserving cases.
There is a general point to consider, too. The Government is beginning with funerals because they’re relatively straightforward, but their approach has been to take the existing scheme and “drag and drop” the regulations with a few tweaks. Far better to rethink.
In a recent blog, Jonathan Bradshaw has suggested that limiting Tax Credits and Universal Credit to two children is the “worst social security policy ever”. There’s a lot of competition for the title. As Jonathan writes,
There are many competitors for this accolade in our history — less eligibility in 1834 Poor Law Amendment Act, the 1934 Unemployment Assistance Board household means-test, the 1991 Child Support Act, the 2017 lower benefit cap and, probably forthcoming, Universal Credit. But the two-child policy is just morally odious.
That set me to wondering: aren’t there worse examples? Here are a few other contenders.
Settlement and removal. The effect of the settlement laws under the Poor Laws meant that the local parish had to support certain people, and that if they were in need elsewhere they’d be “removed” to their parish of origin. That meant both that parishes did their utmost to avoid illegitimate children being born on their patch – if necessary, picking up a pregnant woman and dumping her on another patch – and that people in need were transported back to their original parish, regardless of their reasons for leaving.
Housing Benefit. The Housing Finance Act 1972 set about demolishing the system of housing subsidies, and trebled rents in the process. Housing Benefit was introduced initially in the form of Rent Rebate and Rent Allowance, supposedly representing a shift from subsidising bricks and mortar to subsisising people. The benefit was staggeringly complex, the costs and management span out of control. The effects were catastrophic, especially when they were combined with the costs of rent from Supplementary Benefit. The first stage might be thought of as a blunder – the theory said that it would be more efficient to direct resources to people. The second stage, introduced when it was evident that the first stage hadn’t worked, was a fiasco. We’re still suffering from the consequences: a destruction of housing subsidies, a diversion of resources to private landlords, a horrendous poverty trap, and the introduction of restrictions (including the benefit cap) because the system is unworkable.
The Griffiths report. Creating a quasi-market system in social care was widely welcomed by many people who ought to have known better, and the system still has its defenders. The system depends on intrusive personal assessment, penal means tests, market distribution (which always leaves gaps) and lengthy delays in service delivery. Some of the defences begin with feeble excuses, such as the claim that it would all have worked if only there was more money and the thing had happened more; some try to deny that we’ve been trying to do this for nearly thirty years and it’s never worked. (It’s a social security policy, because it directs cash towards a test of need rather than providing a basic service. A large part of the funding came from the resources for residential care that were being paid for in social security benefits. )
Reclaiming overpayments. The practice saddles people on low incomes with long-term debts. It used to be the case that claiamnts could only be directed to repay money if they had misrepresented or failed to disclose a material fact. That was overturned with the Tax Credits system, which presented people with demands for repaying thousands of pounds they had no reason to suppose they weren’t entitled to. The Ombudsman laid into the system as being fundamentally unsuited to the needs of the low income families it was supposed to help. Now the same principles are being rolled forward into Universal Credit – and, it seems, the new Scottish system of benefits, including benefits for disability.
Disability assessments. I’ve already referred to personal intrusion. Why is every person who is sick required to undergo an assessment? Why are medical records disregarded? Why is everyone being asked about going to the toilet? Why are most of the people who are too sick to work being required to attend sessions to indicate a readiness to work?
Suspending benefits. When the “four-week rule” was applied, research (by Molly Meacher) reported that about a third of the people subjected to suspensions were convicted of their first criminal offences afterwards. Now lengthy, indiscriminate suspensions have become a major aspect of the social security system, with getting on for a quarter of all claimants having benefits sanctioned for a period, and some having benefits cut off for three years. There are no circumstances where leaving people without enough to buy food is ever justified.
These policies have something in common. In every case, it’s not just that the policies didn’t work; it’s that after they had been tried out and were shown to have bad effects, the responsible governments ploughed on regardless, and rolled them out more generally. That’s the point at which incompetence crosses over into immorality. And that’s why Universal Credit is such a horror: it takes every element in recent years that has been shown not to work (tapers, sanctions, delays, assessments, obstructions to redress, transfers of process across agencies, multiple moving parts, and so on), and builds a whole system round them.
A response to my post yesterday on Twitter asks: “Wondering what “directed to the wrong purposes” really means?” Twitter isn’t a good medium for discussion, so I’m going to try to deal with it here. This government believes, I think genuinely, that the primary purpose of benefits is to help people into work. That was the view not just of the Coalition before them, but the Labour government after 1998: people may remember the slogan, “work for those who can, support for those who cannot”.
I tackle this point in my book, What’s wrong with social security benefits? Most people on benefits aren’t expected to work (actually, most of them are pensioners); most people of working age aren’t expected to be in the labour market; most of the rest are working. Benefits are there for lots of reasons – among them, meeting need, relieving poverty, economic management, social inclusion, subsidy, compensation, and so on. When we get to particular categories of people, such as disability, the aims multiply; for example, I gave a special presentation last year about the provision available for people with mental health problems, and the list I’ve just given here doesn’t cover the ground at all. When we get to the issues of Universal Credit, pat formulas about work miss the point; and the incongruity of lumping together issues such as self-employment together with incapacity, homelessness and child care helps to explain not just why the system isn’t working, but why it can’t.
The announcement of modifications to Universal Credit in the Budget fall a little short of what is needed. Para 6.14 outlines proposed changes:
- advances on entitlements for those ‘in need’ – effectively an interest free loan repayable over twelve months. UC will continue to be paid in arrears.
- the reduction of waiting time by 7 days; it will still be 5 weeks for most claimants.
- continuation of Housing Benefit for two weeks. That should reduce rent arrears by two weeks – it is not enough to ensure continuous payment.
- ‘easier’ arrangements for payment of rent to landlords.
- a slower roll out, still to be completed by December 2018; and
- a limited trial of ‘innovative” approaches to improve earnings.
What the proposals didn’t include was
- a review of tapers
- a review of work allowances – the current allowances are too low to lead to continuity of contact
- a review of the treatment of children
- pause and fix, or
- any announcement of measures to deal with the administrative problems.
Para 6.12 and 6.13 defend the system’s design. The government evidently thinks that the scheme is okay because people on it are working, and that if there are residual problems it’s because people are not getting out and working. They haven’t realised that most of the people on working age benefits, and so most of the people the scheme is going to deal with in due course, are unable to work, and most of the rest are working already. (Universal Credit should ultimately be there for 6 to 7 million people; only 1.4 to 1.5 million of them are ‘unemployed’, that is not working and available to work.) The roll-out of Universal Credit began by focusing on a particular category of claimant, mainly younger single applicants; but as the scheme expands, more and more of the people who are being dealt with will be in other categories. That’s why problems such as self-employment or telling people who are working to come in to the office are only really emerging now. The scheme is not so much ‘unfit for purpose’ as directed to the wrong purposes – and that means that no amount of reinforcement is ever going to make it appropriate to people’s needs.