Category: Social security

This blog includes discussion of issues in British social security policy, along with new material to complement my book, How Social Security Works.

The decision not to compensate the WASPI women

The government has decided not to compensate women who have lost several years’ pensions because of the shift to equal pension ages.  The main complaint that has been addressed (notably, the decision of the Ombudsman on this issue) is focused on a specific question: were the women properly informed about the change in their entitlement?  The Ombudsman’s judgment was that some notices came late, or not at all, and so that there was maladministration.

That, however, is only part of the issue, and not (in my view) the greatest matter of concern.  The problem lies not so much in the 1995 Act, which set about equalising pension ages, as the 2011 Act, which both speeded up the timetable and further increased the pension age.  (The notices of this went out in 2012 and 2013). The effect of that Act was that women who were at that point aged (roughly) 56-58 years was that, even if they were perfectly informed, they were given less than five years, and possibly as little as two, to make alternative financial arrangements.

Parliament decided to save money at these women’s expense. There are two key objections to this.  One is that the government took away a property right – the pension that they had paid for.   The other is the breach of a fairly long-standing principle in public service, that of ‘promissory estoppel’: that people make plans and commitments guided by the advice of government and officials, and that they have the right to expect that official promises will be held to.   The bad faith, not the lack of information, is the main reason the WASPI women have been so indignant.

 

How to get Britain working – and how not to go about it

The government’s white paper, Get Britain Working, isn’t bad.  It’s reflecting on a long-standing failure of policy.  For the best part of forty years, the focus has fallen on the failings of unemployed people, rather than the structural deficiencies of the labour market.  Successive governments have tried to remedy this through increasingly punitive actions, impoverishment by design and the development of a bewildering series of agencies that are supposed to guide people into work.

This ‘White Paper’ devotes much of its attention to the problems rather than the responses – stuff that would more conventionally be the subject of a consultative Green Paper.  It does commit, however, to a substantial  increase in opportunities for young people who are not in work or education. That is no bad thing.

In my book “How to Fix the Welfare State”, I pointed to a series of misjudgments:

  • ‘Active’ labour market policy shifts the burden of unemployment to the people who experience it.
  • Incentives are not a simple matter of comparing benefit levels with wages.
  • The standard microeconomic analysis, presenting unemployment as a matter of personal choice, is an ideological prejudice, not social science.
  • Employment services have suffered by being muddled with benefits.

It’s more worrying that the White Paper has been announced by ministers in terms that are openly punitive.  “Starmer declares war on benefits Britain”, says the Mail.  “Young people who refuse to work to lo0se benefits”, says the BBC reporting Liz Kendall.  This language is poisonous. One would think that forty years of failing to drive people with skills they don’t have into jobs that don’t exist might have given policy-makers reason to think things through.

I want in this blog, however, to point to another aspect of the same policy failure, which relates to sickness and disability.  There’s rather less about this, with a Green Paper promised for next Spring.  The previous (Conservative) government issued a DWP Green Paper about disability benefits, Modernising support for independent living, which showed a disturbing failure to understand the simplest things about disability benefits: that

  • these benefits are a supplement to income
  • they are not based on an assessment of extra costs
  • they are not means tested
  • they are not about the ability to work, and so they are not lost if people work.

I have made fuller comments about that Green Paper here.    For present purposes, what matters is that these benefits hold the answer to the supposed problem that the new White Paper says it wants to address: “to change the system of health and disability benefits across Great Britain so that it better enables people to enter and remain in work.”  That is exactly why we   need benefits that are a supplement to income, not means tested and unrelated to the capacity to work.

Budget 2024: a mixed bag

The Labour government’s first budget fires a salvo of measures in the general direction of social security, some large, some small.  They include:

Pensions.  The   headline figure claims that the government is increasing the state pension by 4.1%, reflecting the increase in wages.  This is being presented as an  amount consistent with the triple lock, but that is not true.  The level of the state pension will increase by the triple lock  minus the value of the Winter Fuel Payment, typically equivalent to some £4 to £6 per week.
The Budget alse presents a cost for increased takeup of Pension Credit.  This is listed at a desultory £15m over four financial years. There may be more of an increase in takeup than the government is anticipating, because of another factor: the intention to bring Housing Benefit for pensioners into the PC system.  Takeup rates – the propotion of eligible pensioners claiming – will be low, but the absolute numbers of claimants will increase.

Benefits for disability and incapacity.  Migrating claims for Employment and Support Allowance to Universal Credit is claimed to be very costly over the next 3-4 years but then to save money in years 5 and 6, apparently through the magical process of persuading sick people to take up work.  The government seems to believe they’re in  the court of miracles, where the lame will walk and the blind will see.
The threshold that carers might earn before losing their benefit, is being updated. A small measure, that will not resolve the problem but will put off some problems  for a little time.

Fraud and error. The government aims to save £4.3bn with a crackdown on fraud (pp 40-41 of the budget red book).  This has been reported as somehow linked with benefits for disability and ill health, a misleading juxtaposition on page 2 of the red book; in fact the main focus of the budget saving is Universal Credit, a consistently ill-thought out set of reforms which have greatly increased the likelihood of error and serious fraud.  There will be an extra 3180 civil servants charged with curbing fraud and administering verification procedures.  The biggest saving, however, is supposed to come from targeted case reviews within the UC system, facilitated by new powers to investigate people’s bank accounts and assets.

Other lesser changes include extending the Help to Save scheeme, extending the surplus earnings threshold in UC, a modest but welcome ‘Fair Repayment Rate’ for people in debt to the DWP, the extension of Household Support Fund and Discretionary Housing Payments, and pilots of new schemes for  kinship and fostering.

A cut in Winter Fuel Payment is a cut in the basic pension

The Winter Fuel Payment has always come over as a little odd.  It’s not a cold weather payment – the weather is irrelevant.  It’s not really a winter payment – it’s based on the situtation in September.  It’s not actually a payment for fuel – people are free to spend it on whatever they think appropriate, and while some people will use it to pay for a little more fuel, it’s unusual to use even most of it for that.

The proposal to abolish WFP is essentially, then, a proposal to cut the income of pensioners, currently by up to £300 a year.  That cut is not self-evidently justified, because it reveals a somewhat distorted view of priorities, but it’s not fundamental either.  If the government really wanted to rethink the distribution of income to pensioners, it would make far more sense to tax the state pension (that would only affect those pensioners who had combined income from state pension and other sources above the tax threshold).   They’re not doing that, because they came to office with an undertaking not to increase personal tax rates.  Taking the money directly from pensioners may be different from tax, but it ends up in the same place.

I’ve been more concerned by a set of ill-informed public comments about the WFP.  Taking them one by one: why should rich pensioners get anything? The immediate answer to that is really simple. Pensions aren’t income-related.  All pensions go to richer pensioners as well as poorer ones.  I’ve already explained that the Winter Fuel Payment is not really tied either to winter or to fuel. The cut in WFP is nothing more, and nothing less, than a cut in pensions. 

The second question: why can’t they just claim Pension Credit?  To which the answer is: Have you looked at Pension Credit? It’s not as complicated as Universal Credit, which is a blessing, but it’s still difficult to decipher. (For example, entitlement is still expressed in weekly amounts, but pension payments are often monthly.  It becomes more complicated if Savings Credit is included: at that point, it becomes difficult to work out when people become entitled, and when they cease to be.)  Like other income-tested benefits, PC has consistently failed to reach hundreds of thousands of people who are in principle entitled.   The last estimate (2022) was that PC was received by 63% of the people entitled, and not received by 37%.

That is also the answer to the third question: why don’t we just means-test WFP?  The basic reason is again obvious. Every means-test calls for more details and more complexity.  In their heyday, there were literally thousands  of separate means-tests. (Consider, for example, the awful mess we’ve got into with local authority means-tests for residential care – but that at least relates to very large financial payments.)  We already have one, comprehensive means-test for everyone with an income.  It’s the tax system. Why create yet another complex, burdensome process to do the same job?

Means tests all fail to some degree.   It’s far, far more difficult to work out who is entitled and who is not if the assessment relies on a test of income or other resources. That is not a reason never to have any means test, because considerable numbers of people depend on the payments – but we do need to decide whether it wouldn’t better to go for simpler, broader eligibility criteria for benefits with a mass role.  I’d be in favour, for example, for a guaranteed minimum state pension, so that everyone who received a partial pension and had no occupational pension got the state pension automatically made up to a set level.

This blog is not, however, here to offer you a vision of the shining city of the future.  If WFP is so feeble, why should we keep it?  Does it matter?  Here are three reasons.

First, the principle.  The cut in WFP is a cut in pensions.  Is that merited?  Pensions in the UK are markedly lower than pensions in many of the countries we’d use as comparators – which is why the ‘triple lock’ has been used, however slowly, to bump them up a wee bit.  WFP is another way.

Second, the value of having a distinct benefit.  Benefits don’t work too well when they cover multiple contingencies.  Technically, cash benefits are ‘fungible’ – they mix together in different ways for different people.  The best and most effective way to be able to respond to particular circumstances is to have a stand-alone benefit that can be added to other income.  That’s the mechanism that the government is set to destroy.  WFP is the only system that is available to distribute benefits to everyone.  If we wanted in the future to make a lump sum available to pensioners  (and why not – we did it for the banks), this is the administrative mechanism you’d need to use.  An old rule about tax: don’t burn your instruments. You never know when you’ll need them.

Third, the economics.  WFP (and pensions overall) are not ‘public spending’.  If they’re paid out of tax, the amount of money in the economy is just the same afterwards as it was before.  Pensions are ‘transfer payments’, which mainly affect who is going to spend the money. The state does not spend the money; pensioners do.   The abolition of WFP is, crudely put, a cut in the disposable income of pensioners. That is also a cut in the financing of economic activites that the money would otherwise have been spent on.   Far too many people in the UK are destitute.  Markets don’t work if people don’t have the money to spend in them. There is a powerful case for increasing benefits overall.

The DWP consultation on disability benefits: read it and despair

The DWP’s new Green Paper, Modernising support for independent living, could well be the most alarmingly  misconceived document on social security I have witnessed during the tenure of the Conservative government, which in the era of Universal Credit is saying something.  It displays a basic lack of understanding of how benefits for disability work and what they are there for.

Personal Independence Payment (PIP) was introduced in 2013 to provide non-means tested cash payments to disabled people and people with health conditions to help them live independent lives.

A brief history is in order.  PIP was not a fundamental replacement of the previous system.  It was a rebranding of Disability Living Allowance, or DLA, which itself brought together two existing benefits for people of working age: Attendance Allowance and Mobility Allowance.

None of those four  was designed to promote independent living.  That was the job of a completely different set of systems, initially pioneered by the Independent Living Fund,  subsequently incorporated into the Griffiths reform of community care, and currently taking the form of personalised or ‘self-directed support’.   There is a limited overlap, to the extent that people who are supported by community care may also get financial benefits, but most of the users of either system are not covered by the other.

PIP … is often described as an ‘extra costs benefit’. It is paid at various rates depending on the level of functional impact of a person’s disability or health condition.

Well, that was how both DLA and PIP were presented politically – but it’s not what they do, or what they were designed to do. The criteria for awards do not, and never have, depended on extra costs.  They focused on the severity of the disability, which is something quite different. (The tenuous link to costs is explained in the DWP’s  Equality Analysis on PIP, undertaken in 2017:

“PIP is a payment that is intended to be broadly proportionate to the overall need of a claimant. The greater someone’s need, all else being equal, the greater the cost they will face as they go about their daily lives.”)

If the benefits were not about costs, what were they supposed to be doing instead?  That was made  explicit at the time of the introduction of benefits for people with disabilities in the 1970s.  It had become clear that people with disabilities, regardless of their status in other respects, suffered disadvantage throughout their working lives – not necessarily because they had additional costs, but because they were disabled.   Alf Morris explained in Parliament:

“It is not only a question of finance we are discussing, but also the dignity of disabled people. … This is only one stage towards improving the financial status, and therefore the dignity, of every one of our severely disabled fellow citizens.”

The logic of not means-testing the benefits was that this disadvantage affected everyone with a disability.

Additional note, 23rd June  This graph, from a report by the Resolution Foundation, shows what PIP actually does. Its principal role as a benefit is to do just what the benefits it was based on were meant to do: not meeting extra costs, but offering additional support for persistent low income.

In the United Kingdom, we have had a predominantly cash transfer system for extra costs since the introduction of Attendance Allowance and Mobility Allowance in the 1970s.

These were not ‘extra costs’ benefits, and no assessment was made to relate them to costs.  (I should perhaps add that despite the name, Attendance Allowance was not given for attendance, but for severe  disability.)  In the past, there were two ‘extra costs’ benefits attached to Supplementary Benefit and Income Support: those took the form of “Exceptional Circumstances Additions” and “Exceptional Needs Payments” when they were part of Supplementary Benefit, and became ‘premiums’ when Income Support was introduced. Things have moved on since; the ‘legacy benefits’ are being eradicated, and these provisions are going with with them.

We know from research that people often use their PIP payments on core household expenditure (such as utility and housing costs). We also know that some disabled people view their PIP award as compensation for being disabled rather than as an award for extra costs.

This is one of the few statements in the review that recognises how social security actually works.  Benefits are delivered as cash so that people can choose how to use them, and cash is ‘fungible’ – it gets lumped together  with other cash.

We also know a certain amount  about what applicants think about the disability benefits.  One of the primary findings about DLA, shortly before it was renamed, was that applicants didn’t have much idea of what the criteria were, and if they were receiving other benefits were likely to think they ought to have  a crack at it.  The takeup of these benefits has been weak; people with disabilities do not necessarily think of themselves as ‘disabled’, and some say that they are disabled ‘sometimes’.  It has not  helped that the benefits have been lumped into a single, supposedly ‘working age’ benefit, and that assessments have often focused inappropriately on someone’s ability to work.  There is a good case for smaller, more clearly defined benefits that might actually make some sense to the people who receive them – and, given the level of incomprehension that this DWP paper reveals, to the people responsible for delivering them.

We would like to understand whether some people receiving PIP who have lower, or no extra costs, may have better outcomes from improved access to treatment and support than from a cash payment.

This is disingenuous.  If there is no cash payment, those people will be worse off financially, as the evidence mentioned in the previous quotation makes clear. That will be true regardless of whether their health care is enhanced.

We want to hear how the welfare system could be improved by exploring new approaches to providing support. These include:

  • Moving away from a fixed cash benefit system so people can receive more tailored support in line with their needs.
  • Moving towards a better join up of local services and a simpler way for individuals to access all forms of support and care, whilst reducing duplication, to better meet the needs of people with health conditions and disabilities.
  • Exploring alternative ways of supporting people to live independent and fulfilling lives. This could mean financial support being better targeted at people who have specific extra costs, but it could also involve improved support of other kinds, such as physical or mental health treatment, leading to better outcomes.

In every particular, this refers to the objectives of the system of social care, not benefits for disability.  The thorough-going replacement of the objectives of the existing benefit system by the system of community care could potentially imply an expansion of community care – but it also implies, no less, the virtual abolition of the system of social security benefits for people with disabilities.

 

The Resolution Foundation loses sight of what Universal Credit is really like

I listened on Monday to a discussion at the Resolution Foundation of a new report, In Credit.  The participants seemed on the whole convinced by the proposition that UC has simplified the system, that the process of digitisation has worked well (especially in the pandemic) and that the central issues now concerned the adequacy of the benefits rather than the design of the system.  At the same time, reports from other organisations  point to serious structural problems with the benefit.  An outstanding report from CPAG  goes methodically through the processes of claiming, decision making, official communications and failures in the management of disputes. And research from Bath University’s Institute for Policy Research  criticises the rigidity of the assessment system and the drastic volatility and unpredictability of the income that is being provided.  “Monthly fluctuations in UC were ubiquitous, frequent and sometimes very large. ”

Someone has to have got this wrong, and in my view, it’s the Resolution Foundation.  They acknowledge that there were ‘teething problems’ at the outset.  It’s much worse than that.  The early years were a complete disaster, which is why the programme had to be ‘reset’ and massively overspent, but the system failed then, and has failed ever since, to meet any of its declared objectives.   I’m not going to go through everything I’ve said about this on this blog, but here are a few salient points.

The declared aims of Universal Credit have shifted frequently over time, but in general they were claimed to be:

  • the simplification of the system
  • reducing fraud and error,
  • reducing worklessness, and
  • improving work incentives.

Other objectives have included:

  • reducing the cost of the welfare system
  • rewarding work and encouraging personal responsibility
  • reducing poverty
  • smoothing transitions in and out of work
  • improved efficiency through automation
  • personalising benefits through a tailored response.

Every one of those objectives has been a failure. I’ve previously presented evidence about each of them. There have been critical reports from the House of Commons, the House of Lords and the National Audit Office, and specific rebuttals of the positive spin put on them by the DWP.

The main thing to add since I made that argument  has been the question of how things changed with the pandemic.  According to the Resolution Foundation report, “the system garnered praise during the pandemic for its ability to cope with a huge increase in claimant numbers with minimal delays.”  I seem to remember something different.  The first thing  is that the social security system had  coped before with massive increases in claimant numbers.  The second point is that in the early stages of the pandemic, the system didn’t cope: it locked up. Here’s a reminder.

When UC eventually did catch up, it was at the cost of substantial delay, uncertainy, error and fraud.

So – how has UC fared?  It has failed to simplify. Its digitisation has been  clumsy and inappropriate to claimants’ circumstances.  As for ‘incentives’, the policy-makers have lost sight of the main purposes of the benefits system, which have little  do with work.  And, in the process, we have lost sight  of the need for a basic benefit that can at least ensure that people are not malnourished,  destitute or in despair.

Universal Credit: the gift that keeps on taking away

I’ve been ploughing through a long, complex but very worthwhile report from CPAG, which examines the effect of the digital administration of Universal Credit  on the way that people experience the system.  It focuses on the scheme’s serious deficiencies in transparency, procedural fairness and lawfulness.

First, there are the problems relating to claims.  Thje system absolutely insists that people fill it in perfectly and in line with the expectations of administrators.  It can’t cope with incomplete information, such as people not having a bank account, and doesn’t have the options the process needs for people to get round the blocks.  Standard additions, exemptions and exceptions aren’t considered.  The system can’t manage backdating or claims made in advance (for example, for someone leaving care).

Second, there is the problem of decisions. The DWP has sailed ahead regardless of the notices it is supposed to give or the need to fix problems that come from clearly incorrect assessments.  The absurd pretensions of tracking income in ‘real time’ are still subject to wildly inconsistent arbitrary calculations based on calendar dates – the courts have repeatedly taken the DWP to task about this.  There are widespread problems  of claims being closed without due consideration, obstructing further action or the ability to revive and correct the details.

Third, there are the issues of communication: incomprehensible calculations, failure to inform people of their entitlements, and frequent failure to give the information required by law.

Fourth, there is the management of disputes.  The process for “mandatory reconsideration”, itself a deliberate obstacle to access to justice, is protected by stonewalling, where DWP officials refuse to register requests or let claimants ask for redress.

It seems all too clear that, nearly thirteen years after the scheme was adopted, the many deficiencies of the computer programme have still not been sorted, and the benefit continues to fail in many major respects.

 

 

In praise of the triple lock

The ‘triple lock’ is the name given to a commitment to maintain and improve the value of state pensions.  The table comes from a recent report by the Institute for Fiscal Studies.

Table 1. Triple lock indexation since its introduction

In the course of the last twelve years, this has meant that pensions have increased by a nominal 60%, while if they had only increased by inflation, they would be up 42%. Putting that  another way, pensions have risen by 12.7% over inflation (that is, 160/142), which in real terms is 1% a year.

One might suppose that ratcheting pensions up, however slowly, was a praiseworthy thing to do, but the principle has come under fire from those who claim that it represents an unsustainable commitment. The criticism has been fed by the IFS report, which argues that it creates ‘uncertainty’ about the future value of state pensions, and that if it is left in place till 2050, it will increase the value of the state Pension from about 25% of median earnings to something between 26% and 32%.

The first of these arguments is, frankly, codswallop.  The benefits  system is in a parlous state: the main ‘uncertainty’ it is creating is whether or not people will be able to eat.  Improving the value of the pension does not increase uncertainty; it reduces it.   If we are genuinely concerned about the narrower problem of how people plan their pensions for the future, the main ‘uncertainties’ come from the govenment’s eccentric reliance on means-testing and the desperate problem of paying for social care.

The second argument invites the obvious retort – so what?  A modest increase in the value of pensions, relative to the median wage, is surely a good thing.  The UK’s treatment of pensioners is, by international statndards, parsimonious.  Consider this graph from the OECD.  It puts the percentage of GDP spent on pensions in the UK at 5.1%.  The Office for Budget Responsibility, which works on a slightly different set of definitions and takes into account a few extra benefits,  estimates that this year, the percentage will be – try not to be too shocked – 5.3%.

https://data.oecd.org/socialexp/pension-spending.htm

The  State Pension provides, at best, a modest basic income.  The (somewhat limited) success of the triple lock is something to applaud, not to denigrate.  One might wish that the the same approach could be taken for the painfully inadequate benefits offered to people of working age.

My submission to the Work and Pensions Committee on the adequacy of benefits

The Work and Pensions Committee has issued a call for evidence about benefit levels in the UK.  My response to that call is here in a PDF or on the Committee’s website here.

There are some common confusions in the discussion of adequacy, which this submission seeks to clarify.

  • The purposes and functions of benefits are complex.
  • The adequacy of benefits depends on how they work in combination with each other, and with other sources of income.
  • Benefits have not been set at a level that reflects the costs of subsistence.
    Universal Credit in particular is not designed to provide a basic minimum
    income and does not do so.
  • Most benefits are designed to be delivered regardless of work status. The
    emphasis on the centrality of work is a major distortion of their role and
    purpose.
  • The operation of the benefits system is frequently penal and fails to provide
    adequate avenues of redress.
  • Assessments of people’s  financial position which attempt to identify all possible income streams and household circumstances are unavoidably complex, difficult to administer and liable to error. The alternative is to offer a range of less comprehensive benefits which can be combined in different ways.

The proposed abolition of benefits for long-term sickness is staggeringly stupid.

When I posted about the reform of the Work Capacity Assessment before, I had no idea that what was being contemplated was an abolition of benefit for  long-term sickness.  That, however, appears to be what the government actually intends to do.  They are so fixated on disability that they have forgotten what sickness benefits are supposed to do.

The Beveridge reform included, initially, only a Sickness Benefit.  This wasn’t enough, and in 1971 a longer-term benefit called Invalidity Benefit was introduced, largely to cope with people who otherwise would have to make demands of the system for unemployment.  Subsequent changes gave us Incapacity Benefit, then Employment and Support Allowance, now being swallowed by Universal Credit.  It’s already the case that benefits for people who are ill are now set at the same level as benefits for people who are unemployed.  The difference rests in the situation of people who have ‘limited capacity for work related activity’ or LCWRA – people who (in the terms of the 2012 Welfare Reform Act) it is not reasonable to expect to work. Those people are largely exempt from the requirement to be actively seeking work.

Transforming Support, the White Paper on Health and Disability, has been published at the same time as the 2023 Budget.   The bulk of the White Paper is taken up, unexceptionably, with the situation of people with disabilities, and how they might be supported into work.  The problem is, straightforwardly, that sickness benefits are supposed to do something quite different.  They are there to support people who are sick.  The government, it seems, is incapable of making the distinction. Most people who are sick are not disabled.  Many people who live with disabilities are not ill.  There are conditions which overlap, but these are different circumstances calling for a different approach.  I’ve explained the difference between sickness and disability benefits in my previous work; here is a quick summary.

Benefits for people with disabilities people are given on a number of principles.

  1. Compensation for disability. Industrial disablement or action in the courts assume that people should be paid if something unpleasant happens to them. This does not extend to those who simply become ill or to those born with disabilities.
  2. Special needs. Allowances can be made for example for personal care, transport, and medical goods.
  3. Desert. In some cases compensation depends on a moral evaluation of the
    reason for disability. War pensions are the obvious example.
  4. The protection of carers. People caring for a disabled person may be limited in their capacity to seek work and to earn.
  5. Rehabilitation. Benefits may be concerned to change the status of the disabled person – for example, through training or the provision of special equipment.
  6. Promoting employment. A number of benefits are geared specifically to the promotion of employment for disabled people, as a desirable end in itself. They do so principally by altering the calculation of costs and benefits made by disabled people or by employers.
  7. Improving low income. Low income may reflect incapacity or disadvantage in the labour market. Many disabled people on low incomes rely on forms of social assistance benefits, for others who are poor. Support for disabled people on low earnings is another example.
  8. Equal opportunity. Rehabilitation and the promotion of employment can both be seen as means to further equality of opportunity for people with disabilities.
  9. Participation in society. This encompasses rehabilitation, employment and income support; it is also a justification for a range of benefits in kind intended to promote social inclusion for people with disabilities, including housing, transport, leisure, cultural and educational benefits.
  10. Market-based and voluntary provision. With the exception of insurance-based social protection, the role of non-governmental organisations (NGOs) in this field is overwhelmingly geared to disability, not to incapacity. The voluntary sector has a wide range of objectives, including humanitarian, religious, mutualist and commercial aims. State intervention which is based on support of the voluntary sector necessarily reflects those principles to some degree.

Benefits provided to deal with sickness are based on different criteria.

  1.  Social protection. The principle of social insurance is intended to cover changes of circumstance and needs which might arise. This extends to cover for medical care, the incurring of unexpected costs and income maintenance.
  2.  Income maintenance. People wish to protect themselves from circumstances in which their income might be interrupted. This is sometimes done through social assistance but more typically it affects people who have previously been earning.
  3. Economic efficiency. Part of the rationale for incapacity benefits is based, not in the circumstances of the incapacitated worker, but in economic processes. Employers wish to maximise the productivity of the workforce. Rules relating to short-term incapacity allow for restoration of full capacity; rules relating to long-term incapacity allow for removal of less productive workers from the labour market. (Note that there is a potential tension between this principle and the desire, in relation to people with disabilities, to promote increased participation in the labour market.)
  4. Early retirement. A scheme for incapacity benefits may become in effect a
    surrogate scheme for early retirement. Because it legitimates withdrawal from the labour market, it makes it possible for those who hope to retire a means of doing so.
  5. The functioning of medical services. The balancing of medical priorities has
    been an important element in the administration of incapacity benefits: part of the purpose of sickness benefits has been to facilitate and encourage medical consultations, but the routine certification of sickness has proved burdensome and (in some systems) ineffective as a means of prioritisation.

Although there is some overlap between the two issues, it mainly happens in so far as disability implies incapacity, or incapacity includes disability. A person who is disabled does not need social protection or income maintenance solely on account of the disability; a person who is incapacitated without disability does need social protection, but is not necessarily disadvantaged in terms of equality of opportunity or participation in society.

What the government proposes is to confine health benefits solely to people who pass the assessment for Personal Independence Payment – that is, people with disabilities, who have a long-term, functional limitation in capacity.  The key proposal in the White Paper is this:

145. We are therefore proposing to replace the current UC LCWRA element with a new UC health element. The new element will be awarded to people who are receiving the UC Standard Allowance and any PIP element.

146. This new element will abolish the need to be found to have limited capability for work and work- related activity, as is the case with the current UC LCWRA element. This will remove barriers in the system that can prevent people who would like to, from entering or remaining in employment.

So – what happens to people who are not disabled, but sick?  The answer is that they will be treated simply as if they were unemployed.  The Institute for Fiscal Studies points out that “The 1 million people who are currently on incapacity but not disability benefits could potentially lose out from this change – with a typical health-related UC claimant losing £354 per month.”  They are going to be expected to engage in job-seeking for 35 hours a week.  They are going to have to report for meetings, and be sanctioned if they are too sick to get to them. People with conditions such as heart disease or cancer are going to have to undertake a PIP assessment on the off-chance, when they have no reasonable prospect of qualifying  – a situation that was recorded in some detail when in the past a million people who applied for Disability Living Allowance had to be rejected. This is going to be an administrative nightmare.  The CEO of the charity Mind has commented that the policy represents “a one-dimensional, overly-simplistic approach to a complex, systemic issue.”  The proposed reform  disregards everything we know about this sort of benefit.  It is staggeringly stupid.