A utopian vision of money for everyone

One of the Zoom sessions I went to today was fuelled by optimism about a most unlikely scenario: the idea that the United Nations should provide people around the world with a universal basic income.  The advocates were arguing that the money could be raised to pay everyone $30 a month, and that it should be.   Their position paper can be read here.

I don’t want to dismiss this as a thoroughly bad idea.  In the course of the last 20 years or so, many countries have been introducing cash support for their populations, that support can make a huge difference to people’s lives, and the support doesn’t have to be conditional. The case is well made in a short book by Hanlon and others, Just give money to the poor (2010), and reinforced by the experience of small area provision in India and Kenya.  (These experiences don’t translate well into a case for the same policy in developed countries, where BI proposals are often being developed in terms that will not improve the incomes of many poor people, and may make some worse off.)

Nor do I see the proposal as being intrinsically unaffordable.  It would call for redistribution from richer countries, but that already happens in the form of Oversesas Development Assistance.  Asking the UN to take it on seems like a long shot, but the UN is at least an appropriate forum for discussion: the UN’s Guiding principles on extreme poverty and human rights marks out their interest in the area.

The core problems are somewhat different.  The first question to ask is obvious: is this the greatest priority? People in developing countries need money, but many of them are poorly integrated into any formal economy where the money can best be spent. Other contenders for support might be health care, education, water, and sanitation – all of which are essential to welfare, but probably better delivered without depending on private, commercial markets.-

The second problem is logistic.  How does one distribute money to seven billion people – or even to four billion?  I raised the point on the forum, and the answer came back: mobile money wallets.  For which people need first to have access to electronic devices, and the means of powering them, and local providers need to have the means to process the payments.   It’s not much of an argument to say this has been done in small communities.  Implementation changes with scale.

Advocates for Basic Income are not all utopians, but the curse of Basic Income schemes has been a common failure to think through how things can practically be done, and what the rules should be.  Who gets the money? Do they have to claim? How is the money paid? How are children to be treated? How can we ensure that the money is used by the person it’s intended for? What happens when someone dies?  These are the sort of details that experiments in BI ought to have engaged with and sorted long ago – not all the nonsense about incentives and behaviour change.

‘Shaping future support’: more on the obsession with work-testing people who are ill

The ‘health and disability’ Green Paper, Shaping Future Support, is nominally addressed to benefits for people with disabilities and ‘health conditions’.  It promises a review of three broad areas – ‘enabling independent living’, support into employment and  experience of the services, but in the wash this mainly comes out as a review of two issues, assessment and employment.

On the topic of assessment, the paper has little to offer.  People find the assessments are repetitive and inaccurate; the main responses are ‘triage’ and developing more telephone and video assessments.  On the first point, I defy anyone to develop a triage process that doesn’t lead to people being asked some of the same questions twice – unless, of course, the purpose of the triage is to block some people from going futher. As for inaccuracy, the central problem is that the DWP is still holding to the idea that their assessors can garner more information in an hour than professionals in continuing care can collect over several months.  There will be a problem for as long as the DWP continues to disregard medical evidence.

The other issue, and the issue which gets the most coverage in the Green Paper, is about employment. I apologise for repeating myself, but it stands repetition. Two million people who receive Employment and Support Allowance have been receiving it because they are too sick to work, and it is not reasonable to ask them to.  I can say that with reasonable confidence, because they have been subjected to a government-set assessment that was designed to establish precisely that point.  I am sure that there will be those in government who will say, ‘ah yes, but they are still capable of work-related activity’.  They may be, or may not, but there has been no assessment of that; there should have been, there was going to be some relevant test, but the DWP decided not to introduce one.  At present the only criterion for being deemed capable of work-related activity is an assumption, that by default people who need less support must be capable of such activity.  So they are set to do things like writing a CV and invited to have their confidence built. Just what people with bowel cancer need.

One other point about the Green Paper is worth noting.  Late on, in paras 300-303, it floats, for no obvious reason, the possibility of combining ESA/UC with Personal Independence Payment – despite acknowledging that the criteria for eligibility, and the assessments, are  quite different.   I suspect, but do not know, that this may herald an attempt to restrict disability benefits to people on low incomes.

Unemployment is not about to triple – is it?

I was idly poring through the most recent edition of the DWP’s Benefit Expenditure and Caseload Tables – I know, it’s sad – when I came across this striking sequence of data, in the table headed “Unemployment benefits”.

2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
Outturn Forecast Forecast Forecast Forecast Forecast Forecast
Expenditure, £m (real terms)
20,119 38,564 41,873 42,680 45,298 50,373 57,990
Caseload, 000s
2,330 4,284 4,509 4,544 4,714 5,192 5,953

By that reckoning, both caseload and expenditure will increase to two and a half times their current level.  There will be nearly six million people unemployed.

There are two possible explanations for this.  One, which I think implausible, is that the government is anticipating a massive and prolonged surge in unemployment as a result of the pandemic and Brexit.  The scenario is not beyond imagination, but I don’t think it at all likely,  even if it was true, that the government would build it into their medium-term forecasts.

The second, which is much more likely, is that the figures represent the anticipated caseload of Universal Credit, currently being counted without any distinction between people who are unemployed and the rest. At the moment, Universal Credit is mainly performing two functions: payments to people who are unemployed, and payments to people on low earnings.  As time goes on, it will also be taking in more and more people on ‘legacy benefits’, and the largest group of people in that category  are nearly two million people currently receiving Employment and Support Allowance. There may well be some people on ESA who are really unemployed, but all of them are  sick or incapacitated.  Bear in mind that the basic, central criterion for receipt of the benefit is that these people are sick, and cannot be expected to work.  That’s not just me saying that. This is the text of the 2012 Welfare Reform Act:

37 Capability for work or work-related activity
(1) For the purposes of this Part a claimant has limited capability for work if—
(a) the claimant’s capability for work is limited by their physical or mental
condition, and
(b) the limitation is such that it is not reasonable to require the claimant to
work.     

Anyone who applies for ESA has to show that they have limited capability for work, tested not (as it once was, and should be) by doctors who know their patients,  but by an elaborate points scheme.  The whole point of providing a long term sickness benefit is to make provision that does not depend on people seeking work.

What the forecasts tell us is that the government currently intends to make no distinction between people who are unemployed and people who cannot reasonably be expected to work.  They will all be counted as receiving unemployment benefits.

The Resolution Foundation proposes a rethink of benefits

The Resolution Foundation has published a short report – they call it a ‘briefing note’ – to consider lessons from the crisis for the system of benefits.  They make several key points, most of which I’d endorse:

  • Earnings-replacement is a critically important role of benefits
  • The current system of sick pay is inadequate, and forces sick people to go to work when they shouldn’t
  • The distinction between employees and self-employed people makes no sense
  • The general level of benefits is too low
  • The safety net needs to reflect housing costs and family size
  • Big reforms will inevitably generate problems
  • There is going to be an increased demand for support for long-term sickness.

I’d depart from their arguments in two ways  First, I don’t think the response of the benefit system, and particularly Universal Credit, has been adequate even within its limited sphere of operation.  Half the applicants have found the process difficult, delays have been marked, it’s full of arbitrary hurdles, and it’s riddled with errors.

Second, the report  seems to me to think of universal benefits, earnings replacement and safety net benefits as being alternatives.  It’s in the nature of cash benefits that they can be combined from different sources, in different ways  – what matters is the final ‘income package’.

Universal Credit is not ‘spending’; it’s a transfer payment

At the risk of generating more fog than light, I’ve just tried to squeeze a complicated little argument into a tweet. Benefits are commonly presented, in public accounts and in the media, as a form of public spending.  That’s not strictly true.  Benefits are technically a form of ‘transfer payment’.  The government doesn’t actually spend the money; they pass the money to the people who receive benefits (pensioners, families and so forth) so that they can spend it.

This has one of two effects.  If the transfer is paid for by personal taxation – that’s not the only way for governments to raise money – then benefits are simply redistributive.  On the face of the matter, redistributive transfers are economically neutral  – they have very little effect.  If they do have an effect on economic activity, it’s because people on lower incomes may well spend their money differently from people on higher incomes.   Typically, they save less (so the money is used more) and they spend more on food as a proportion of their income.

If the transfers aren’t paid by personal taxation, the situation is a little more complex.  If the cost can be tracked to a specific form of finance, that may imply a different pattern of economic behaviour, and the transfer payment may not be so neutral.  However, government finance doesn’t work to a strictly balanced budget, and it’s quite possible that the money will simply have been created, like ‘quantitative easing’ or ‘helicopter money’.  In the present circumstances, there’s a very strong argument for government to maintain a flow of money in order to shore up economic demand.  Quite apart from that, of course, the case  for protecting people on low incomes while that happens is strong in its own right.

Stephen Kidd on universal social security benefits

I’ve just heard a superb  presentation by Stephen Kidd, of Development Pathways.  He argues that developing countries should be focusing on universal benefits, like child benefit or a universal pension, rather than the means-testing which is being rolled out in many poorer countries.  The  report, by Development Pathways and the Church of Sweden, is here.

To give a flavour of his argument, here are two graphs.  The first highlights the failure of selective benefits.  The best performing selective programme, in Brazil, excluded 44% of the eligible group.  The worst performing, in Rwanda, used community based targeting, and excluded more than 97%.

The second graph shows something about the tax take.  Offering universal benefits means that people feel included in the support offered by governments – and that means that they are more ready to pay tax.  Kidd argues that universal benefits create trust, and the sense of a social contract.

The simplicity of Universal Credit

I’ve just finished giving evidence to the Commons Scottish Affairs Committee about welfare in Scotland – the video is here, the transcript here.  The main point I stressed in the hearing is that we no longer have either a minimum threshold for income, or an effective safety net.  The first part is true because there are reasons for benefits not to be paid in full: the repayment of advances, notional income, the two-child limit  and overpayment recovery.  The second part is true because people may find themselves with no support: that can apply because of the five week wait, the 3 week wait for legacy benefits, sanctions, self employment status, immigration status or the treatment of capital.

I have to admit that I’m completely flummoxed by the repeated claims from politicians that Universal Credit is ‘simple’.  This seems to mean, that the UC works by comparison with the legacy benefits; but many of the complexities of legacy benefits, such as managing overpayments, conditionality, assessments and the benefit cap, are recent introductions.

Universal Credit is complicated by design.  It brings together disparate benefits within a common framework of rules. Pre-existing rules relating to worklessness, incapacity, and housing largely remain, and that means that UC is really a group of benefits clumped together under a shared masthead – a ‘portmanteau’ benefit.  Lumping benefits together doesn’t make them simpler.  First, there are the complications built into its design.  People can’t tell when they’re entitled, how much for, or when entitlement stops.  The amounts of benefit can change suddenly and unpredictably.  Second, there is the reliance on technology to fix the problems – tough for those who don’t have the facilities, tougher still when they’re locked down and free sources are cut off.  And then, third, there are all the rules  – multiple, finely discriminating rules, which turn the process into an obstacle course.  Examples are the rules for partners, reporting changes across multiple dimensions, capital rules and managing overpayments.  There are too many rules, and too many moving parts.

 

 

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Funeral support payments: how much information is too much?

When I’ve written about social security payments before, I’ve at times referred to  Funeral Payments as a example of where the system goes wrong – as in my blog, here.  It has too many moving parts to be workable.  I was interested, then, and pleasantly surprised, to see that applicants have few complaints about the application process. You can see what’s asked here,  because the Scottish Government has understood that people need alternatives to on-line processes.  It’s still a convoluted process: applicants are asked about themselves, whether they get benefits,  their relationship to the deceased person, the estate’s resources and the funeral arrangements.

Most complaints in the  claimant feedback, however, are about something else entirely: the details on equalities, which account for the last five pages of the form.  People resent those questions, it seems, because they’re not really about the process at all – and the questions are consequently seen as intrusive, in a way that the earlier questions are not.  People should be able to bury their mother without having to tell a government agency that they’re gay.

Couling strikes again: the DWP continues to be in denial about the failings of Universal Credit

Neil Couling, the ‘Director General’ of Universal Credit and the Senior Responsible Officer accountable to Parliament, has a long track record of denying what everyone else can see.   In 2012, he was the one who claimed that there were no targets for conditionality and sanctions, despite the detailed  evidence provided by the PCS and Guardian.  In 2013, he fronted the UC Full Business Case, where he wrote that

This Business Case clearly demonstrates that Universal Credit provides value for money and huge benefits for claimants, the broader population and the economy as a whole.  Some of the most compelling aspects of Universal Credit are also highlighted here: the £2bn total cost of investment against a social return to the economy of £34bn over ten years; and an increase of people in employment of 200k.

The National Audit Office expressed its doubts, as well it might; there was no evidence to back up those claims.

This year, it fell to Couling and his colleagues to defend the DWP’s perverse practice of pretending that there were no bank holidays.  LJ Rose, for the Court of Appeal commented:

Mr Couling’s evidence is that as at the date of his statement in September 2018 the universal credit IT system had cost £1.3 billion to build and the estimate was it would need another £1 billion to finish the task. Any additional adjustments would increase this cost. Building another calculator to allow the amendment of assessment periods would, he says, require a complete rebuild, therefore substantially increasing the cost to the taxpayer by at least many hundreds of millions of pounds. …  Taking full account of all the SSWP’s evidence … I cannot accept that the programme cannot be modified … This case is, in my judgment, one of the rare instances where the SSWP’s refusal to put in place a solution to this very specific problem is so irrational that I have concluded that … no reasonable SSWP would have struck the balance in that way.

And now we have the latest report of the House of Commons Work and Pensions Committee, which takes Mr Couling to task over several points. First, he wanted to deny that people on UC were falling behind on their rent.

“When asked about the comparison between arrears, in Universal Credit and the legacy system, Neil Couling, the Senior Responsible Owner for Universal Credit, said that it was not possible for him to create a counterfactual” (pp 14-5)

Then he wanted to deny that the DWP had failed to provide the recommended support mechanisms for vulnerable claimants:

“We cannot agree with  the  assertion  made  by  Neil  Couling,  Senior  Responsible  Owner  for  Universal Credit, that the Department is currently providing a “de facto Universal Support”. ( p 46)

And he also wanted to claim that UC was not slower to deliver benefits for people with disabilities than other benefits have been:

the NAO found that, while 84% of claims from people receiving Personal Independence Payment (PIP) and Disability Living Allowance (DLA) were paid the core elements of their Universal Credit claim on time, only 75% of claims were paid in full and on time. … Neil Couling told us that the data on whether disabled claimants are paid in full and on time can “overstate” the degree of lateness … He told us : “Some of the lateness is artificially created by the way in which we are forced to collect the data, which is much better than the legacy system, I am hastening to add …” (p 53)

There is a pattern of behaviour here.  The Public Accounts Committee reported in 2018, after it had received evidence from Mr Couling and his most senior colleague, that

The Department’s systemic culture of denial and defensiveness in the face of any adverse evidence presented by others is a significant risk to the programme.

I am less concerned about the risks to UC, which has never been able to live up to its sales pitch, than I am with the effect on claimants.  The impact of cumulative delays, restrictive conditions, sanctions, an over-reliance on technological wizardry, debt and the devastating removal of minimum entitlements, has subjected millions of people to privation.  But it doesn’t help to be told that none of this is happening.

Some of the complexities of social protection, laid bare

The World Bank’s  Sourcebook on the foundations of social protection delivery systems is a substantial document, but it’s a bit of a curate’s egg: while some parts of it are excellent, others should be avoided.  ‘Social protection’ mainly refers to benefits; it seems to take in social work – part of the same process only in some countries – but doesn’t apparently extend to medical care, and social care for older people is largely dismissed in a page (half on page 254, half on 264-5).  The text is based around a seven-stage process of application and service delivery, shown in the graphic.

I wasn’t convinced at the outset that this  was an ideal way to explain how the process of administering benefits and services was translated into practice; that’s partly because they’ve opted not to use or even refer to some well-established literature about claiming, and partly because the labels they use  don’t quite capture what they intend to refer to.  ‘Outreach’ is about how the intended population is identified, and becomes aware of services prior to claiming; ‘registration’ is mainly about basic documentation; ‘onboarding’ is induction.  These stages aren’t necessarily sequential; many services apply eligibility criteria as a part of acquiring information about the population, and needs assessments are sometimes done to winnow out initial enrolment.  (I think the point is made for me in chapters 7 and 8, which have to track backwards to get a view about information, contact, referral and verification.)

Despite those reservations, I warmed to the model as the book went on, because it does at least give shape and structure to discussion of the issues.  It may be particularly useful for some of the advocates of Basic Income to consider: any viable Basic Income scheme still has to negotiate issues relating to documentation, identity, addresses, banking, how updates and corrections are made,  and such like.  This is the first document I’ve seen in an age which engages with that kind of issue.

There are, however, some problems with the way that the questions are explored, and arguably they reflect the agenda that the authors are implicitly following, much of which assumes that shiny new IT contracts and commissioning are the way to go.  I suspect that some readers will have strong reservations about the criteria the authors of this report set for schemes for disability assessment, which need to be ‘valid, reliable, transparent and standardized’ (p 107) rather than being, if it’s not too wild a leap of the imagination, personal,  dignified, expert or sensitive to complexities. The report promotes  a sizeable range of approaches using digital tech, but  the detailed coverage is fairly casual about many of the familiar problems that relate to reliance on such approaches – the obstacles the technology presents to claimants, the difficulty of determining whether their personal circumstances fit the boxes that people are offered, the role of the officials administering the system (most are not ‘caseworkers’ – a bureaucratic division of labour is more common), and the role of  intermediaries.   It doesn’t consider, with the main exception of enforcing conditionality, the possibility of using existing institutions such as schools and hospitals as the base for service delivery.

There are eccentricities in the way that benefits are described – the bland acceptance of proxy means testing, for example, the idea that a tapered minimum income is a ‘universal’ policy, and the treatment of grievances as a ‘confidential’ issue, when systematic reporting and review of complaints is essential to public management and scrutiny.   Taking the UK as an exemplar for the recording of fraud and error is a bit rich, when the accounts have had to be qualified for years because of it.  The entry that grated most, however, was about a ‘predictive tool’ for child protection, in  Box 4.10.   It claims that they have an instrument that can predict future out-of-home placements “accurately” and “to a high degree”.

Specifically, for children with a predicted score of 1 (predicted low risk), 1 in 100 were later placed out-of-home within two years of the call. For children with a predicted score of 20 (predicted highest risk), 1 in 2 were later removed from the home within 2 years of the call.

Calling this ‘accurate’ is overstating the case somewhat: if 1 child in 2 is going to be removed from the home, the other 1 child in 2 isn’t.    I tried to dig for more information, but couldn’t find it – the source the report cites for this study isn’t public.  From a previous published paper on the same project, it seems that the account given here is a misinterpretation anyway.  The purpose of the scheme was not to predict whether the child ought to be removed to a place of safety, but to stop the people who are answering the telephone hotline from dismissing calls about child abuse that might otherwise seem innocuous.  If similar low-level calls were being made repeatedly, they might all be dismissed in the same way.  This looks more like a problem in logging and managing referrals than it is a problem with casework judgments. But for what it’s worth, predictive tools based on profiling referrals have major limitations when it comes to managing benefit claims, too.  The problem is that there are too many variations and complexities for generalisations about claimants to work at the level of the individual.