How Labour might rethink its social security policy

I’ve just received a copy of a book I’ve contributed to, which reviews Labour party policy on a range of topics.  The book is edited by David Scott, and called Manifestos, policies and practices: an equalities agenda; the contributors include Richard Murphy, David Blanchflower, Rebecca Tunstall and Graham Scambler.  I wrote the chapter on social security.

I’ve previously written that “Labour needs to think rather more thoroughly and deeply about what social security is for and how it might be changed.” I’ve been critical about Labour’s policy for some time – it was the Labour government that launched ‘welfare reform’, with its emphasis on work at all costs.  In this chapter, I’ve outlined a set of rather different proposals and approaches that Labour might consider:

  • Re-emphasise Labour’s previous commitments to security, meeting need and social justice.
  • Reconsider what people need benefits for, providing services rather than cash where appropriate.
  • Offer a wider range of benefits to meet social objectives.
  • Move away from means-testing, with greater reliance on contributory benefits and universal allowances.
  • Rethink how things are done: aim to have benefits with simpler rules, fewer conditions, fewer personal adjustments and longer time scales.
  • Secure benefits for disability to secure their financial status and their dignity.
  • Protect the position of children in disrupted families by directing benefits to the child
  • Improve provision for the oldest pensioners.
  • Reform occupational pensions, to secure the future of pension entitlements and to ensure that pensions funds are invested in the British economy.
  • Protect people better during the interruption of earnings caused by sickness and unemployment.
  • Separate benefits and employability provision; they are doing different things.
  • Provide more public sector jobs, to do the things that we want to have done.

Somewhere, in a world quite unlike our own, Universal Credit is working brilliantly

Universal Credit has its defenders, and the Daily Express has come out fighting:

“disruptive” proposals could hammer 30 million Britons, cost tens of billions of pounds and send taxes soaring.

The middle bit of this could be true, because all major reforms have a price tag; introducing Universal Credit had cost more than £2bn by last year, though that figure ignores the false start and ‘reset’.  The very belated Final Business Case claimed that UC will gain £24.5 bn in people choosing to work more, £10.5 bn in distributional improvements, and £9.1 billion in reduced fraud and error.  The National Audit Office has told us that “We cannot be certain that Universal Credit will ever be cheaper to administer than the benefits it replaces”; their 2018 report said that

 the extended timescales and the cost of running Universal Credit compared to the benefits it replaces cause us to conclude that the project is not value for money now, and that its future value for money is unproven.

We now know that the figure on fraud and error is wrong, and that Universal Credit has made fraud and error  much worse; and ‘distributional improvements’ don’t save money, they move it to a different place.  So the only possible saving could be by encouraging people into work, and given that only a very small proportion of claimants are continuously unemployed – the majority of claimants are too ill to work, carers, short-term unemployed or already working on low incomes –  it isn’t going to be anything like £24.5bn.  If I had to guess, I would estimate the net gain, by comparison with the previous system, at something closer to zero.

That leaves us with the extraordinary claim that 30 million benefit claimants will be affected.  Yes, that really is what the Express article says:

It would immediately impact around one million people currently on Universal Credit, but it would likely also have an impact on the 30 million-plus people receiving some form of benefits.

To get anywhere near 30m, that has to include all pensioners, and every child where the families receive Child Benefit.  It seems that the lives of children and pensioners have been turned around by the prospect of a benefit that neither group gets, and they can all look forward to a brighter future, if only this benefit remains in place.  But perhaps I  mistake the argument, and the Britons in question are the occupants of a parallel dimension, like the Man in the High Castle, where everything is subtly different.  Suddenly, everything in the Express starts to make sense.

My submission about benefits takeup

The Scottish Parliament Social Security Committee has issued a call for evidence on the takeup of social security benefits.  I’ve done lots on this in the past, so I’ve dashed something off based on a paper I presented in Belgium a little time ago.  Here, for the truly dedicated,  is the submission.  The key points:

  • Arguments about takeup have often centred on means-tested benefits, but the problems are much more extensive. Non-means-tested benefits are just as vulnerable.
  • The main explanations for non-takeup conventionally include ignorance, the complexity of benefits, limited marginal benefit, and stigma. More detailed accounts consider perceived need, basic knowledge, perceived eligibility, perceived utility, beliefs and feelings, perceived stability of circumstances, and the process of making a claim.
  • The benefits with the best takeup – Child Benefit and State Pension – are simple to access, have few conditions and are delivered for the long term. The benefits with the worst (including e.g. Pension Credit and DLA/PIP) are complex, poorly understood and have several moving parts. While there is scope for greater automaticity, the key problem rests in the design of such benefits.
  • Takeup reflects the complex relationship between people and the public services, and consequently it can be enhanced by outreach and support; but the problems are more fundamental.
  • Benefits should be understood as part of an income package. The route to security is not the integration of complex systems, which implies more complexity still, but the delivery of smaller, simpler, stand-alone benefits with a common pay day.

 

 

Some snippets on the Scottish variations in benefit rules

I have spent a little time this week preparing for an evidence session of the Commons Scottish Affairs Committee, which was reviewing the development of social security in Scotland.  The hearing, scheduled for next Tuesday, has now been cancelled, because everyone is currently more concerned with High Politics; the process may resume in due course, or it may not.

I’d been focusing on the back half of the committee’s remit, which was concerned with the relationship between the Scottish system and the UK system.  In the process, I’ve spoken with people from a range of organisations, including the Scottish Federation of Housing Associations, Glasgow Welfare Rights, Citizens Advice Scotland, Clydebank Independent Resource Centre, Child Poverty Action Group and One Parent Families Scotland.  I’ve also seen the written submissions from Inclusion Scotland, Poverty Alliance and the Scottish Campaign on Rights to Social Security: the written submissions should be published more generally  shortly, but publication has to be approved by the Committee first.  Thanks to you all.  I also found a SPICE paper, on administrative costs and relationships with the DWP, particularly helpful.

There have been very positive things said about a couple of the new benefits that rely heavily on the cooperation of the DWP, particularly the Carers Allowance Supplement and the Best Start Grant.  There are more reservations about the operation of variations in Universal Credit, partly because the system from direct payment of rent to landlords isn’t adequately integrated,  and because there seems to be some hesitation about applications.  That may reflect advice from housing associations, and there have been some problems with some rent being paid monthly while income is bi-monthly; but I’d guess that it may also be because bi-monthly payments don’t get over the outstanding problems of an unpredictable, fluctuating level of benefit.

A protest about the two-child limit

I have signed, along with 108 others, a letter published in today’s Times.  This is the text:

Today, the Government publishes statistics on the number of families affected by the two-child limit. This policy substantially reduces support through tax credits and universal credit for low-income families with a third or subsequent child born since April 2017. The two-child limit breaks the fundamental link between need and the provision of minimum support. It implies that some children, by virtue of their birth order, are less deserving of support. It leaves affected families £50 a week worse off, and will push 300,000 more children into poverty by 2024.

The two-child limit means unprecedented cuts to the living standards of the poorest children in Britain. We know it is affecting children now. Families report struggling to pay for basic living costs and being forced into debt, and children missing out on healthy food and activities. Children growing up in poverty, or pushed further into poverty as a result of the policy, will be likely to do less well at school, have poorer health outcomes and worse life chances. It is quite simply one of the most damaging changes to the social security system ever.  

The two-child limit should be abolished before it harms more children.

Reducing payments for families with more than two children does not, of course, mean that the first two children will have support while the third child will get nothing; that is not how families work.  It means that support is reduced for the whole family, and every child in the family is effectively being penalised.

The problems with Universal Credit can’t be fixed by loans or advances.

PRESS RELEASE: UC APPG responds to childcare announcement

From the APPG I have the news that people on Universal Credit will be able to get a loan or advance to pay for their child care.  Whenever someone gets a loan or an advance they have to pay it back, usually by deductions from their benefits.  That means that, whatever their benefit entitlement may be, in the future they will get less than that entitlement.

I apologise for stating something that should be painfully obvious to anyone after a moment’s thought.  (‘Painfully’ was not the first adjective that sprang to mind.  I thought it better to moderate my language for public consumption.)

A report on Universal Credit

The All Party Parliamentary Group on Universal Credit has published a detailed report on Universal Credit, including something in the region of 50 reasonable proposals to help the system work better.  The group has notable expertise in the field, and there is no recommendation I wouldn’t agree with, but I don’t think it goes anything like far enough.  The fundamental design flaw, which they point to at the outset, is this:

many claimants say they cannot understand how their UC is worked out, and it is subject to so many variations that it is far harder to budget on UC that it was on tax credits.

That instability of income is built in to the system.  Some of the fluctuations would be damped down by the group’s proposals, including modifications to work allowances, a review of the treatment of self-employed people and 53-week years, but they would not prevent the wild fluctuations in the amounts being paid month by month. To stop that happening, the system needs

(a) to make payments on a uniform date, rather than a personalised one which varies with weekends and bank holidays;

(b) routinely to make rental payments direct to landlords, as Housing Benefit did; and

(a) to relate entitlement to a preceding period, rather than the current one.  As this report says,

This mismatch of pay cycles and assessment periods and the ‘whole-month’ approach to changes of circumstances, can leave people struggling to budget with unpredictable and arbitrary awards.

 

Universal Credit and a pattern of fraud

A major fraud has been reported affecting Universal Credit.  Over the course of the last eight and a half years, I’ve frequently commented on the vulnerability of the UC system to fraud and error, despite repeated assertions from the government – and the falsification of the business case – to claim the opposite.  This fraud is different from most, because it represents organised criminal activity that is neither attributable to claimants nor to DWP officials.  The criminals  pretend to be other people, both claimants and people who have not claimed, to register for short term loans before any checks might be made.  (This is not, for the most part, ‘identity theft’; it is personation.  A fraud of this sort is typically a fraud on the DWP, not on the claimaint.)

It should have been obvious from the outset that computer-based identification wouldn’t be sufficiently secure for the purposes of the DWP.  There was something close to an admission of this more than  three years ago, when Verify, the successor to the failed “Identity Assurance”, was cut adrift.  But the problem is not only down to poor tech.  The situation has been produced by a system that relied on online verification, rather than claims in person; that left claimants without resources for well over a month; and replaced a system capable of processing the vast majority of claims within 14 days with one that struggled to do it in six weeks, and sometimes could take as long as three months.   Universal Credit is error-prone by design.  Its vulnerability to deception is only a part of that.

 

 

A Scottish supplement to benefits for children

The announcement of a Scottish “child poverty” benefit has to be welcome.  In principle, it will increase the incomes of many families by £10 per week per child, starting with children under the age of six.  Focusing on the under-sixes is good; there’s a clear relationship between the age of the youngest children and low incomes.   So is the promise that it will be there for every child in a family.

The main problem with reliance on qualifying benefits is that receipt is going to reflect the deficiencies in that system.  One clear problem is takeup.  I’m not convinced by the HMRC claim that CTC goes to 85% of all potential recipients (if it’s true, it’s more accessible than any other means-tested benefit), but that still leaves out the 15% who don’t get it.  A second problem is that entitlement is intermittent, particularly for benefits assessed on the basis of income; and benefit entitlement can be interrupted by sanctions, which shouldn’t be relevant for this supplement.    Dealing with changes in circumstances – including moving out of Scotland – could also be problematic.

In practice, the details are still vague; I’ve been greatly helped by a reference supplied by Ian Davidson, who pointed me towards the Position Paper posted on Wednesday by the Scottish Government.  The qualifying benefits will be:

  • Child Tax Credit
  • Universal Credit
  • Income Support
  • Pension Credit
  • Working Tax Credit
  • Housing Benefit
  • Income-based Jobseeker’s Allowance (JSA)
  • Income-related Employment and Support Allowance (ESA).

Those benefits are all under the control of the DWP, with a particular emphasis on Universal Credit; Scottish benefits, including Council Tax Reduction and Disability Assistance, will not qualify claimants for the Scottish Child Payment.

One way to resolve the problems of means testing – just make the details up

I’m definitely slowing down; it’s the nearly the end of May and I’ve still got seven hundred pages to work through of the CPAG handbook.

I’ve been struck this time by something I really ought to have noticed before now, which is the system’s gradual, creeping dependence on imaginary money: ‘notional’ income,  earnings or capital, ‘deemed’ income, treating loans as income, attributing to people the benefits they haven’t claimed, ‘underlying’ entitlements, treating payments that are owed to a claimant as if they had actually been paid, and so on. For those of you who habitually don’t spend their time curled up with the Handbook, here are a few examples:

If your main work is self-employment but your earnings are low, your UC may be worked out on higher earnings than you have.  (p 119)

You may be treated as having notional income if … you work free of charge or for less than the going rate ( p 129)

If you fail to apply for income to which you are entitled without have to fulfil further conditions, you are treated as having it from the date you could have obtained it. (p 451)

Capital (unless it is disregarded) is assumed to provide a set rate of income – called ‘deemed income’ (p 477)

You may be treated as having notional capital if:

  • you deliberately deprive yourself of capital in order to claim or increase benefit
  • you fail to apply for capital which is available to you
  • you are a sole trader or a partner in a business which is a limited company (p 501)

You are treated as having ‘notional earnings’ if it is not possible to work out your actual earnings from employment or self-employment when your claim is decided (p 564)

Student loans for maintenance count as income if you could get a loan by taking ‘reasonable steps’, even if you choose not to apply for one.  (p 871)

The basic principle is that if people’s income is too complicated, too unstable or too uncertain to declare, the process of means-testing is going to plough on regardless.  They may not actually have any income, but we can still pretend that they have one. It’s a wonder that we’ve not thought more about make-believe food.  It’s the obvious answer to foodbanks.