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.

Poverty and social security

I went today to a seminar for early career researchers, most of whom are working on issues related to social security.  That is, of course, a terrible idea; I spent most of my career trying to interest people in social security issues, and look what happened to me.

Adrian Sinfield, who reflected about the changing situation in Scotland, gave one of the presentations,  He was very kind about a book I wrote more than 25 years ago, Poverty and Social Security: concepts and principles.  However, as I’ve explained to Adrian, I’ve had some reason to think again about that book, and I wonder if I didn’t make a strategic error in writing it.   If we want a social security that treats people with respect and dignity, it’s important that people should see it as a part of everyday life, not as provision for the poor, or even a safety net for exceptional  circumstances.  It’s not necessarily a good idea either to focus a discussion of social security on its effects on poverty, or conversely to identify poverty with the receipt of social security benefits.   The discourse has shifted since, and discussions of social security tend to be hijacked by discussions of employment; that is even less appropriate.

Takeup is falling among private renters

The new figures for takeup of means-tested benefits show an interesting trend.  Takeup is falling, and the initial impression given is that there has been a slow, marginal fall in in takeup overall.  However, the fall is not the same across the board.  The takeup that has most clearly fallen relates to the housing costs of private tenants.  It seems unlikely that this is driven by increasing ignorance about benefits, and that tends to suggest that something is happening in the private rented market – most likely, that landlords are restricting access for claimants.

The Work and Pensions Committee is critical of sanctions

The House of Commons Work and Pensions Committee has reported critically on the sanctions regime.  The Committee recommends that

  • sanctions should stop for people who do not have capacity for work
  • there should not be in-work sanctions on UC until the system is fully operational
  • deductions should not be more than the benefit
  • there should be clear rules about what is a good reason for non-compliance
  • there should be warnings before the first sanction, and
  • families with young children should not have more than 20% of benefit deducted.

They accept that “Sanctions must be a last resort and claimants should be able to challenge the decision before it is imposed.”  That alone would make a marked difference to current practice.

This could have gone further. The DWP has no evidence about the effects of sanctions in most cases, and the Committee asks them to get some.  That looks like a recipe for delay, because there’s no shortage of other evidence. Looking over the recommendations, the Committee clearly sees no good reason to sanction people who have no prospect or reason to go to work instead – and that is the vast majority of people who depend on ‘working age’ benefits.

Additional note, 24th November:  Michael Adler has posted a detailed summary and critique of the Committee’s report.

The Budget doesn’t do much for benefits

The main story in the Budget is about Universal Credit, but the measures taken fall rather short of what would be needed to save the benefit.  The  Work Allowances are increased for some, but not for people without children – a high proportion of current claimants, because they went on the system first – and one of the main effects of cutting the Work Allowance has been that they have little reason to remain in contact with the scheme as income fluctuates.    Most of the administrative problems are untouched, and a slightly slower rollout (still continuing, but slowing by a few months) is not going to make much difference to them.

The other part of the Great Plan, which is less noticeable, is a declaration of the intention to continue with the abolition of Housing Benefit by moving to a Housing Credit within the Pension Credit system.  This provision was set up rather a long time ago, in 2011 – I have to admit I’d forgotten about it – and it will take a long time, now planned for late 2023, to be fully implemented.  At the time the government suggested, bizarrely, that combining Housing Benefit into Pension Credit should improve takeup.  It will probably have the opposite effect.  Housing Benefit is more effectively accessed than PC; that’s probably true because social landlords steer their tenants towards an application, and they won’t be able to do the same with Pension Credit.

There’s another issue besides.  We’ve seen in Universal Credit that the effect of transferring Housing Benefit back to the DWP has been to create confusion: DWP officers don’t necessarily know about housing (for example, what a tenancy is) or what they need to do.  (We had the same problem in reverse when the DHSS initially transferred responsibility for rent to local authorities in 1982.)  Killing off Housing Benefit will also finally kill off the expertise of local departments that learned the hard way how to make the system operate despite its arcane rules.

ScotPHP: Scotland can use benefit and tax powers to improve people’s health

I missed it when it came out at the beginning of this month, but an interesting report from  the Scottish Public Health Observatory has been trying to identify the possible impact of new benefit policies in Scotland on the health of the population.  The figures are complex, but the basic principle behind them is reasonably straightforward.  Their argument is built on the case that higher income leads to fewer deaths and less health inequality.  Effectively, then, their report is an assessment of the potential distributive impact of different policies in Scotland.  Critically, however, the distributive impact they are considering is not the distribution for individuals or households, but for deprived areas.

Part of their summary is a fairly confusing graph, which seems to suggest that the best method by far would be to increase means-tested benefits by 50%.  The comparison being made, however, is with other policies with very different sizes and shapes – for example, increasing takeup by 1% (a very marginal increase, costing little) or introducing Citizens Basic Income and abolishing all other benefits (a very major change, costing a great deal).  The details about what’s covered and what’s not are sketchy, and the figures are, of course, indicative rather than certain.  The core of the message is this:

increasing means-tested benefits by 50% is modelled to have the biggest effect on reducing premature mortality (5% prevented) and narrowing inequalities in premature mortality (-8%). The results also suggest that the real Living Wage, Local Income Tax and increasing devolved benefits by 50% would be good policies for reducing premature mortality (~2% prevented for each). The two illustrative CBI schemes are also likely to be effective at narrowing health inequalities (-4% for CBI, and -6% for CBI Plus).

In the supplementary papers, Table 2a, it’s possible to find a statement of costs per outcome.  This also needs to be treated with caution, because the costs of CBI cannot be introduced in part; but the best value for money, in the sense of effect for each pound spent,  comes from CBI , improving DLA and PIP, increasing takeup and increasing basic means-tested benefits.  The powers of the Scottish Parliament don’t cover all these options, but they do include powers to improve disability benefits and to increase takeup.  There’s a case to consider, but there has to be a major reservation: at the level of individuals and households, there would be losers among those who are poorest.

The Economist still likes the idea of Universal Credit

The Economist this week describes Universal Credit as a good idea, badly done.  We can agree at least on the second part.   Here are three justifications they offer for thinking it’s a good idea.

“Streamlining benefits into one monthly payment will eventually make the system easier to deliver.” 

Combining six benefits into one doesn’t actually streamline anything.  Universal Credit ‘brings together’ a range of benefits, but unemployed people are still subject to rules on unemployment benefits, sick people are still subject to rules on sickness (and work conditionality, too!), the housing components are still subject to all the rules on housing benefit, and so on.  Lumping everything together in one mass makes for one, highly complicated benefit.  It also  adds one potentially catastrophic complication: actions which lead to the revision of entitlement in one component (such as changes in household details, or the application of conditionality) can lead, catastrophically, to an interruption or cessation of entitlement.

“It removes perverse incentives whereby somebody moving from welfare to work can lose about as much in benefits as they earn.”

There is a slight mitigation of the ‘poverty trap’, because the interaction of Housing Benefit and Tax Credits are removed for some; but since the taper is 63%, further deductions are made from salary for National Insurance and tax, and the system doesn’t include Council Tax rebates, the  marginal rate of deduction is typically 70-74%, and can be more.

“Allowing people to make a single application for all their benefits should improve take-up, and so reduce poverty.” 

Requiring people to negotiate a complex system, with limited flexibility about application details, has caused major problems in access – check, for example, this blog entry on the NAO report in July – and that can be expected to appear in takeup figures in due course.

It seems, however, that the myth that Universal Credit was sound in principle refuses to lie down and die, despite being shot, stabbed, buried, set on fire and otherwise subject to refutation.   When the scheme was first mooted in October 2010, I wrote that it was over-simplified, impractical and couldn’t achieve what the government claimed it would achieve.  If government sets up a scheme that can’t possibly work, it shouldn’t be surprising that it will make a mess when it’s  put into practice.

The problems with Universal Credit are grim. There are not really more of them, there are just more of the old problems.

The report on Universal Credit by the Public Accounts Committee is pretty damning, but that should come as no surprise.  The PAC argues, amongst other things, 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.

  • Universal Credit causes financial hardship for claimants including increased debt and rent arrears, and forces people to use foodbanks.

  • The Department is failing vulnerable claimants because it places too much reliance on the discretion of its work coaches to identify and manage the needs of people requiring extra support.

  • The package of support to help claimants adjust to Universal Credit is not fit for purpose

  • Universal Credit is pushing costs onto the local organisations that support claimants – including local authorities, housing associations, and foodbanks.

  • We are seriously concerned about the Department’s ability to transfer around 4 million people from existing welfare benefits to Universal Credit without causing further hardship to claimants.

They also comment that the DWP can’t assess or justify its claim that UC will push another 200,000 people into work, but that’s hardly a major criticism; the suggestion that a rollout causing hardship to 6-7 million people can possibly be justified by changing the behaviour of 200,000 of them simply reinforces the lamentable distortion of perspective and priorities that has blighted this system from the start.

The flurry of criticisms that people have been making in the last couple of weeks are of different kinds.  Some are about poor administration.  Claimants are supposed to track changes in their online journals, and the DWP can’t absorb information that’s presented in this way.  (Even The Sun has noticed.)  Claimants who fall into rent arrears – that’s most – may have direct payments to landlords, but there is evidence from Citizens Advice that in some cases the DWP is deducting the rent from the benefit and not passing it on.  A disturbing proportion of new claims are paid late, or not paid enough.  The DWP is holding claimants to standards that it’s unable to meet itself.

Other criticisms, however, concern the way the benefit has been designed.  The concern about women at risk of abuse was raised formally more than five years ago.  UC has also been criticised for not being able to deal with people who don’t fit in its boxes, but the problems with dealing with non-standard “pathways” were identified right at the start.  In 2003, the DWP commissioned a report which told them that segmentation, or working to ‘typical’ profiles, wouldn’t work: “Profiling outperforms the random allocation of treatments but wrong denial and wrong treatment rates are not trivial”.  That didn’t deter pilots of segmentation for unemployed people in 2005, presenting details of segments in 2010 (when UC was first announced) and further commissioning of a ‘proof of concept’ on it in 2014.  The problem is basic.  This system is supposed to offered a personalised response to millions of people, and with that many people, there will always be some who just don’t fit.

 

Universal Credit: the monster staggers on

It’s being reported that Universal Credit is to be delayed again.  There are also suggestions that a small number of minor tweaks will be made – allowing legacy benefits to run on for two weeks, changing direct payment rules and altering rules for self-employment.  None of that really gets to the heart of the problems.  The system is simply not designed for the variety and complexity of conditions it is supposed to deal with.

The BBC offers this graph of delays, citing the National Audit Office as source.  It’s kind to the record, because it waves aside the failed attempts that led to the system being “reset” in 2013.  The original deadline for the completion of the rollout was not 2019, but 2017.  The planning has, of course, been going on since 2010, and at no stage has it ever seemed likely that UC could be delivered, as Iain Duncan Smith repeatedly claimed it would be, on time and within budget.

Universal Credit delays graphic

I’ve been blogging about the problems with Universal Credit since October 2010, and complaining about the bogus claims made for it since the first glimpse of a business case in 2013.    The Treasury failed altogether to follow its own procedures, undertaking massive expenditures before any plan had been submitted.  The lack of routine scrutiny has been scandalous; but not as scandalous, I regret, as the way that claimants have been treated in the hope of sparking life into the monster.

Is there scope for universal support for funeral payments in Scotland?

Funeral payments are being devolved to the new Scottish social security system.  The current arrangements are more than a little haphazard.  The means-tested Funeral Expenses Payment covers some of the basic expenses (typically not all), but the scheme administered by the DWP has some of the worst features of any means test in the system.  It calls for information about the deceased person’s estate, the funeral, the means of the applicant, the relationship between the claimant and the deceased person, and the position of other family members who might bear the costs instead.  Only half the people entitled get the benefit.   The average funeral expenses payment, successfully claimed by less than 4500 in Scotland,  is a little under £1400.

A consultation document on arrangements for funerals in Scotland has given me some material to think about.  There are about 58,000 deaths in Scotland every year.  Currently 68% of people are cremated, at an average cost of £738 for the cremation itself, and 32% of people are buried, with an average cost of £1428 for the burial; but the fees vary from £586 to £870 for cremation, and £705 to £2,340 for burials.

Funeral arrangements can cause dreadful hardship.  Some relatives walk away; some funerals are left to public authorities to arrange.  Others find themselves with a large bill, about £3600 on average.  Abolishing fees would not be cheap; on these figures, the bill would come to something like £56m a year, less £3m saved on Funeral Expenses Payment.  And it would not be completely straightforward, because there are 15 private crematoria and numerous private cemeteries in Scotland.  Many of the true beneficiaries would be people who are inheriting from an estate.  But this is an area which affects everyone, and where it’s in everyone’s interests to make collective arrangements to manage a major foreseeable expense.

Unifying benefits is hardly a new idea

In the comments to a previous posting, Andrew Hatton asks when the idea of first unifying benefits was seriously considered by a UK Government. I started to respond within the comments, and then thought it might stand as an entry on its own.

It might reasonably be argued that governments in these islands have always thought in terms of unified systems. The Tudor poor law  of 1536, inspired by the model of Ypres, created national law for responding to poverty. The statutes of 1598 and 1601 – the “Old Poor Law” – instituted a national scheme, at least in principle. The 1834 Poor Law Amendment Act – the “New Poor Law” – was designed to implement a uniform regime within that scheme, treating for example older people and unemployed people on the same terms. The Beveridge scheme was supposed to create a unified national administration based on insurance – popularly described as a system to cover people ‘from the cradle to the grave’. National Assistance initially included income and welfare services for every group not covered by insurance. And Supplementary Benefit, its successor, incorporated a range of provisions into a single means-tested benefit: income, unemployment, disability, rent, mortgages, sickness, old age, residential care for older people and child support among them. Universal Credit is not a great, original idea; it revisits the portmanteau benefits of the past.

Marina Hyde, writing in the Guardian, puts her finger on one of the key problems with Universal Credit.  “The most dangerous type of politician”, she comments, is “the sort who thinks that very complicated things are actually very simple.”  And I wrote something similar in the Guardian myself shortly after Universal Credit was first mooted.

Benefits deal with millions of people, and recipients’ lives are diverse and complicated. If universal credit responds to their needs, it will also be diverse and complicated – and therefore expensive. If it does not, it will cause hardship – and it will look unfair.

There have been, of course, other types of unifying scheme, and currently the one which is most discussed is Universal Basic Income – an idea which has been around since the eighteenth century.  Some of the models for UBI are utopian, but if we take UBI to mean an all-singing, all dancing answer to every human problem, it will fail for the same reason that all the other combined schemes fail: people’s lives are too complicated to be covered neatly and simply in a uniform way.  It’s more important to focus on the idea that Basic Income is meant to be basic – a springboard, an element of income that can be mixed with other income – and forget the idea that it will then be possible to junk everything else about the benefit system, because it won’t be.