Social security – Social policy: commentary and updates

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.

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.
Special needs. Allowances can be made for example for personal care, transport, and medical goods.
Desert. In some cases compensation depends on a moral evaluation of the
reason for disability. War pensions are the obvious example.
The protection of carers. People caring for a disabled person may be limited in their capacity to seek work and to earn.
Rehabilitation. Benefits may be concerned to change the status of the disabled person – for example, through training or the provision of special equipment.
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.
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.
Equal opportunity. Rehabilitation and the promotion of employment can both be seen as means to further equality of opportunity for people with disabilities.
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.
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.

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.
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.
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.)
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.
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.

Changing the Work Capability Assessment

It’s been announced, in various fora, that the government will propose in a forthcoming White Paper to abolish or reform the Work Capability Assessment. This is the pro-forma points system used to determine whether or not a person has limited or no capability for work.

The government’s priorities lie in ‘supporting’ people into work, rather than determining whether or not it is reasonable for people to work – which is supposed to be the legal test. We can probably all agree that the WCA is not a good test. It is slow, bureaucratic and rather bad at identifying what people’s circumstances actually are. Torsten Bell has suggested, on Twitter, that the actual plan is to replace the WCA with the test for PIP – a different kind of test, but still one which has little to do with capacity.

Calling for reform doesn’t imply, as some might think, that the process of certification should go back to GPs, who have quite enough on their plate already. In my 2017 book, What’s wrong with social security benefits?, I made a series of proposals about how the WCA could be refomed. Here’s an extract.

As things stand, nearly everyone who claims is being assessed. … Although repeated checks on people with long-term conditions have now been acknowledged to be ‘pointless’, most of the assessments that remain are little better. They either confirm the obvious or they duplicate information that is already held. Some assessments are necessary: many people with disabilities cannot say whether they are disabled or not, and have no idea whether or not their disability fits the criteria for benefits. Any general rule, no matter how sensitively it is administered, is going to have to deal with some grey areas. But the same approach does not have to apply to everyone.
First, it is possible to identify certain conditions which should imply automatic entitlement, offering benefits on minimal or secondary evidence – either accepting on sight that the person has a qualifying disability (double amputation, severe disfigurement) or passporting benefits on the basis of provision by other agencies (congenital disability, blindness).
Second, there are conditions which will have led to prolonged long term contact with health services, and certification from a consultant is sufficient to establish that the condition is there without requiring further detailed examination of personal circumstances. Examples are terminal illness, multiple sclerosis, MND, malignant neoplasms or brittle bones.
Third, there are conditions where existing services in long-term contact with the individual are far better placed to judge the impact of a condition than an independent assessor could be, and it would be appropriate to accept medical certification. Examples are continued psychosis, epilepsy, dementia and learning disability.
Only after these three categories are considered is it appropriate to think in terms of further individual assessment. The points scheme currently used in a range of benefits was initially developed from work to establish the range and severity of disabilities in the UK. That research validated the approach through a range of tests, but it pointed to an important conclusion: that once the primary disabilities had been identified, it was very rare for further disabilities to make any notable difference to the findings, and that information served no useful purpose. It follows that it is neither appropriate nor necessary to ask most claimants whether they can go to the toilet unaided. The question is embarrassing and the information obtained is for the most part irrelevant. The assessment process should begin by asking people to identify their most important disabilities, ask questions about those, and go further only in marginal or complex circumstances.
Finally, there will be a residual category of people who are not adequately dealt with by any of the four stages above, and who will require or ask for a more thorough comprehensive assessment. This category should be small.

Overpayments – challenged through judicial review

An important case has been decided against the Department for Work and Pensions, calling into question at least three long-standing, major elements in social security law. R v Secretary of State for Work and Pensions [2023] EWHC 233 (Admin), which can be read here, concerns the operation of the relatively recent overpayments policy, which makes it possible for the DWP to reclaim overpaid benefit despite the fact that the claimant has done nothing wrong and may have had no reason to suppose that the payment was not legitimate. (This pernicious rule has, regrettably, been replicated in the Scottish Parliament’s recent law on social security.)

The first concerns the DWP’s use of discretion. For decades – at least since the 1960s – the DWP and its predecessors have limited its use of discretion by the development of national rules, intended to ensure that there is no inconsistency between judgments made in different parts of the country. (See M Hill, 1969, The exercise of discretion in the NAB, Public Administration, 47(1) 75‑90; J Bradshaw, 1981, From discretion to rules, in M Adler, S Asquith, Discretion and welfare, Heinemann.) The court, in this case, emphasised that notwithstanding that principle, the DWP always had a duty to make an individual assessment in the particular case that presented itself – explaining how its discretion would be exercised, rather than choosing not to exercise it.

The second element concerns the publication of guidance. Since 1980, when I started teaching welfare rights, I’ve visited social security offices irregularly – the last time was in 2019 – and like many old-timers in this field, I’ve been required to sign the Official Secrets Act, because (for example) publication of the fact that social security officers are sometimes asked to use screens with impossibly small print might threaten the security of the nation. The Supplementary Benefit rules were contained in a loose-leaf binder, and then a set of binders, called the A code, and that was superseded by even fatter guidance documents called the S manual, also treated as an official secret. This case cites a previous judgment, which says this, in terms:

It is axiomatic in modern government that a lawful policy is necessary if an executive discretion of the significance of the one now under consideration is to be exercised, as public law requires it to be exercised, consistently from case to case but adaptably to the facts of individual cases. If – as seems to be the situation here – such a policy has been formulated and is regularly used by officials, it is the antithesis of good government to keep it in a departmental drawer.

The third major point concerns the appeals procedure. The present procedure requires claimants to ask first for Mandatory Reconsideration, and then to appeal to a tribunal. After that, the claimant’s options have been held to be exhausted. This case makes it abolustely clear that this is not, and cannot be, the end of the road. A DWP official had written to the claimant:

“Regarding your request to have your overpayment waived, as I have stated previously the routes for you to challenge an overpayment with Universal Credit are Mandatory Reconsiderations and a tribunal following an upheld Mandatory Reconsideration. Neither myself or anyone working for Universal Credit can reconsider your overpayment as you have exhausted all appeal routes with us. The legislation you have quoted does not apply directly to the processes that we have here.”

That response is described here as ‘manifestly unlawful’ (para 73).

I regret that so few social security cases come to judicial review. If they did, I think it likely that other important rules – including the requirement to seek mandatory reconsideration and the imposition of sanctions without the possibility of a hearing – would also be found to be unlawful.

Not quite Universal Basic Income: the new selectivity

UBI is universal when it provides for everyone in a category, without further conditions; basic, when it is only the starting point, and people are free to add income from other sources; income, when it is paid periodically. The Basic Income Earth Network identifies five main points:

1. Periodic—It is paid at regular intervals (for example every month), not as a one-off grant.
2. Cash payment—It is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.
3. Individual—It is paid on an individual basis—and not, for instance, to households.
4. Universal—It is paid to all, without means test.
5. Unconditional—It is paid without a requirement to work or to demonstrate willingness-to-work.

There is more to being ‘unconditional’ than not having a work test – benefits that are restricted to people with disabilities or care needs have to impose a test, and to that extent they are selective. UBI tries to avoid the pitfalls of selective benefits, which have three great problems: complexity, the difficulty for claimants of knowing whether or not they will be entitled, and potential stigma. Selective benefits commonly fail to reach many of the people who ought to be receiving them.

Arguments for Basic Income have captured the imagination of many people. I have my reservations about them, and those reservations are serious, but I’m sympathetic to the core objectives: providing people with a foundational income that is consistent, reliable, and as simple as possible.

It seems, however, that some recent programmes have departed somewhat from the script. In Wales, a ‘basic income’ experiment is being conducted for 500 young people leaving care. The programme is linked to advice and support relating to financial management, education, employment and welfare. That’s the right way to go about supporting vulnerable people, but it’s three steps removed from ‘Basic Income’: it’s selective, time-limited and not just a cash payment. In San Francisco, there are three such programmes. The first is the “Abundant Birth Project“, which offers a ‘Basic Income Supplement’ to pregnant women who are African American or Pacific Islanders, mainly for the duration of their pregnancy and shortly afterwards. Next is the Guaranteed Income Pilot for Artists, supporting two cohorts of 60 artists, nominated by partner organisations. The third, and most recent, is the Guaranteed Income for Transgender People, offering both cash support for 55 transgender people and ‘wrap-around’ support (including medical care, case management and financial advice). Again, these initatives are time-limited.

These programmes don’t have much in common with the idea of Basic Income. They’re selective, short-term, and eligibility is highly restrictive; they are linked, beyond cash, to other forms of support; and their target groups are highly visible. I don’t think we can draw any lessons from them about how Basic Income might work, or how people might adapt to a UBI. It’s interesting, however, to see that arguments for UBI have influenced the development of highly targeted, selective benefits – for example, this paper on supporting transgender people. We’re seeing, not a commitment to universality, but a new selectivity.

A few reasons not to cut the value of benefits

The most obvious problem with cutting the real value of benefits is that it will plunge people further into poverty. It’s not a great surprise that people on benefits and low wages might be going without food; that’s been a recurring problem since at least the early 1980s. It’s been estimated that there are two and a half million people in Britain who are destitute. There will be more. Expect growing malnutrition, and the short and long term harm to public health that goes with it.

A policy of impoverishing benefit recipients, however, will affect more people than just the recipients. There are the macroeconomic effects. Cutting the value of people’s benefits would cut the demand for goods and services, at a time when the economy is teetering on the edge of a slump. We know that people on lower incomes spend proportionately more of their income than richer people do – that much is self-evident, because people on lower incomes don’t have resources to save. Research for the IMF has calculated that benefits for poorer people produce more of a multiplier – a beneficial ripple outwards – than tax cuts for richer people. Conversely, withdrawing money from poor people will reduce demand more than withholding it from richer people.

Next, there are sectoral effects. Poor people spend proportionately more on food and energy than people on higher incomes do. Local shops and community businesses depend on their customer base; if that base withers away, so do the businesses that serve them.

Now to labour markets. Most benefits, by quite a long way, are not concerned with whether or not people are part of the labour market: pensions, child benefits and disability benefits account for three quarters of the cost of benefits, and other benefits, notably Universal Credit, extend to people who are working as well as those who don’t. The mean-minded reluctance to support people on benefits is often justified in terms of the ‘incentive’ to work. As benefits for unemployed people currently stand at something like 15% of the average wage, one might have thought that there was every incentive to work for pay. But there’s more going on here. Many years ago, I heard a senior executive from the Danish social security system explain that they didn’t want to make too little provision, because if people got used to living on very low income that would undermine their incentives to work. I dismissed that argument at the time – the evidence didn’t seem to show much of an incentive or disincentive effect in either their system or in ours. But the speaker had a point. If we want people to engage in a high-wage economy, the last thing we should be asking those people to do is to survive on a pittance and take any low-skilled job that comes up. Forget the gibberish about preparing CVs: we should be training, getting people into education and funding internships. We have to put more money into the process, not less.

Finally, microeconomics. One of the central arguments that’s made by free-market liberals is that markets need to be able to operate. Indeed they do, but markets have to be fed. When people get cash benefits, those benefits are spent in the market. When incomes are very, very low, people have less ability to participate in markets, and market providers have less reason to engage with them. Lower incomes mean more uncertainty for businesses and for poor people, more debt, and more debt defaults. This is the opposite of anything a free-marketeer should want.

The Natcen report on disability benefits is disappointing

The DWP declined to publish the Natcen report on The uses of health and disability benefits. It’s now been released to the Work and Pensions Committee, and is available here. The report is presented as a qualitative study; wisely, the authors have avoided numbers. However, the form of the report is disappointing, and I cannot suppose that it is an adequate reflection of the work that was done.

Qualitative social research works, or needs to work, on two guiding principles. The first is that what people tell you is evidence. That is often derided by people in love with quants, but it is fundamental to the nature of evidence. Courts of law judge evidence by looking for corroboration – probabilities and statistics aren’t enough. As a broad proposition, evidence is corroborated when two or three witnesses say the same things, confirming what the others have said. This report doesn’t do that. It consists very largely of the researchers’ summaries of what people told them. In a 79-page report, there are 15 ‘case illustrations’, and only 27 direct quotations from respondents. That means, simply put, that while there are plenty of judgments, there is hardly any evidence given for those judgments.

The second principle is voice: what people tell you, and the way they tell it, matter. Direct quotations, right or wrong, have a purpose and a moral authority. Researchers have an ethical duty to report what people are telling them. The way the respondents express themselves is fundamental to any adequate qualitative social research.

It may well be that this format was demanded by the DWP. (I’ve been asked by other commissioners, in the past, to dump direct quotations and to just say what I think instead – and I’ve refused to do so.) It’s very likely that the researchers intend to provide the evidence for this report, and to reflect the voice of the respondents, in a separate publication. However, they will need the DWP’s permission for this. Their report, as it stands, does not do what it needed to do.

Computer says ‘no’

It’s admittedly difficult to get resources to people given the state of the benefits system. The Chancellor has pleaded that it’s difficult to get higher benefits paid to people, because so many benefits don’t run on the shiny new systems introduced for Universal Credit. Many people are still on legacy benefits, which rely on older computer systems.

A focus on Universal Credit may seem the best option available, but there are two large deficiencies in that. The first is the deliberate exclusion of so many people from Universal Credit itself. The coverage of UC is limited by design: the limitations are produced by

work requirements
people excluded from recourse to public funds
sanctions (the largest number being for people who have missed a meeting)
limited entitlements because of notional (or imaginary) income
capital rules
the arbitrary changes in entitlement coming from fluctuating incomes, and
Inaction/suspension because information required

At slightly higher income levels, people may also drop out of the UC system because of the benefit cap or the two child limit.

The second problem, of course, is that people may not have claimed UC although they were entitled to it. The government seemes to be working on the wholly implausible assumption that takeup is about 83% – which would mean that the takeup of UC was markedly better than the previous takeup of Pension Credit, Job Seekers Allowance or any disability benefit, and that that would be true despite UC’s special blend of all the factors identified as deterring takeup in previous research (PDF file).

There are other ways of getting money to people on the lowest incomes. Cold weather payments (ignore the weather bit) provide one obvious mechanism: they make it possible for the government to transfer money automatically to recipients of Pension Credit, UC, Income Support, income-based JSA or ESA. Or, if that’s too finicky, Winter Fuel Payments (which aren’t actually assessed in winter anyway) go to every pensioner, and Child Benefit goes to every child – that covers, in a simple and practical way, a substantial majority of people on lower incomes. Putting money into pensions and Child Benefit as well as UC would be hugely more helpful than UC alone. The targeting is not perfect, but it’s practical and a more effective than tax reductions could ever be.

Initial income	100
Inflation	10.7%
Value of income after inflation	89.30
Increase of:
2.7% (recent public sector awards)	91.71
6.9% (recent private sector awards)	95.46
7% (NHS in Scotland)	95.55
10.7% (‘in line with’ inflation)	98.56
12.32% (break even)	100
19% (the claim made by the RCN)	106.27

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