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.

Scottish social security benefits – a talk on video

For diehards only:  I gave a talk last week to a meeting of Common Weal and the Scottish Unemployed Workers’ Network, in Dundee.  It was filmed, and the film has been put up on Youtube.  The stuff I was covering will have a short shelf life.  It’s conceivable that you may have something more exciting to do with your day.

Further note, 25th July.  In the course of this talk, I refer to the Irish problem – that Northern Ireland, despite having full devolution of powers relating to social security for the best part of a century, was still being subject to direction from the Treasury and the DWP.  It’s just been reported that the UK government proposes to introduce the two-child limit in Universal Credit to Northern Ireland, along with the ‘rape clause’.  The principle at work seems to be that if there is no operative government in Northern Ireland, the UK government is free to do as it thinks fit.  The government really doesn’t understand devolution at all, and this is another illustration.

DWP benefits still suffer from high levels of error

The National Audit Office has qualified the DWP accounts, yet again, because of the levels of ‘fraud and error’.  I put that phrase in inverted commas because the DWP has always presented them as a package; it’s not really about fraud.  The breakdowns usually attribute most of the over- and under-payments to error.

(This graph may look blurred in some browsers; double-clicking or tapping on it should make it easier to read.)

The basic message from the graph is that some criteria are harder to manage that others.  People get questions about income wrong, in both directions, and capital doesn’t necessarily get declared.  In a nutshell, many of the problems are simply and directly attributable to means-testing.  Living arrangements cause problems, too.  By contrast, the sort of thing that doesn’t much appear is contributory entitlement.   The essential problems stem from asking questions that suppose we can find out how people live and respond to their individual circumstances, rather than simply stating – as we do with state pensions – whether or not people are entitled.

A judgment on the benefit cap: “Real misery is being caused to no good purpose”

The forthright judgment delivered by Mr Justice Collins in [2017] EWHC 1446 is, perhaps, unusual; I have not seen one like it before.   Justice Collins took the view that the application of rules intended to encourage people into work could not reasonably be applied to lone parents with children under the age of 2.  References to work were “entirely irrelevant”.  The system of Discretionary Housing Payments “simply is not working with any degree of fairness.” The idea that people could renegotiate their rent was ‘laughable’ and ‘unrealistic’.  Describing the status of lone parents as a choice was ‘offensive’; one of the cases before him concerned rape in an abusive relationship.  He concludes:  “Real misery is being caused to no good purpose.”

Part of the judgment seems to run against the view of the Supreme Court, but Justice Collins took advantage of the Supreme Court’s haphazard presentation of their opinions on a previous case.  I’ve previously commented on the Supreme Court’s ramshackle and muddled approach to legal commentary; if they can’t agree on what’s being said, they can’t expect people to follow their decisions.

The Social Security (Scotland) Bill has been tabled

The Scottish Government has published the new Social Security (Scotland) Bill, intended to lay the foundations for the delivery of a range of new benefits.  The benefits specifically mentioned in the Bill include

  • Carer’s assistance
  • Cold-spell heating assistance
  • Winter heating assistance
  • Disability assistance
  • Early years assistance
  • Employment-injury assistance
  • Funeral expense assistance
  • Short Term assistance

as well as the specific top up for carers, and the addition of Discretionary Housing Payments.

Most of these clauses are a shell: they are creating powers to introduce specific benefits rather than specifying how the benefits will operate.  We already know in relation to one category, Early Years assistance, that the name of one planned benefit in the general category (“Best Start” Grants) will be different.  That leaves me some hope that they will also sub-divide “Disability assistance”, because mobility needs to be dealt with differently.

Probably more important at this stage are other aspects of the framework.  Three points are worth noting.  First, although there is an assumption that people will have to apply for benefits, there is provision to make regulations to allow claims to be registered without a claim.  Claiming is normal in the UK benefit system, but things don’t have to be done that way – it’s perfectly possible to issue certain benefits without an application (a baby box is an example, and some grants for serious disability could be made via hospitals in the same way. )  It may be possible to develop systems that deal with claimants in a new way.  (I have altered this part of the entry  from my first posting on this; I’m grateful to the parliamentary counsel who corrected me.) 

Second, reflecting some of the worst excesses of the system in recent years, there is a harsh rule covering overpayments: individual recipients are liable for the mistakes made by officials (s.36), regardless of whether or not they could have been expected to know that a mistake had been made.

Third, and most positively, all the benefits being introduced will be open to appeal to the First-Tier tribunal.

Will the DUP protect Winter Fuel Payment?

I’ve just been participating in a Radio Scotland phone in on Winter Fuel Payment.  It’s a subject that breeds confusion.  It’s not really a Winter payment; the qualifying date is in September.  It’s not really a Fuel payment: there is no connection between the money paid and energy.  It is a payment, though, and that seems to get people’s goat up – like the caller who was indignant that some people who get the benefit are able to come in to his pub.  The whole point of giving people cash is that they decide how to use it.

The reason that WFP is back on the agenda is that apparently the Democratic Unionist Party are insisting that the Conservatives keep WFP as it is.  This is ironic, because Northern Ireland has nominally been in charge of its own distinct social security system for the best part of a century.  The reason why DWP benefits  matter so much to Northern Ireland is partly a matter of political choice (the application of the so-called “parity principle”), but more recently a because of the Treasury’s insistence that Northern Ireland had to fall into line with DWP’s benefits, whether they wanted to or not.   That closes off the obvious solution, which would have been to allow Northern Ireland to do as they see fit.

 

Is Mandatory Reconsideration legal?

I questioned the legality of the system of Mandatory Reconsideration nearly a year ago on this blog.   It’s encouraging, then, to see a condemnation of the system by Sir Henry Brooke, a former Lord Justice of Appeal, and I’m grateful to David Webster for drawing attention to it (his briefing will be on the CPAG pages shortly).   Brooke describes DWP guidance on the operation of Mandatory Reconsideration as “an absolutely outrageous interference by the executive with the rule of law.”

A ministerial announcement on the next devolved benefits

Angela Constance, the Cabinet Secretary for Communities, Social Security and Equalities, made a statement yesterday about the first changes to benefits reflecting the shift in powers in the Scotland Act.  The new schemes for maternity (the “Best Start” scheme) and for funeral payments will come on line in 2019; although the application process will be “simplified”, they will continue to be one-off, means-tested payments.

Carers Allowance will be the first new benefit to come on line, starting in Summer 2018.  The purpose of the benefit is to bring up the rate of Carers Allowance (currently £62.70 pw) to equal the rate of Jobseekers’ Allowance (£73.10 pw for those over 25).  Rather than taking over Carers Allowance, the Scottish Government has opted to pay a supplement to the DWP-administered  benefit. It will be done by making two payments a year, and while the payment will be made by the new Scottish Social Security Agency, it depends on information drawn from the systems and processes of the DWP.

Transferring responsibility from the DWP to the new agency would have been complex task; that has been avoided.  Paying a supplement weekly or monthly would involve constantly passing information back and forth; that has been avoided, too.  However, the decision will have some substantive implications.  Currently Carers Allowance is not actually paid to many people who are nominally entitled; that will still be true.  Claiming Carers Allowance may have negative effects on a disabled person’s entitlement to the severe disability premium; that will still be true.  There had been talk of extending the benefit to younger people or those in full time education; it looks like that is not going to happen. So, for the while at least, the decision is going to lock the basis of payment a little more firmly to the status quo.

Flying a kite: a convertible personal tax allowance

This is a partly-baked idea, based on reform of the Personal Tax Allowance.  It would allow people to take the allowance in cash rather than by setting it against their liability for tax.  The current allowance of £11500 is worth £2300 (that is, 20% of the allowance) to everyone who pays income tax.  If it was possible to convert it to a cash payment, it could benefit many more people.

In round numbers, there are about 65 million people in the United Kingdom.  30 million (24 million people of working age, 6 million pensioners) of them get the personal tax allowance.  For most of these taxpayers, tax and allowances are calculated at source, so the benefit is invisible.  The cost to the Treasury is something in the region of £70 billion.

If 30 million people receive the allowance, 35 million don’t. 15 million of them are 19 or under, so there are roughly 20 million adults (both pensioners and people of working age) who don’t currently get the benefit of the Personal Tax Allowance.  The proposal is simple:  to make it possible for those people to elect to receive the equivalent cash value of the allowance (that is, £2300 pa, just under £200 per month).

The idea may be off the wall, but it’s not outlandish: it asks for nothing better than what is already received by the other 60% of the adult population.  The only net beneficiaries would be people with incomes lower than the tax threshold.  About 6 million of them are people over 65 on lower pensions, 7 million are adults of working age receiving benefits, and the remaining 7 million are either people on low pay or non-workers.  There is no obstacle to people in work receiving the same option – there would be no net cost, apart from the mechanical administration of the payment – but there is no financial advantage for people who are already in receipt of secure incomes to make the switch.

The basic model should be easy to operate.  A tax year runs roughly from April to March.  Records of tax allowances are already kept for everyone with a National Insurance number.  People who wanted to convert their tax allowance into a cash payment would need to make their election in good time before the tax year – the obvious deadline is the time of the submission of tax returns by the end of January.  A person who made that election would then have a tax allowance for the forthcoming year of zero. No further administrative test is necessary.

Many Basic Income schemes have suggested that the Personal Tax Allowance should simply be abolished.  I think it’s important that there should be a choice, for three reasons.  First, PAYE works, and it works for millions of people.  Getting rid of it would complicate people’s lives and breed resentment; it would also more than double the administrative burden.  Second, there are some people, especially self-employed workers, for whom a zero tax allowance would be difficult to manage or live with. Third, choice matters in its own right. If the choice proved popular among workers, it could pave the way for other, more ambitious schemes; we can cross that bridge if we come to it.

This scheme could all get more complicated, but it’s important to avoid that.  Changing back and forth between PAYE and cash payment, week by week or month by month,  would be complicated and could be error-prone.  Disregarding the payment in means-tested benefits would be inequitable, because if the benefit is allocated continuously for at least a tax year, some people would have the payment and others wouldn’t; and if it’s not allocated continuously, there would have to be a complex set of mechanisms to cope. People who owe back tax typically get an adjustment in their tax allowance; if people do not have a full personal tax allowance they should not be eligible.

In principle this scheme could cost up to £46 billion (20 million times £2300), but there are reasons why it wouldn’t.   First, anyone who is currently getting more than the tax threshold in the course of a year already receives the equivalent benefit.  Most people would remain on PAYE – the main reason for electing for a change would be to secure a more stable income.  Most people who become unemployed pass through unemployment: about half the people who drop out of the PAYE system return within six months.  They will typically keep their tax allowance in PAYE.  So not everyone who receives benefits will be getting a converted allowance.  Second, those who earn but are below the tax threshold already receive part of the equivalent benefit.  Third, most important, the cash payment will have to be offset against benefits for about half the relevant population – that is, pensioners and adults of working age on means-tested benefits.  I’m not going to pretend that the interactions with benefits are straightforward – far too many pensioners who are entitled to Pension Credit don’t actually get it – but it should all mean that the net cost is likely to be in the region of half the maximum, something over £20 billion.  That’s still not cheap, but it’s both practical and much less expensive than many alternative proposals that have been canvassed.

This is a proposal, then, for a relatively small, limited benefit that would be unconditional and easy to administer.  It would mainly work in favour of people who are not well protected in the current system: people on unstable incomes, students, people who are not receiving benefits, people with home responsibilities. The argument for a scheme like this is that it would make a difference, not that it would answer every problem.  It would not settle the problems of the benefits system, and it is not big enough to make any very large difference to poverty.  However, money from one source can be mixed together with money from other sources, and a small benefit like this would make sense alongside other benefits.  It would offer a limited but stable source of supplementary income to many people on insecure incomes, and it would offer some support to people who currently have none.  What set me off on this week was a challenge made by Kathy Mohan to Theresa May in the street: “I can’t live on £100 a month”.  She’s right; she can’t.  We need to make sure that part of the benefits system, at least, is stable, secure, guaranteed and permanent.

The cost is the main reservation.  It’s much less than the cost of many Basic Income schemes, and it’s better targeted – getting money to just the people that Basic Incomes are supposed to reach, and doing it without making any of them worse off.  But there is always an opportunity cost.  I’ve not run the figures, but I suspect putting the same money into Child Benefit would have a much greater impact on poverty than this proposal, which offers more to pensioners with moderate incomes, students and women with home responsibility. On the other hand, it probably compares favorably in distributive terms to current proposals for supporting university students and FE, which will cost over £14bn, but have other arguments running for them.  It’s all a question of priorities.  Nor is this the only half-baked scheme I’ve canvassed on this blog.  Think of this as the glimmer of an idea, rather than a personal recommendation.

I also have to admit to a certain apprehension about putting potentially dangerous ideas into the public domain.  One of my first supervisors, Della Nevitt, once scribbled a back of an envelope calculation in the Ministry for Housing and Local Government and it mushroomed into the Rate Rebate,  Rent Rebate and Housing Benefit schemes, the last one in its day described as the greatest administrative fiasco in the history of the welfare state.  I need to think more about this, and it’s possible that other people can see a lurking catastrophe in the idea I’ve not thought about yet.  I’d be grateful for comments.

The new Scottish Social Security Agency

The Scottish Government has published an Outline Business Case for its new Social Security Agency.  They are opting for

a central agency with enhanced phone and online support, which incorporates face-to-face pre-claims and support services locally in existing public sector locations and with assessments undertaken in a manner that is appropriate for policy choices that will be made as the final business case is progressed.

This is not a great surprise, because the Scottish Government has had a long-established preference for working through centralised agencies, and the case for doing this in a rights-based social security system is stronger than it is in fields which depend more heavily on professional judgment or local adaptation.  The Business Case says something about the kind of system they want Scottish social security to be, but the document is still vague about many of the specifics:  who the agency will be run by,  what the new benefits will be, or how the rules will be decided.

Spring, and a new CPAG handbook

April is the cruellest month, marked by the sound of the latest CPAG Welfare Rights Handbook thumping on the doormat.  I scan it every year to see what I’ve missed this time; I realise to my horror that this must be the fortieth year I’ve been doing this for.  In 1978, the National Welfare Benefits Handbook  had 103 pages, and the Guide to Contributory Benefits and Child Benefit  had 80.  The current edition of the handbook has 1,756.  I know less every year.

The main changes this year were telegraphed some time ago:

  • denying key benefits to the third child (the notorious rape clause is a by-product of that)
  • confining bereavement benefits to 18 months – ending one of the remaining strands of the Beveridge system
  • closing down class 2 National Insurance contributions – unpicking another part of the legacy
  • reducing support for people with long-term sickness to the level of the (short-term) JSA: this is a final reversal of a bipartisan policy to recognise long-term disadvantage, adopted with the introduction of Invalidity Benefit in 1971.

Most other changes are continuations of previous policies:

  • shifting new claims for several benefits to Universal Credit
  • closing down DLA for people of working age, so as to transfer people to PIP – the process should be complete by next year, and
  • the gradual introduction of entitlement under the new State Pension.

It’s only in the field of pensions that it’s possible to identify any real improvements in the system in the course of the last 10 years; but  that is not negligible, because it’s the largest single element in the benefits systems.