More on Personal Independence Payment

Following the Lords debate, and disquiet in the press, I should perhaps add a further comment on PIP. The government’s assumption that the reformed new benefit will have fewer claimants than DLA seems mainly to have been predicated on a longer qualification time, removal of those with lower dependencies and some special rules, like the removal of some entitlements to people in residential care. At the same time, the government is proposing a redefinition of rules which will make the benefit more accessible to people with psychiatric illnesses; and it has made no proposal about the very large numbers of older people who have continued on DLA in preference to claiming Attendance Allowance. If that was the whole story, it could mean that PIP will have as many claimants as DLA; it might even have more. But it is not the whole story. The prospect of reducing the number of claims radically seems to depend primarily on the process of re-assessment and disqualification of existing claimants, and the government does not need its reforms to pass to achieve that.

The consultation on Personal Independence Payment

In a previous posting I expressed concern about the announcement of policy decisions before consultations had been closed (see “A failure to consult”, 21st February 2011). A new report, Responsible reform, criticises the consultation on Personal Independence Payment because the government has misrepresented the responses. The authors have mainly counted the responses, which is not necessarily a valid criticism – consultations are not numerically representative, and large umbrella organisations cannot sensibly be counted in the same way as individuals submitting standard responses. However, the overwhelming opposition to the reforms is well conveyed by the quotations.

This contrasts with the government’s response to the consultation, which suggests broad support for the principles even if there are differences on specifics. Responsible Reform thinks the government’s response is misleading, and it is hard not to agree. The report cites a standard legal principle: “once a public body decides to consult it has to do so properly.”

Limits to growth, again

More than 200 years ago, Malthus argued that the world was going to run out of resources, because population inevitably increased faster than our ability to provide for it.  The argument has been disproved time and again, but its adherents  remain convinced that it must be true sooner or later.  It doesn’t seem to matter how often the arguments are shot down in flames – there is always someone ready to pick up the standard.  This week’s New Scientist has four pages praising The Limits to Growth, the book that argued that come what may, we were going to run out of the things we need.  Part of the problem is the flakiness of the predictions – the birth rate has not followed the projected path, and nor will most of the consequent projections.

The NS article comments that economists claimed that “Limits underestimated the power of the technological fixes humans would surely invent.”   If you can’t counter an argument, misrepresent it.  The basic objection from economists is not that new technologies will inevitably appear – even if they might.  The point is that many alternative technologies  already exist, and costs are relative. If a resource becomes scarce, it will cost more, and other technologies which are initially too expensive become  preferable.

The fundamental economic mechanism is one which pushes people to use substitutes. As coal has become more expensive, options for producing energy which once seemed unrealistic – nuclear power, bio-fuels – start to be feasible.  As wood has become more expensive, plastics have expanded.  If food production through conventional methods becomes unsustainable, there is a range of viable technologies, such as hydroponics, which stand in readiness.  There is, certainly, an incentive to develop new technologies, such as electric cars, water purifiers or solar power, and many will be developed, but that is not the central mechanism. We will never use the last piece of coal, the last drop of oil, or the last lump of copper; long before then, it will cost too much.  The argument that we are about to run out of resources is just plain wrong.

Rising unemployment

The Chartered Institute of Personnel and Development estimates that unemployment figures are likely to reach 2.85 million in the coming year, equivalent to 8.8% unemployment.  In principle, this figure should be independent of the claimant count – people who are unemployed do not necessarily qualify for benefits.  In practice, it may not be.  Part of the government’s current policy is to disqualify people from long-term incapacity benefits, in the form of Employment and Support Allowance.  The medical reassessments have led to many people leaving the benefit rolls – 36% of reassessments are brought to an end because the claimant is no longer entitled, but that reflects a certain turnover in the figures anyway (for example, among women who have had to claim sickness benefits while pregnant).   More important for the unemployment figures are the further 39% who are found to be fit for work.  It is not immediately clear how many of these people will go on to claim Jobseeker’s Allowance instead of ESA, but those who do will be redefined as actively seeking work.  If only a third of them make that shift, it will increase the unemployment figures by more than 300,000 – taking the figures well over three milllion.

Scotland refuses consent

The Scottish Parliament has refused legislative consent to the Welfare Reform Bill. There is considerable concern about the direction of welfare reform, especially relating to the treatment of disability, but it would be misleading to say that the concerns have gelled into a solid body of opposition. If people’s concerns have been diffuse and difficult to focus, it is because the Bill itself is so vague. It outlines principles for action, but it is still desperately thin on detail. The Coalition Government has taken the view that the Bill is only about broad outlines; the details will go into secondary legislation. More than a year after the White Paper, it is still far from clear how Universal Credit will work, what will be included, and what its implications will be.

The Legislative Consent Motion effectively asked the Scottish Parliament, then, to agree to the Bill without knowing what they were signing up to. The Health and Sport Committee (the Scottish Parliamentary committee that reviewed the motion) expressed concern that the effect of passing the motion would be to commit Scottish Ministers to come forward later with secondary legislation that would not be subject to scrutiny. Equally, the vagueness of the proposals makes it difficult for the Parliament to be sure what will happen after refusing legislative consent. The Parliament’s consent is needed mainly to ensure that UK legislation is compatible with Scots law, and refusing consent will not prevent the UK legislation from being passed. The most positive interpretation is that the UK government will have to bring forward primary legislation for the system to work in Scotland; but witnesses to the Committee raised concerns that the effect may be the suspension of benefits to Scottish recipients.

The Parliament’s action is more than a gesture. Benefits are a reserved matter – that is, they are governed exclusively from Westminster – but training for employment is a shared responsibility. When the Department for Work and Pensions has taken action in Scotland in the past, it has been done with the active cooperation of the Scottish government. The view of the government was that “they rely on our support”. Scotland will have to take responsibility, under the reformed system, for Council Tax Benefit, and it is likely that other responsibilities, including Housing Benefit and work formerly done by the Social Fund, will gravitate to the Scottish Government. It is difficult to see how Westminster’s programme can be implemented in Scotland without the Scottish Government’s co-operation.

Plan C

The government has represented its spending plans as the only option available. The Labour opposition has called for an alternative approach, “Plan B”, involving Keynesian stimulation of the economy through tax reductions and quantitative easing. It looks as though the government is sticking to “Plan A”: but is it? The recent spending review points to the gradual emergence of an alternative strategy. In November, the government announced funding for 250,000 work experience placements and 160,000 job subsidies, all aimed at young people aged 18-24. Less prominent, but possibly more significant in the long term, were the low-key declaration of a National Graphene Institute, and recent announcements about support for life sciences. These initiatives suggest that the government may be starting to move in the direction of a policy to foster development in selected industrial sectors. That, ironically, was the policy of the Labour government in the 1970s, which sought to pick winners through the National Enterprise Board – for example, its investment in Inmos and microchips.

People who have never worked

One of the recurring myths in the British social security system concerns generations of families who have never worked. The issue has been the subject of recent correspondence on the JISCmail list on Social Policy.

There are relatively few households in Britain where there are adults of working age that consist entirely of people who have never worked. The DWP has issued statistics for households and for individuals; this applies respectively to 1.7% of households of working age (about 350,000 households) and 1.4% of individuals. More than a third in both categories are adults under the age of 25.

The primary determinant of worklessness is the economy, and variations in the economy over time mean that the experience of previous generations is hardly ever the same as that of the current generation. Forthcoming work for the Rowntree foundation by Rob Macdonald, Andy Furlong and Johann Roden compares the search for “three generations who have never worked” to the hunt for the Yeti.

Are claims for incapacity out of control?

There’s been a lot of confusion about the stats issued for Incapacity Benefit, which was recently replaced by Employment and Support Allowance. The IB stats seem to show an increase of over a million people since the revision of the system in the mid -1990s. The Daily Mail reports that the figures trebled after 1979. That seems initially plausible, because we might expect incapacity to rise in line with unemployment, but it’s not actually true. In 1979, the principal benefits covering people now covered by ESA were Invalidity Benefit (contributory), Supplementary Benefit for people who were sick or disabled (means-tested) , Non-Contributory Invalidity Pension and Sickness Benefit. There were 1,463,000 claimants for those four benefits in 1979. There was a reduction in the early 80s when Statutory Sick Pay came in, and then a lesser increase when Severe Disablement Allowance replaced NCIP. The big increase for people with incapacities happened in the 1990s, and it mainly occurred in Income Support – the means-tested benefit – rather than in Incapacity Benefit. Incapacity Benefit figures may also have seemed to increase, but that was mainly because Sickness Benefit was taken into it in 1995, and Severe Disablement Allowance was rolled into IB for new claimants in 2001 – those inclusions probably account for 250,000 extra claimants.

The figures in contemporary reports have been retrospectively revised between 1997 and the present, in the apparent belief that people will find the numbers easier to understand that way. Unfortunately it’s led people to believe that claims have rocketed, when they haven’t. I’ve had to piece these figures together from different sources, which always raises questions about consistency, but subject to that, here are the counts in 000s of claimants for 1998, 2003 and 2008.

1998 2003 2008
Incapacity Benefit 1618 1586 1413
Severe Disablement Allowance 376 331 281
Income Support for sick and disabled people of working age 881 1100 1191
Total 2875 3017 2885

Sick note Britain?

A report by Carol Black and David Frost makes proposals that are supposed radically to reduce the flow of people moving on to Employment and Support Allowance. The argument that this can be done is built on the belief that the initial response to illness makes it more likely that people will adjust to long term sickness by claiming benefits. However, the most substantial reduction that is foreseen in the report is in the numbers of people who move directly to long-term benefits without going to employment in between. This group includes people who would formerly have claimed Severe Disablement Allowance.

Despite the reports about “sick note” Britain, benefits are not in general issued with sick notes – or “fitness for work notes” as we must now learn to call them. GPs didn’t, in general, get to sign people onto Incapacity Benefit, and they don’t sign people onto Employment and Support Allowance. However, there are some exceptions. If a person is not entitled to Statutory Sick Pay, typically because their employment has been terminated, they will be put onto ESA directly. If they have certain illnesses, principally terminal illness and life-theatening conditions, there may be no requirement to undergo a Work Capability Assessment. Those exceptions will be maintained. The main proposal in the report is that such claimants should move directly to the WCA. It is not immediately clear how this procedure is going to deliver a substantial cut in the number of successful claims.

Mis-reporting fraud

The BBC has been making some seriously misleading statements about fraud. A recent Panorama programme took people parking in “disabled” spaces and failing to occupy social housing as evidence of fraud. One claimant was filmed cycling; one was playing golf; another was gardening. People who claim incapacity benefit can indeed be found on occasion to take physical exercise. That is not evidence that their claim is fraudulent. People with mental illness, for example, may be fully able to use their bodies. People with restricted mobility may well be encouraged by their doctors to take exercise. The benefits are about the ability to work, not to walk. And people might have some personal wealth; some of the benefits are not means tested.

The bullying, censorious tone is made worse by mispresentation – for example the claim that fraud is costing £22 billion, when the DWP estimate for fraud is £1.2 billlion. The figures are reviewed by Ben Baumberg in a lucid posting at this address. For a more detailed consideration, view the sample chapter from How Social Security Works.