Can we afford to support older people?

The Herald asked me yesterday to comment on whether we could afford universal services for older people; here is my response, as it appears. (The Herald website allows direct access to first-time users; after five views you have to register.)

The debate on free services for older people lumps three questions together. The first is whether we can afford to support services for growing numbers of older people. That question has been reviewed in many reports; the answer comes out, consistently, that the commitments are sustainable, but they will have to be paid for in higher taxes or contributions. Many people imagine that when they pay for pensions, that the money is being saved for their old age. In most cases, it isn’t. Contributions now largely pay for pensions now; the current generation of workers is relying on the next generation to pay for them in turn. The real test, then, is whether we’re willing to pay for pensioners now.

The second question is whether help should be free. The critical judgment is about what should be provided, and what should not. Some essential items we expect pensioners to pay for (food and telephones), some we don’t (personal care and prescriptions) and for some the signals are mixed (cleaning). The arguments for free services are partly about solidarity – services we want people to have and have a duty to provide – and partly self-interest, whether we’d want ourselves or our families to be charged in the same circumstances. Few people in Scotland would want everything to be paid for: it’s difficult to make the case that help with incontinence – an important component of health care as well as personal care – should not be free.

The third question is about universalism, whether benefits and services should go to everyone, or only those in most need. Services that test people’s needs are complex, difficult to provide fairly and can be expensive. Tests are often intrusive, burdensome, demeaning and many are put off from asking for help. Universal services use simple eligibility criteria, such as age, so are cheap to run. The basic argument for bus passes, for example, is that many older people need help, extending it generally allows those who need it to get help, and people who have alternative transport don’t use the buses. When money is short, simple generalised provision is often the way to go.

Will PIP block claims from people with disabilities?

The Minister for Disabled People has suggested that 330,000 people will lose their Disability Living Allowance when they are assessed for PIP, the benefit that is replacing it. The magazine Community Care suggests that the target is a reduction of 600,000 people taken off benefit by 2018. I am not sure how a cut in numbers of that size is supposed to be achieved, but it is most probably made up of three elements: people who will lose the lower rate for the care component, people who fail to turn up for assessment, and people whose conditions have improved sufficiently not to qualify. (There is a fourth element, which is the attempt to individualise assessments more closely – blind people, for example, will no longer qualify automatically for higher rate mobility – but that can work both ways.)

On general principles, I think the predictions are likely to be wrong. The common experience of selective benefits has been that when governments try to impose firmer boundaries, they are liable to discover that needs are deeper, more complex and more difficult to reject than they imagine. The distinction between the lower and middle care rates on DLA has always been confusing, and many people can argue persuasively for higher banding. There are new opportunities to include people with psychiatric disorders. And the PIP rules do not exclude the growing numbers of older people claiming DLA. Short term reductions have to be offset against the general trend, and as time goes on, inexorably, there will be pressure to extend protection. That happened with Single Payments, it happened with Incapacity Benefit, it has happened with DLA, and it will probably happen here, too.

Three generations who have never worked

A new report for the Joseph Rowntree Foundation gives a recognisably faithful picture of the situation of workless people in deprived communities. It shows, yet again, that the myth about “three generations who have never worked” is drivel. The researchers searched “doggedly” in areas of high unemployment for anyone to fit the criteria, and there wasn’t anyone. I’m not surprised, because that’s exactly what the previous longitudinal studies, going back to 1950s, have found: see e.g. Atkinson et al (1983) Parents and children, or Kolvin et al (1990) Continuities of deprivation.

Housing Benefit: the under-occupancy rules

The idea of limiting the size of accommodation that tenants of social housing could occupy was first proposed two years ago. It was resisted in the House of Lords earlier this year, and a critical judgment in the Court of Appeal (Burnip, Annex C of the linked document) has challenged its application to people with disabilities, but new draft regulations are set to bring it into force for many tenants, beginning next April. It is based on the ‘bedroom standard’ introduced in 1960 to measure overcrowding. It allows a couple or person over 16 to have one bedroom; any two children under the age of 10, and any two children under 16 of the same sex. By this standard, most households in the UK have at least one ‘spare’ bedroom. Housing Benefit claimants of working age in social housing will lose 14% of their entitlement if they are under-occupying by one bedroom, 25% if they are under-occupying by two or more. It is difficult, given the number of overlapping cuts taking place in Housing Benefit, to know which is going to have the largest effect, but this is a contender.

The general reduction in support for rented housing is a serious cut in benefits in its own right, but it also presents a major challenge for the allocation of social housing. (I haven’t written about allocations for a time, but it was how I started my career, and I’ve done several reports about it in the past.) Most properties in social housing have two or three bedrooms. Many applicants for social housing are single people, who under the new rules can only occupy one bedroom. Most families with children – and 80% of those on benefits – have one or two children. The distribution of properties generally requires landlords, then, to offer one or two bedrooms to single people, and three bedrooms to families with two or more children. Social landlords have to ensure that their property is occupied and rent is paid; if they routinely allocated only two bedrooms to families with two young children or children of the same sex, there would not then be enough qualifying families to let their three-bedroom properties to. Many of those people will consequently be ‘underoccupying’, and subject to the penalty. The Scottish Government has estimated that about 45% of social tenants overall are underoccupying, and possibly 95,000 tenants currently receiving Housing Benefit – about 35% of tenants, rather higher than the DWP’s initial estimate – will be hit by the benefit cuts.

There may be some ways round the problem, for some housing agencies at least. One is to redefine what makes a bedroom – many modern properties combined storage space to carve out a small room from the finance, and it could be classified as storage space again. A second option is to let more three bedroom properties to single sharers as joint tenants, but that will involve a major shift of practice, and a commitment of housing managers to make it work.

Reducing fraud and error?

In Parliament on Tuesday, Iain Duncan Smith claimed twice that the Universal Credit system would reduce fraud and error by up to £2.2 billion. He explains:

“Many people are receiving overpayments or underpayments when they should be receiving the correct amount. Too often with tax credits, people are chased at the end of the year, without their realising that they had received the wrong money in the first place. Universal credit will be kinder in the sense that it will be adjusted each month. It will help us save huge sums — some studies state £2.2 billion per year.”

That sum ought to be be compared to current estimates. Currently the total losses through error and fraud in DWP benefits are estimated at £3.4 billion, while for Tax Credits and Child Benefit the estimate is £2.3 billion. £460m of the first figure is down to Pension Credit, which is not part of the Universal Credit system, so the total comes to £5.2 billion – nearly half of that is down to mistakes made by claimants. But there are also mistakes made in favour of the government – estimated at £1.4 billion. That means that the difference between overpayment and underpayment is £4 billion, and Duncan Smith is claiming that well over half of that is going to be saved in the new system.

I’ve expressed doubts before as to whether the reformed system will save anything at all. Table 6.1 of the newly published statistics on fraud and error gives a long series of categories where errors have been generated: they include, among others

  • Capital
  • Conditions of Entitlement
  • Household Composition
  • Housing Costs
  • Passporting
  • Non-Dependant Deductions
  • Earnings/Employment
  • Income Other Benefits
  • Income – Occ & Pers Pensions
  • Income – Other
  • Control activities not being carried out
  • Living Together
  • Labour Market Issues

Three factors together – earnings and employment, income from occupational and personal pensions and living together – make up 44% of all the losses through fraud and error. However, most of the list will apply to Universal Credit with as much force as it does to benefits now.

New draft regulations for Universal Credit

The DWP have published some new regulations, and more importantly some new draft regulations, to cover the Universal Credit system. This follows the comments of the Social Security Advisory Committee and the government response. The SSAC’s response focuses on five main issues:

  • self employment
  • housing
  • the benefit caps
  • sanctions, and
  • claims and payments.

There are several hundred pages to work through, and it will take me some time to absorb what’s in the package. It’s possible to identify immediately some concerns which have been responded to, and others which have not. Among those which have been responded to

  • couples whose relationships have broken down should not be bound to make joint declarations (though there is some vagueness about this)
  • unemployed people who are sick will be able to submit medical evidence to cover longer periods.

Problems which remain include

  • inconsistent periods for calculation, including scattered references to periods of days, weeks and months
  • the requirement that unemployed people should be looking for work for 35 hours a week
  • a failure in the regulations to specify criteria for identifying different liabilities to undertake work related activity.

The take-up statistics will be maintained

The DWP has accepted the arguments for maintaining the statistics on the take-up of means tested benefits. They cited a healthy chunk from submissions from myself and Adrian Sinfield, which is gratifying. They have not committed yet to extending them to cover the Universal Credit system, but one hopes that will follow in due course.

Cutting the minimum

An article in today’s Observer argues:

“Make no mistake. The 1% uprating means that for the first time since 1931, the income of the poorest will fall as a deliberate act of government policy.”

That’s only half true. This is the first general cut since 1931, but there have been other, less wide-ranging cuts, and many have been deeper.

The minimum income standards that apply in the UK have never been complete, and they have not been maintained very faithfully. The rates of the system in 1948 were represented as being based on Rowntree’s 1936 standards, but they were actually less, and known to be inadequate at the time. (I have amended this from the first posted draft, in recognition of a comment from John Veit Wilson, whose authoritative study I can’t do justice to here.) In the 1980s, there were changes in the structure of the basic rates, leaving some people markedly worse off – for example, householders under the age of 25. And various provisions have been made for money to be taken off benefits, for example deductions that apply to people who fail to take up work – the suspension of benefits through sanctions is currently affecting very large numbers of people (3 million claimants have had varied length sanctions, and 1.3 million fixed length sanctions, since 2000). There has never been a true national minimum. Perhaps there should be.

Leveson: How not to write a report

I’ve struggled with the Leveson report; there are 1817 pages of text without the appendices, and it’s a model of how not to write. The problems include:

  • an executive summary that weighs in at 46 pages – the length of a report in itself – but which mainly summarises evidence instead of summarising the arguments and the options
  • lengthy, unstructured repetition of evidence
  • wordy, self-indulgent prose
  • judgments divorced from the sections which they refer to – for example, the evidence for the failure of previous enquiries comes more than a thousand pages before a firm statement that giving the press one more chance will not be acceptable, by which time readers will probably have forgotten how strong the case is
  • lack of an adequate cross-referencing system
  • the lack of clear, concise statements of arguments, options and intermediate conclusions, and
  • lack of prioritisation – the reader cannot tell where the important points are without ploughing through the lot.

This is a pity, because there are lots of good things buried in there somewhere. The objection that this could all be done by using the criminal law is squarely tackled in volume 4. The position of new media, which Leveson has been accused of ignoring, is considered in several places. There are short but effective arguments for treating press regulation differently from other professional regulation, explaining why that redress for privacy cannot be effectively protected in the same way as redress for defamation, or making a distinction between statutory underpinning and statutory regulation. Leveson, as a judge, seems to think that his main brief was to establish the true facts – which often he cannot do – rather than identifying options for action. He does recognise the advantages and disadvantages of different options, intelligently and often well – but he smothers the critical arguments under the weight of too many words with too little shape. He needed an editor.