Tagged: devolution

Devolution: the Constitution Committee misses the point

The House of Lords Constitution Committee has published a report on Devolution in the UK.  It’s primarily focused on the relations between the four nations; that means that, despite taking a wide range of evidence, it misses the point almost completely.  It doesn’t understand the most fundamental problem with the whole idea of devolution: that power in the UK is overwhelmingly centralised.  Local government in the UK used to be responsible for hospitals, social assistance, public housing, gas, electricity, water, police, fire, public health, schooling and transport.  Local authorities could develop enterprise, issue bonds to borrow money, and raise money for specific projects. All of those powers have been taken away.  The promise of the ‘Northern powerhouse’ is a pale shadow of what local government used to be.

During the Scottish referendum campaign, I wrote about The failure of the UK.

The most obvious problem is remoteness –  the problem of London-centred government.   That was a problem in the 1920s and 30s, and the centralisation of the UK since World War II  has made it progressively worse.   The process began with the centralised control of services and resources that were necessary in wartime; after the war, while central government gradually (and reluctantly) relinquished control of industry and markets, it retained control of resources and services that were formerly part of local government.  … In the process, the regions – all the regions – have been left behind.  It’s not just the arrogation of control to the centre over public services; it’s been the sustained campaign to deny any part of the regions the power to borrow, to build,  to take action on behalf of their population.

The process of ‘devolution’ is about delegating scraps of authority, rather than allowing regional and local authorities to act.  Federalism is not about the grant of authority: power in a federal government is reserved to smaller units.  There is no understanding in this report of that principle or what it implies.

The Scotland Act has passed. Now we can do something about sanctions.

The Scotland Act 2016 has received royal assent.  I’ve been critical of the aspects that deal with benefits.  The first draft bill was sloppily drafted, the purpose of the clauses was misinterpreted, and the resistance of the Scotland Office to most amendments meant that improvements were slow and difficult.  There are still parts of the Act that are badly thought through  – for example, the disability clauses, which I’ve written about before, the assumption that Winter Fuel Payment would be covered by rules about cold weather, or the removal of the Scottish Parliament’s existing power to authorise crisis loans. But there is also a significant loophole which the Scottish Government could, if it wanted, use to challenge the system of sanctions.   Now the Act has passed,  the loophole could only be removed by a further Act of Parliament.

Three clauses contain the same wording, apparently intended to stop interference with the sanctions régime.  Clauses 24, 25 and 26 deal with top ups to reserved benefits, discretionary housing payments and discretionary benefits. They all include the same qualification about sanctions.  Clause 26 reads:

This … does not except providing financial assistance where the requirement for it arises from reduction, non-payability or suspension of a reserved benefit as a result of an individual’s conduct (for example, non-compliance with work-related requirements relating to the benefit) unless—

(a) the requirement for it also arises from some exceptional event or exceptional circumstances, and
(b)
the requirement for it is immediate.

The key phrase here is that the requirement for financial assistance “arises from some exceptional event or exceptional circumstances”.   Now, it might be that someone thought that “short term” means one off, that “discretionary” means “only do it once” and “exceptional” should be taken to mean “very rare and unusual”.  That is not what those terms mean in social security law or practice.

  • The “short term” benefits introduced after 1948 were intended to cover unemployment, sickness and maternity, while the “long term” benefits covered pensions, bereavement and death.  This distinction lasted till the mid-1990s.
  • “Discretion” covered all benefits not paid as a right: the discretion of the Supplementary Benefits Commission (1966-1980) included elaborate rules for extra payments, including provision for Urgent Needs Payments, Exceptional Needs Payments and Exceptional Circumstances Additions.  The rules were largely covered in the “A Code”, but a summary of the rules were laid out annually in the Supplementary Benefits Handbook.  There is no incompatibility between discretion and rules.
  • The term “exceptional” was taken by the SBC to mean anything that lay out of the ‘normal’ provision of benefits.  So, for example, there was an Exceptional Circumstances Addition of 30p per bath for anyone who needed more than one bath a week for medical reasons.

The Scottish Government does not have the same discretion as the SBC – it is not possible to argue that discretion must always be used the same way.  But the principles guiding discretion share an important common element: it has been clearly established that discretion can be interpreted and expressed in terms of rules.  It follows that the Scottish Government can use their discretion to issue guidance under these provisions, defining the rules applying to provision and the circumstances which should be treated as exceptional.  Such rules may reasonably extend provision,  for example, to families under pressure, cases of special hardship and circumstances where the personal circumstances of the claimant, such as mental illness or conflicting duties, have led to sanctions being imposed.

This would have the effect of removing some sanctions; it would not remove most of them.  There is a tenable argument for adding a further rule defining an exceptional circumstance, which could have a much more profound impact.  Professor Michael Adler has argued that in several respects it is questionable whether the  current sanctions regime is consistent with the established principles of the rule of law.  Of the many points he makes, one seems to me to stand out: it is that people who are affected must have a hearing.  The current practice lies in breach of an ancient principle of administrative law:  audi alteram partem, which is one of the elements of natural justice.  If decisions are being taken about claimants, they must have an opportunity to put their case.  (It has now  been decided, for example, that the bedroom tax cannot be imposed without a hearing in cases where bedroom size and use is disputed).  In the current sanctions régime, claimants can only be heard after the punishment has been imposed – and indeed they may not know that a sanction has been imposed until after  the punishment has taken effect.

I think it can plausibly be  argued that any punishment or variation in the rights of a citizen must be lawfully done, and that circumstances where they are not lawfully done should always be considered exceptional.   In any case where people have been sanctioned without a hearing, the Scottish Government could exercise its discretion to make payments to mitigate the sanction.   If the DWP doesn’t agree, they are welcome to test that proposition in the courts.

The disability clauses in the Scotland Bill

The Devolution Committee of the Scottish Parliament has published a lengthy report reviewing the provisions of the Scotland Bill.  I get a brief mention, because I was asked to submit evidence about the fiscal framework, but I want in this entry to address a different issue, concerning the clauses about disability.  As it stands, the Bill has five distinct definitions of disability:

  • two definitions deriving from the definition of a disabled person as someone receiving a disability benefit, which is

a benefit which is normally payable in respect of—

(a) a significant adverse effect that impairment to a person’s physical or mental condition has on his or her ability to carry out day-to-day activities (for example, looking after yourself, moving around or communicating), or

(b) a significant need (for example, for attention or for supervision to avoid substantial danger to anyone) arising from impairment to a person’s physical or mental condition

  • a recipient of Severe Disablement Allowance,

a benefit which is normally payable in respect of—

(a) a person’s being incapable of work for a period of at least 28 weeks beginning not later than the person’s 20th birthday,
or  (b)
a person’s being incapable of work and disabled for a period of at least 28 weeks

  • a reference in the provision for carers, which is to a disabled person as

a person to whom a disability benefit is normally payable

  • and a completely different reference in clause 31 on employment support, where

“disabled person” has the same meaning as it has in the Equality Act 2010

I put it to the Devolution Committee last year that these definitions were not adequate.  I wrote then:

“The Smith Commission proposed the devolution of powers relating not only to disability but to those who are ill.   The use of a more restrictive definition is a matter of concern to some agencies working with disability, such as the Multiple Sclerosis Society and the Scottish Association for Mental Health. The use of the Equality Act definition of disability would have automatically brought in some classes of illness, such as people with multiple sclerosis or HIV/AIDS; the new definition does not.”

Subsequently the Committee received assurances from the Secretary of State, and those assurances are the ones included in their final report.

“344.  He explained that the reason that there is a variation in definitions used for disability between clause 19 and the clause relating to employment provisions is to accommodate different devolution issues. The UK Government’s view is that the Equality Act 2010 definition would not be appropriate for clause 19 and, indeed, could put limits on the Scottish Parliament’s ability to decide who is, and who is not, covered by their provisions relating to disability benefits. The definition used in clause 19 is designed, in the UK Government’s view, to cover the adverse effects or needs arising from an individual’s health condition or disability, with the proviso that these effects or needs must not be short-term.

345.  The Secretary of State concluded by noting that the inclusion of the phrase “normally payable” gives the Scottish Parliament the necessary flexibility to create exclusions or to create special categories, for example to enable provision for people who are terminally ill. The phrase “normally payable” was explained in more detail by the UK Government. It said, “The phrase “normally payable” is designed to provide sufficient flexibility to enable provision for exceptional cases – for example it would enable provision to be made to prevent the payment of benefit in situations where a person is temporarily accommodated at public or local expense in a care home or is receiving free in-patient treatment from the NHS or to enable the payment of benefit in situations where a person is terminally ill.

Only the courts could ultimately decide whether or not these statements are true, but while there is some force in the first paragraph, the second has to be wrong.  The disability clauses are not defining the scope of Scottish benefits; they are defining the powers of the Scottish Parliament to legislate in this field.  All the clauses on social security start from the principle that the Scottish Parliament has no powers relating to social security unless and until those powers are explicitly granted.  The Scottish Government  has no right to assume that if a benefit is ‘normally payable’ under one set of circumstances then that carries the implication it  might also be treated as payable in different circumstances.  A person might be terminally ill without meeting either of the key criteria in s 19, and if that was true,  the Scottish Parliament would have no right under these clauses to create a benefit.

In the absence of opposition from central government, it is unlikely that this would ever get to court.  The main stumbling block is likely to be the Scottish Parliament’s own lawyers, who are quite properly concerned to work strictly within the rule of law, and have blocked legislation that is outwith the Parliament’s competence before.   It may still be possible to use the other powers in the Bill – the power to create new benefits or to top up reserved benefits – to cover the contingencies that have been left out.  (This was not an option when I made my submissions a year ago, but it is now.)  It would have been so much clearer, and so much easier, if we were not dealing with such restricted and muddled definitions of disability.

How much will Scottish benefits cost to run?

I spoke yesterday to a reporter from the National, who asked me about the administrative costs allowed for benefits in the new fiscal framework.  She quotes me as saying, “The lack of clarity as to what the arrangements will be and what the costs will be that the Scottish Government are expecting to carry makes it very, very difficult. There are clearly matters of concern.”  I actually went into a lot more detail than that – for example, the difficulty of dealing with benefits in transition, the uncertain predictions for PIP, and the precedent for costing administrative change in central government.

Nicola Sturgeon has written to David Cameron in these terms.

“there is still considerable distance between us, including capital and revenue borrowing and the transition costs – set up and administration – associated with the devolution of powers within the bill and specifically welfare powers.
For example, on the last of these issues, based on information provided by DWP and our own analysis of published data from DWP’s Personal Independence Payment and Universal Credit business cases, we estimate ongoing administration costs to be approximately £200m annually, and set up costs to be between £400m-£660m.”

The Treasury, it seems, has dismissed the estimate of £200m for administration.  Apparently they have commented that “either the Scottish Government plans on running a remarkably inefficient benefit system, or is not serious about agreeing a deal and doesn’t want the responsibility of using its new powers.”  So – is £200m a serious estimate?

The problem that most of us have in estimating the costs of administration is that this sort of information is no longer publicly available.  The DWP claims a general administrative cost of about 3.5% a year, but that lumps together high cost benefits like ESA with low cost ones like the State Pension.  The DWP Annual Reports used to carry a breakdown,  but in recent years they have been replaced by glossy propaganda, and nothing in the balance sheets tells us what the administrative costs are.  I went back a few years, then, to get an indication of the costs.  In 2007-08, the administration of working-age benefits cost £2.98bn, on expenditure of £47.3bn: that comes to 6.3%.  Pensions cost £220m for £97.8bn benefits, equivalent to 0.23% of the cost.     The administration costs of some benefits will have increased in the intervening period – that is the result of personalisation, conditionality and assessment.

The benefits being devolved to Scotland are not like pensions – they are nearly all the more expensive, fiddly ones.  (It’s been reported that there were proposals from the Smith Commission to pass over some more straightforward ones, and they were vetoed by the Cabinet. ) The value of benefits currently being devolved to Scotland is just below £2.7 bn, so the estimate of £200m looks like an administrative cost in the region of 6.9% (that is, £200m out of £2.9bn.)  Please bear in mind here that I do not have access to the real figures – I am piecing together a puzzle in an attempt to get a sense of what is happening.  That suggests that £200m might be on the high side – 6.3% of costs would be closer to £183m – but it’s a long way from being ‘remarkably inefficient” or “not serious”.

The no detriment principle in operation

The Smith Commission proposed that neither administration should be better or worse off as a result of devolution, and argued for compensation if the effect of decisions were to push costs onto the other party.  A House of Lords Committee has described this as a ‘recipe for continuing conflict’, and they may well be right.  A small report from the Auditor General remarks on a small element in the costs of transferring responsibility from HMRC to Revenue Scotland.

HMRC has charged the Scottish Government £0.73 million for it to stop collecting Stamp Duty Land Tax.  HMRC charges the Scottish Government for costs associated with the devolution of Stamp Duty Land Tax. … It estimates this will cost £1 million, most of which is for changes to IT systems.  For the period up to the end of 2014/15, HMRC has invoiced the Scottish Government for £0.73 million.

So HMRC has charged the Scottish Government for the costs of not doing anything. This is an ominous precedent for the transfer of responsibility for benefits; if the DWP bills the Scottish Government for not doing disability benefits any more, it’s going to be an expensive business.

Local government and devolved benefits

There’s an intriguing disagreement reported in the Herald between disability organisations and CoSLA, which represents local authorities.  CoSLA has been arguing for building up the role of local authorities in benefits administration.  At present the Scottish Local Authorities administer Housing Benefit, Council Tax Reduction and the  Scottish Welfare Fund; they are also effectively responsible for support in social care, including the fashionable (and misguided) trend to individual budgets.  They stand to lose responsibility for a large slice of the work relating to Housing Benefit (relating to working-age benefits).  That has raised questions about the viability of the operation and the prospects for people working in that field.

Others have expressed concerns about the possibility that disability benefits will be transferred to local authorities.    Tressa Burke, of Glasgow Disability Alliance, is concerned about cuts – a reasonable fear, because the experience of local authority administration to date has been that social care is expected to work within fixed budgets, and benefits don’t work that way.    Sally Witcher, a former director of CPAG who is now CEO for Inclusion Scotland, comments that there will be a ‘postcode lottery’ and points to the problem of people transferring across local authority boundaries.  (As a carer myself, I’m more worried about the discontinuity of care: quite apart from the effect on personal relationships, putting together a fresh care package in Scotland can take months or even years.)

The main concern raised by CoSLA’s statements to date – such as the delivery plan for people with disabilities –  is that they’re based on a narrow concept of disability, dominated by the model of ‘independent living’.    I’ve sat before now through a long presentation arguing for disability benefits  to be unified with social care, a prospect which appals.  It implies  the replacement of entitlements with assessment and bargaining within the constraints of fixed budgets;  a system where assessments of need are geared to what’s available;  and a subordination of all the other objectives of disability benefits – social protection, income smoothing, compensation, rehabilitation, empowerment and so on – to the priorities and demands of the social care budget.

There may be room for compromise.  A CoSLA spokesman is reported as saying that “councils are not suggesting they should make decisions about who gets benefits or how much they get.”  If that’s right, this could be taking as proposal for something very different, focusing on effective benefits administration, and there’s a good case to think about administration at local levels.  One of the first priorities has to be to ensure that benefits are not swallowed up by an misplaced identification with social care.

 

The House of Lords is (mainly) right about the Scotland Bill

When the press reported that a House of Lords committee had condemned the Scotland Bill, I was sceptical.  The Scottish Office has consistently taken the line that no devolution is possible without foreknowledge of the outcomes of future decisions, and that position is inconsistent with devolution in principle.  The report of the Economic Affairs Committee is a different kettle of fish.   They identify seven problems with the fiscal framework, and I think they are right about six of them.  The seven problems are

  • the absence of an agreed fiscal framework
  • the lack of a fair, need-based mechanism for resource allocation – Barnett is not it
  • how the block grant should be adjusted to allow for tax receipts
  • Smith’s second ‘no detriment’ principle, which calls for footling cross-compensation to be made for every decision taken – the Committee calls it “a recipe for continuing conflict”
  • the lack of an explicit mechanism to pay for joint activities such as international aid
  • the unrestrained borrowing powers, and
  • the lack of transparency and scrutiny.

The only thing in this list I disagree with is the point on borrowing powers – there is no good reason why any public authority should not be able to issue bonds, if people want to buy them.

The criticisms of the settlement are not an argument to delay the Scotland Bill, but, nearly a year after Smith reported,  they are good reason to get the UK government to stop digging their heels in and think harder and more clearly about the mechanisms that are needed to deliver a devolved settlement.

Subsidiarity in Scotland?

The idea of subsidiarity, which I referred to yesterday, is worth spending a little more time on.  In Catholic social teaching, the principle means that “it is likewise unjust and a gravely harmful disturbance of right order to turn over to a greater society of higher rank functions and services which can be performed by lesser bodies on a lower plane”.  In the European Union, that has been translated to mean that “decisions are taken as close as possible to the citizen”.

The principle is decentralist, especially as it’s applied in German federal law, and that seems to support the moves to devolution.  There’s no reason, however, why subsidiarity should stop at Holyrood.  Two weeks ago, The Economist‘s political correspondent ‘Bagehot’ wrote a blistering attack on the centralising tendencies of the Scottish National Party:

“Even as the SNP preaches freedom, devolution and pluralism in Britain, within Scotland it hoards power, stamping on regional differences, tightening the state’s control and marginalising critics. … Where councils once held sway, SNP ministers oversee hospitals, police departments, regional development agencies, fire services and even local tax levels.”

He might have added that social work and social care are also about to be absorbed into central government.

The proposal to incorporate the principle of subsidiarity comes from Labour MP Graham Allen.  It may not get very far, because the Scotland Office has given no comfort at all to opposition amendments, but it looks like a firework in the bran tub.

Amendments to the Scotland Bill

Although the Scotland Office has announced a series of amendments to the Scotland Bill, the details haven’t yet been released.  The cumulative process of making amendments has, however, already included some important concessions.  The initial proposals of the Smith report were watered down in the White Paper, and marginally relaxed in the draft Scotland Bill, which included one of the significant innovations: the power to top up existing benefits.   The amendments tabled by 22nd October,  tabled by opposition MPs, included three potentially very important  changes:

  • an extension of the power of local authorities, which will be able to do anything an individual can – that must include powers to borrow, to invest and to give;
  • the imposition of a principle of subsidiarity, which will limit the powers of the Scottish parliament relative to local authorities; and
  • the ability to define new benefits.

In the latest round, dated 2nd November, it seems that there has been an amendment to the restrictive rules for carers and some allowance for greater flexibility in Universal Credit.   It’s not everything Smith promised – the restrictions on disability benefits and employability support remain – but it’s closer than it was.  The power to introduce new benefits could, in principle, include benefits for early retirement, for defined disabilities such as blindness, for support in further and higher education or even for social inclusion.

Dealing with the interactions between benefits

The discussion today in the Devolution (Further Powers) Committee tackled some thorny issues, including some I don’t begin to have the answer to – such as what kind of financial relationship could support an effective devolution of powers and what arrangements will be needed for inter-governmental coordination.  It did occur to me, however, that there is a more general problem lurking behind the difficult questions.  In principle, there shouldn’t be a problem in delivering benefits separately from two agencies at once.  It happens in loads of contexts.  For example, occupational pensions typically come from a range of different funds, all working to different rules; it works, more or less, as long as they’re able to do that without tripping over each other’s feet.  So why can’t the same be done between governments?

There are two main practical reasons why benefits interact with each other.  The first is the use of means testing.  If one benefit goes up when another goes down, there’s a potential transfer of burdens between different agencies.  That’s the objection that the White Paper makes to alterations in the tax rates, which will affect the level of Universal Credit payable.    So we need to have a basic agreement that benefits from one source will be disregarded by someone calculating benefits in another.  That’s not quite enough if both agencies are trying to run means-testing – if someone’s income goes up, they might be able to lose money both from Universal Credit (65% deduction) and from Council Tax Reduction (20%) at the same time.  That can be resolved by negotiating the terms of the calculation for each benefit. A simpler solution is for one of the two agencies to foreswear means-tests altogether.

The second problem is passporting:  we use certain kinds of status (disability, caring, full-time education) to qualify for others.  That makes life easier for claimants, because there only has to be one assessment of eligibility instead of two. (We don’t use the mechanism as we could in the interaction between DLA/PIP and ESA – but I don’t think that making systems work for claiamants has been very high on the policy agenda.)   There is not much choice here but to agree common criteria for different benefits.

Once we’ve addressed these basic issues, it should be possible to define different benefits, paid from different sources – even if they overlap (as pensions do).  Sensitivity and responsiveness to personal circumstances become the product of different combinations of benefits, rather than attempts to vary the terms of each benefit.  And once we accept that principle, other advantages start to appear.  If there are several little benefits, rather than one big benefit, mistakes and interruptions in delivery become less serious for claimants.  Eligibility criteria can be managed for each component benefit without creating artificial boundaries.  IT and administration can be simpler for each benefit.    These, of course, are some of the reasons why big, catch-all benefits – like Universal Credit – are a bad idea.