This morning Radio Wales asked me to be up before six to be interviewed about the proposals in a report, Delivering Dilnot, edited by Paul Burstow MP. (My wife’s reaction to being woken at 5.45 this morning: “For Wales?”) Part of the proposal is to implement the Dilnot recommendations in England, limiting the amount that any person will have to pay for social care and increasing exemptions for capital on the means tests. (Scotland has ‘free personal care’, but the system is far from perfect. It has been shackled to a complex, selective process where needs are closely specified and nothing is delivered without prior assessment. In common with many other selective systems, that leads to confusion, complexity and inexorable increases in the budget.)
The report argues that the Dilnot proposals can largely be paid for by removing Winter Fuel Payment except for claimants of Pension Credit. The Conservatives have pledged to maintain WFP, but it has long been identified as a prime candidate for cuts. Pension Credit has many of the usual problems of means-tested benefits – complexity, low takeup (a third of those eligible don’t get it) and errors in calculation. The main justification for doing this seems to be that people don’t like better-off pensioners getting WFP. This seems to me a very weak argument – the same case could be used to reduce the state pension. If we’re not happy that a few older people have very large personal incomes, we can tax them on those incomes without complicating the pensions system for the rest of the population.
If the policy in Burstow’s report was to be implemented, it would imply a transfer of resources from most pensioners to the children of better off pensioners, who would inherit more. There’s no good reason, however, to suppose that this redistribution is what would happen – if government wants to implement Dilnot, it can afford it, and if it is trying to raise money, it is likely to cut WFP regardless. The two policies seem to me quite separate.
The release of Cabinet papers from 1982 has led to headlines about the revelation of a secret plan to dismantle the welfare state. It was hardly the best kept secret of its day. Nicholas Timmins, in his 1995 book The Five Giants, writes (pp 392-3):
“The headline options included: ending even price protection for all social security benefits and ending state funding of higher education. Market fees … could be charged for courses. … Replacing the NHS with private health insurance … This was dismantling the welfare state by anyone’s standards. … The wets for once combined, producing in the the words of Nigel Lawson, then Energy Secretary, ‘the nearest thing to a Cabinet riot in the history of the Thatcher administration.’ They forced the paper off the agenda … and for good measure someone … leaked it to the Economist.”
This was the background to Mrs Thatcher’s famous statement that the NHS was ‘safe with us’. The NHS has not been replaced with private insurance, but the other main measures in this agenda – charging for university tuition and stopping benefit upratings – have now been introduced.
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.
I’m joint author, with three others, of a new report for the Reid Foundation on The case for universalism. Here’s the link.
A new report by Ben Baumberg, Kate Bell and Declan Gaffney highlights the problem of stigma in benefits. I’m not going to say much about this report, because I’ve had some involvement with its production; I discussed the issues with Elizabeth Finn Care before the research was commissioned and I was on the advisory group. The book I wrote on stigma nearly thirty years ago is free downloadable here.
The report has also prompted a useful short piece on representations of welfare in the press on the Guardian website.
The DWP and Department for Education are consulting on “better measures” of child poverty that will include a range of considerations – deprivation, parenting skills, worklessness, debt, housing, education, parental health, and family stability.
There are three fundamental muddles here. The first is the confusion between definition and correlation. We know that some people are more likely than others to be poor, such as families headed by women or people in lower social classes, which are not on the list. Even if all the things in the consultation were associated with poverty, it would not mean that they defined poverty.
Second, an association – an increased likelihood – is not the same thing as a characteristic. Poor families are more likely to have children at risk – but that does not mean that most, or even many children are at risk because they are in poor families. Poor families where children are at risk are a very small minority.
Third, the model in the consultation is based in an unjustifiable, stereotypical identification here of poverty and family problems. Many people – on low income figures, most – have been poor at some point in their lives, and all of us are vulnerable to poverty. Family problems are something quite different.
Football bores me personally, but it’s hard to live in Scotland and not to be aware of the passion and commitment it arouses in Scottish communities. A tiny nation has been trying to accommodate a finance structure which belongs to an international entertainment industry, and has made local clubs the playthings of rich entrepreneurs. It doesn’t work. We’ve just had the announcement that a second major club faces imminent bankruptcy, and it’s the fans and supporters who have been asked to save it.
This posting, then, is flying a kite. Communal activities, which rely on communal support, don’t have to be organised communally, but they can be. Public organisations which promote “participation in sport”, recreation and culture are now able to register as charities in Scotland – provided they are not for profit, they offer substantial benefits to the broader community, and they are properly governed. (There’s no intrinsic bar to a professional sport. The English Charity Commission’s guidance is directed only at amateur sport, but that’s not the distinction here; other charities employ professionals, and some such as theatres put on professional shows.) The full list of criteria for charitable status is laid out at OSCR’s website. A football club could qualify. But it is going to call for a rethink of what football clubs do, and how they do it.
The European Commission has proposed the development of a new fund to give European aid to the ‘most deprived’, mainly homeless people and children in poverty. The money would be directed through Member States or ‘partner organisations’ – that is, through NGOs.
I’ve written in the past about the Commission’s attempts to establish competence by developing programmes that create a precedent (see The principle of subsidiarity and the social policy of the European Community, Journal of European Social Policy, 1991 1(1), pp 3-14; Social policy in a federal Europe, Social Policy and Administration 1996 30(4) 293-304). When the Lingua programme allowed the EU to fund language teaching in schools, the responsible commissioner claimed: “we now have competence in education”. It’s been a long time since the EU did much to pursue that agenda; but if this fund is approved, the EU will have competence in poverty relief.
I’ve commented more than once about the DWP’s use of stats, so it may be of interest to note a letter from the Chair of the UK Statistics Authority to the Secretary of State for Work and Pensions, occasioned by the previous statistics on Welfare to Work. Andrew Dilnot, UKSA Chair, writes:
we suggest that your Department’s approach to the publication of ad hoc statistical releases should be reviewed to ensure that all statistics which are likely to be regarded by Parliament as ‘official statistics’ are released in line with the Code of Practice for Official Statistics. We do appreciate that this is an area of uncertainty for both government departments and ourselves. The formal position is that Ministers decide whether statistical material should be treated as official statistics, not the Statistics Authority. However, the Authority has a statutory responsibility to advise Parliament on any concerns we have about the comprehensiveness of official statistics. I would be happy for Authority officials to work with DWP statisticians in finding a way forward that is mutually supportable.
I’ve also put a Freedom of Information request to the Department of Communities and Local Government to ask whether the decision of the Department not to publish statistics on Troubled Families before they were referred to and acted on has been reported as a breach of the Code of Practice.
Kezia Dugdale writes in today’s Scotland on Sunday about “predatory legal loan sharks”. A typical rate of interest cited by one of the lenders (I’m not going to link to it and give them a free advert) is 1734% APR, which is close to what you get to if you charge 27.5% a month at compound interest. A monthly rate of 36.5% adds up to something close to the 4200% APR that Ms Dugdale cites. Someone who starts with a debt of £50 which is rolled forward for six months will have more than £300 to pay back. (I got the sum wrong on the first posted version, because I’d changed my mind about the example to use in different versions – the perils of blogging!)
Here, then, is a modest proposal for reform: that debts which cost more than a certain rate per month, inclusive of all other fees and charges, should cease to be enforceable by the courts. Let’s say, for the sake of argument, that the maximum APR should be 12% a month, or about 290% a year. That’s still very high – more than fifteen times what a credit card loan costs from a reputable company, and more than enough to justify a risky short term loan. It’s a straightforward calculation; all the court has to look at is the original amount and the date of application, and apply a standard formula. If the company goes to court, that and nothing more is what they should get.
There is a precedent for this; for decades, until 2007, gambling debts were not enforceable in court. It didn’t stop gambling. If the lenders don’t like it, they don’t have to make the loan. But at a potential 290% APR, does anyone think that lenders would be hard done by, or that they would stop trading?