More evidence (if you needed it) that Universal Credit is failing

It’s not been a good month for Universal Credit.  Hard on the heels of the release of the Full Business Case, there has been a critical report from the National Audit Office and a troubling review of the operation of Universal Credit based on the experience of claimants.  Neither of them shows the system in a good light.  The NAO report casts doubt on the efficiency of service delivery and questions whether any of the claimed advantages of the reform can be realised.  They write:

We cannot be certain that Universal Credit will ever be cheaper to administer than the benefits it replaces.

There is no clear reason to suppose that the system will save money or that fraud and error will be reduced, and the impact on employment  is unknown and unknowable.  The review of the system’s operation finds that the system is complex, difficult to access and the support is inadequate.   Only half the claimants managed to claim without help, and the NAO found that rather less than half managed to get through the verification procedures online.  A quarter of claimants couldn’t submit a claim online at all. There were particular problems for older claimants and people with health conditions.  Then, after claiming. getting on for half the claimants were falling behind on bills or experiencing major difficulties.

One of the points that the NAO picks up on is timeliness in payment.  This little gem offers  the DWP’s reasons for late payments:

2.20  … The Department has told us that the performance had
declined because payment timeliness is sensitive to staff availability. It believes the lower performance can be attributed to:
• poor weather leading to office closures;
• February being a shorter month and therefore incorporating fewer working days to administer payments; and
• the Easter bank holidays.

Who could have guessed that there would be bad weather during the winter, that February would be shorter than other months, or that there would be a bank holiday at Easter?

Depressingly, the NAO  thinks we’re committed – this has gone on too long to be unwound again.  But there were still only 815,000 claimants in March, 325000 of them on ‘live service’ using legacy systems; that means that there are half a million people on full service, when the system is supposed to deal with 8.5 million.  It still makes sense to pause the rollout and fix what can be fixed.

Additional note, 15th June:  This is not so much an additional note as a reminder.  We’re being told, yet again, that Universal Credit was a great idea and everyone liked it.  I first objected to the ideas behind Universal Credit in October 2010, starting on the day that Iain Duncan Smith announced the scheme.  I argued then that the proposal was simplistic and impractical.  “There is no reason to believe that this scheme will increase incentives to work. There is no reason to suppose it will reduce fraud or error – quite the contrary. And there is no real basis for supposing it will make any difference in getting people to work instead. The government’s hopes for the new scheme look like wishful thinking.”  More than eight years later, there’s not a word of that I need to change.

 I might add, though, an objection to the fatuous argument that UC is a success because more people receiving Universal Credit are getting into work while on the benefit.  The Resolution Foundation comments on the basis that 110,000 more people are in work; the DWP says that 200,000 will be.  The NAO has already commented that we can’t know whether this has anything to do with benefits at all, but let’s assume for a moment that it’s true.  This is a scheme intended to cover eight and a half million people (the figure is on page 4 of the  NAO report).  If 200,000 more people work, that covers less than one person in 42.  If it’s 110,000, it’s one person in 77.  For every person who gets more work than before, there are something between 40 and 75 who don’t. Universal Credit is  a scheme that introduces confusion and hardship for  roughly  half of all claimants.  Does it really make sense to make twenty or thirty people suffer to get one of them into a job?  If governments seriously wanted to get people into work, it would be cheaper, fairer and easier to make jobs instead.

 

The Polish Constitution may not protect the universities

My work in Poland is coming to an end.  As I write, the University where I’ve been is engaged in a dispute with the Polish government about new legislation which will change the way that universities are organised.  The constitution guarantees the autonomy of universities, and so does the disputed bill; but the three references to autonomy in principle are somewhat outweighed by more than 200 substantive references powers being given to the Minister.  They range from relatively minor powers (for example, that the Minister can direct a university to appoint someone to teach sports) to rather more important ones.  “Law 2.0” is framed in the belief that it is up to government and the parliament to determine how universities are run.   The constitution and operation of universities is subject to the government, including how the university should be organised and run, whether the university can undertake research (the classification of universities as vocational is explicitly subject to the administrative power of the minister in article 15) and who they can appoint to be their professors.  As I read it – I have to rely on my computer for detailed  translations – the Minister determines what is a university and what is not (art 35), and art 40 suggests he can refuse if a university is ‘grossly in violation of the law’. The Minister apparently has the power to order a university to close (art 36), as well as the power to dispose of any remaining assets (art 37).  There are clauses governing what subjects can be taught and even what the curriculum should be.

The context in which this is taking place is one where the government has been determinedly taking power to itself.  The European Commission has expressed concern in strong terms:

the  constitutionality  of  Polish  laws  can  no  longer  be effectively guaranteed. This situation is particularly worrying for the respect of the rule of law since, as explained in the Commission’s Recommendations, a number of particularly sensitive new legislative acts have been adopted by the Polish Parliament, such as a new Civil Service Act, a law amending the law on  the Police  and  certain  other  laws, laws on the  Public Prosecution Office, a law on the Ombudsman and amending certain other laws, a law on the National Council of Media and an anti-terrorism law.

The central problem, as far as I can make it out, is not that the government is determined to undermine the rule of law; it’s that they don’t believe the Constitution really matters that much, that all it offers is a series of principles, that it’s open to the Sejm (parliament) to pass whatever laws they think fit, and that as a government they’re the people in charge.  In the case of the universities, they think that universities are public institutions and that public institutions have to be kept under public control.  There’s a very fundamental misunderstanding there.  A constitution is a ‘basic’ law, not a set of guidelines, and it underpins everything that follows.

The DWP has published the Full Business Case for Universal Credit.

I have to confess to a weakness for fantasy fiction, but there are times when the willing suspension of disbelief doesn’t come easily.   The DWP’s Full Business Case for UC, Neil Couling’s entry for the Man Booker Prize for Fiction, scores well for imagination but lacks conviction.

There’s been a fairly dedicated attempt to avoid direct comparison with the equally unbelievable business case published in 2014.  At that time, the DWP was claiming that  Universal Credit would bring benefits of  £35.9 billion, consisting of  £9.1 bn for reduced worklessness, £21.1 bn in distributional improvements, higher takeup and entitlement, £1.5 bn in reduced fraud and error, £3.7 bn in reduced admin costs,  and £0.5 bn in improved health.  Now the claim is that UC will gain £24.5 bn in people choosing to work more, £10.5 bn in distributional improvements, and £9.1 billion in reduced fraud and error.

We’re being asked to believe that a system that has greatly reduced work allowances, and gets withdrawn much more rapidly than originally envisaged, will do vastly more to get people into work than was claimed last time.  And (given that the error figures have jumped across categories) we’re also supposed to believe that savings on fraud are six times greater than they were before, at a time when all the indications are that UC is more vulnerable to fraud than the previous system was.  What is supposed to make this plausible?

 

India’s response to open defaecation

A billion people in the world defaecate in the open, largely because they have no toilet.  Half of them are in India. The graph below comes from an atlas of the Sustainable Development Goals produced by the World Bank.

SDG6.2

The government of India hoped, five years ago, that it could end open defecation by 2019.  It is well behind that target, but claims that 72.3 million toilets have been constructed, out of a target of 110 million. Reports from India number such things in lakh, a unit of 100,000; 72.3 million is 723 lakh.  The position was slightly confused last month by the Prime Minister’s claim that the state of Bihar had constructed 8.5 lakh, that is 850,000, toilets in a week – it seems that the toilets have been constructed, but not so quickly.

The Economist is sceptical about the figures more generally; some of the toilets that were supposed to be constructed appear not to exist, the claims of one state to have ended the practice have been shown to be false, and besides some people continue to defaecate in the open even though they have a toilet.   In Bangladesh, improved sanitation has been linked to education about hygiene, to great effect.   Regardless, the government deserves some credit for the priority it has given  to issues that are intended to make people’s lives better – including housing, electricity, financial inclusion and sanitation.

 

More evidence that means tests don’t work

A review of the effectiveness of proxy means tests by Brown, Ravallion and van de Walle finds that they are not an effective way of concentrating resources on the poor. The process is simply not accurate enough.

“Standard PMTs help filter out the non-poor, but exclude many poor people, thus diminishing the impact on poverty. … The prevailing methods are particularly deficient in reaching the poorest.  … The most widely-used form of PMT in practice does only slightly better on average than an untargeted universal basic income scheme, in which everyone gets the same transfer, whatever their characteristics. Even under seemingly ideal conditions, the “high-tech” solutions to the targeting problem with imperfect information do not do much better than age-old methods using state-contingent transfers or even simpler basic income schemes.”

Proxy means tests are being used because poor countries just don’t have the quality of information to make fuller assessments work.  As many critics of means testing have pointed out, richer countries don’t have the capacity to do it either.  People’s incomes fluctuate, boundary problems are intrinsic, people don’t understand what should be included and what should not be, and take-up is consistently poor.

There is however one large reservation to make about this study’s findings.  There have to be doubts as to whether any country, rich or poor, really has the capacity to produce the kind of information that detailed quantitative studies of this kind call for.  This study points to the difficulty that any test has in determining whether or not specific individuals are poor.  The standard they use to verify the connections, household consumption, is not absolute proof of poverty; it’s an indicator.  It’s probably more valid than some other indicators, but it isn’t perfect and it is just as difficult to collect as income.  I happen to agree with the paper’s conclusions about proxy means tests, because they happily coincide with my own judgment, but nothing can be supposed to be proved beyond doubt; the core information that the analysis is built on is not good enough, and it cannot be.

A consultation on the claimant count

The DWP has issued a consultation about changes to the claimant count.   Once upon a time, we used to have a count of the numbers of people who were unemployed.  That count was persistently too high, despite a long series of downward revisions.  In the 1980s the government started to use the ‘claimant count’ instead, focusing on benefit receipt and excluding many people who were looking for jobs but who weren’t claiming benefit.  The claimant count series goes back to 1971; it correlates with unemployment figures, but it is usually lower. Now, all too predictably, the claimant count has been rising.  It’s happened because the rules of JSA, ESA and Universal Credit demand that people are treated as looking for work.  The two options in the consultation are both intended to massage the figures so that things don’t look quite so bad.

There is another option, of course.  The ONS already keeps figures from the Labour Froce Survey, which counts unemployment in the terms of the international definition used by the ILO.  The series goes back to 1984, when the government dropped the old count of unemployment.  It has also stopped using the claimant count from its Labour Market Statistics, because it’s meaningless as an economic indicator.   Indicators are not particularly useful when the conditions they’re kept under change.  So why are we using the claimant count at all?

“No-one is illegal”

I came across this slogan for the first time earlier this week, in a café in Oświęcim, shortly after a visit to the extermination camp at Auschwitz.  It struck a chord, for more reasons than the obvious one. There’s something deeply disturbing about with any system that accuses people, not of offending, but of being an offence – making their very presence a matter for the criminal law.

The words and the logo are the badge of a movement, “No One is Illegal”,  described on Wikipedia as a “loosely connected international network”.  The  groups describing themselves in these terms take subtly different positions – “a world without borders” (Sweden), an end to immigration controls (UK) , or “freedom to move, freedom to return, freedom to stay” (Canada).   (These are not the same thing: the first of these is about status and citizenship, the second about movement, the third about membership.)  It is probably fair to say that the movement represents some extreme viewpoints; but sometimes, thinking about the extremes can help to clarify issues that matter for those of us who live in the murky, muddy middle.  The challenge that No One is Illegal puts before us is this:  can immigration controls be justified?

The basic arguments for free movement are these:

  • Individualism – that every individual should have a choice of where they live, and opportunities to improve their lives through their own actions
  • Freedom – people are free to move, and no-one has the right to deny them a chance of a decent life
  • Free markets – the efficient operation of labour markets depends on the movement, not just of goods and services, but of people.
  • Humanitarianism. Migrants are not fleeing war, famine and disease lightly. People have a duty to each other, including a duty to strangers.
  • Arguments about consequences.  The effect of denying people access to legitimate means of movement has been disastrous – a human rights catastrophy that has costs the lives of tens of thousands of people.   People use boats or walk because they cannot fly or drive.   They use dangerous, illegitimate routes because the safe, legitimate routes have been closed to them.

No One is Illegal starts from the premise that everyone has a right to be where they are.  If immigration controls are to be justified, there have to be some considerations to set against that presumption.   The key arguments for control are these:

  • Communitarianism.  People in different places have connections, networks, shared values and culture that have to be respected.  Migrants are not excluded, but have to be integrated; free movement is not compatible with this.
  • Citizenship.  Citizenship can be understood, for this purpose, as membership of a social and political community; membership depends on status, mutual obligations and relationships with the wider community, not just on physical presence.
  • Pragmatism.  Migrants can be admitted when they are useful for a nation, and excluded when they are not.
  • The argument about capacity.  If people are going to be absorbed into any new society, there have to be the services, facilities and infrastructure to support them.  This, like the communitarian argument, does not mean that migration is excluded; it means that it needs to be controlled.

(There are also lots of bad arguments for restricting migration, including racism, ethnocentricy, and the defence of privilege.  I am not going to look at them here, except to note that they have been made.)

All of the the arguments for free movement are good ones, and some are very strong; but I am not convinced that they trump  all the arguments for some controls.  Even if people should be able to move much more freely, some thought has to be given about integration and management – housing, education, medical care, language and so on.  The countries which are most welcoming to migrants are the countries which do just that.

That brings me back to the slogan, “No-one is illegal”.  What, if that was more generally accepted, would that mean? Taken to the extreme, it could be taken to imply a free-for-all, or or an unregulated labour market, or unrestricted laissez-faire.  However, the position does not need to be taken so far (and I doubt that the supporters of the principle, many of whom think of themselves as ‘anti-capitalist’, mean to say that). In general terms, it implies only:

  • that being present in a country is primarily a question of fact, not a legal status;
  • that countries which intend to regulate migration need to accept that migrants have rights, too; and
  • that it should not be a criminal offence simply to be present in a country.

The arguments considered here would mean that migration can still be controlled by regulating and managing permissions to reside, and taking steps to integrate migrants.  For the UK, it seems to me to follow that :

  • The UK has a responsibility to manage the integration of migrants, to ensure appropriate facilities and access to services;
  • The onus of showing that a person does or not not have permission rests with the authorities, not the individual;
  • While some permission to reside may be explicit, permission to reside is  also implicit in a range of actions that governments may take, including levying personal taxation,  licensing actions (e.g. issuing a driving licence), regularising employment (National Insurance numbers) or recording the presence of the person (births, marriages or divorce).    It follows that any of these could be considered to be proof of residence.
  • The rule which has applied since 1971 – that being present without permission is in itself a criminal offence – is wrong in principle, and should be discontinued.

I should add one further issue, which is not implicit in the slogan: the principle of natural justice, which is that no person should be deprived of his or her liberty without due process and a hearing.  That should be true for everyone that the state comes into contact with, regardless of nationality, status or permissions.

Shamefully, the Home Office is harassing British citizens

This note was posted on Twitter by David Lammy MP.  Lammy writes:

I am disgusted and appalled by the case I have just received. My constituent arrived from Jamaica in 1964 aged 6. He has shown me his letter from the Home Office telling him that he will be deported despite having a National Insurance card from 1974 & NHS documentation from 1964.

I cannot say, in all honesty, that I have never seen anything like this, but I did hope never to see it in the UK.  Over the last 18 months or so, I have been reading, in short bursts, a fairly detailed account of the life of Jews in Vichy France – it’s hard to take, and I’ve still not finished the book.  Most of my father’s family escaped from France, because my grandfather was English, but others, like his cousin and aunt, didn’t; they’d thought they were French. For those who stayed, the little restrictions added up piece by piece.  At first people couldn’t go out at certain hours, then they couldn’t work or earn.  People who conformed to the rules, reporting to the authorities as requested,  realised too late what was happening.

Governments may find it convenient to blame this policy on mistakes or insensitivity, but it’s much worse than that.  This policy breaches the most basic principles of natural justice:: it offers a sentence before a verdict, and a verdict before a hearing.  It threatens people with bodily force, and we have to presume that the threat has been carried out.  It denies UK citizens the rights of their citizenship.  As David Lammy has said, the people who came to Britain before 1971 don’t need to be granted UK citizenship – they were UK citizens before they arrived.

There’s more.  The Home Office has ignored the evidence it was offered.  It has responded aggressively to enquiries from legitimate citizens and residents (including EU nationals).  It has denied people access work, health care and employment.  It has created a situation where the only most sensible thing for a citizen to do may be to hide.   And it all results from the deliberate decisions and actions of those in power.

I’ve seen some bad administration in Britain in my time, and some shameful decisions. This may be the worst.

Experiments with Basic Income were never going to settle the arguments

Many advocates of Basic Income will be disappointed at the decision in Finland to discontinue the experiments.  The decision seems to have far more to do with a change in the political climate than with any concern about how Basic Income operates; but moral judgments about rewards or disincentives are not the sort of issue that can be resolved with a proof of concept.

The experiments were always likely to be inconclusive. There are things that tests can show – for example, whether there are issues in the mechanisms of payment – and things they can’t, such as the impact of basic income over a person’s life cycle.  If anyone imagined that two years of Basic Income would resolve arguments about work incentives, they haven’t been paying attention.  In the first place, Basic Income is designed to be neutral as to whether or not people work; in the second place, previous income experiments have generally shown incentive effects to be feeble (and the economists who are convinced there have to be such effects have had to work hard to isolate them).  There’s a more substantial problem.  We know, from the introduction of pensions after 1908, that pensions have materially changed the way that older people engage in the labour market; but we also know that the effects took seventy or eighty years fully to materialise.  What that demonstrates, in economic terms, is that not that labour supply is something that responds directly to economic stimuli, but rather that, over time that the curves are liable to shift, reflecting changing patterns of behaviour, norms, expectations and the economic context.   (Two world wars and a health service might have had something to do with it, too.)   A two year programme can’t possibly replicate or predict such effects.

I’ve not seen any evidence to  support the view that Basic Income materially changes work incentives; while there is reason to think that some people will take the opportunity to disengage from work, there will be others who will be encouraged into casual work or self-employment.   The principal concerns I have about BI are quite different – related to the distributive implications and the relationship to existing benefits.  Those issues won’t clearly be addressed by experiments, either.

How selective benefits affect people who are not being targeted

A technical study for the World Bank challenges one of the central arguments for ‘targeting’ the poorest – as well as posing a major challenge to conventional economic theory.  The report is snappily titled General equilibrium effects of targeted cash transfers: nutrition impacts on non-beneficiary children.   The first effect of cash benefits to selected poor people was substantially to improve the extent to which their children were able to get protein rich foods.  There were marked improvements in nutrition, particularly on stunting – the effect that malnutrition has over time, in limiting children’s growth.

However, the policy also had a side-effect: the relative price of that kind of food increased. That, in turn, had a further effect: it reduced the access of other children, children in families who were not getting benefits, to protein-rich foods.  The effect was clearest in poorer villages where more people were getting benefits.  “We find that weight-for-age is significantly lower and the likelihood of being underweight significantly higher in program villages that have high rates of saturation. Average height-for-age is also lower and stunting rates higher …”

There are two major implications.  The first is about targeting.  One of the key problems with selectivity has always been that a line has to be drawn somewhere: the effect is that people a little above the line are not necessarily being treated fairly relative to those who are just below it.  The way to avoid this is to make the benefits universal – which is what has been happening with basic health care and universal primary education.

The second implication is about one of the received principles of economic theory, ‘Pareto optimality’.  Most economic analyses about of suppose that welfare is increased if at least one person is made better off, and no-one is worse off.  I’ve argued in previous work (for example, my book Reclaiming individualism) that this cannot happen, because prices are relative to resources.  This  study demonstrates the effect very clearly.