Category: Social security

This blog includes discussion of issues in British social security policy, along with new material to complement my book, How Social Security Works.

Winners and losers from Universal Credit

In any benefit reform, there are likely to be winners and losers; unless there is a substantial increase in the budget, the gains for some can only be made because others are being paid less. A fascinating report from Mike Brewer and his colleagues at the Institute of Fiscal Studies looks at the difference between short- and long-term gains and losses from Universal Credit. The difference is important, because Universal Credit has in theory been designed to maintain contact with large numbers of people over extended periods of time.

What the IFS report finds includes

  • greater lossers for people on long-term low incomes,
  • losses for people with disabilities
  • short term losses for self-employed people with low earnings, that are less likely to last as their circumstances change, and
  • some large gains and losses in the short term, which are not always reflected in the long-term outcomes.

The report is concerned with entitlement, rather than the actual amounts of benefit received – the serious problems there have been in practical delivery, and the impact of conditionality and sanctions, are going to mean that many more people are worse off than they ought to be on paper. Short term losses matter, too. For people on very low incoimes, a short-term loss means, in practice, that people have periods of severe privation, often going without food and accumulating debts.

Some reservations about Basic Income

Yesterday I was at the launch of the report from a seminar series organised by the Scottish Universities Insight Unit in conjunction with Citizen’s Basic Income Scotland.  My role has been as the resident sceptic; I prepared a series of background papers and a paper outlining the reasons for my doubts, and how they might be overcome.  The results are in the report, Exploring Basic Income in Scotland, available here.  There are my papers on Basic Income and Human Rights and Equality on pp 12-17, Care  on pp 47-52, Housing on pages 62-65.  The longer paper on Reservations about Basic Income is on pp 90-104.

The summary of those reservations goes like this:

Even if we accept all the arguments for Basic Income in principle, there are serious issues to resolve relating to cost, distribution, adequacy and practical implementation.

  • Cost. Basic Income schemes are all very expensive. The first question to ask is not whether we can afford BI, but whether we should – whether the money would not be better used in some other way.
  • Distribution. All the Basic Income schemes which have been developed to date make some poor people worse off. That mainly happens because they try to pay for BI by cutting or reducing existing benefits. Any scheme which does that it is going to benefit some people on higher incomes more than it benefits people on lower ones.
  • Adequacy. The treatment of existing benefits and of current tax allowances cannot work as intended. Basic Income cannot meet all the contingencies currently covered by social security benefits. It should not even try to do so.
  • Implementation. BI will not be without its complications. It is time to address them.

Basic Income cannot be ‘adequate’, but it does not need to be; it only needs to be basic. A modest income could be provided without damage to poor people, so long as it does not affect the status of other benefits.

 

Nothing personal: a proposal to convert the personal allowance from tax to benefits

About ten months ago, I put an argument for a convertible tax allowance on the blog – here is the link. The New Economics Foundation has just floated a very similar idea, in a report called Nothing Personal. The main difference between their proposal and mine is that they are proposing not an optional conversion, but a universal one.  That would have the advantage of ensuring coverage, but it would also have two large disadvantages.  One is that it would call for much more extensive direct administration, because it doesn’t use the existing PAYE system in the same way. The other is that the personal allowance would be reduced to zero, requiring declaration of every penny earned.

Disability Assistance: the consultation paper opts for too many of the wrong answers

The Scottish Government has launched A Consultation on Improving Disability Assistance in Scotland, with a closing date set for the end of May. The consultation paper makes the important assumption that the design of Disability Assistance should be based broadly on the existing pattern of benefits.  In particular, it proposes

  1. A distinction between benefits for children and young people, for people of working age and for older people
  2. The continued use of a functional assessment, and
  3. The maintenance of components to cover ‘daily living’ and ‘mobility’

A risk of confusion  At three points (on pages 15, 16 and 17) the document suggests that they want to reduce the “risk of confusion between benefits being delivered by both UK and Scottish Governments”.  The existing system of benefits is already deeply confusing, and as a consequence it fails in many important respects to reach the people it is meant to help. The approach laid out in the consultation paper is designed to make sure it is at least as confusing as it was before.

I would point here to three pieces of evidence.  The first is from an ad hoc study done for the DWP.  Three-quarters of the people who benefits are supposed to support do not recognise themselves as being ‘disabled’.  Most of them do not think of themselves as being disabled; others answer that they’re disabled ‘sometimes’.   The second is that people do not understand the basic premise of a benefit that is supposed to cover daily living or care.  A study of unsuccessful claims for Disability Living Allowance found that people receiving Employment and Support Allowance – the long-term sickness benefit – did not understand that DLA was there for different purposes from ESA; that they sometimes made claims with no reasonable hope of success, thinking that they may as well have a crack at it anyway; and if they were refused, they put it down to luck rather than the operation of appropriate criteria.  The third issue is that takeup of these benefits is worryingly low.  None of these figures is certain, but the best guesses are that the mobility component of DLA is claimed by something in the region of 60% of the people entitled, Attendance Allowance by 50% and the care component of DLA (now the ‘daily living’ allowance of PIP) is taken up by 40%.

Distinctions on the basis of age.  Wherever a distinction is made on the basis of age, there will be problems in managing the transition between benefits.  The suggestion that people of “working age” have different needs tends irresistibly to give the impression that the criteria have something to do with working, and one of the problems with PIP at present is the mistaken assumption that ability to work is somehow a relevant criterion in assessment – that is not what disability assistance is supposed to be about.

The most important problem, however, is that distinctions on the basis of age can lead to serious inequity, and anomalies in the operation of the benefit.  As things stand at present, people under the age of 65 get PIP, and people over the age of 65 are supposed to get Attendance Allowance.  That implies, on the face of the matter, that people under 65 can get help with mobility, and people over 65 cannot.  However, that is not what happens.  A person who becomes disabled before the cut-off date can continue to receive DLA/PIP after the date.  Fully a third of PIP and DLA claims are made by older people under this rule.  And that means that people with the same disability can get different benefits, depending on when their disability was incurred.  One of the most common causes of disability for people aged 50-70 is stroke; some people who have strokes recover, some others recover partially.  So a person who had a stroke at 63 and recovers partially may get help with mobility, while another person who has a stroke at 67 cannot, even if the functional limitation of the older person is more serious.

The use of a functional assessment. DLA was made by clumping together two rather different benefits: Attendance Allowance for adults below pension age and mobility allowance.   Mobility Allowance was based on a functional assessment – whether or not people could walk; Attendance Allowance was not.  While there have been many challenges to the mobility component, for example those related to conation, it is the care or daily living component which causes most confusion.

The points-based approach to functional assessment was initially based on work by the Office for Population Censuses and Surveys, when the scheme had a very different purpose.  There was no intention to develop a mechanism for individual disabilities to be precisely measured, and points were not the sole test: when the OPCS scheme was initially worked out, one of the critical points made about it was that disability reflected the nature of each person’s most serious impairments, not a cumulation of smaller functional limitations.  The points scheme has never worked well, and one of the reasons why entitlement to DLA and then PIP grew beyond the government’s expectations was that repeated challenges drew attention to groups of people who were simply left out – first people with learning disabilities, then mental disorders, then people with terminal illness and most recently people with fluctuating conditions.  The central problem is simply this: most disabilities do not have a strict, constant and precise relationship to functional capacity or daily activity.  People cannot clearly relate their circumstances to the tests.

There are alternatives.  I have made the case before on this blog, and it bears repetition here.  First, it is possible to identify certain conditions which should imply automatic entitlement, offering benefits on minimal or secondary evidence – either accepting on sight that the person has a qualifying disability (double amputation, severe disfigurement) or passporting benefits on the basis of provision by other agencies (congenital disability, blindness).  Second, there are conditions which will have led to prolonged long term contact with health services, and certification from a consultant is sufficient to establish that the condition is there without requiring further detailed examination of personal circumstances. Examples are terminal illness, multiple sclerosis, MND, malignant neoplasms or brittle bones. Third, there are conditions where existing services in long-term contact with the individual are far better placed to judge the impact of a condition than an independent assessor could be, and it would be appropriate to accept medical certification. Examples are continued psychosis, epilepsy, dementia and learning disability. Only after these three categories are considered is it appropriate to think in terms of further individual assessment of function, or a points scheme.

Daily living and mobility components. The other main issue to consider is whether there should be two components of a combined benefit, at least for people of working age.  The key problems have already been identified here.  People do not understand it, and ‘have a go’ instead; takeup is poor; there are serious inequities because of the treatment of the mobility component.  If there was a separate Mobility Allowance, its rules could be reconsidered to sort out which older people should get it, instead of the arbitrary current rules; and people do understand, more or less, what a Mobility Allowance is about.  Then we could have a reasoned discussion about the other component – whether it is supposed to respond to extra needs, or to provide extra income, some compensation for disability, or some other purpose.  (My own view is that we ought to revive SDA, rather than abandoning it, but I appreciate that that probably puts me in a minority of one.)

Whatever we do, we need to recognise that the current arrangements do not work, and that minor tweaks are not enough; it is time to bring them to an end.

Policies for devolved disability benefits

The Scottish Government has decided not to ask for the transfer of responsibility for Severe Disablement Allowance, which will continue to be managed by the DWP. I was asked by a journalist for a reaction, and what follows is my answer.

The decision is  understandable, because SDA was closed to new claimants many years ago, and the government does not want to create disruption for the small numbers of people who are currently entitled to Severe Disablement Allowance. Having said that, the power to deliver a benefit similar to SDA could be important for the future. SDA was always a relatively small, residual benefit designed to fill in the gaps when other benefits were not available. The distinctive feature of SDA was that it was the only benefit paid to people simply because they were severely disabled. Other benefits like Attendance Allowance, DLA and PIP have tied the conditions to people’s care needs, which usually means, for example, that people in residential care may not get them. I think it’s valuable to have a mechanism of the sort, and hope that the Scottish social security system will be able in the future to recognise needs that the current UK system doesn’t.

More generally, I’d also like to see benefits for people with disabilities to be made more accessible. The proposed reforms will make it possible for older people to continue to receive Personal Independence Payments without repeated assessments, and that’s a good thing. But the basic reason why older people are continuing to claim DLA or PIP, instead of moving on to Attendance Allowance, is that Attendance Allowance doesn’t cover mobility needs. This means, for example, that someone aged 63 can get long-term mobility support after a stroke, but someone aged 67 can’t, even if the restrictions the older person faces are more severe. It would make more more sense, and it would be fairer, to have a separate Mobility Allowance without the age restrictions that currently apply.

Universal Credit leaves more people destitute

The Social Security Charter promises a different kind of service

There are a couple of days left to comment on the draft Scottish Social Security Charter, but I’m not going to do that, for a simple reason: it’s excellent, and I have no criticism to make.  I’m going to pick out just five points:

  • the Charter promises that the agency will listen to people and to trust them.  There is long-standing evidence that threatening people with prosecution during the process of claiming is simply destructive.
  • the Charter promises that the agency will learn from its mistakes.  I commented during the passage of the Bill that while the UK system treats complaints, rectification and review as a quasi-judicial, adversarial process, “other public services attempt to learn from complaints and use them as feedback to improve their processes.”  They’re on it.
  • Payments will continue while people are appealing a decision.  In the UK system, penalties are routinely imposed without a hearing.
  • People will be told about their entitlements, including services delivered by other agencies. 
  • People will not have their time wasted.  They promise to “recognise that your time is precious and handle your application and enquiries as quickly as we can.”

This may be a challenge, but can anyone spot the difference between this and the DWP?

PIP is costing more than DLA did. Why is the OBR surprised?

Personal Independence Payment has proved to be more costly than the system it replaced.  If only we had realised, the Office for Budget Responsibility complains, we shouldn’t have accepted that PIP would deliver the savings that the DWP was predicting.

“At the time of its use in our December 2012 forecast, the results from [the DWP survey] appeared the best available guide to the assessment process. But hindsight has revealed several issues with the nature and use of the results …  including: the voluntary nature of participation; the hypothetical nature of the assessment; subsequent changes to assessment criteria; and a sample that was unlikely to be representative of new PIP claims. It is now clear that the results were biased rather than merely uncertain.”

Among the excuses, the OBR notes that the forecasts are subject to changes in the composition of the population which is making claims, legal challenges about the scope of the benefit, and changes in the way that benefits are delivered.

Oh, my: who’d have thought it?  Well, as it happens, I did.  I wrote in this blog on 15th December 2012:

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.

 

Monthly assessments for Universal Credit aren’t working

The High Court judgment on Universal Credit payments has implications beyond the immediate issues.  It condemns the DWP for simply following through an automated process for income testing rather than considering the actual circumstances of the claimants – in this case, the early payment of monthly salary.

When the idea of making assessments in ‘real time’ was first mooted, in 2010, I was critical of the idea.  In the course of the last eight years – yes, it’s that long – I’ve posted a range of comments about the effect of assessing income on the basis of the current month.   I’ve just been reading through my old posts to make a list:

  • it deals with uncertain information
  • it requires the system to process information that it doesn’t have  access to
  • it deals with information from diffuse sources
  • it’s not applicable to the circumstances of self-employed people
  • it puts claimants into default when things go wrong
  • the system can’t cope with irregularities in the calendar, like bank holidays or Februaries
  • it provides an income that is fluctuating, unstable and unpredictable.

To this, we can now add another point: mechanical calculation yields arbitrary and unreasonable results.

Surely, people in favour of means-testing might reasonably ask, there’s no real difference in principle between monthly assessment and the assessments we used to have?  That may be true.  Many of the problems we’re seeing are problems that we’ve known about for years.  They include:

  •  the problem of offering fluctuating incomes to people on very low incomes – a system, the Ombudsman commented about Tax Credits, fundamentally unsuited to the needs of low income families
  • the problems caused by tapers, which mean that people can’t tell when they’re entitled to benefits and when they aren’t
  • the problems posed by changes of circumstances, and
  • the devasting effect when changing entitlement to one benefit (such as Income Support) spills over into suspension or recalculaltion of another (such as Housing Benefit) .

Universal Credit, I’ve previously written, “brings together every major feature that has caused administrative meltdown in the course of the last forty years … It is as if the designers had painstakingly identified all of the elements of the benefit system that are known not to work and built the new benefit around them.”

 

The ‘rethink’ of Universal Credit doesn’t go very far

A couple of recent announcements suggest that planning Universal Credit has been subject to a “rethink“.  The actual changes amount to something less than that.  There is a delay in the rollout, which will affect those people currently being transferred from existing legacy benefits.  The largest group of people affected by the decision are those who are currently on Employment and Support Allowance, because that is the largest group of people of working age who receive benefits for longer periods.  Most people who were unemployed and in receipt of JSA have already been transferred, and anyone who signs off benefits and then needs to make a claim will have to claim through the Universal Credit.  Amber Rudd has said that even with the ‘pause’, the numbers of people receiving Universal Credit is expected to grow to three million in the normal course of events – more than double the existing figure.

The other major change has been the revision to the two-child policy, which limits support to the first two children.  That does not mean that two children will get fed when the third doesn’t; it means that every child in a larger family gets less support, and that is why the policy is exepcted to have such a large effect on child poverty.  The change is confined to children born before April 2017, which is why it will only benefit 15,000 families.

The treatment of Universal ‘Credit in the press has become increasingly critical, but I’m not sure that most have yet appreciated just how deep the hole is.  It doesn’t help that benefits are paid monthly, that it expects people to be online, or that strict and lengthy penalties are being applied for non-compliance, and the idea that people with no other income can have their benefits stopped for 5 weeks or more is simply outrageous.  Any of those could be stopped in short order. That would still leave us with all the other problems with the scheme.  MPs are well aware of those problems – their constituency surgeries are inundated with them.  The government is trying to offer enough tweaks to defuse the discontent.  It will take more than a few tweaks.