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.

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 peopopulation 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.

Universal Credit rolls out, despite the problems

Brexit has used up all the oxygen of political debate.  There are few proposed changes in policy for real life, but it’s important to realise that while all this has been going on politically, Universal Credit has been rolling out.  David Webster’s invaluable briefings on sanctions also tell us a lot about the process.

  • 1.3 million people are now on Universal Credit.  (The November figures make that more than 1.4m.)  With more than 100,000 new recipients each month, the numbers are increasing rapidly – even if it will still take four or five more years at that rate to reach the target figures.
  • 580,000 of the UC claimants are unemployed.  339,000 unemployed claimants are still in receipt of JSA.  That means that UC is now the main source of support for unemployed people.
  • 190,000 UC claimants are working.

That leaves 530,000 others to account for.  Most benefits for people of working age are there, not for unemployed people, but other people of working age.  As the numbers receiving UC continue to grow, that must mean that progressively higher proportions of people who are sick, or otherwise out of the labour market, will be receiving UC instead.  But the whole focus of UC, such as the requirement for people to form a claimant agreement with ‘work coaches’, is on the very small minority of people who are unemployed and unlikely to find work in their own right.  That can only mean that problems of UC get worse.

Poverty and social security

I went today to a seminar for early career researchers, most of whom are working on issues related to social security.  That is, of course, a terrible idea; I spent most of my career trying to interest people in social security issues, and look what happened to me.

Adrian Sinfield, who reflected about the changing situation in Scotland, gave one of the presentations,  He was very kind about a book I wrote more than 25 years ago, Poverty and Social Security: concepts and principles.  However, as I’ve explained to Adrian, I’ve had some reason to think again about that book, and I wonder if I didn’t make a strategic error in writing it.   If we want a social security that treats people with respect and dignity, it’s important that people should see it as a part of everyday life, not as provision for the poor, or even a safety net for exceptional  circumstances.  It’s not necessarily a good idea either to focus a discussion of social security on its effects on poverty, or conversely to identify poverty with the receipt of social security benefits.   The discourse has shifted since, and discussions of social security tend to be hijacked by discussions of employment; that is even less appropriate.

Takeup is falling among private renters

The new figures for takeup of means-tested benefits show an interesting trend.  Takeup is falling, and the initial impression given is that there has been a slow, marginal fall in in takeup overall.  However, the fall is not the same across the board.  The takeup that has most clearly fallen relates to the housing costs of private tenants.  It seems unlikely that this is driven by increasing ignorance about benefits, and that tends to suggest that something is happening in the private rented market – most likely, that landlords are restricting access for claimants.

The Work and Pensions Committee is critical of sanctions

The House of Commons Work and Pensions Committee has reported critically on the sanctions regime.  The Committee recommends that

  • sanctions should stop for people who do not have capacity for work
  • there should not be in-work sanctions on UC until the system is fully operational
  • deductions should not be more than the benefit
  • there should be clear rules about what is a good reason for non-compliance
  • there should be warnings before the first sanction, and
  • families with young children should not have more than 20% of benefit deducted.

They accept that “Sanctions must be a last resort and claimants should be able to challenge the decision before it is imposed.”  That alone would make a marked difference to current practice.

This could have gone further. The DWP has no evidence about the effects of sanctions in most cases, and the Committee asks them to get some.  That looks like a recipe for delay, because there’s no shortage of other evidence. Looking over the recommendations, the Committee clearly sees no good reason to sanction people who have no prospect or reason to go to work instead – and that is the vast majority of people who depend on ‘working age’ benefits.

Additional note, 24th November:  Michael Adler has posted a detailed summary and critique of the Committee’s report.

The Budget doesn’t do much for benefits

The main story in the Budget is about Universal Credit, but the measures taken fall rather short of what would be needed to save the benefit.  The  Work Allowances are increased for some, but not for people without children – a high proportion of current claimants, because they went on the system first – and one of the main effects of cutting the Work Allowance has been that they have little reason to remain in contact with the scheme as income fluctuates.    Most of the administrative problems are untouched, and a slightly slower rollout (still continuing, but slowing by a few months) is not going to make much difference to them.

The other part of the Great Plan, which is less noticeable, is a declaration of the intention to continue with the abolition of Housing Benefit by moving to a Housing Credit within the Pension Credit system.  This provision was set up rather a long time ago, in 2011 – I have to admit I’d forgotten about it – and it will take a long time, now planned for late 2023, to be fully implemented.  At the time the government suggested, bizarrely, that combining Housing Benefit into Pension Credit should improve takeup.  It will probably have the opposite effect.  Housing Benefit is more effectively accessed than PC; that’s probably true because social landlords steer their tenants towards an application, and they won’t be able to do the same with Pension Credit.

There’s another issue besides.  We’ve seen in Universal Credit that the effect of transferring Housing Benefit back to the DWP has been to create confusion: DWP officers don’t necessarily know about housing (for example, what a tenancy is) or what they need to do.  (We had the same problem in reverse when the DHSS initially transferred responsibility for rent to local authorities in 1982.)  Killing off Housing Benefit will also finally kill off the expertise of local departments that learned the hard way how to make the system operate despite its arcane rules.

ScotPHP: Scotland can use benefit and tax powers to improve people’s health

I missed it when it came out at the beginning of this month, but an interesting report from  the Scottish Public Health Observatory has been trying to identify the possible impact of new benefit policies in Scotland on the health of the population.  The figures are complex, but the basic principle behind them is reasonably straightforward.  Their argument is built on the case that higher income leads to fewer deaths and less health inequality.  Effectively, then, their report is an assessment of the potential distributive impact of different policies in Scotland.  Critically, however, the distributive impact they are considering is not the distribution for individuals or households, but for deprived areas.

Part of their summary is a fairly confusing graph, which seems to suggest that the best method by far would be to increase means-tested benefits by 50%.  The comparison being made, however, is with other policies with very different sizes and shapes – for example, increasing takeup by 1% (a very marginal increase, costing little) or introducing Citizens Basic Income and abolishing all other benefits (a very major change, costing a great deal).  The details about what’s covered and what’s not are sketchy, and the figures are, of course, indicative rather than certain.  The core of the message is this:

increasing means-tested benefits by 50% is modelled to have the biggest effect on reducing premature mortality (5% prevented) and narrowing inequalities in premature mortality (-8%). The results also suggest that the real Living Wage, Local Income Tax and increasing devolved benefits by 50% would be good policies for reducing premature mortality (~2% prevented for each). The two illustrative CBI schemes are also likely to be effective at narrowing health inequalities (-4% for CBI, and -6% for CBI Plus).

In the supplementary papers, Table 2a, it’s possible to find a statement of costs per outcome.  This also needs to be treated with caution, because the costs of CBI cannot be introduced in part; but the best value for money, in the sense of effect for each pound spent,  comes from CBI , improving DLA and PIP, increasing takeup and increasing basic means-tested benefits.  The powers of the Scottish Parliament don’t cover all these options, but they do include powers to improve disability benefits and to increase takeup.  There’s a case to consider, but there has to be a major reservation: at the level of individuals and households, there would be losers among those who are poorest.

The Economist still likes the idea of Universal Credit

The Economist this week describes Universal Credit as a good idea, badly done.  We can agree at least on the second part.   Here are three justifications they offer for thinking it’s a good idea.

“Streamlining benefits into one monthly payment will eventually make the system easier to deliver.” 

Combining six benefits into one doesn’t actually streamline anything.  Universal Credit ‘brings together’ a range of benefits, but unemployed people are still subject to rules on unemployment benefits, sick people are still subject to rules on sickness (and work conditionality, too!), the housing components are still subject to all the rules on housing benefit, and so on.  Lumping everything together in one mass makes for one, highly complicated benefit.  It also  adds one potentially catastrophic complication: actions which lead to the revision of entitlement in one component (such as changes in household details, or the application of conditionality) can lead, catastrophically, to an interruption or cessation of entitlement.

“It removes perverse incentives whereby somebody moving from welfare to work can lose about as much in benefits as they earn.”

There is a slight mitigation of the ‘poverty trap’, because the interaction of Housing Benefit and Tax Credits are removed for some; but since the taper is 63%, further deductions are made from salary for National Insurance and tax, and the system doesn’t include Council Tax rebates, the  marginal rate of deduction is typically 70-74%, and can be more.

“Allowing people to make a single application for all their benefits should improve take-up, and so reduce poverty.” 

Requiring people to negotiate a complex system, with limited flexibility about application details, has caused major problems in access – check, for example, this blog entry on the NAO report in July – and that can be expected to appear in takeup figures in due course.

It seems, however, that the myth that Universal Credit was sound in principle refuses to lie down and die, despite being shot, stabbed, buried, set on fire and otherwise subject to refutation.   When the scheme was first mooted in October 2010, I wrote that it was over-simplified, impractical and couldn’t achieve what the government claimed it would achieve.  If government sets up a scheme that can’t possibly work, it shouldn’t be surprising that it will make a mess when it’s  put into practice.