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NPF Report reviews – Work, Pensions and Equality

Serious discussions of Social Security policy start from a few fundamental questions. One is the balance between contributions and means-testing as a basis for entitlement, another the balance between vertical redistribution, from richer to poorer, and horizontal redistribution, between different stages in the life cycle. A third is the relationship between the social security welfare state, operated through cash payments, and the parallel welfare state based on tax allowances.

Readers will search this National Policy Forum (NPF) report in vain for references to any of these. Contributions are not mentioned. Universal credit seems to be accepted in principle, suggesting general endorsement of means-testing, but this is an inference. The idea that tax allowances have a similar function to benefits seems unknown to the authors. An earlier consultation document pointed out that the dichotomy between ‘strivers’ and ‘skivers’ was false, implying a recognition that ‘workers’ and ‘claimants’ are not fixed groups. Most people are members of both groups at different points in their lives, and many at the same time. The final report could have built on this insight, but in fact drops it completely.

If the report is weak on fundamental principles it is weaker still on practical proposals. Virtually all the concrete suggestions for legislation are lifted from the Labour Party manifesto; a strange inversion of the normal relationship between a policy document and a manifesto. The manifesto deals directly with some major abuses like the sanctions system, the bedroom tax and the abolition of the WRA component of ESA but it might have done a lot more if it had had some serious preliminary policy work to draw on.

Where the report touches on the worst aspects of the present system its usual reaction is to promise to “closely scrutinise” or “pay close attention to” them. One favourite was the freeze on levels of working-age benefits, where “Commission members will continue to address the impact the four-year freeze is having on families”. The word ‘adverse’ suggests itself, though NPF members might find this too radical.

The failings of theory and practice are of course linked. The effect is a persistent focus on symptoms rather than causes. The treatment (or non-treatment) of children is a good example.

Astonishingly, there is no mention of Child Benefit at all. This has been frozen almost continuously since 2010 while personal tax allowances have risen hugely in both cash and real terms. The effect has been a substantial transfer from households with children to childless ones or, more simply, from children to adults. If the NPF had noticed this they might have asked if it was a good thing and, if not, what could be done about it. The obvious answer would be to freeze tax allowances for a few years while increasing child benefit in real terms.

The report (and the manifesto) emphasise the point that social security cuts have affected women disproportionately. This is true enough, but it masks the more fundamental fact that the real target has been children. For the Government women are only collateral damage.

The benefit cap, for example, is essentially a mechanism for forcing children into poverty. The number of childless households affected by it is minuscule. There is little point in expressing concern about increasing child poverty (which the report does) without proposing the abolition of the benefit cap (which it declines to do).

A still more striking example is the law refusing credits to third or subsequent children, a bizarre revival of 1930s eugenicist plans to stop poor people, or people who might become poor, from breeding. The report cannot quite bring itself to condemn this or propose its repeal (though the manifesto very nearly does). It does however condemn the ‘rape clause’ which allows rape victims to escape the effects of the law. This completely misses the point. What is truly abhorrent is not the rape clause itself but the existence of a system within which a rape clause makes perfect sense.

The failure to challenge Government thinking in any fundamental way is pervasive, and also affects the manifesto. Problems with the Employment and Support Allowance (ESA) and the Personal Independence Payment (PIP) assessments are correctly identified and it is proposed to replace them with something more ‘personalised and holistic’. Is this really the right approach? For the first half century of the post-war welfare state it was accepted that the Social Security Department’s responsibility was to assess benefit entitlement accurately and pay promptly. If people wanted further help they could ask for it elsewhere. It is unclear why or how it became accepted that the people who pay benefits should also be responsible for micromanaging poor people’s lives. It is legitimate to point out that the Department for Work and Pensions does this job extremely badly, but this should not distract us from asking why it does it at all.

Why not be even more radical? It is now clear (for reasons touched on in the report) that the ESA system is vastly inferior, both conceptually and administratively, to the Incapacity Benefit system which it replaced, and the same is true of PIP and Disability Living Allowance. Universal Credit, of course, is, in the face of formidable competition, probably the worst idea about Social Security that anyone has ever had. Why not just scrap the lot? The Social Security system before 2007 was far from perfect but it was sort of good enough, and it was certainly a better basis for planning improvements than what we have now.

One rather large gap in the report is the whole topic of unemployment. The earlier consultation document touches on it but perhaps reductions in unemployment are seen as a Conservative success story and best left alone. This is a superficial view. Forcing people into inappropriate work or more or less bogus self-employment is integral to a system which, as the manifesto puts it, “demonises people not in work” and inflicts punishments including homelessness and hardship for their children. It should be said very clearly, following principles accepted since Beveridge, that it is better both for individuals and for the economy to give unemployed people the time and facilities to find the right job rather than shoehorn them into the first employment or quasi-employment that can be found. If this increases durations of unemployment, so be it. Unemployment levels are of course important but it is worth remembering the wise saying that ‘Every measure is useful until it becomes a target’.

Getting people into work with the central aim of getting them off benefits, as the phrase ‘work is the best form of welfare’ might suggest, does not sit well with complaints about low productivity.  It is surely self-evident that any society which regards work as a form of welfare is bound to have low productivity.

The manifesto does touch on the idea that being in work is not necessarily the ideal situation for everyone and hints at some very interesting ideas about varying retirement ages to provide, in effect, early retirement for some people. The report mentions this but the authors do not really seem to have understood the implications.

What can we say about this report in conclusion? There are many policy areas, including Social Security, where the Labour Party since 2010 had seemed to be stuck in a sort of Stockholm Syndrome. Its spokespeople had not only accepted many of the Conservatives’ policies but also, it appeared, internalised their world view. Against this background the 2017 manifesto inspired not so much enthusiasm as a huge sense of relief, as the first serious attempt to break free.

The manifesto proposals on Social Security were of course sketchy, provisional and incomplete. Some longer-term body like the National Policy Forum was needed to carry them forward. Unfortunately, this is not what seems to be happening. This report rarely goes beyond manifesto proposals and frequently seems to be trying to row back from them. Perhaps we need to go back and start again.

9 Comments

  1. C MacMackin says:

    Thanks for the article. Like others, this NPF report was weak, vague, and not very useful. It must be said, that even the manifesto didn’t go nearly far enough in reversing Tory benefit cuts. That was one of its big weaknesses. Unfortunately, doing so would like have required tax increases which would begin to affect the middle class, which Labour was shying away form.

    It is mentioned that “It is unclear why or how it became accepted that the people who pay benefits should also be responsible for micromanaging poor people’s lives”. I agree with the author that this is a bad thing. However, I question if this is a recent phenomenon. I don’t know much about the British case, but certainly in the US welfare was always paternalistic and policed people. For example, social workers would check the bathrooms of single mothers for extra toothbrushes, which would suggest they were seeing a man. In that case, some of their benefits would be taken away. This sort of micromagement alienated people from the welfare state which supposedly helped them and was part of the reason why there was so little public support lent to it when it came under threat by Reagan.

    It strikes me that, in addition to the three theoretical question asked in the first paragraph, there is the question of universality vs. means testing. Universal programs tend to get broader public support and can be implemented more efficiently. Claimants can’t be cheated out of them by, e.g., an assessor working for Atos. They have the advantage of asserting that they are a right of citizenship, not just a handout for those who can’t make due on their own. However, they are less redistributive than means-tested benefits. Taken to their logical conclusion, universality would suggest an UBI, which I think has numerous practical problems. I think both universal and means-tested programs have a part to play, but we need to consider what is the appropriate balance.

    1. JohnP says:

      Good point on the thorny issue of Means Tested versus universal benefits, C.Mack. In reality all the claims about the escape from means testing that UBI represents actually disintegrates the moment a “Left” version of UBI/Citizens Income is looked at in detail (eg, The Green proposals) . No such problem with the libertarian Right’s version of course – as UBI is just a one off , one size fits all, survival ration for every citizen – to use “wisely” to purchase healthcare, etc, in the marketplace.

      The viciously paternalistic/authoritarian way welfare benefits have been policed in the past, and you cite some examples, and the “19th century poor Law Commissioner” mentality behind current Tory operation of the Welfare system , has of course discredited a means-tested system – particularly with people with disabilities. Hence the current retreat of sections of the Left into calling for UBI. But of course a UBI survival ration can be cut by the whim of every government – and those with the greatest need will either simply go without special assistance under a strict “one payment for all ” UBI system, OR we are back to means testing and needs assessment anyway, for payments above the UBI minimum (as the Greens now admit).

      UBI is a neoliberal bleed-over from the libertarian Right, that offers no advantage to the Left . We need to campaign for a generous and HUMANE universal Welfare system, combining universal (eg, the NHS) and needs based/means assessed methodologies, operated under a Left government. Without a Left government with a determination to assist the most in need , and this can only involve needs assessment and means-testing, every form of welfare system will always be operated to oppress and punish the most needy, and frighten those in work with the dire consequences of being out of work , or being sacked for standing up to the employer.

      1. David Pavett says:

        I agree that welfare needs to use a combination of universal and means tested benefits. Finding the right mix isn’t easy and cannot be decided by slogans or formulaic responses. If all benefits are universal then we have a form of UBI which I agree is untenable. If all benefits are means tested then a large part if the population no longer feels part of the system which is seen as just fir the poor.

        As Chris points out universal benefits are less redistributive than selective ones. This means, in my view, that welfare is not always and only a matter of redistribution. It also has a function of maintaining social cohesion.

      2. James Martin says:

        I think though that we need to defend the concept of universal benefits and roll back means-testing. Child Benefit is one example, and state pensions another (although, again ironically, it was the 2010 Tory government whose raising of the basic state pension took millions of pensioners out of the means-tested Pension Credit). The admin on universal benefits tends to be very much cheaper than the costs of implementing means-testing, and in addition if you want to get back something like Child Benefit paid to very rich families who don’t need it just have a fair taxation system to do so – means-testing then becomes completely unnecessary.

        1. C MacMackin says:

          For benefits which address specific needs (e.g. child benefits, parts of the state pension system) I agree. My point was that, while we should defend the principle of universality (especially when it comes to public services) we shouldn’t necessarily assume it is suitable in all circumstances. I used to be a supporter of UBI because of the principle of universality, but when looking the details I’ve concluded that it is simply not practical to structure the whole welfare state in a single, universal, program.

  2. Peter Rowlands says:

    A very good review. It is worth pointing out, however, that if pensions are excluded almost half of means tested benefits are paid as tax credits or housing benefit, most of which is effectively a subsidy to exploitative employers or landlords. The provision of decently paid work and modest rents would enormously reduce these payments to the benefit of all concerned, including taxpayers, except for the previous recipients of an unjustified subsidy.

  3. Bazza says:

    Yes bring back taxes on private landlords with multiple properties (ended by the Tory/Lib Dem Coalition) and bring in rent controls.
    UBI is a right wing con and we just need decent benefits for all and we all may need them one day!
    One of the best things I learnt as the first in my working class family to go to university (as a mature student) was that there are TWO welfare states.
    There is ours – the working class welfare state – which is often associated with being meagre, shame, stigma and is vilified in the right wing media.
    Then there is the upper class welfare state where the rich and powerful are often subsidised to the hilt with tax relief, tax loopholes, illicit offshore banking etc. etc. and I read in The Guardian recently that there are over 1,000 different tax reliefs for the rich and better off and this upper class welfare state is often associated with luxury.
    Interestingly benefit fraud (which is wrong) is estimated at £1b annually and there are I think 3,000 Revenue staff chasing this whilst tax avoidance per annum is estimated by some to be £70b with 50 staff chasing this!
    Concerning corporate welfare, Adritya Chakrabatty in the Guardian (7/7/15) also argues Big Business (the upper class welfare state) gets £93b in tax subsidies and tax breaks a year which is the equivalent to each household giving them £3,500 each!
    So tax the wealthy and corporations, close tax loopholes (and employ more staff to chase tax avoidance) and close tax havens (New Internationalist argues the rich have stashed over 50 trillion dollars globally in these – to avoid giving to society) and we can have a decent benefits system which treats working people with respect.
    Someone once said there are givers and takers in society and it is perhaps working people (and unpaid domestic labourers and carers) who are the givers and perhaps the rich and powerful are the takers?
    And of course as consumers we also buy their commodities but the reality is it is working people globally whose labour really creates the wealth and makes societies work.
    We need to start getting over our narrative.
    Solidarity!

  4. Bazza says:

    Footnote re tax credits take supermarkets for example they get an estimated £8-10b a year from these to subsidise low pay whilst they run away with the profits (and we are all subsidising this through out taxes as well as buying their goods).
    If Amazon gets its way (as it enters the supermarket field with self scan and your account is debited) it is estimated a million supermarket jobs could go in the UK.
    We need a society which serves diverse working people and not one where we seem to serve big business.
    We certainly need to transform society as an example to other countries.
    Solidarity!

    1. James Martin says:

      Yes, the biggest scandal of Tax Credits (introduced by Gordon Brown of course) was in the (entirely predictable) way that they acted as a huge subsidy paid by the state for low wage employers who became the main benefit recipients rather than poor families themselves. Ironically this was pointed out by George Osborne and was part of his selling point for a significant raise in the minimum wage as that would then act as a reverse process to this employer subsidy.

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