Tag Archive | welfare reform bill

The People’s Review of the WCA: a summary

Yesterday a report was released about the Work Capability Assessment for Employment and Support Allowance.  It contains many stories of poor assessments and inappropriate decisions that a person is fit for work.  Here I have made a summary of some of the problems that the WCA faces.  The full report is well worth reading and can be found at http://wearespartacus.org.uk/wca-peoples-review/

 

The ESA is surrounded by secrecy:

  • Atos Health Care Professionals (HCPs) have to sign the Official Secrets Act
  • The DWP has refused to release details of the contract between the DWP and Atos
  • Details of the Independent Tier that monitors Atos have not been released
  • Data on Quality Assurance checks are not available to the public
  • The report on improved Mental Health descriptors developed by Professor Harrington with Mind, Mencap and the National Autistic Society has not been released to the public
  • recordings of assessments are ‘only provided for the customer’s own personal use’ and will not be routinely used in appeals or as evidence of inaccuracy in the WCA
  • Data on the use of free text boxes during the WCA are not released to the public

 

Evidence suggests the ESA is not working well:

  • 41% of people found fit for work appeal this decision
  • Of this 41%, 38% win the appeal.  This rises to 70% if the claimant has a representative; some representatives claim a 100% appeal success rate
  • 72% of claimants found fit for work are still out of work 12-18 months later[1]
  • anecdotal reports from Jobcentre staff show multiple people are sent to look for work who are demonstrably too ill to work
  • appeals cost £60 million a year; the Atos contract is worth £100 million a year[2]
  • A large backlog of appeals means that the tribunal service has had to:[3]
    • recruit more judges and medical panel members
    • increase administrative resources
    • secure additional estate
    •  increase the number of cases listed in each session
    • run double shifts in its largest processing centre
    • run Saturday sittings in some of the busiest venues
    • set up a customer contact centre to deal with telephone inquiries

 

Atos HCPs are not well trained:

  • reports on training vary, but appear to be measured in days or a small number of weeks[4]
  • HCPs are not required to have a Diploma in Disability Assessment Medicine[5]
  • any training received by Atos HCPs is not recognised by the European Qualifications Regulations 2007[6]
  • The Royal College of Nurses has refused to accredit the training of Atos Nurse assessors[7]

 

WCAs are not well checked for accuracy and quality:

  • Checks are internal and are not open to the public
  • The checks are run by a company chosen and paid for by Atos
  • Professor Harrington recommended unannounced visits to assessment centres, but this has not occurred
  • the National Audit Office said that, “The current target of no more than 5 per cent of reports being graded as ‘unsatisfactory’ is not sufficiently challenging and allows the contractor to deliver a significant number of assessments before financial penalties become due.”[8]

 

WCAs have been criticised by multiple bodies and experts:

  • GPs called for an end to the WCA with immediate effect
  • The British Medical Association called for an end to the WCA with immediate effect[9]
  • The RCN has refused to accredit Atos nurses[10]
  • The Liberal Democrat Party voted unanimously for a Motion calling for the WCA to be changed
  • The High Court has granted a Judicial Review against the Secretary of State for Work and Pensions, on the basis that medical evidence for claimants with mental health issues should be obtained early in the assessment process
  • the National Audit Office criticised the DWP for not seeking financial redress for delays
  • The NAO noted “uncertainty of roles and responsibilities, poor record-keeping and irregular sitting of the Executive Management Board.”

 

Recording of WCAs is variable:

  • no information about the right to have WCA recorded, or how to request this, is provided on either the DWP or the Atos website
  • the Jobcentre said that, “There is no real need for customers to request and use the recording of their assessment.  The recording is only provided for the customer’s own personal use and must not be put into the public domain… If the customer is insistent on the recording being taken into account as evidence, these will be handled on an individual basis and the customer will need to provide consent for Atos Healthcare to share this information with Jobcentre Plus.”

 

Professor Harrington’s recommendations have not all been implemented:

  • work with Mind, Mencap and the National Autistic Society to develop better mental health descriptors has not been used by the DWP
  • Professor Harrington recommended unannounced visits to assessment centres, but this has not occurred[11]
  • there is no requirement for a claimant’s doctors to submit medical evidence
  • there is strong opposition to incorporating a real world test into the ESA assessment process
  • Atos is not required to provide data on the use of free text boxes during the WCA[12]

 

There is risk of breaching human rights:

  • a judge ruled that not requesting data from a claimant’s doctors may breach the Equality Act requirement for reasonable adjustment for claimants with mental health problems
  • the Welfare Reform Bill was not accompanied by a human rights memorandum, and there has not been any detailed analysis of the compatibility of the Bill with human rights obligations
  • conditionality and sanctions could lead to destitution, which would be inhumane or degrading treatment This is particularly problematic where disabled people are judged capable of work when in practice they cannot work; they may therefore struggle to comply with the requirements put on them.
  • The decision to time-limit contribution based ESA to 12 months has not been taken on the basis of any evidence that twelve months is a reasonable time frame in which to expect chronically ill or disabled people to have recovered and/or found work

 

Customer satisfaction with WCAs is low.  Problems include:

  • poor format of the assessment process:
    • irrelevant questions
    • lateral questions
    • lack of consideration from the claimant’s doctors
    • tick-box approach
    • increase in severity and prevalence of mental health problems as a result of the assessment[13]
    • doctors have noted that suicidal tendencies and self-harm are occurring in patients where the WCA is cited as a contributing factor
    • nearly 1000 complaints have been made against Atos so far this year
    • Citizen’s Advice Scotland has received 24 000 complaints about Atos and the WCA[14]
    • investigations have been started into 35 Atos HCPs

 

 


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Lord Freud and Universal Credit – again

 

Lord Freud has written another piece about Universal Credit.  So I’ve written another response, and here it is.

 

Yes, Universal Credit should be simpler to work out withdrawal rates because there is just one withdrawal rate.  But then there are different disregard levels, so an individual may still struggle or need a computer to help them work it out – much like the benefits calculator that currently exists to allow a person to work out the effects of different situations.

Someone will still have to calculate the different components and how much a person or household is entitled to for each component, but that may be the DWP’s job.  And because tax-credits are removed, there is no need to apply to the HMRC.  So from the claimant’s view, applying is also simpler.

Online processing is supposed to give a more streamlined process.  I don’t know if this will be the case or not.  Certainly when I applied over the phone the form that was filled in for me was full of mistakes.  Filling in online meant no mistakes (or fewer mistakes) were made, because I had all the information I needed in front of me.  However I still needed support, partly because health-related benefits can be distressing to apply for.  For people competent with computers, I suspect using an online form is easier.  But for those who are not competent with computers; those who have other difficulties such as learning difficulties, dyslexia or illiteracy; those without computers or without internet; those with chaotic lifestyles or are living in hostels; for these and for others the emphasis on online submission will be detrimental.

I would have assumed that those who find online forms easier, such as because it avoids a trip to the Jobcentre, already submit online.  And those who find this too difficult will already go to the Jobcentre or use a telephone.  So why the need to change?  Should this not be about the customer’s best interest?

Furthermore, an application for Jobseeker’s necessitates repeated trips to the Jobcentre anyway.  So what’s wrong with one at the beginning of the application process?  If you have alternative plans for those who cannot manage online applications, why have them in the first place?

Comments about whether or not work is worthwhile, or more worthwhile, under Universal Credit deserve fuller attention so I shan’t address them here.

The line about ‘most people at work are paid monthly’ gets a little tiring.  The argument against is not about what most people get.  It is about what people at the bottom of the income ladder get; it is about what it is reasonable to expect of people who often already face numerous challenges that may include poor arithmetic skills; and it is about what is best for the people concerned.

If you have alternative plans for those who cannot manage on monthly pay-packets, why have them in the first place?

I’m confused by the ‘new’ conditions on working part-time and claiming benefit.  As far as I was aware, a person could only work up to 16 hours whilst retaining benefit; this was to encourage people to seek some work whilst continuing to have the requirement of looking for full-time work.  Anyone who had caring duties could claim Income Support to top-up part-time work.  I don’t know what ‘new’ conditions have been brought in, unless part-time work is to be discouraged.  Which would be unfortunate given the difficulty of finding full-time work in the current climate, and would keep people away from the labour market for longer.

Lord Freud seems to have hinted at a partial benefit for those who are ill.  Other countries have partial benefit schemes whereby those who are deemed too ill for full-time work but capable of part-time work are given partial benefits.  Some countries also top this up with an unemployment benefit if the person concerned cannot find part-time work.  But as far as I am aware, there has been no suggestion of this by the government.  I am therefore unsure what Lord Freud means when he says, “If someone can’t work full-time because of an illness or caring responsibilities or simply because a full-time job isn’t available, then we will not place additional expectations on them.”  People who cannot work full-time because of an illness do have expectations placed on them – it is called the Work-Related Activity Group.

I also imagine it could be very difficult to determine who is not working full-time “because a full-time job isn’t available,” as opposed to lack of trying.  This would also be a new policy I have not heard of before.

I can’t say whether “speculation” that the IT system will fail is true or not.  I can point out that such large schemes generally do have problems.  But concern about failure, when the concern is based on many past failures and difficulties, is not defeatist.  It is a pragmatic request that things are done properly the first time, taking the time necessary to do so.  It isn’t that “people believe we shouldn’t changes the system because it is hard.”  Rather, it is that given we are changing the system, we should do it properly.

Lord Freud correctly says that, assuming full take up under both the current system and the new one, Universal Credit will involve an extra £2 billion in spending.  Which leaves the unsettling question that if UC brings higher payments and pensioners are not being touched at all, where are the savings coming from?  In large part, the savings are coming from the fact that rises in benefits will no longer be inline with the Retail Price Index, and will instead rise with the Consumer Price Index.  This means that benefits will rise at a lower level, thus giving the savings.  This also counteracts the government’s anti-poverty measures.

This is Lord Freud’s article in the Guardian:

http://www.guardian.co.uk/commentisfree/2012/nov/01/universal-credit-debunking-myths

(Why We’re Not) Benefit Scroungers: Extract 2

The one thing I am absolutely unreservedly and implacably opposed to in all of this is a real world test.” – Chris Grayling, Minister of State, Department for Work and Pensions, 2011.

But the current, not-real-world test isn’t working.

It is not uncommon for a claimant to be signed off work by a GP, and yet be refused benefits.[1]  Nor is it unknown for an employer to consider an employee to be too ill to return to work, yet the employee is refused ESA.[2]  The DWP argue that this is because the ESA assessment considers the ability to carry out any job, not just the one the claimant was in before becoming ill.  However this still conflicts with the GP’s judgement, and the questions asked are so poor that it is often unclear what job the DWP has in mind when assessing a person as fit for work. …

When a system works well, appeals against decisions occur in marginal cases.  In terms of the WCA, the only people appealing should be those who received just under the required points.  After all, most people know whether or not they can walk 200m, dress themselves, prepare a meal, remember to take all their medicine etc.  They won’t appeal if they can appreciate that the decision was fair (n.b. fraud in DLA costs a mere 0.5% of DLA payments, less than the cost of official error.  Fraud in Incapacity Benefit is even lower at 0.3%.  ESA will not be assessed until 2013).  Yet up to February 2010, 60% of appeals overturned in favour of the claimant were for cases that had originally been awarded zero points.  A further 23% had been awarded between 3 and 6 points (there are no 1 or 2 point descriptors), leaving just 17% who had been awarded between 7 and 14 points.[3]  This is unacceptable.  A high percentage of claimants are failing to even come close to having a proper assessment of their health made. …

There is high variability between decision makers [who are non-medical staff at the Department of Work and Pensions].   Professor Harrington, the head of the independent reviews into the ESA assessment, said that “consistency and quality of decision making appear to be key issues.”  This is particularly the case now that Harrington’s previous recommendations have led to an increased importance of the decision maker’s role, relative to the ATOS assessment. …

Professor Paul Gregg, before the WCA was rolled out nationally, reported that, “the test so far has caused a huge amount of anguish to the people who have gone through it. We need to have something that is working accurately before we apply it nationally. We shouldn’t roll this out until we have something that is working.”[4]  Gregg was involved in the design of the new system (ESA and WCA)and  has been described as “one of the most rigorous and high-impact social policy academics in the UK.”[5]


[1] Dryburgh, Unfit for Purpose, 2010, Citizen’s Advice Scotland. http://www.cas.org.uk/publications/unfit-purpose

[2] Dryburgh and Lancashire,The Work Capability Assessment, 2010, Citizen’s Advice Scotland http://www.cas.org.uk/publications/work-capability-assessment

[3] HC Deb, 28 June 2011, c662W

[4] New disability test “is a complete mess,” says expert. 22nd Feb 2011, The Guardian. http://www.guardian.co.uk/politics/2011/feb/22/new-disability-test-is-a-complete-mess

[5]Baumberg, September 27th 2012, Paul Gregg: new ideas for disability, employment and welfare reform. Inequalities. http://inequalitiesblog.wordpress.com/2012/09/27/paul-gregg-disability-employment-speech/

Esther McVey and the Tipping Point

The Hardest Hit campaign recently brought out a report, the Tipping Point, about the impact of the welfare reform on disabled people.  Various papers ran an article on this report, including a statement from Minister for Disabled People Esther McVey, such as the one reported by the BBC:

Ester McVey said there were a lot of misleading stories about the impact of welfare reforms on disabled people.

“The truth is – as the Paralympics showed – the UK continues to be a world leader in the rights for disabled people.

“However, too often under the current system we are wasting money on overpayments where people’s conditions have changed, with £630m a year on DLA alone.”[1]

Are there any misleading stories?  Yes, but not the ones Ms McVey is implying.

Here are a few examples of what is implied or stated about fraud in the benefits system:

“Half a million people are set to lose disability benefits as the Government pushes ahead with plans to rid the system of abuse and fraud, Iain Duncan Smith says.”[2]

“The amount of money lost to benefit fraud and error has soared by a staggering £200million since the Coalition took office – despite repeated pledges from David  Cameron to fight the scandal.”[3]

“More than £1BILLION lost to disability benefit fraud and error – and that’s just the tip of the iceberg.”[4]

“Too much of what workers pay is wasted in a bloated welfare system where fraud and abuse is rife.” [5]

What about the ones McVey is implying?  From the rest of the article and what McVey says, I assume she is talking about articles discussing negative impacts of the reform on disabled people.  For example, the fact that the government is cutting 20% off the working-age Disability Living Allowance bill.  By definition, this means less money and less support for the disabled.

Or the fact that it is ending the Independent Living Fund.

Or that whilst the government is removing billions from welfare, all the cuts focus on just 1/3 of benefit recipients; i.e. on anyone who is not a pensioner.

Demos calculated that disabled people and their carers are £500 million worse off.  They report deteriorations in mental health, increasing isolation and increasing burden on informal care.[6]

These are just a few of the impacts.

Is the UK a world leader for disabled rights?  Well, the UK is below average for proportions of disabled people in jobs.  Although just over 90% of disabled people have an income from work, benefits or both (making UK the third best of OECD countries for this measure), the UK has one of the toughest tests for incapacity and one of the lowest rates of payments.  The personal income of disabled people, whether in work of not, is amongst the lowest of OECD countries.  So whilst many disabled people manage to get an income together from somewhere – whether work, disability benefits or other benefits – this income is low compared to both the income of disabled people in other countries and the income of non-disabled people in this country.

The Paralympics showed very little.  They did not show the increase in disability hate crime in this country, or the increase in pejorative language used by the media towards benefit recipients.  Transport for London did introduce ramps for 16 of its tube stations, but the number of accessible stations remains at 66 of 270.  Not all buses will take people in wheelchairs, even when there is a ramp available and working.  Small train stations remain inaccessible – I recently took a 2 hour detour when station staff forgot to get me off at the right station, and the station after did not have wheelchair access to the platform for trains going back to where I was supposed to be.

Are we wasting too much money on overpayments?  £630 million is a figure estimated by the previous minister for Disabled People, Maria Miller.  It refers to individuals where change in circumstances has been so gradual that a definite cut-off for no longer qualifying for DLA cannot be identified.  But Ms Miller did not also estimate how much is underpaid because people who gradually become eligible for DLA do not apply at the moment when they cross the boundary from not qualifying to qualifying.  Apart from this type of under- or over-payment, £180 million is overpaid due to errors and £310 million is underpaid due to errors.

Will we be proud of Universal Credit?

Some time ago Lord Freud (Minister for Welfare) published an article in the Huffington Post extolling Universal Credit as a benefits system we can be proud of an should embrace.  This is a quick critique of what he said.

 

“Universal Credit will be with us next year. There have been questions raised lately and it’s worth being clear about where we are, when it will come in, and how it will impact on people.

We are rolling out Universal Credit in Greater Manchester and Cheshire regions in April next year – six months before the start of the national roll-out in October. This is the start of a four-year process that will see eight million households move on to Universal Credit and benefit from it.”[1]

So far correct.

 

“Universal Credit will create a benefits system that will secure the safety net we are all proud of – with £2 billion a year more in benefits paid out and around 900,000 children and adults being lifted out of poverty – and ensure people are actively helped by the Welfare State into independence.”

The Institute for Fiscal Studies estimated that Universal Credit would, in the long run, cost £1.7 billion more than the current system of benefits.  By ‘in the long run’ they mean that they are ignoring transitional protection.  Transitional protection means that anyone currently on benefits who would be worse off with UC will receive the same amount as they currently receive, until a change in circumstances occurs.  At that point payments will drop to UC levels.  Including transitional protection, Universal Credit will cost £3.6 billion more, but this will not be the long-term cost as the number of people receiving transitional protection will decline over time as their circumstances change.

Lord Freud is therefore correct to say that UC will result in £2 billion more in payments under UC – as long as no other changes are made that would reduce welfare payments.  This isn’t the case, but as long as UC and only UC is considered, then it is true that welfare payments will rise by £2 billion.

UC will reduce relative and absolute poverty.  The IFS estimated that, without transitional protection, UC will result in 450 000 children and 600 000 working-age adults being taken out of relative poverty.[2]  The DWP estimated a lower number of children, which is why Lord Freud has given lower figures.  But he is correct that UC will reduce poverty.

“Currently the system actively holds people back from getting into work and we have a duty to stop this.”

Jobseekers Allowance is £71 a week if you are 25 or over, or £56.25 if you are aged 16-24.  If you are on JSA, then you can also get Housing Benefit and Council Tax benefit.

Housing Benefit has a maximum of £400 a month for four bedrooms, £340 for 3 bedrooms, £290 for two bedrooms and £250 for 1 bedroom or shared accommodation.[3]  Housing Benefit is available to those on low incomes as well as those on JSA. Child Benefit is paid regardless of other income or money received.  Other benefits are tapered off as work income increases.

To see how work incentives occur, let’s consider one case – leaving aside any considerations of why someone on such low income is living in such an expensive area as I have assumed here.  This person is single, over 35, has no children and works for minimum wage.  He rents accommodation for £250 a week and pays £2000 a year in Council Tax.  He has contracted out of the state second pension, is not paying into a private pension scheme and has no savings or assets.  The person is also looking for more work.  Because he has no children, he only receives Working Tax Credit once he is working for 30 or more hours a week.

  Housing Benefit Council Tax JSA or Working Tax Credit wages Total Extra
Unemployed 250 38.47 71 0 359.47 0
11 hours 250 38.47 5 71 364.47 5
16 235.03 33.87 0 99.04 367.94 8.47
24 230.02 24.02 0 148.29 375.33 15.86
30 162.57 11.57 52.08 173.53 401.75 42.28
40 134.62 2.97 52.08 218.53 408.20 48.73

 

This case shows that there is some incentive to work for this person.  If he went from no work to 30-40 hours of work, he would be £40-50 a week better off.  An extra £40 can greatly increase the quality of housing that is affordable, or be enough to own a car, or have a holiday abroad.

Working less than 16 hours a week may not be worth the effort – it’s not even £10 extra.  This may be a ‘passive’ holding back from work – I’m assuming that by ‘active’ Lord Freud means people who would be worse off working, rather than just not very much better off.

 

So how about a couple?  This couple has no children, and the partner does not work.

  Housing Benefit Council Tax JSA or Working Tax Credit wages Total Extra
Unemployed 250 38.47 71 0 359.47 0
11 hours 250 38.47 10 71 369.47 10
16 250 38.47 0 99.04 387.51 28.04
24 232.56 33.11   148.29 413.96 54.49
30 167.77 13.17 89.53 173.53 446.00 86.53
40 152.95 8.61 89.53 218.53 449.43 89.96

 

My couple now has two children under 20; one is over 10 and the other is under 10. Because one is over ten and they are of opposite sexes, they are entitled to separate bedrooms.  This means rent can be up to £340, although I am assuming Council Tax remains at £2000.  The partner is still not in work.  No childcare costs are paid for these children.  The family does not live in London.  Nor does it live in Leicester, Bradford, Black Country, Edinburgh, Lothian and Borders or Cardiff and Vale.

  Housing Benefit Council Tax JSA or Working Tax Credit Child Tax Credit Wages (40 hrs is post tax) Child Benefit Total Extra
Unemployed 340 38.47 111.45 113.68 0 33.70 637.30 0
11 hours 340 38.47 50.45 113.68 71 33.70 647.30 10
16 340 38.47 0 113.68 99.04 33.70 624.89 -12.41
24 307.26 28.40 74.34 113.68 148.29 33.70 705.67 68.37
30 279.68 19.91 89.53 113.98 175.53 33.70 712.03 74.73
40 264.85 15.35 89.53 113.68 198.34 33.70 715.45 78.15

 

As you can see, there continues to be a ‘passive’ deterrent to work when paid work is at minimum wage and is part-time.  Full-time work and work that is paid above minimum wage will generally be worth the effort.

There is an ‘active’ deterrent, but this occurs only in situations where a parent works between 16 and 24 hours a week.  This is because the entitlement to JSA is lost at 16 hours, but Working Tax Credit for parents does not start until 24 hours a week.[4]  This is a change brought in by the current government from 6th April 2012; if they had not brought this in then there would not be any ‘active’ disincentives to work.

Lord Freud is largely incorrect to say that the system actively holds people back.

 

“By bringing together six major benefits, people will be able to manage their claims much more simply. The current risks people face by moving into work, and the fears they will be worse off, will go.  Universal Credit will remove the barriers that we have under the current system where starting a job means switching from one set of benefits to another and informing councils, Jobcentre Plus and the HMRC.  This mountain of paperwork alone is now enough to stop many people from moving into work. Under Universal Credit, claiming will be much simpler and the one benefit will stick with people as they move from unemployment and into work.”

Having looked at the different benefits and what UC replaces, I can agree that UC looks simpler, although it is not as simple as it could be.  UC means that people need only apply to the DWP, and not also to the HMRC for tax credits.  It means that only one benefit is applied for, rather than several – although passported benefits may not be that much effort anyway.  UC means that there will be one tapering rate when a benefit recipient increases the number of hours worked, rather than the different rates that currently exist.

Paperwork in applying for benefits does put people off; whether this is important in terms of stopping people moving into work is questionable.  I have no experience of moving off benefits into work so can’t comment.  The government does however have a good website system for assessing what benefits a person is eligible for.  I have used it above to work out the benefits for different scenarios.  A person does not need to know the tapering rate of a benefit to be able to work out what benefits they will receive under a change in circumstances.  Nor does a person need an understanding of maths, disregards and tapering rates as percentages of extra income.

 

“Many of the new rules under Universal Credit are designed to mimic work -whether that is self employed or paid employment – with much more accountability for both individuals and households.

For the small businesses where people also claim benefits, a requirement to do simple monthly reporting will help people keep a closer grip on their accounts and to budget effectively. In many cases it will also help people to grow their businesses. And in fact, I am working the Chartered Institute of Taxation to simplify the system for small businesses.”

These new rules include being paid monthly in arrears.  What this fails to recognise is that many employers, especially at the low-end of the wage scale, pay weekly – only half of jobs paying £10 000 a year use monthly pay packets.[5]  Monthly payments only mimics higher end jobs.  Additionally, it could leave people without money for a month whilst employers and the DWP catch up with changes in employment status such as job loss.[6]

The government even seems to have recognised that some families may struggle to budget with monthly payments: “The Government is seeking providers who can supply products with extra budgeting functions to support claimants as they move to the new benefit Universal Credit.”[7]  Whilst this may well be very helpful for many clients, it is odd that the government first claims that monthly payments will ensure budget responsibility and then claims a need to spend £80-145 million on developing schemes to manage people’s budgets for them.[8]  This need was also picked up on by the thinktank Social Market Foundation in their report, “Sink or Swim,” although they encourage an opt-in approach by individuals rather than the government identifying those whom they deem vulnerable.

The government plans to make all benefit recipients report any income at the end of every month.  But the Chartered Institute of Taxation has ruled that these extra burdens include deadlines that many businesses may be unable to meet.  According to the CIT, “ rule preventing losses from one assessment period being carried forward to the next ‘shows fundamental misunderstanding of how businesses operate.’”[9]  These monthly transactions would be calculated using different methods and criteria from those determining self-employment.  There seems to be little foundation for Freud’s comment that this will be helpful for small businesses.  however, it is good to note that he is still in consultation with the Institute on this matter.

 

“Most importantly of all, under Universal Credit people will know they are better off in work than on benefits.”

Well, yes.  But the same is true for the majority of people under the current system, and where it is not true it is because of changes made by this government to Tax Credit eligibility.  So UC is only an improvement if the incentives to work (i.e., more money is kept) are greater than the current incentives.  Work incentives are largely better under UC, but not always.  They are better for:

  • single, no children: up to 30 hours
  • single, 2 children: up to 16 hours
  • couple, no children: 2nd earner less than 10 hours
  • couple, 2 children: always better off under UC

Work incentives under UC are the same as the current system for:

  • single, no children: 40+ hrs

Work incentives under UC are worse than the current system for:

  • single, no children: 30-39 hours
  • single, 2 children: over 16 hours
  • couple, no children: 2nd earner works over 10 hours

 

“We are working closely with Councils too as they introduce localised Council Tax support schemes. The speculation that these will undermine the work incentives in Universal Credit is misguided. It fails to take into account the increased earnings disregards in Universal Credit – the amount that someone can earn before their Universal Credit starts to be reduced.”

As far as I am aware, concerns that the new Council Tax system will undermine UC is not due to lack of consideration of the increased earnings disregard.  As the above bullet-points show, UC does not uniformly improve work incentives.  Nor does UC mean everyone wins.  And UC tapers at 65%, which is higher than the taper rate for tax credits.  The Institute for Fiscal Studies said that, “It is difficult to see how a localised form of CTB could work alongside Universal Credit without undermining the government’s aims of a simpler benefit system with more transparent and stronger incentives: a fully localised CTB could lead to a complicated and opaque benefit system, if the hundreds of authorities that currently administer CTB each have their own rules for its replacement; and giving local authorities the ability to determine the withdrawal rate of CTB (or its replacement) could undermine any strengthening of work incentives that might arise when Universal Credit is introduced.”[10]  There is no reason to believe that Lord Freud is correct in saying that increased earnings disregards will be sufficient to counter any negative effects of localised CTB.

 

“As well as helping people to move into work, Universal Credit will get people online and closer to the jobs market.  Independent research carried out by Ipsos Mori, reveals that 78 per cent of working age benefit claimants say they use the internet already – clearly demonstrating that being online is suitable for most claimants.  However, we recognise that not everyone is ready to use online services and we are making sure that there will still be face-to-face and telephone support in place for those who need it.

We are working now with councils across Britain to have this support in place – and to ensure the skills people gain from learning to claim online also help them to look for work online.”

Whilst 78% use Internet, 10% of these (7.8% of the total) did not use it at home, meaning that overall 30% did not have internet access at home.  People on JSA were particularly likely to not have access to internet where they lived.[11]

But the information that matters most comes out later.  People were asked about their use of technology, specifically using self-service tills and various uses of the internet.  At best, only 51% of respondents used and were happy to continue using internet for searching for jobs online, and a further 10% had never done so but would like to try.  The possible negative responses were ‘I have done this but am not interested in doing it again’ and ‘Never done and not interested/doesn’t apply to me/never use service.  For using the internet for social network sites, 47% selected one of these responses.  For online shopping it was 47%; online banking was 51%; finding out about government services, such as entitlement to benefits, was 43%; and claiming benefits online was 58%.

Only 14% of people had previously used the internet to make a claim for benefits.  Only 43% had ever used the internet to find out about government services.

So the majority have not used the internet to access benefits, despite this being the recommended route, and the majority do not want to claim benefits online; 43% also do not wish to find out about benefits online.

These figures were for ‘main claimants’, defined as the member of the household that receives the largest amount of benefits.  When all claimants are considered, 62% responded positively when asked if they would be willing to make an application for a benefit or Tax Credit online.  45% said they would need help or support.  Reasons against online use included lack of skills (32% of respondents) and low literacy (9%), fear of making a mistake (21%) and cost (13% cited cost of computer, 10% cited cost of internet).

Evidence submitted to the DWP by the Centre for Economic and Social Inclusion suggests even worse figures:[12] “Universal Credit will also serve to reduce the channels through which individuals can claim benefit. As the draft regulations make clear, online claiming will be the only option available to claimants unless they fall “within a class of case for which the Secretary of State accepts telephone claims or where he is otherwise willing to do so.” On the latest data just 19.6% of new JSA claims were made online,[13] while ONS figures show that almost a quarter of households have no internet access and that the rate of internet use decreases in line with income.”[14]

Overall, these are not figures that suggest an on-line service of benefits is something that will work well or easily for benefit claimants.

 

“Our IT programme for Universal Credit is on time and, in fact, and is already being tested by claimants. Rather than a big bang approach we will be rolling out Universal Credit gradually. Nor are not starting from scratch, we are using existing IT systems and building the extra capacity and capability as we need it.”

But BBC News quoted Labour’s Shadow Work and Pensions Secretary Liam Byrne as saying, “Universal Credit is overdue and over budget and now everyone from the chancellor to charities, the CBI to local councils is warning this is a car-crash about to happen.  We’ve been warning of this for months and we’re summoning Iain Duncan Smith to the Commons for a full scale debate.”[15]  Liam Bryne led an opposition day debate on this topic.[16]  He has said that UC is £100 million over budget, nine months late and in danger of becoming a car crash.[17]  Leaked documents showed that part of the welfare reform – real time information on finances – has been rated as having significant risk of failure.[18]

“We are working with other Government departments, councils, housing associations and community groups across the country to prepare people for the change. We will even establish a hotline for MPs as the benefit comes in to answer their questions.”

Well, I hope they are, although DPAC might point out that the DWP sometimes claims to be in discussion with groups with whom it has not had any discussions.

“Universal Credit is about to become a part of the lives of millions of people across Britain. It will simplify their benefits and ensure their path into work is much easier and clearer. I want everyone to embrace that.”

It is unclear if UC will make paths into work easier and clearer.  Until it is shown that UC is a success, I have no intention of embracing it as such.


[1] Freud, 4th October 2012, Universal Credit will create a benefits system we are all proud of, Huffington Post. http://www.huffingtonpost.co.uk/lord-freud/universal-credit-lord-freud_b_1935413.html?utm_hp_ref=tw

[2] Brewer, Browne and Joyce, 2011, Child and working-age poverty from 2010 to 2020. Institute for Fiscal Studies.

[4] If a couple has children, together they must work at least 24 hours and one of them must work at least 16 hours.  In this hypothetical example, only one adult works so this adult must work 24 hours.

[5] Sink or Swim, Social Market Foundation

[6] ibid., IFS Brewer, Browne and Wenchao, 2011, Universal Credit: A Preliminary Analysis. Institute for Fiscal Studies

[7] Freud, 17th September 2012 New financial products to help Universal Credit claimants manage their money, DWP http://www.dwp.gov.uk/newsroom/press-releases/2012/sep-2012/dwp102-12.shtml

[10] Brewer, Browne and Wenchao, 2011, Universal Credit: A Preliminary Analysis. Institute for Fiscal Studies

[11] Tu and Ginnis, 2012, Work and the welfare system: a survey of benefits and tax credits recipients. Ipsos Mori All figures in this section come from this report.

[13] DWP (2012) Proportion of new claims to Jobseeker’s Allowance submitted online http://www.dwp.gov.uk/docs/jsa-claims-online.pdf

[14] Office of National Statistics (2012) Internet Access Quarterly Update, 2012 Q1 , 16 May 2012

[18] Kirkup, 9th Apr 2012, Tax reform project running into trouble, say experts. Telegraph. http://www.telegraph.co.uk/news/politics/conservative/9194620/Tax-reform-project-running-into-trouble-say-experts.html