For whose benefit?

5 Oct 11
Claudia Wood

Plans for a universal benefit are sensible but not the way the government is introducing it – in particular by blaming claimants for the failings of the old system

As the Welfare Reform Bill nears royal assent, many charities are mounting last-ditch attempts to amend some of its less well formulated proposals.

They have been doing this for almost a year, but Department for Work and Pensions ministers appear impervious to their efforts. With such a radical policy plan, the government reasons, there are bound to be dissenters. Disability charities will stick up for disabled people. Children’s charities will fight for special treatment for children. That’s their job. Right?

If only we could dismiss as 
self-interested lobbying the research presented by the Children’s Society, the Disability Benefits Consortium, Shelter and others. But they are credible, statistically robust analyses.

Charities have clearly realised they can’t rely on government sympathy –  they have to appeal to heads, not hearts. So they are using the DWP’s own figures to highlight serious flaws in the plans.

Some of the most obvious include the time limitation of contributory Employment Support Allowance. This means that disabled people assessed as capable of work will have a year to find a job before this benefit is stopped.

Contributory ESA is given to people who have worked in the past and have paid National Insurance to insure themselves against being too ill to work. If you’ve paid NI for 25 years, you will now only be ‘insured’, so to speak, for one year if you become disabled.

This is particularly poorly 
thought-out in an economic climate where jobs are scarce and only 50% of disabled people are employed.

Another issue is that the benefit cap will be set at around £500 per week per family. As the Children’s Society points out, this is based on the average income of all families (with and without children). The average wage for families with children is actually £598, rising to £683 when tax credits are included. Imposing a cap on families with children that falls so far short of actual earned income poses significant risks to child poverty rates.

The cap also takes no account of the variation of housing costs across the country, potentially leading to a rent shortfall in the Southeast and urban centres. Higher rents often coincide with employment hubs, so we risk taking unemployed people away from the job market as they move to cheaper housing areas.

The Department for Communities and Local Government has estimated that up to 20,000 people risk becoming homeless as a result of the cap. At the same time, 15% of private landlords have said they would stop renting to housing benefit claimants due to the increased risk that the benefits won’t cover the full cost of rent.

Yet, in spite of these flaws, it’s hard to be against the basic idea of the Bill. A single benefit payment with a guarantee that employment will always pay more than benefits – that’s the gold standard of benefits systems. It’s something a government would do if they were creating a welfare system from scratch.

But here’s the problem. We are not creating a benefit system from scratch. We are inheriting 60 years of reforms and tweaks, a maze of interacting payments and perverse incentives, and millions of benefits claimants from previous systems.

This is not to say this radical plan should be abandoned. But we can’t ignore the fact that people have been claiming for years under the old system(s). And they need support for transition – not recrimination for having done so.

The government’s biggest error around welfare reform has actually been the communications strategy behind it.

We are being encouraged to think of people who have been – rightly and lawfully – claiming incapacity and unemployment benefits as scroungers and fraudsters. We are being told that large families living in large houses – given to them legitimately under the old rules – are ‘scamming’ the system.

The government is whipping up this emotive response in collusion with the red-tops to gain public backing for what are – let’s be honest – some clunky reform ideas. But time wasted on statements about how many people claim Incapacity Benefit for allergies could be better spent on improving the Personal Independence Payment assessment, or developing ways of helping families in high-rent housing move into less costly options, for example, with relocation grants.

The idea of a universal credit is so sensible, the government should have had a very easy time in getting everyone behind it. It could have gone a lot further a lot faster if it had started by explaining that the system was at fault, not the people claiming in it. And if it had developed more nuanced plans to move people to new benefits, which weren’t wrapped in a narrative of ‘wasting taxpayers’ money’.

Perhaps the government needs to take a leaf out of the charities’ books, and try appealing to our heads, not our hearts.

Claudia Wood is head of public services and welfare at Demos


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