Some arguments about the UK government's welfare reform programme - ... and Universal Credit will seal their victory for a generation
- Category: Analysis
- Published on Tuesday, 21 October 2014
- Written by Richard Atkinson
- Some arguments about the UK government's welfare reform programme
- 1. They are not trying (very hard) to reduce welfare expenditure
- 2. They do not want, at all, to reduce welfare dependency
- 3. They are not interested in getting people into work...
- 4. ... because they don't know what to do with people when they are working
- 5. They are not, exactly, aiming to abolish the welfare state
- 6. … not least because the present welfare state is their own, neoliberal, creation
- 7. They are converting the DWP into a punitive arm of the state
- 8. They are looking to create a low waged, unskilled, precarious workforce
- 9. They are enforcing a patriarchal discipline on women and families by means testing
- 10. They are winning ...
- 11. ... and Universal Credit will seal their victory for a generation
- 12. They have a problem with pensioners, which they have yet to sort out
- 13. Labour are as deeply committed to these aims as the Tories
- 14. Why it’s Welfare, not Social Security
- 15. Why it’s back to 1601 not 1834
- 16. No-one asked for welfare
- 17. Against welfare: for class independence
- ADDENDUM - On proposals for an Unconditional Basic Income.
- All Pages
11. ... and Universal Credit will seal their victory for a generation
Complexity in a welfare scheme is generally seen as an unavoidable cost of fairness. Outcomes must reflect either people’s needs, in a means tested scheme, or their contributions in a contributory or an insurance based scheme; and these factors are infinitely variable. But complexity has other implications. It deprives people of control of their own income and vests that control in a separate, expert, caste. It makes people’s income a mystery and therefore allows myth, disinformation and resentment to grow unchecked. It disempowers and infantilises.
No surprise then that the Coalition government’s long term fix for welfare - Universal Credit - uniting as it does most DWP benefits with housing benefit and tax credits, sets a new high water mark for the floods of complexity. The fact that the government computer systems aren’t up to the job is entirely welcome but given cross party support for the principles of Universal Credit, not perhaps for long. They will introduce it anyway - are introducing it slowly - and provided the effects of all the inevitable chaos of errors and missing payments is felt only by the poor, will congratulate themselves on a job well done.
Universal Credit is intended to replace entirely most existing benefits - Income Support, Housing Benefit, ESA, JSA, Income Support - and all Tax Credits. A single, common, means test will apply to all claimants and a common range of ‘conditionalities’ - from the full work seeking requirement applied to unemployed claimants to no requirements for a few of the most severely impaired disabled people. A common, online or telephone, administration and claims system will be introduced. All payments will be monthly in arrears (causing long delays at the start of a claim) and adjusted in line with the previous months earnings through a realtime link to the PAYE tax system (or by monthly declarations of income for self-employed people). All overpayments, however caused, will be recoverable. Immediate penalties will be in place for any claimant errors. All payments of UC, whether for housing costs, children or adults will be subject to sanctions for breaches of conditionality.
The claimed advantages of this totalitarian system of control are that it will “improve work incentives”. This claim is still repeated by a lot of organisations in the welfare sector who should know better. True there is a more generous ‘disregard’ - the amount of income that can be earned before UC payments are affected - for some people. But the rate at which UC will be withdrawn once it starts to be reduced for earnings - 65%, or about 85% for householders liable for council tax - is no better, or worse, than under present systems; self-employed people will, after 12 months, be assumed to be earning at least minimum wage, whatever their actual takings; and there is nothing like the delay effect in Tax Credits where additional earnings did not take effect until the next tax year, which often worked to claimants’ advantage.
Similarly claims that people will be better off under UC are almost entirely illusory, with losses more than balancing gains. Extra expenditure under UC is caused entirely by ‘transitional protection’ - maintaining existing claimants on their current benefit rates, but frozen, where they would otherwise lose out. And Mr Duncan Smith’s repeated claims that take up rates will improve under UC are pure fantasy. Most people, I predict. will undergo a great deal of deprivation rather than claim this nightmare benefit. But we will never properly know this because the government, quite uncoincidentally, are going to stop collecting data on the take up of means tested benefits.
Then, even in cases where there is a slight gain, who will actually receive it? Families claiming benefit or tax credits under present arrangements will generally have several income streams - tax credits, child benefit, DWP benefits, earnings - which will usually be divided among both members of a couple. But for UC only one person can claim (although both members of a couple are liable to sanctions). The entire income of a family (apart from Child Benefits and earnings) will be dependent on the UC claim, deepening the financial dependence of women (mostly) in couples and making all low income families just one official error away from penury. Direct payment of the rent element in UC which replaces Housing Benefit (direct to the claimant that is, rather than the landlord) could ameliorate this slightly but the DWP are back-pedalling fast on this in the face of protests from social landlords.
Finally, in so far as anyone is notionally better off under UC, how is this funded? The bulk of the cuts fall on the most severely impaired disabled people. The ‘severe disability premium’, a £61 a week addition to most low income benefits for people with the most severe impairments, and a keystone in the financial architecture of most supported housing schemes, is abolished under Universal Credit (although existing claimants will have their current payments frozen at present levels under transitional protection).
Universal Credit, in fact, is the realisation of a long held neoliberal dream. In 1962 Milton Friedman advocated a scheme for a negative income tax for the USA. This was to replace the entire US welfare and social security system with a common, universal, means tested benefit integrated with the income tax system with the aim of ‘making work pay’ and applying common conditionalities. In fact the closest approach to implementation of such a system in the USA was Nixon’s proposal for a Family Assistance Programme which covered families with children only and did not make it through Congress (so that, uniquely among developed capitalist countries, the USA has never had a comprehensive minimum income guarantee scheme).
Friedman’s disciples in the UK however have now seized their chance with Universal Credit. The only aspect of Friedman’s scheme on which it falls short is integration with income tax; in all other respects UC is the perfect neoliberal benefit. Automating administration reduces costs. Universal, graded, conditionality with sanctions and penalties, disciplines the entire underclass of their fantasies. The live feed of earnings information from PAYE ensures a seamless join with even the most casualised forms of work. The system is, by design, ideally suited to zero-hours contracts, precarious jobs and total casualisation. Millions of people in permanent, automated dependency are set to make Friedman’s fantasies real.