Tag Archives: welfare reform

Duncan Smith Wants To Change The Legal Definition Of Child Poverty So He Can Eradicate It In Time For The Election.

Steve Bell cartoon 16.07.2013  poverty_2061048a

Thanks to the Child Poverty Act 2010 – legislation brought in by the last Labour government – the Coalition is legally committed to working towards meeting targets for eradicating child poverty in Britain by 2020. Given their current performance this has now become a tragic joke. Nonetheless, it is a statutory duty and we should do all we can to hold them accountable for it.

The Act sets the ‘poverty line’ at an income that is 60% or less than the average net household income, adjusted for inflation. The Act also defines persistent poverty to be having an income that is 60% or less than the average for three consecutive years after 5th April 2010. The target is for there to be 5% or less of children living in families with such an income by 2020.

According to the latest available figures for 2010/11, when housing costs are included there were 13 million families in Britain living beneath the poverty line. This was before the full impact of welfare reform began to bite. That figure is now likely to have shot up sharply as an inevitable result of benefit cuts , rising rents and food prices.

 images      However, the Child Poverty Act contains clauses that allow the Secretary of State for Work and Pensions the freedom to alter the targets for poverty reduction by redefining the legal meaning of persistent poverty. He can do this provided he does so before 2015 and, more importantly, provided he has the consent of the Children’s Commissioner.

In effect, before the next election, Iain Duncan Smith has the power to redefine the ‘poverty line’ in Britain so long as he can persuade or browbeat the Children’s Commissioner into agreeing with him.

Back in June of last year Mr Duncan Smith provoked a row by suggesting he was going to do just that although he was vague about the detail and made no mention of his statutory duty to secure the consent of the Children’s Commissioner. The Independent reported that:-

“Mr Duncan Smith announced plans to scrap the way poverty has been defined since the 1970s – below 60 per cent of the median income. He argued that it would be better to tackle poverty “at source” and to take account of other factors such as drug addiction, worklessness, welfare dependency, debt and family breakdown.”

ids     Then in November 2012 IDS announced he was launching a consultation exercise to look into how poverty could better be defined other than just by income. This consultation closed on 15th February this year. Based on the Tory’s ideological view of poverty as mainly the result of ‘chaotic’ lifestyle the government proposed that there should be eight dimensions of poverty measurement but it seems the academics and organisations taking part in the consultation almost without exception disagreed with their proposals, saying it would be conceptually impossible to devise a credible measurement tool to accurately measure child poverty based on the categories suggested by IDS .

More significantly for the Secretary of State though is the response of the Children’s Commissioner whose report was based on a consultation with children themselves and stated in no uncertain terms that for them poverty meant having little money and living in bad housing. It would seem that the consent he needs to proceed with his plans is unlikely to be forthcoming.

poverty2804_468x431      So far as I can discover, six months on the government have not yet published the outcome of this consultation. But as the election creeps closer and as the devastating impact of their welfare reforms bites deeper and deeper, its not hard to imagine that the government will be desperate to do all they can to portray their performance in the best possible light. Given how central to their deficit reduction platform welfare cuts have been its vitally important to them to be able to claim that child poverty has reduced and that if any still exists its not their fault.

IDS needs another cunning plan.

_62813107_maggie     The current Children’s Commissioner. who stands in his way,  is Dr Maggie Atkinson who was appointed in 2009 by Ed Balls from her position as director of children’s services at Gateshead council  which she’d held since 2005.

Last November Dr Atkinson came in for some highly unusual criticism regarding another  report she produced about the sexual exploitation of children by predatory gangs of men. According to one news report:-

“An unnamed government source is widely reported to have questioned the report’s methodology and calls some of the language used in it “hysterical”. That highly unusual intervention prompted an exchange today in the House of Commons at Prime Minister’s question time.”

In response to that question David Cameron said a strange thing, considering that the contentious report had already been published in full:-

“We need to give every encouragement to the Children’s  Commissioner to make sure that the final version of the report is produced.”

cam   Is Cameron implying that the government would be putting pressure on Dr Atkinson to alter her report?  Is this why a link to the ‘FULL REPORT’ published online here in November doesn’t work? Is that why the report published on the Commission website is now entitled ‘INTERIM REPORT’ ?

And doesn’t it seem strange that there is also a version of the report published on the same Commission website in JULY 2012 with the odd title of ‘ACCELERATED REPORT FOR THE SECRETARY OF STATE FOR EDUCATION’?

What could the difference be between an ‘accelerated report’ and an ‘interim’ one? Its not possible to examine the version posted as ‘FINAL’ because the link doesn’t work but the version now calling itself ‘INTERIM’ looks awfully like a complete, fully referenced report to me whereas the so-called ‘ACCELERATED’ version has the look of an interim report produced for briefing purposes.

My instincts tell me there’s something fishy about all these versions and I’m inclined to think that Dr Atkinson and her team have been told in no uncertain terms to doctor their research to suit the government’s agenda. In other words pressure has been applied and it looks like she has given in to it.

I’m not concerned here with delving into the details of this particular report and the possible objections that might have been made which led to the apparent correction of the ‘hysterical’ content. That will only be possible when the final (doctored?) version appears and comparisons can be made.

images (4)   My immediate concern is with the implications this odd situation raises in terms of the statutory redefining of child poverty by Iain Duncan Smith.

What was the nature of the pressure put on Dr Atkinson to alter a research report to suit the government’s sensibilities? And if she can be made to bend to such pressure once, will she be equally obedient if put under similar pressure from our Fuhrer-like Secretary of State for Work and Pensions should he decide to persist with his plan to change the legal definition of poverty in order to be able to deny the misery he’s brought to millions of children and possibly even claim it no longer exists?

Or will the Children’s Commission suffer the same fate as the CQC where reputations were very publicly destroyed forcing resignations followed by the politically convenient appointment of Tory-friendly Board members and a Chief Executive who was once a Tory MP?

 

 

 

 

 

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This Is No Way To Treat Human Beings: A First Hand Account Of An ATOS Assessment Centre.

  • My First Work Capability Assessment

    If, after you’ve read this, you feel moved to do something about it, please start by signing the WOWPetition, by clicking here

    I’ll tell you upfront what one of the worst things about this story is. It’s that I don’t feel comfortable naming the time or place of my first encounter with an ATOS Medical Assessment Centre. Certainly, I’ll be clear about it in a letter to the relevant MP, and to the organisation itself, and with no hope of being heard, to the Department for Work and Pensions, whom I hold solely accountable for what I witnessed today.

    Also, the actual assessment I witnessed, by two sympathetic, understanding, quiet, professional, helpful Eastern European Doctors seemed fine. It was the only bit of sanity in an experience that has left me with the impression of an enormous, industrialised processing of sick people by one organisation; ATOS, doing the bidding of a dangerously distant government department, the DWP, pursuing a dispassionate ideology incapable of engaging with the individual needs of those being palpably dragged through assessment.

    A little background; I attended as a ‘plus one’ for a friend of mine who has been in receipt of a benefit for many years that is being subsumed into the Employment and Support Allowance. I went along because some of the drugs my friend is on prevent them from driving, or staying awake, and my friend often suffers from a terrible memory, so I planned to prompt when my friend got stuck, and take in as much of what happened today so that I could remind them of it afterwards.

    I wasn’t really looking forward to the Work Capability Assessment (WCA) and I know my friend wasn’t either, as it has been hanging over them like a weight for a number of weeks. Without drilling down into all the detail, my friend relies on this benefit to survive with their children, and although my friend is probably eligible for Disabled Living Allowance, or Personal Independence Payments as they are set to become, I have not been successful at pressuring my friend to apply for them. A lot of people are reluctant to label themselves, or to be judged by others, given the stigma that is increasingly attached to recipients of disability benefits by an ignorant public.

    So, this story has had all the names, some sexes, and some other details changed for public consumption, but I’m leaving in the facts as I witnessed them. It was horrific, and I’ve been seething with a dark anger about the events, kicking myself about not taking the phone numbers of the other witnesses, or the names of the staff involved. If only I hadn’t been so wrapped up in looking after my friend and their concerns about today, I could’ve acted like a better citizen, although after today I’m not even really sure what that means, and whose standards that could possibly be judged by.

    The story starts in the waiting room of an ATOS assessment centre. Present are A lady and her daughter, who I shall call Mrs and Ms. Nice. They are a quiet couple, apprehensive. The mother cares for the daughter and had helped her crutch her way into the barren, industrial waiting room, and was sat trying to reassure her daughter that it was going to be ok. After later conversation, it turned out Mrs Nice has been to three tribunals for members of her family and friends, all of which have been successful in overturning incorrect DWP decisions on DLA awards, so she is no stranger to the system.

    Also present is Builder John, a man who comes to play a pivotal role and who doesn’t even want to be there. John is self-employed and is used to earning lots of money every week through contracting his services out. Unfortunately John is awaiting surgery for an injury that is preventing him from engaging with the very physical nature of his job. John doesn’t want to be there, but has no choice but to do so to carry on qualifying for the measly £140 a fortnight in benefits that he will lose if he doesn’t, metaphorically speaking, jump through hoops. John cannot understand why there is a procession of sick and disabled people being dragged through assessments. He speaks of a happier time, before he was forced to claim benefits for those pesky asides like eating food, when he was blissfully ignorant of just how unfair the system is.

    Also waiting are Mr Shirt and Ms. Shirt. Ms. Shirt enters unsteadily on one crutch with Mr Shirt’s support, and after discovering that she is half an hour late, having got the time of the appointment wrong and with one arm shaking uncontrollably as a result of her disability, Ms. Shirt bursts into tears and nearly stumbles over in the waiting room, setting off a chain of events that lead me to witness something unsavoury, cynical, corrupt and distressing.

    Mr and Ms. Shirt are sent away for being late, but shortly afterwards, one of the other actors in this piece, “ATOS Receptionist” makes a phonecall to try and accommodate Ms Shirt getting an appointment later that afternoon. With good intentions, Receptionist calls another person who has an appointment that afternoon to cancel their appointment, and sends another player, “Security Man” to intercept Ms. Shirt as she struggles back into her car, apparently to let her know that if she can hang around for half an hour or so, she can stay and see the Doctor after the next appointment has finished.

    The time of the appointment Ms Shirt is given turns out to be exactly the same time that John Builder and Ms Nice have been given as *their* appointment time, too. Mr Shirt looks gravely concerned when he learns this fact, he’s clearly been trying to reassure Ms. Shirt that everything’s going to be ok, but he no longer looks like he believes it, and Ms Shirt sits on her hand in an effort to control the obvious, wild tremor in her arm.

    The catalyst characters arrive next. Mr and Mrs Cancelled. Mrs Cancelled answered the phone when Receptionist called to make room for Ms. Shirt in the already triple-booked afternoon slot. Mrs Cancelled is apparently no stranger to this assessment centre. She’s already had some of her benefits stopped, and has had to get Mr Cancelled to start and finish work early to accompany her to this re-assessment. She failed to convey to Mr Cancelled that she’d been told not to come in this afternoon, because one gets the sense she hadn’t fully understood how long the wait would be if she did choose to attend, despite being told not to. She attends, out of a fear you can see in her face of continuing to have no money at all, stretching the resources of Mr Cancelled, who is philosophical about the burden placed on his wages, but who chooses to express a perfectly reasonable opinion that his wife is being messed around with when her appointments are being scheduled and rescheduled, with knock-on effects for his employment and pay and convenience. Mr Cancelled makes it perfectly clear that he does not think the ATOS staff are to blame for this, but that it is the stupid DWP system that is causing this upset, pressure and hardship.

    Unfortunately, Receptionist chooses to interpret the valid concerns of Mr Cancelled as a personal attack. Nobody else in the room understands why, and the surly, abrasive, combative face that Receptionist presents changes the course of the rest of the day. It’s probably a face that has become necessary to present to difficult clients. It’s a face that, reassures Receptionist, is not for the genuine claimants – she thinks it’s a massive waste of time and effort that the deserving poor are subjected to these humiliating, inconvenient, and often painful assessments, too. Receptionist’s true views, however, are informed by DWP rhetoric about statistics. The same statistics that are so clearly unsafe in the hands of the Iain Duncan Smith, the man who has constructed a House of misinformation, and not yet taken to task over it by the Department for Work and Pension Committee, though they have asked him to answer for his misinformation on repeated occasions.

    Mr Cancelled is asked, in no uncertain terms, to leave with his wife, who seems distressed and confused and willing to leave to avoid causing more conflict, and to avoid upsetting her husband further. Her husband loudly proclaims that they will leave, his language may now be peppered by distressed obscenity but all he really wants is some clarity about when his wife’s next appointment will be. Receptionist can not give a date, nor reassurance that that appointment will not also be cancelled. Ms. Shirt realises that her assignment to an appointment is what has caused this mess, and starts to cry again. Ms Nice starts to cry too, and John the Builder stares on in disbelief. Mr Shirt is banging his head quietly against the wall behind his chair, and is heard to say “How did we come to this?”.

    Mr and Mrs Cancelled close the door behind them from the waiting room, but they are pursued down the corridor by Security Man. He says “AND I’LL TELL YOU ANOTHER THING”, for some inexplicable reason, he has chosen not to just let them leave, but to take issue with the fact that Mr Cancelled is upset that his wife keeps having her appointments change. Even though Mr Cancelled specifically said he knows it isn’t the personal fault of Receptionist and Security Man, they both seem to have taken it so. There is shouting from the corridor outside, and then the sickening sound of a scuffle, as Mrs Cancelled’s carer and husband is apparently tackled by Security Man, simply for having the audacity to speak out. John the Builder joins them in the corridor, quick to his telephone, where he films the ensuing, angry shouting and the insane exchange of angry words between a man upset about his wife being caused more pain, and a man, acting unprofessionally and physically, upset that his organisation might be deemed to be responsible for this. Mr Shirt checks through the window of the door. Ms Nice is now inhaling heavily, clearly in the throes of a panic attack, while Mrs Nice, also close to tears now desperately tries to calm her down. Ms Shirt is crying, shaking, uncertain. John the Builder tries to remonstrate with both parties in the corridor to diffuse the situation.

    It’s simply insane. In Britain, in 2013, there is an industrial, machinated subjugation of ill people to demeaning, degrading, invasive medical assessments being enforced at the behest of a pathological DWP and implemented by an arrogant, uncertain ATOS.

    John Builder returns to the reception room, an angry but drawn expression on his face. He expresses his frustration that neither Receptionist nor Security are to blame for this crazy mess, but as he is defending the difficult situation they are in, they return to the room.

    “STOP TALKING!” Mandates Reception. There is a pause in the room, a little confused. Mr Shirt points out that John Builder was just trying to defend the position of Receptionist, but John’s temper is blown. In an emotive outburst, John tells Receptionist he won’t be told to shut up. Rightly, he gives what-for, in that most British of manners he explains he is perfectly entitled to talk to other people, to Mrs Nice and Mr Shirt in the waiting room, that this is not a fucking concentration camp. The words hang, pregnant, because that is exactly what it fucking feels like.

    Receptionist explains that it isn’t her fault, that the huge number of false claimants are the reason that the DWP has to test everybody to make sure the system isn’t being sucked dry. Mr Shirt looks crestfallen, and after Receptionist and Security simmer down, he explains to everyone else in the room that DLA fraud rates are 0.5% and that ESA fraud rates are 0.3%. This seems like a tired, rehearsed skit from him, and he borrows a pen from Mrs Nice, and a couple of post-it notes, on which he scribbles “wowpetition.com”.

    John Builder, Mr Shirt and Mrs Nice express their utter disgust at the government, both Conservative and Liberal Democrat bits of it, although they all agree that they can’t understand how looking after vulnerable people became so distasteful to government, and how people who’ve paid into the social security system are now being subjected to this cynical, judgemental, prejudiced, ignorant DWP system, administered by an inappropriate, unprofessional, reactive and dangerously ignorant private company that keeps getting it wrong.

    It’s a disgrace, it’s the most depressing scene I think I’ve ever witnessed, and the dehumanisation of all involved has left me with a sick feeling in the pit of my stomach.

    Is this really what we have come to?

Cameron Has Created More Income Inequality in Three Years Than Thatcher Did in Eleven Years.

inequality-cleese-and-bar-002  The following article written By Howard Reed last month for The Fabian Society is a shocking indictment of a Cameron-led government and their relentless programme of austerity for the poor. Using the now discredited and tired excuse that the previous Labour government ‘got us into this mess’, they have managed to create a low wage economy increasingly characterised by zero hours contracts and have callously denigrated the disabled and the poor, forcing many people who were just getting by before onto the breadline. Ministers, such as Iain Duncan Smith, have shown no compassion whatsoever for the thousands of people who now suffer a precarious existence and sometimes die under their regime of work capability assessments and forced workfare. And it seems there are even more cuts to welfare to come.

wealth  In statistical jargon welfare recipients are classed as being in the 1st decile whilst millionaires like Cameron, Clegg and Osborne are in the 10th decile. The huge gap in terms of wealth between these two extremes can be seen on the graph above. According to Howard Reed’s research the gap really began to open up after Thatcher came to power in 1979 and it widened dramatically during her eleven years in power. It levelled off for a while during New Labour’s reign but began to take off again in 2010 when the coalition took over. Reed shows that on Cameron’s watch inequality became turbo-powered.

david_cameron_pm_1910795 David Cameron, in my view, is no intellectual. In fact he’s a bit of an air head who never gets drawn into honest debate but simply parrots Tory sound bites. I’m sure Ed Milliband could wipe the floor with him if he wanted to. Sadly, though, the Labour opposition are giving the impression they agree, on the whole, with Cameron’s policies on welfare cuts. They’ve not shown much enthusiasm for standing up for the people who are really suffering the brunt of Cameron’s attack. Neither has Ed Milliband made any real attempt to defuse the constantly repeated myth that they were responsible for a wrecked economy despite there being plenty of hard evidence this was not the case. For three years Milliband has allowed Cameron to belittle Labour on this issue at every opportunity without defending himself. As a result of his failure and the perpetual repetition of the myth by every LibDem and Tory MP at every opportunity its now firmly fixed in the mind of the public as unquestionable truth and has done untold damage to Labour’s credibility as a safe guardian of the economy.  Why on earth has Milliband stood by and let this happen?  Its high time the Labour Party took back a little self respect and spoke out for the people its supposed to support – the working class – who are being bullied into poverty and despair by the Coalition.

Fabian_Society_Logo_CMYKHere’s Howard Reed’s article in full:-

 The Inequality Boom

Howard Reed

22 July 2013

Howard Reed finds that the impact of the coalition’s tax and benefit measures could end being as bad for inequality as the Thatcher government’s record. Turning the tide needs to be at the heart of Labour’s strategy for government

Concern about the extreme inequalities of incomes produced by capitalist societies has traditionally been a central component of left-of-centre politics, and the progressive taxation systems and redistributive welfare state put in place by the 1945 Attlee government was at least partly motivated by a desire to reduce inequalities. But how unequal is Britain now, 35 years after the Thatcher government and the end of the post-war consensus? What are the consequences of the current policies of the coalition government for inequality? And how much might impact on inequality might a Labour government expect to make if elected in 2015?

Inequality from 1961 to 2012

Inequality in the distribution of incomes is the result of a combination of two factors. One is the distribution of gross market incomes, ie income before taxes or transfer payments. The largest component of gross incomes is earnings, but the distribution of incomes from investments and (private) pensions, and property income, are also important. The other main factor determining the distribution of net income is the extent of redistribution by the government through the form of taxes and transfer payments (eg benefits, tax credits). Inequality can rise thanks to increasing dispersion of gross incomes, a reduction in the extent of redistribution, or both. Thanks to household surveys conducted on an annual basis from 1961 to the present day, we now have around half a century of data on the UK income distribution on a reasonably consistent basis. Figure 1 is based on analysis of this data by the Institute for Fiscal Studies (IFS) and shows the evolution of inequality in disposable income since 1961. The measure of disposable income used is net household income before housing costs, adjusted for family size. The figures go up to the 2011-12 tax year which are the most recent figures currently available[1].

The measure of inequality used is the Gini coefficient, which is a number between 0 and 1 showing the extent of inequality in a distribution of incomes. A Gini of 0 would correspond to a situation where every household had the same net income, whereas a Gini of 1 would correspond to a situation where one household had all the income and the rest had nothing. Hence, the higher the Gini is, the greater is inequality in incomes. The figures are for Great Britain (including England, Scotland and Wales but excluding Northern Ireland) because the Family Expenditure Survey, which was the survey used to measure incomes until 1992, did not cover Northern Ireland but data for the whole UK from 1993 onwards using the Family Resources Survey (which does cover Northern Ireland) show a very similar picture.

Figure 1. Inequality of household incomes Before Housing Costs, 1961 to 2011/12

inequalityboom1-e1374506159246

Source: Institute for Fiscal Studieshttp://www.ifs.org.uk/bns/bn19figs.xlsx

Broadly speaking, the evolution of inequality in Britain over the past 60 years comprises three distinct phases:

  • Between 1961 and the late 1970s, inequality was roughly stable, with a Gini coefficient in the range 0.24 to 0.27.
  • Inequality rose consistently from 1979 onwards, with the Gini moving above 0.27 in 1985. By 1990, the Gini had reached 0.34 – a rise of 0.07 in just five years. The 1980s were a period of persistent rises in inequality.
  • From 1990 onwards, inequality stabilised at a Gini of around 0.33 to 0.36 and has remained at that level until the present day.

In terms of the relationship between inequality and UK politics, it looks like the period of Margaret Thatcher’s premiership (1979-90) was very different from Labour or Conservative governments before or after it. Mrs Thatcher’s tenure in Downing Street coincided with a massive increase in inequality of household incomes in the UK. What caused this rise in inequality? Research by Stuart Adam and James Browne of the IFS[2] shows that between 1978 and 2008, reforms to the tax and benefit system increased the Gini by around 0.034 compared with a situation in which the 1978-9 tax system had been kept in place and uprated according to the uprating rules in place at that time. This increase in inequality appears to result mainly from two reforms undertaken by the Thatcher government: firstly, the reduction in income tax rates, with the top rate of income tax falling from 83 per cent in 1979 to 40 per cent in 1988; and secondly the decision to uprate means-tested benefits in line with price inflation rather than earnings, which (given that this was a period where average earnings were growing by about 2 per cent above inflation every year) meant that incomes for poorer families who were dependent on benefits for a large proportion, or all, of their net income lagged behind working families.

Thus, changes to taxes and benefits under the Thatcher government account for around half the overall increase in inequality seen between 1978 and 2008. The rest of the increase in inequality can largely be explained by two factors: firstly, increasing dispersion of earnings, with growth in earnings for top earners far outpacing average or low earners; and secondly a shift in the distribution of national income from wages to profits (income from profits is far more unequally distributed than income from wages).[3]

The record of the Labour governments between 1997 and 2010 on inequality is also worth commenting on here. New Labour was much more concerned with reducing poverty, and child and pensioner poverty in particular, than with reducing inequality per se. However, there is an obvious link between poverty and inequality in that redistribution via the tax and benefit system from richer households to poorer households – aiming to reduce poverty by increasing the net incomes of the poorest families – will tend to reduce overall inequality in net incomes as a by-product. Overall, the IFS research by Adam and Browne shows that New Labour made the tax-benefit system more redistributive (as a result of increased benefit payments for poorer pensioners and tax credits for low-income families with children). However, inequality in gross incomes continued to increase over this period. Overall, the two effects more or less cancelled each other out, meaning that inequality in 2010 was almost unchanged from its 1997 level.

The impact of coalition government policies on inequality

Figure 2 presents a breakdown of the distributional effects of most of the reforms made to the tax, benefit and tax credit system over the course of the current parliament using a tax-benefit micro-simulation model constructed by Landman Economics for the Institute for Public Policy Research. The analysis divides families in the UK income distribution into ten equally sized deciles ranging from decile 1 (the poorest) to decile 10 (the richest). The line in the graph shows the overall impact of reforms to the tax, benefit and tax credit systems as a percentage of disposable income, averaged across all families in each decile. Overall, the reforms introduced by the coalition are regressive across most of the distribution – the poorest families lose over 12 percent of their net income on average, compared with only around 3 percent of net income for families in the ninth decile. At the very top, the reforms are slightly progressive, with the top decile losing a slightly higher percentage of their income than the ninth decile; this is mainly due to increases in national insurance contributions and below-inflation increases in the higher rate income tax threshold.

The main factor driving the regressiveness of tax and benefit reforms between 2010 and 2015 is cuts to benefits and tax credits, particularly for working age families with children. The generosity of working tax credit, in particular, was cut back severely over this period. Furthermore, the uprating regime for working age benefits and tax credits has been changed from the retail price index (RPI) to the consumer prices index (CPI), and as annual CPI increases are typically smaller than RPI, this means that households reliant on benefits and tax credits lose out increasingly as time goes on. The decision in the 2012 Autumn Statement to limit working age benefit and tax credit increases to 1 per cent in nominal terms – well below CPI inflation – exacerbates the regressiveness of the reforms to social security. Meanwhile, coalition reforms to income tax and national insurance contributions during this time – principally the above-inflation increases in the income tax personal allowance and the lower thresholds for national insurance contributions – help families in the middle of the income distribution more than the poorest families, most of whom were not earning enough to pay income tax or national insurance in the first place.

Figure 2. Impact of Coalition Tax and Social Security Reforms introduced in 2010-15 Parliament, by income decile

The-Inequality-Boom-3-e1374506123849

Source: author’s own calculations using IPPR/Landman Economics tax-benefit model and Family Resources Survey data for 2010-11

The impact of the total package of tax and benefit reforms between 2010 and 2015 is to increase the Gini by 0.018 points – more than half as much again as the total increase in the Gini which arose from tax and benefit reforms over the period 1978 to 2008. There are additional reforms that it is not possible to model due to insufficient data on benefit claimants in the UK Family Resources Survey (such as many of the changes to housing benefit, and the replacement of disability living allowance by the personal independence payment). However, if they were added in to Figure 2, it is quite possible that the impact of the coalition’s tax and benefit measures would be as bad for inequality as the Thatcher government’s record, despite the fact that by 2015, David Cameron will have been prime minister for less than half the duration that Margaret Thatcher was. Looked at in this way, the coalition government’s tax and benefit reforms are like a speeded-up action replay of Thatcherism. This may come as a particular shock to Liberal Democrats in the government, many of whom spent the 1980s railing against the kind of increase in inequality which I forecast to occur as a direct result of policies introduced in this parliament.

The actual increase in inequality, as measured by the Gini coefficient, over the period 2010 to 2015 is likely to be more than 0.018 because of the continuation of the trends which contributed to increased inequality in gross earnings between 1980 and 2010. While earnings at the top of the distribution are continuing to increase, real wages for low-to-middle earners have been falling behind inflation for at least the last five years. And the most recent available data shows the share of wages in national income continuing to fall, to 53.7 per cent of GDP in 2011 (down from 59.2 per cent in 1980).

Reducing inequality in the future

How should a future Labour government respond to these trends? Discussion of the role tax and benefit measures to reduce inequality – or even to reduce poverty – after 2015 (should Labour emerge victorious at the next election) has not figured highly in policy discussions over the last three years. To a large extent, Labour seems to have bought into the argument of the right-wing media – trumpeted loudly by coalition politicians – that redistribution through the welfare state became increasingly unaffordable under New Labour. This is despite the fact that in 2007-08 – the last year before the Great Recession – total spending on benefits and tax credits as a share of gross domestic product was 11.4 per cent, compared with 11.9 per cent in 1996-97, just before Labour came to office[4].

But with the Labour leadership seemingly insistent that the poor state of the public finances rules out further action to reduce inequality through the tax and benefit system, attention has shifted to what the political scientist Jacob Hacker has called ‘predistribution’ – measures to make the distribution of gross market incomes more equal, thus reducing the pressure on the tax and social security systems to do the ‘heavy lifting’ of reducing inequality. This would be a big change in policy away from the New Labour years, where the market was more or less left to ‘let rip’ in delivering increasing inequalities in gross earnings and investment incomes, with the tax and social security systems having to do more and more redistribution to hold after-tax inequality constant.

There are several policy options for more equal predistribution of earnings, mostly focusing around changes in wage determination, bargaining structures and trade union representation, particularly in private sector industries and services, as well as upgrading skills and improving employment and job progression opportunities for the lowest paid.[5]

But while measures to equalise the distribution of gross earnings would be most welcome, they would work best in conjunction with a more redistributive tax and benefit system, rather than one being a substitute for the other. Many features of the current tax and benefit system are needlessly regressive; for example, council tax, which on average charges low-to-middle income households a much higher percentage of their disposable income than the richest households. There is plenty of scope for major reforms of the UK’s tax and social security systems to increase their progressiveness and reduce net income inequality, at the same time as simplifying the system and raising more money to help balance the public finances.[6]

At the same time, a lot of the inequality in incomes from investments is a function of vast inequalities of wealth and assets and therefore it would be necessary to redistribute wealth – perhaps via radical measures such as land value taxation – to equalise the distribution of investment income significantly.[7]

Whichever set of policies Labour chooses in 2015, it will be important for inequality reduction to be at the heart of the party’s strategy for government. As Richard Wilkinson and Kate Pickett show in their book The Spirit Level, there are clear links between lower inequality and a range of better social outcomes (eg lower crime, increased levels of trust in society, and greater social mobility). For Labour to enter government with a mindset that inequality doesn’t matter would be a serious mistake. Instead, it is to be hoped that despite the difficult economic circumstances which the next Labour government is likely to inherit, they can nonetheless place a clear focus on getting UK income inequality down to the levels which prevailed before the Thatcher revolution of the 1980s.


[1] Prior to 1993 the annual surveys used to obtain data on the income distribution were conducted in calendar years; from 1993-94 onwards they changed to fiscal years.

[2] Stuart Adam and James Browne, Redistribution, Work Incentives and Thirty Years of Tax and Benefit Reform, IFS Working Paper 10/24. http://socialwelfare.bl.uk/subject-areas/services-activity/poverty-benefits/instituteforfiscalstudies/132531wp1024[2].pdf

[3] Both these trends, and the reasons behind them, are examined in more detail in Jacob Mohun Himmelweit and Howard Reed, Where Have All The Wages Gone? Lost Pay and Profits Outside Financial Services, TUC, 2012. http://www.tuc.org.uk/tucfiles/466.pdf

[4] Source: IFS analysis of benefit and tax credit spending as a proportion of GDP. http://www.ifs.org.uk/ff/ben_spend.xls

[5] For more discussion of how to reduce gross earnings inequality see Stewart Lansley and Howard Reed, How To Boost The Wage Share, TUC, 2013.

[6] The bare bones of such a reform package are Richard Murphy and Howard Reed, Financing the Welfare State: Towards a Full Employment Economy, Centre for Labour and Social Studies, 2013. http://socialwelfare.bl.uk/subject-areas/services-activity/employment/centreforlabourandsocialstudies/1464492013_Policy_Paper_-_Richard_Murphy__Howard_Reed_(Social_State_-_Idleness.pdf

[7] Several options for introducing a wealth tax in the UK are looked at in Kayte Lawton and Howard Reed, Property and Wealth Taxes in the UK: The Context for Reform. Institute for Public Policy Research, 2013. http://www.ippr.org/publication/55/10503/property-and-wealth-taxes-in-the-uk-the-context-for-reform

Pride Comes Before A Fall: Problems With Universal Credit Could Leave IDS With Egg On His Face.

Fee-for-use-Iain-Duncan-Smith-1797134 In yesterday’s Observer Iain Duncan Smith once again boasted about how proud he was of his precious welfare reforms. Instead of addressing the very real and totally legitimate criticisms of his performance so far he pointed to the fact that the DWP had delivered their programme of torture on time:-

… we already have a proud record of achievement… We promised a benefit cap and it began, on time, in April in four London areas. It will be completely rolled out by September. We introduced the new personal independence payment as planned and on time. Automatic enrolment started last year, and now 1 million people have been registered into a workplace pension. People are using our Universal Jobmatch website for more than 5m job searches a day. Our Work Programme has launched and the industry tells us that so far 321,000 people have found a job through it.I am proud of this record.

sick  How any decent, sane human being can ignore the thousands of lives that have been devastated by his policies or refuse to acknowledge the deaths and suicides that can be directly linked to his actions is totally beyond my comprehension. Why a newspaper like the Observer gave him the space to make those comments is also a  mystery to me. And his refusal to undertake an impact assessment of the effect he’s had on the lives of disabled people simply shows that he doesn’t want to know. The only conclusion you can draw from this is that he’s irresponsible, unprofessional and should never be allowed to ‘serve’ as a politician again.

shoes But as usual the odious Mr Smith is not giving us the true picture about the DWP’s performance when it comes to the progress of Universal Credit. There are huge problems with it. Two aspects stand out here. The first is to do with their badly thought through devotion to ‘digital by default’. This report from Public Net published today shows that the DWP have overestimated the number of people who will be able to claim the benefit online. The potential for chaos is tremendous.

UNIVERSAL CREDIT PILOTS REVEAL CHALLENGES FACING BENEFIT CLAIMANTS

Headlines: July 29th, 2013

Many benefit claimants will struggle to meet the requirement of the new welfare arrangements which are due to be introduced from October 2013 with the launch of universal credit. Pilot schemes started last year by councils have revealed the scale of the difficulty many claimants will experience.

Universal credit will require all claimants to submit claims on line. Although 86 per cent of the UK population have access to the internet, the pilots have found that in the case of benefit claimants it is closer to 60 percent. Theoretically claimants can use facilities in libraries to submit claims, but they don’t visit libraries and they need support to cope with the technology and with the benefit processes. Some pilots are experimenting with providing access points in council premises and with staff on hand to support the claimants. Other pilots are exploring various approaches to improving access but have found it difficult to encourage take up.

Universal credit will roll up all benefits into a single payment which will be made directly to the claimant. This will meant that currently where some housing benefit is paid to landlords, in future it will be paid directly to the claimant. The pilots have revealed that many social housing tenants have problems with debt and rent arrears which might compound possible problems with personal budgeting.

Some councils have found a reluctance from customers to take part in budgeting and financial training in group sessions. It is thought the reluctance is due to the stigma of engaging in sessions which may highlight personal debt and rent arrears issues. The uptake of group financial education sessions in some authorities has been so low that sessions have been cancelled. This evidence is mirrored in the Direct Payment Demonstration Pilot areas.

Different approaches are being used to support personal budget management. They include sessions in smaller community groups and collaborating with partner organisations. Changing the welfare culture, which universal credit seeks to achieve, is a mammoth undertaking and it raises issues which must be addressed to bring success. While solutions to the problems are available, they will need time and funding on a scale which has probably not been foreseen in the implementation plan.

global race  The second report is potentially more damaging since it concerns the IT system that’s being developed to allow Universal Credit to be calculated. Because it combines all previous benefits into one package claimant information has to be gathered from HMRC systems and the system used by local authorities to calculate Housing Benefit. It seems they’ve messed up and now need to start from scratch. With the next roll out due in only two month’s time (October) its looking increasingly unlikely that even the six centres that are earmarked for the next stage will be able to cope. These computing problems were highlighted earlier in the year but in typical IDS fashion our SoS shrugged them off and refused to acknowledge that his ‘baby’ wouldn’t be born on time. Again Public Net have the story:-

UNIVERSAL CREDIT AMBER RED-RATING VINDICATED

Headlines: July 15th, 2013

Last year’s Government review conclusion that the Universal Credit project should be rated as amber/red because its successful delivery was in doubt and urgent action was needed, has been proved to be correct. Current trialling of the system with simple claims has revealed failings and there is to be a new design for dealing with the more complex claims.

Universal Credit will simplify the benefits system, improve work incentives and reduce fraud and error. It will replace income-based Jobseeker’s Allowance; income-related Employment and Support Allowance; Income Support; Child Tax Credits; Working Tax Credits and Housing Benefit.

The Universal Credit project is being tested in 2 areas of the north-west, with another 2 starting later this month. The pathfinder trial is restricted to new claimants who are specially selected. Despite this narrowing of usage, it is understood that significant manual input by officials is required to verify accuracy and deal with other problems.

This assessment of the pathfinder is supported by the announcement that the next stage of development in October will be restricted to 6 additional job centres. The original project plan was for all new claims for out-of-work support to be treated as claims to universal credit from October 2013.

A potentially more serious aspect of the project is how the system interacts with Real Time Data System which includes information about earnings of claimants from HMRC. It appears that this element of the system design has been scrapped and it is now ‘back to the drawing board’. The official line about this re-think is that there is a need to explore enhancing the IT for Universal Credit working with the Government Digital Service.

The need for a re-think is unsurprising, because the universal credit system design was completed prior to the emergence of the Real Time Data System. Pressing on with the system design without knowing what the final integration requirements would be, involved many assumptions. This was a high risk strategy which proved unsustainable.

Re-writing this element of the system will take time and the trialing of in work claims cannot start until it is possible to use information from the Real Time Data System. Getting the IT system to perform effectively is only one of the major risks to the success of the project. The cultural transformation involving claimants moving to a digital service will be difficult to achieve. In a move to promote this transformation 20,000 Job centre Plus advisers will be involved in a training scheme and ten pilots will test how to best encourage claimants to progress in work.

6a00d8341d417153ef0133f5d6b4ef970b-550wi   Mr Smith’s plans to get everyone including the terminally ill and profoundly disabled working to make Cameron’s pipe dream of winning the ‘global race’ come true seem to be nothing more than pie in the sky. The tragedy is by pursuing their hopeless policies this government are causing misery and death.

The Trial of a Proud Man: Evidence against Iain Duncan Smith

the_great_ids   Iain Duncan Smith has spoken a number of times about his pride in the welfare reforms he’s presided over. He’s dismissed all criticisms and poo-pooed all the evidence that these reforms are causing hardship.

Imagine that IDS could be put on trial for the harm he’s done (I wish) and evidence was presented for the prosecution. What would that evidence be? Where would we begin to start? Well, here’s an interesting video from February this year. It shows three well educated, articulate  people appearing before the Scottish Parliament’s Welfare Reform Committee, telling how they suffered at the hands of Atos. Its a long video, over an hour and a half, but its well worth watching.

lbc-logo Here’s more evidence for the prosecution in the form of a conversation on LBC radio. A caller, Sally, who claims to be a former nurse assessor at ATOS  gives Petrie Hosken an uncomfortable insight into how assessments are made.

 

So, anyone going to present any evidence for the defence?