The takeup of benefits: lessons from the UK Paul Spicker Robert Gordon University

Benefits in the United Kingdom State pension Employment and Support Allowance Jobseekers Allowance National Insurance Jobseekers Allowance ESA Pension Credit Minimum incomes Housing Benefit Tax Credits Tapered Benefits Disability Living Allowance/ PIP Attendance Allowance War Pensions ‘Non- contributory’ (tests of need) Child Benefit Over 80s pensions Winter Fuel Payment Universal benefits Local welfare assistance Social Work payments Discretionary benefits

Public spending on benefits State pension £83 bn DWP £53.4 bn HMRC £40.3 bn Older people £110.7 bn Total Expenditure £204.4 bn Other benefits Tax Credit JSA/ Income Support Disability ESA/IB Housing Benefit Child Benefit Disability

The Poor Law and the Welfare State Myth 1: The Welfare State would abolish poverty Myth 2: Older people would gradually forget Myth 3: Rights would overcome stigma The Poor LawThe Welfare State StigmaRights SelectivityUniversality Welfare as a ‘public burden’ “From the cradle to the grave” Local discretionUniform, national administration

Means testing The reasons identified for low take-up Ignorance Complexity Stigma Marginal benefit Policies to avoid means- testing (1970s) Extending National Insurance Invalidity Benefit Non contributory benefits Attendance Allowance Mobility Allowance Non-contributory Invalidity Pension Extending universal benefits Child Benefit One-parent benefit

Targeting The return to means-testing (1980s and after) Tapered benefits – Rate Rebate, Community Charge Benefit, Council Tax Benefit, Council Tax Reduction – Unified Housing Benefit – Family Income Supplement, Family Credit, Tax Credits The collapse of National Insurance for unemployed people The resurgence of selectivity Refining the target Type 1 errors: wrongful exclusion Type 2 errors: wrongful inclusion The methods Tightening eligibility criteria “Computermania” Purging benefit fraud Segmenting – refining responses to client groups

The problems of targeting Problems of selectivity complexity exclusion non-takeup equity costly administration intrusiveness boundary problems the ‘poverty trap’ Problems of means testing threshold definition and tapers capital equivalence and household composition changing circumstances self-employment

Two models of takeup Burton Weisbrod: Costs and benefits Costs: Information Stigma Access Benefits: Marginal benefit Utility Scott Kerr: Thresholds 1. Perceived need 2. Basic knowledge 3. Perceived eligibility 4. Perceived utility 5. Beliefs and feelings 6. Perceived stability of circumstances 7. Making a claim

The take-up of various benefits Type of benefitEstimates of % takeup by eligible recipients Estimates of % money due being claimed Child BenefitUniversal95-96% Child Tax CreditTapered83-87%92-95% Housing BenefitTapered78-84%84-90% Income Support plus ESAMinimum income77-89%82-92% Working Tax CreditTapered63-68%82-87% Pension CreditMinimum income62-68%73-80% Council Tax BenefitTapered62-69%64-71% Jobseekers AllowanceInsurance/ minimum income 60-67%61-70% Disability Living Allowance – mobility component Non-contributory50-70% Attendance AllowanceNon-contributory40-60% Disability Living Allowance – care component Non-contributory30-50%

Some things we know, some we don’t Pensioners Similar rates for Housing Benefit Unknown capital holdings Reluctance to identify disability Couples Persistently lower claims than for single people Employment Different rates for Housing Benefit Problem of fluctuating income Precarious work/ sub-employment Some grounds for scepticism Why are Tax Credits > basic means tests? Why is Attendance Allowance > DLA care component? Why is Housing Benefit > Council Tax Reduction? Why are lone parents more likely to claim than single pensioners?

What works? Stability and predictability Outreach Personal support City of Ypres, Forma Subventionis Pauperum, 1531 Many people are so naturally ashamed and fearful, that they would rather hide their need than disclose it, and they live at home in serious want. Because of them, it has been decreed that people who are needy secretly and in private should be searched out. Those who are ashamed to be seen shall be visited, and those who are too ashamed to take anything shall be given support. Men will go to the houses of those who do not dare speak to us or to come to our gates. We think it best not to delay unless they are driven, through the loss of this honest humility, to show their deprivation and need. They must be helped, privately and promptly, lest they are lost by our negligence, when they are just those who a caring charity requires us to help.

Welfare reform: how benefits have been changing Personalisation Means testing Personalised assessments Responses in ‘real time’ Work testing ESA Lone parents “Work for your benefit” New rules for jobseekers Conditionality Compulsory entry to programmes ‘Intensive intervention’ Sanctions Who are the target groups? Does universal coverage still matter?