Welfare reform: Responding to welfare changes Paul Spicker Employability and Skills Scotland 18 th September 2013

The benefits system Part 1

Benefits State pension ESA/JSA National Insurance Jobseekers Allowance ESA Pension Credit Minimum income support Housing Benefit Tax Credits Tapered Benefits Disability Living Allowance/ PIP Attendance Allowance War Pensions Non- contributory (needs tested) Child Benefit Over 80s pensions Winter Fuel Payment Universal benefits Scottish Welfare Fund Social Work payments Discretionary benefits

The aims of the benefit system The aims of welfare reform The focus on out of work benefits “Work for those who can, support for those who can’t” Individual responsibility

Misrepresenting welfare ‘Welfare dependency can become deeply entrenched, handed on from one generation to the next’ Job seekers out of work for: Six months or more 32% One year or more 16% Two years or more 4% Five years or more 0.4% Ten years or more 0.08% Spending on people of working age is ‘unaffordable’ 1992/93: 4.3% of GDP 2012/13: 3.5% of GDP ‘People found they are better off on the dole than in work’ Replacement ratios Switzerland Denmark Germany USA UK Housing Benefits undermine the incentive to get a better paid job Marginal rate of deduction on HB: 65% Marginal rate of deduction on Universal Credit: 65%

Welfare reform Part 2

The elements of welfare reform Personalisation Means testing Personalised assessments Responses in ‘real time’ Work testing ESA Bereavement benefits Lone parents “Work for your benefit ” New rules for jobseekers Conditionality Freud: ‘intensive intervention’ Sanctions Compulsory entry to programmes

The cuts Tax Credits Upratings Benefit cap Cuts in benefit levels Sanctions Medical reassessment Individual penalties Child Benefit Contributory ESA DLA lower rate Withdrawn entitle- ments Bedroom Tax LHA rates Non-dependent deduction Housing benefit

Jobseekers Job search 35 hours per week Claiming Online claims The compulsory CV Exclusion of under 18s Compliance and sanctions fixed term sanctions Sickness short-term sickness (2 x 14 days) reassessment work-related activity Other conditions part time work self-employment

The programme of reform Universal Credit ●Income Support ●Working Tax Credit ●Child Tax Credit ●Housing Benefit ●Jobseekers Allowance ●Employment and Support Allowance Personal Independence Payment ●Disability Living Allowance Local authority benefits ●Council Tax Reduction ●The Scottish Welfare Fund

Universal Credit: aims and design The aimsThe design Simplify the systemA complex, portmanteau benefit All elements (JSA, ESA, HB, WTC) maintained Partial coverage No integration with tax, CTB or local benefits Improve work incentivesA 65% taper Smooth transitions in and out of work‘Whole month’ assessment Reduce in-work povertyCuts Cut back on fraud and errorThe onus to report is on claimants

Universal Credit: the plan for implementation The plan Digital by default The claimant commitment Monthly payment Real time processing Direct payment The process Pilots New claimants from October Transition: October The problems Slow progress The limited pilots The ‘fortress’ mentality

The flaws in Universal Credit Is there ‘meltdown’? Personalisation and conditionality The demand for information Joint and several claims Over-reaching administration Real time processing Coordination with HMRC The pilots: back to Excel The impossible computer Repeating recent failures: ‘too many moving parts’ The design

Universal Credit: The design Problems of benefits in general ignorance complexity stigma policing the boundaries Problems of means testing threshold definition and tapers capital equivalence and household composition reporting changes changing circumstances self-employment Universal Credit has the lot Recent failures benefits without clear entitlement repayment expecting sick people to work medical reassessment penalties not linked to knowledge cohabitation rule multiple dimensions

Implications for Scotland Part 3

The impact of cuts £ millions lost in local authority areas, estimated: source, SHU research, Financial Times at ig.ft.com/austerity-map/ GlasgowFifeHighland Incapacity benefits Uprating at 1% Tax Credits DLA Child Benefit LHA Bedroom tax Non-dependent deduction Benefits cap 2 1 0

Three Scotlands from the Scottish Council Foundation Settled Scotland Insecure Scotland Excluded Scotland Insecurity and benefits Scotland’s precarious labour market The need for a secure income The problem of personalisation

The direction of policy Welfare reform aims for: Simplicity Personalisation Commercialisation More emphasis on work Individual responsibility It should aim for: Managed complexity Stable incomes Cost-effective services Social protection Support for the labour market