Welfare reform: Responding to welfare changes

Paul Spicker

Employability and Skills Scotland18th September 2013

The benefits systemPart 1

Benefits

The aims of the benefit system

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

SocialprotectionSocial

protectionPovertyPoverty Economic

managementEconomicmanagement

SocialinclusionSocialinclusion

NeedNeed RedistributionRedistribution IncomesmoothingIncomesmoothing

ShapingbehaviourShapingbehaviour

SolidaritySolidarityCompensation

fordisadvantage

Compensationfor

disadvantageEquityEquity Public

healthPublichealth

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 ratiosSwitzerland 0.687Denmark 0.521Germany 0.353USA 0.275UK 0.189

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 reformPart 2

The elements of welfare reform

The cuts

JobseekersJob search

35 hours per week

ClaimingOnline claimsThe compulsory CVExclusion of under 18s

Compliance and sanctionsfixed term sanctions

Sicknessshort-term sickness (2 x 14 days)reassessmentwork-related activity

Other conditionspart time workself-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 aims The designSimplify the system A complex, portmanteau benefit

All elements (JSA, ESA, HB, WTC) maintainedPartial coverage No integration with tax, CTB or local benefits

Improve work incentives A 65% taper

Smooth transitions in and out of work ‘Whole month’ assessmentReduce in-work poverty CutsCut back on fraud and error The onus to report is on claimants

Universal Credit: the plan for implementation

The planDigital by defaultThe claimant commitmentMonthly paymentReal time processingDirect payment

The processPilotsNew claimants from OctoberTransition:

October 2013-2017

The problemsSlow progressThe limited pilotsThe ‘fortress’ mentality

The flaws in Universal CreditIs there ‘meltdown’?

Universal Credit: The designProblems of benefits in general

ignorance complexity

stigmapolicing the boundaries

Problems of means testingthreshold definition and taperscapitalequivalence and household compositionreporting changeschanging circumstancesself-employment

Universal Credit has the lot

Recent failuresbenefits without clear entitlementrepaymentexpecting sick people to workmedical reassessmentpenalties not linked to knowledgecohabitation rulemultiple dimensions

Implications for ScotlandPart 3

The impact of cuts£ millions lost in local authority areas, estimated: source, SHU research, Financial Times at ig.ft.com/austerity-map/

Glasgow Fife HighlandIncapacity benefits

94 33 17

Uprating at 1% 47 21 10Tax Credits 45 22 12DLA 28 10 6Child Benefit 24 16 9LHA 13 4 2Bedroom tax 10 3 2Non-dependent deduction

6 2 1

Benefits cap 2 1 0

Three Scotlandsfrom the Scottish Council Foundation

Insecurity and benefits

Scotland’s precarious labour marketThe need for a secure incomeThe problem of personalisation

The direction of policy

Welfare reform aims for:

SimplicityPersonalisationCommercialisationMore emphasis on workIndividual responsibility

It should aim for:

Managed complexityStable incomesCost-effective servicesSocial protectionSupport for the labour

market