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The government is misleading in its claims for Universal Credit

The British government's response to criticisms of its welfare reforms are misleading - the overall picture remains one which will ensure poverty and misery for many through little fault of their own.

Deborah Padfield
26 February 2014

Following Vincent Nicholls’ welcome intervention in the welfare benefits debate, BBC Radio 4 fielded a parliamentary private secretary to respond for government; I believe, though I haven’t been able to find it on the web today, that it was Iain Duncan Smith’s PPS Andrew Selous. But what he said was largely untrue or, at best, misleading.

1    Universal Credit (UC) will make work pay as never before. 

The ability under UC to top up part-time wages free of tax credits’ current arbitrary qualifying points (working over 16, 24 or 30 hours according to circumstances) will help low-income people. 

However, UC is designed to make work pay for the first earner in the household. There’s no such aim when a second earner (frequently the woman) starts work. That was deemed too expensive. 

Whether work pays also depends heavily on costs not within the UC package. Several points here:

Against all logic, council tax benefit, now localised council tax support, is to stay with local authorities, calculated separately from UC. Some irrational ‘cliff-edges’ undermining the affordability of work are inevitable.

Under UC, up to 70% of (eligible) childcare costs will be paid, with a fixed maximum, matching current provision through Working Tax Credits. The adequacy of that support will depend on local prices, flexibility and availability. However, UC will cut very significant amounts from childcare support by removing the further subsidy currently paid through Housing Benefit. The Children’s Society 2012 report ‘The Parent Trap’ still holds good: the change will badly affect our poorest families. This is but one of the cuts hiding in the fine detail of UC, following many stealthy reductions in benefits and tax credits over the past few years.

Transport to work and childcare is outwith UC calculations. This will become more significant as low-income families are rehoused in cheap areas further from their work to reduce the housing benefit bill; moving house will often also mean loss of the local support networks which make work possible.

2  Job Seekers Allowance and Employment & Support Allowance are available to those not working or unable to work. As Nicholls said, a ten-day delay between claim and payment is normal. The poorer the claimant, the more critical that is. Housing benefit awards tend to follow those of JSA or ESA; HB delays are anyway likely to increase as more experienced staff leave local authorities ahead of the transfer of their work to Job Centres under UC. 

Working and child tax credit claims can take even longer, since they involve evidence of the last tax year’s income. Awards on an estimate of this year’s income are possible, provided that claimants know they can ask for one. Legal aid for benefit advice has been abolished. 

The people closest to the prime minister’s heart - the many ‘doing the right thing’ by working part-time or taking a series of short-term jobs - are most affected by delays to benefits and tax credits. That’s inevitable, given the need to calculate and prove their incomes. The more informal the evidence of income, the longer it takes, and that’s rarely controllable by the claimant: plenty of employers fail to provide contracts or wage slips and pay cash in hand. UC is designed to improve this with its use of ‘real-time’ information from employers, but only dreamers believe that that will solve the problem for workers at the insecure end of the market.  

Delays don’t only affect the start of a benefit claim. Whenever a query arises, as when the claimant’s income changes or is suspected to have changed, the benefit stops until full evidence is provided. People in and out of short-term jobs, or with the fluctuating incomes typical of zero-hours contracts, face heavily stressful and often disastrous stop-start-stop-starts. 

Following a scandalous though little-noticed change on 31st October 2013, those unfit to work through illness or disability face a further cause of non-payment. Since its introduction in 2008, ESA has been dogged by a persistently appalling standard of evidence-gathering by Atos Healthcare and consequent high level of successful appeals by claimants wrongly turned down. This particularly affects people with ‘invisible’ disabilities such as mental illness or pain. Since October, people wishing to challenge a decision have had first to ask for a ‘mandatory reconsideration’ by DWP before appealing to the independent Tribunals Service; during this initial, non-time-limited process, ESA payments cease. Claimants must choose between being without money for an indefinite period or claiming Job Seekers Allowance. If they are turned down by the reconsideration then decide to appeal, their ESA will be put back into payment and the gap refunded or, if they’ve claimed JSA, they can again change tack and reclaim ESA. 

In Parliamentary and DWP statements, claimants have been assured that such a JSA claim will not prejudice the ESA reconsideration. However, it is a bizarrely complex system that forces people struggling with disability or ill health to decide their least-bad option on the basis of no certain information. A reconsideration could take hours, or weeks. Job Centre Plus merely say they will do them as quickly as possible. 

The system forces claimants into wholly incoherent situations. I have without success sought for DWP’s guidance to front-line advisers in Job Centres facing the inevitable JSA claimant who, when asked if she is fit for work - a necessary condition of the benefit - truthfully says no. If the ‘job seeker’s agreement’ has any meaning, she has to be turned down for JSA. Yet she’s been instructed to claim it. Clarification would be welcome.

It isn’t a wholly new situation, but stands out as outrageous mainly because its only discernible purpose is to use poverty as a weapon deterring people from appealing bad decisions. There is a routine churning of people who, being found fit for work after an ESA assessment and deciding not to appeal, claim JSA as instructed; then, because they are still covered by their GP’s sick note, they are turned down for JSA as unfit. If this sounds unbelievable, I can only apologise for my inability to explain a Looking-Glass world. 

3  People don’t just get JSA and ESA; their rent and council tax are also paid.

Partly. People on means-tested JSA and ESA used to have their council tax paid in full. That ended in April 2013, when local authorities gained control over the amount of subsidy paid to claimants. ‘Localised council tax support’ now varies widely between local authorities. In Peterborough, residents below Pension Credit age have to pay 30% of their bills regardless of eligibility for means-tested benefits: that includes the very poorest. In Sheffield, 23% is payable. In Fenland, it’s 8.5% though likely to rise in coming years. 

People on means-tested benefits are also entitled to ‘full’ housing benefit. For private tenants, that full amount has long been subject to a double calculation: via ‘BMRA’ and household size. The Broad Market Rental Area (BMRA) takes all private rents within a geographic area, looks at the spread and fixes on the 3rd decile (three tenths up) of that spread for each property size. Then the household size comes into play. If a couple have one child, their maximum is the allowance for a two-bed property in that BMRA; if two late-teens children, enough for three beds. A single person under 35 gets enough for a room in a shared property. The rent they actually have to pay in their particular locality is irrelevant. They might get enough benefit - or not. In Cambridge and similarly expensive corners of the country, the amount payable is pulled down by much lower rents within the BMRA, making housing a real problem for benefit claimants. 

For social housing (council and housing association) tenants under state pension credit age, the ‘bedroom tax’ has been hitting the headlines. Their housing benefit is reduced should they be ‘under-occupying’ the property by one or more bedroom according to their household size, irrespective of whether smaller properties are available for them to move to. 14% of the eligible HB amount is taken where there’s one spare bedroom, 25% for two or more. For the Guardian’s assessment of the current impact, see here.

These maximums are, of course, also subject to the overall benefit cap which mainly affects large families and those in high-rent areas. For the level of the cap, see here.

That interview on Radio 4 played politics with half-truths to an unacceptable extent. Its message was untrue. Vincent Nicholls is right that many families are now destitute, with more destined to be so by the incremental effects of forthcoming cuts to welfare benefits and other support services. 

He is right too that this is a disgrace in a wealthy country. If the benefit bill is unaffordable, we need to look hard, and fast, at the economic structures of employment, definitions of work, pay rates and housing provision which underlie it. We shouldn’t make the poor pay the price of a dysfunctional system while we, the relatively affluent, curl up with reassuring half-truths.  

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