Universal Benefit - replacing JSA, IB, ESA, and IS

Presenter: Lawrence Kay

Recognised as a major influence on the thinking of a future Conservative government, the Policy Exchange is moving beyond Freud to look at one of the enduring problems of the welfare state: the ever-increasing complexity of benefit rules, and how they might be simplified. As Theresa May acknowledged in her own appearance at the conference, research on this is in the earliest stages, and the session was mostly a debate rather than a presentation of results. Taking the idea of a single, universal benefit as a starting point, the discussion quickly revealed why so many ministers have come in intending to simplify the benefits system and left with something even more complex in its place.

How complex is the benefits system?

Given that fully understanding and offering advice on the benefits system is a full-time job, it's pretty darn complex. Lawrence used some rough proxies, including:

• The Child Poverty Action Group guide to benefits and tax credits was 400 pages long in the early 90s, and is 1500 pages long now
• The Public Accounts Committee found 30 linkages between different benefits in a study some years ago
• The National Audit Office looked at complexity and internal DWP guidance – 14 volumes of guidance
• The NAO also found that the past 10-15 years had seen significant changes to benefits in every single year
• The Decision Maker's Guide, which acts as the Bible for DWP benefits, runs to 15 volumes

How did it get so complex?

Lawrence identified 'fairness' as the main reason for increasing complexity; adding wrinkles and exceptions so that the system adheres to people's sense of justice by giving help to those who deserve it and protecting state finances from those who don't. Responding to specific circumstances (e.g. seasonal workers in Scottish mills) often necessitates flexing of the system.

Although unstated, there's an obvious comparison with the legal system to be made – the UK common law system is hugely complex, and tends to get more so over time.

Why simplify?

Lawrence's primary argument for simplification was that the complexity of the current system reduces the willingness of benefit claimants choosing to move into employment, thus making the job of JCP advisers and providers much harder. In the absence of quantitative research on precisely how much it reduces job entry, Lawrence used complexity in the tax system as a comparison point. Various US research projects were deployed to show that people were far more likely to make bad decisions in a more complex system.

How simplify?

The starting point for simplification was Roy Sainsbury's proposal of a single universal benefit to replace JSA, ESA, IS and IB, paying a flat rate of £60-70 / week. Tax credits and other benefits such as DLA, SDA and so on would be unaffected. Housing Benefit was also not covered. In universal benefit, all JCP adviser interviews would be work-focused.

Discussion - I do not think it means what you think it means

Much of the discussion was devoted to the wholesale demolition of the universal benefit proposal. Objections included:

• Repeating the past: what would stop the new benefit from increasing in complexity over time, in exactly the same way that the old benefits did?
  Lawrence's answer to this was that government's desire to maintain simplicity would suffice for 15 years or so. He also pointed to the introduction of universal benefit in New Zealand in 2010 as an example of the achievability of simplification
• The complexity is there for a reason: it matches the complex needs of the people being helped by the system
  Giving front line advisers the ability to target funding and support to people on an individual basis would allow them to meet these needs. This flexibility would also remove the rules that prevented advisers from helping customers
• The proposed flexibilities could place a huge burden on advisers, who would need substantial training and support to take advantage of them
• Flexibilities could also undermine the conditionality (i.e. the fortnightly signing, job search requirements etc.) that underpinned much of the success in reducing unemployment prior to the current recession
  Lawrence clarified that adviser flexibilities would still need to operate within a solid framework of rights and responsibilities
• The universal benefit would not replace most of the complexity in the current system, as DLA, industrial injuries, Housing Benefit, capital rules, eligibility requirements etc. would all remain in place
• Even if the entire benefits system was successfully simplified, the complexity of government engagement with claimants and employers would remain, because of the fragmented, silo nature of government delivery through many different departments
• Replacing benefit rules with adviser flexibility would result in inconsistent and often unfair support for customers with particular needs, dependent on their adviser's current mood, availability of funds, caseload pressures, local practices, and simply whether they make a good impression or not. Additionally, giving that level of power to advisers may damage the relationship and trust between advisers and claimants, and potentially result in abuse of power.
  Estimates from a few years ago are that 20% of benefit decisions are wrong. 80% of eligible tax credit recipients don't claim them. The mere existence of full time benefit advisers proves that the system only works properly when it's pushed on by people who know what they're doing. Given this, the system is already inequitable in practice.

A number of participants pointed to the long history of failed attempts to simplify the benefits system, from Age Concern's work in the 1970s onwards. The consensus view seemed to be 'don't start a land war in Asia'.

It wasn't all demolition though. There were also some suggestions for improvements or alternatives:

• Moving payment of Housing Benefit into the DWP's remit
  It was pointed out that HB was originally a central government responsibility, before being devolved to Local Authorities
• Look at the complexity of transitions between benefits and into work, which is what really stops people from moving off benefits
• The Frank Field suggestion of making disability and health support benefits independent of employment status and work readiness. This, coupled with universal benefit, ensures that those with specific health needs still receive extra support, but removes the disincentive to entering work
• Housing Benefit is only paid for four weeks after job entry. Making work appear worthwhile for the long-term unemployed could necessitate paying HB for at least a year
• Transition into work can take 1-2 years for the long-term unemployed. Changing benefit rules and programmes to allow them to undertake training without hitting obstacles such as the 16 hour barrier would help enormously
• A one-button approach to job entry, with a person's benefits being suspended rather than stopped for their first month in a job, and instantly reinstated without having to go through the process of reclaiming should the person leave employment again
• Make it easier for employers to hire people in the first place – there's apparently research showing that very small employers would be far more likely to hire people and grow their businesses if the employment system wasn't so daunting to navigate from their own side

Political bonus question – in response to a final question about the Conservative welfare agenda, the suggestion was made that, owing to the recession and the huge government deficit that resulted from it, the thrust of Conservative policy in a future government would be cost-cutting. Canada was mentioned as an example of the likely mood.