Welfare reform in the dark

Today saw the introduction of the Welfare Reform bill to the House of Commons. Initial Impact Assessments were also published. This piece of legislation has been trailed for many months, but it will nonetheless take quite a while to fathom the detail of what is being proposed across the wide range of areas it touches on. And it will take just as long to explore how it interacts with policy developments in other areas. Much of the early buzz about the Bill was the news that the Government had dropped the proposal to cut Housing Benefit for those receiving JSA for more than 12 months. This is clearly an unusual outbreak of good sense. Many are claiming it as a victory for the Lib Dems, and Nick Clegg in particular. Later in the day we were being reminded not to get carried away with this change – important though it is – because the Bill continues to embody a range of contentious proposals for seismic change to welfare provision (see here at Left Foot Forward, for example).

As those who have read previous posts will know, I am very keen on summing the parts and trying to understand the big picture (see, for example, Piecing together the housing policy jigsaw). It is something that many government are not good at. This government seems particularly poor at it. But in an era of rapid and radical change it is all the more important.

So when I read the opening salvoes of the covering note of the Welfare Reform Impact Assessment, setting out the overall approach, it got me thinking:

2. The proposals in the Bill impact on a wide variety of groups in different ways. A single overall cumulative Impact Assessment has not been produced.

3. The scale of policy change provided for by the Welfare Reform Bill is significant, and is planned to take place over an extended period, beginning in 2011-12 … and ending in 2017-18 … Therefore the impacts build-up over a substantial period of time, and at a different rate for the various measures. To provide a single summary accurately taking account of the different timings would be analytically complex and extremely challenging. To simplify would risk providing a set of misleading impacts.

4. Moreover the changes to social security benefits and tax credits contained in the Bill take place in a wider context of fiscal change. The impact assessments therefore do not account for wider changes that would impact on households over the period, for example, the aim to increase income tax personal allowances to £10,000.

5. Collectively these factors substantially limit the extent to which a cumulative impact assessment would provide an accurate analysis of the impacts of the Bill as a whole. Moreover, an amalgamated assessment is likely to obscure the impacts of individual policies rather than aid the understanding of those considering the Welfare Reform Bill in Parliament and the wider public.

What, exactly, is this saying?

The main point is that no cumulative assessment is presented. We are offered a couple of different reasons. At the end of para 5 it states that an amalgamated assessment is likely to obscure the impacts of individual policies. Presumably that is only the case if we were treating this as an either/or issue. One might suggest that publishing a cumulative assessment, alongside the individual IAs, is a strategy that wouldn’t be too challenging to conceptualise. The earlier paragraphs basically just say that either a cumulative impact is hard (“analytically complex and extremely challenging”) or if, in order to make the cumulative assessment manageable, we didn’t try to capture everything that was going on then the answer we’d get could be misleading.

So the conclusion is that it’s best not to try.

But do we take this position at face value?

In one sense, it feels bit odd. We have assessments of the impacts of the various components, although they’ll take a while to digest. Yet the Government’s position is, rightly, that you can’t simply adding these impacts together to reach the cumulative impact. The impact of the measures in the bill probably can’t be assessed by linear combination. Given that in practice there is likely to be interaction between many of these benefits, their impact is likely to be in some way multiplicative or, for some people, contradictory.  Therefore it isn’t clear that the estimated impact of each component in isolation actually conveys much useful information.

And that’s before you start to unpick the way each of the IAs has been constructed. I’ve only gone through the document relating to underoccupation in the social sector. There is enough in there that is debateable and worth debating that it is probably worth a separate post. Multiply that concern by the 18 separate IAs and add in the fact that the equality impact assessments have yet to be published and there has been no attempt to assess how these proposals interact with other reforms that are under way, particularly in relation to taxation and housing. We might conclude that we currently know very little about how these proposals are going to affect society.

On the face of it, it seems rather negligent not to have attempted a more holistic assessment of impact. So one might like to think they’ve had a go. Perhaps they have. And the answer is not one they feel it wise to share.

There are important ethical issues here – touching on the obligations of the government analysts and economists charged with producing the evidence and doing the modelling associated with proposals of this type. They need to be explored. But that also needs to wait for another day.

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2 replies »

  1. “The earlier paragraphs basically just say that either a cumulative impact is hard (“analytically complex and extremely challenging”)”

    So, although these reforms are supposed to make the benefit system a lot simpler the new system is in fact to complex to even bother trying to work out what the actual impact of it will be on welfare recipients? I don’t really understand how you can have a very simple benefit system but still recognise financially the complexities of individual situations. Either the universal credit will have lots of caveats and special rules, as complicated as the current system, to provide extra for the special cases or everybody will get the same low flat rate of benefit.

  2. @Chris – thanks for the comment. I guess there are two different things in play. The first is what the system would be like after all the reforms have been implemented. I agree that if the principal aim is to make the system simpler then someone ought to be able to provide an account of how it would work that demonstrated it is.
    Second, there is the modelling of the transition itself. I can see that is harder because you’re trying to combine aspects of the existing system with aspects of the new one.

    It seems more than a bit of a cop out not to analyze this, if that’s your job, given the significant consequences of these changes.