Messing with the minimum wage

Waitress serving a slice of all dressed pizzaMaking work pay.

Few sensible people would object to this as a policy aspiration. It’s at the core of the Coalition Government’s justification for its reforms to the social security system. So that’s got to be good.

The cracks begin to appear when we move on to consider quite how we’re going to make work pay.

The Government has broadly three options, in the short run. It can try to mandate an increase in low wages. Increasing the gap between income in work and income out of work should incentivise people to (re)join the active labour force. It can reduce the amount people are paid when out of work, thereby increasing their incentive to take up employment at prevailing wage rates. This is what we might call the “starve them back to work” strategy. Or it can tackle the tangle of rules and regulations in the tax and benefit system that interact to create perverse incentives and high marginal tax rates. Or it can combine these options.

The Government’s strategy so far has largely focused on options two and three. The introduction of Universal Credit is an attempt to address the perversities of the tax and benefit system. The restrictions in the uprating of out of work benefits so their real value declines, and arguably the changes to disability benefits, are a case of option two.

So how’s it going in relation to increasing low wages? No so good. [Read more...]

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Evidence or otherwise on Housing Benefit reform

Graph diagram pie chart 3dThe mainstream media seem finally to have cottoned on to the fact that our welfare system is to undergo substantial change tomorrow. I mentioned a couple of months ago that the changes around the so-called bedroom tax were, belatedly, attracting broader media interest. And the media are connecting the deathly dry changes to the regulations to real life stories of hardship. They’ve also started to join up the dots to realise that it could well turn out that April is, indeed, the cruellest month.

Some of us have been banging on about the potentially negative implications of these changes for some months, if not years. It is good that they are now achieving some serious public profile. But it is a bit late to head off the chaos that could well follow their implementation.

What precisely will follow the raft of changes during April is a bit of a moot point. Will the prognostications of catastrophe be correct? Or will the Government’s much more sanguine view be borne out? Clearly, it is an issue of great significance.

It emerged as a key area of contention in the report on the impact of housing benefit reform published by the Public Accounts Committee last week. [Read more...]

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Policy challenges around welfare reform

[This is the text to accompany my presentation to open the South West Observatory seminar “Welfare reform: challenges, impacts and evidence”, 13/11/12]

Where to start?

Politicians are prone to hyperbole. The most minor modification to a relatively peripheral policy is portrayed as a groundbreaking initiative. However, in the case of welfare reform a hugely ambitious agenda is being pursued in the name of making work pay. Nothing like it has been attempted for decades. The challenges are therefore enormous. There is a huge amount at stake. The well-being of the most vulnerable members of society depends on its successful delivery.

We should begin by distinguishing politics from policy, although there is not such a bright dividing line between the two as is sometimes assumed. [Read more...]

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There’s money to be made from “responsibilizing” the poor

This morning the Social Market Foundation launched their report Sink or Swim? which highlights some of the likely problems to follow if the Government pursues Universal Credit in its current form. Jules Birch blogged today over at Inside Housing on some of the many problems that have already been identified with Universal Credit (UC). There is much more to say on the issue. UC has all the makings of a multidimensional policy fiasco.

One area of concern is the plan under UC to change the mechanics of benefit delivery. In particular, the plan is to move to paying benefits monthly in arrears. Concerns have, rightly, been expressed that vulnerable households will struggle to budget effectively over these longer periods.

The more hardcore liberal/libertarian would no doubt argue that this is the sort of shock therapy required to shift people out of dependency. These scroungers need to be forced to take responsibility for themselves. [Read more...]

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Beds, sheds, and regs

She is looking forward to returning to Hyderbad, where the living conditions will be much better.

Amelia Gentleman, Guardian, 10/05/12

This is the payoff line for an extended article about poor housing in the private rented sector in Newham. The aim is to provoke a reaction.  Conditions are so bad in our glorious capital – a global city no less – that someone would rather return to India which is, we had always presumed, at the very least a bit squalid. We should be shocked.

The article covers “beds in sheds” and headlines the instance of people found renting a walk-in freezer to live in. But it is mostly about overcrowded rented properties. And when they say overcrowded they really mean overcrowded. Sir Robin Wales, the Mayor of Newham, notes that the record case was 38 people, 16 of them children, living in one property.

We are still one of the richest countries in the world but we have people living in sheds, three generations of the same family living in a single room, or several unrelated adults sharing a room or sharing a bed. And paying considerable amounts of money for the privilege. And all this is happening only a few miles down the road from neighbourhoods in which investors are happy to pay multi-millions for properties they will barely live in. [Read more...]

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Risking increased injustice

Just over a year ago the Public Administration Select Committee (PASC) produced a scathing report on the Coalition Government’s approach to creating a “bonfire of the quangos”. It suggested that the whole process was fundamentally inept, as I discussed here. The Coalition nonetheless moved forward with the Public Bodies Act 2011, which was enacted in December 2011. This is the vehicle to be used to abolish public bodies deemed no longer necessary.

Last week the PASC produced a report on a more specific component of this agenda: the proposed abolition of the Administrative Justice and Tribunals Council (AJTC). The report is perhaps slightly less scathing in its tone. But it is equally negative in its assessment of the Coalition’s analysis of the AJTC and the arrangements it proposes post-abolition.

While the PASC is chaired by an incorrigible old Tory, Bernard Jenkin, and includes one or two members of the loose cannon variety, it takes its role seriously and exercises that role in a largely non-partisan way. If you can have a favourite Select Committee, then the PASC is probably mine. [Read more...]

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Failures to care for vulnerable people: what lessons to draw?

The practices exposed by Panorama last week at Castlebeck’s Winterbourne View care home were profoundly shocking. The case continues to develop – several further arrests were made this week. Ghandi said that “a nation’s greatness is measured by how it treats its weakest members”. What we witnessed at that particular care home suggests our claims to greatness are debateable. And, of course, rumbling in the background we also have the Southern Cross debacle. There are grave concerns over the future of the country’s biggest private provider of care homes for older people. There appears to be a government guarantee on the table to see that residents are provided for, but no promise of a bail out.

Searching questions are quite rightly being asked. How can we have got into this situation? It is maybe rather late to be waking up to the issues here. Nonetheless, it is welcome that they are getting their moment in the spotlight. Let’s hope some positive changes result. But are the right lessons likely to be drawn from current troubles? [Read more...]

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Cameron’s Big Society – 8/10 for effort; 3/10 for content

You have to admire David Cameron’s tenacity in the face of widespread indifference and incomprehension. On Monday he sought to relaunch his idea of the Big Society for the third time. The results of yesterday’s YouGov survey were then reported over at Liberal Conspiracy. This indicated that 62% of respondents felt they understood the Big Society “not very, or not at all, well”; a third said the Big Society sounded like a bad idea; 73% said they thought it wouldn’t actually work; and 59% thought it was “mostly hot air” rather than a “real vision”.

Reading Cameron’s speech (available here) suggests several things. [Read more...]

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“Fit to work” ergo a scrounger

Quite a few media outlets (for example, here and here) are this morning reporting figures produced by the Department for Work and Pensions that show four out of ten applicants for Employment and Support Allowance failed to qualify for assistance and, hence, are ‘fit to work’. This is taken by Employment Minister Chris Grayling as further evidence of the need to reassess everyone on the old Incapacity Benefit because, by implication, there must be tens of thousands of people receiving IB when they shouldn’t be. They are, in fact, ‘fit to work’. Scroungers.

The BBC reports Mr Grayling as adding:

“We will, of course, carry on providing unconditional support to those who cannot work, but for those who can it’s right and proper that they start back on the road to employment.”

[Read more...]

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Pressing on with NHS Reform – a less than rational process

The central question in the current debate over the Government’s NHS reforms is whether the “listening” exercise taking place during the recently discovered “natural pause” in the legislative process is genuine or symbolic. Concerns that the exercise is cosmetic will only be fuelled by an article in yesterday’s Guardian which cites a letter from David Nicholson, the Chief Executive of the NHS, who suggests that the implementation process should press ahead and that there is a need to “maintain momentum on the ground”.

The article includes a quote from Hamish Meldrum from the BMA who states that the BMA has:

… always maintained that changes in the NHS must not anticipate the legislative process and lead to irreversible decisions.

I’ve no idea whether the BMA have always maintained this position. But this quote highlights something very significant about the way policy is currently developing in this field. [Read more...]

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