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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