Jenny Willott writes…Mending the Safety Net – our proposals for reforming working age social security

Since last October, I have been chairing the Social Security Working Group, which has been taking a fresh look at party policy in this area.  We had a wide ranging remit covering all aspects of working age social security, from supporting people with disabilities to tackling child poverty.  We have now published our policy recommendations: it has been a big challenge, but thanks to a working group of passionate, talented people, ranging from experienced policy makers to new enthusiastic party members, I think we’ve produced a paper of which Lib Dems can be proud. You can find Mending the Safety Net here.

I thought it would be helpful to set out some of the key things we are proposing.  We heard a lot of different ideas and proposals from party members, experts and NGOs, and have sought to propose policy that is liberal and distinctive, but which, crucially, could make a real and practical difference to people’s lives.

Reducing child poverty

From the outset the group agreed that reducing child poverty should be our priority. We know that a child growing up in poverty will already be attaining less than their better off peers by the time they start school, they will be bullied more, have poorer health and are less likely to leave school with five A* – C GCSE passes. We felt strongly that it should be a real priority to tackle the barriers created for children that grow up in poverty.

Unlike when Labour first came to power, the majority of children growing up in poverty now do so in households where at least one person works. That’s why one of our key recommendations is to introduce a second earner’s allowance to Universal Credit. This could transform the lives of many children by dramatically increasing the amount of money going to some of the lowest paid families in our country. We also want to see an increase of £5 a week to the child element of Universal Credit for the first child in a family to help new families afford the high costs associated with a first child.

Reforming the Work Capability Assessment

We also looked at the way benefit claimants are treated by the benefits system, with a particular focus on those who are sick and disabled.  We heard time and again in our evidence sessions about the Work Capability Assessment (‘WCA’), which fails to treat disabled people as human beings and sets up impossible barriers.  Despite the Coalition Government changing the provider from Atos to Maximus, claimants have completely lost confidence in the whole assessment process.  We felt strongly that this needed to change, so we are proposing scrapping the WCA and replacing it with a new, locally administered assessment. Crucially, this new assessment will take into consideration the environment in which the claimant is living, with a ‘real world’ test that will require proof that there are at least three types of jobs available in the local area that the claimant would be able to do, before they can be assessed as ‘fit for work’.

Mental health

We also want to deliver much more tailored support for those with mental health conditions.  Currently only 5% of those with a mental health condition on the Work Programme find sustained employment.  We therefore propose a new approach based on individual support built on a strong, long term, relationship with an advisor, who will work with the claimant to produce a plan of action with the aim of finding paid employment that matches the person’s interests and aspirations. The support will continue once the person gets a job and should be integrated with the person’s health care. This scheme has already been trialled and has shown to be twice as effective as other types of support in getting people with mental health conditions back into sustained employment.

Sanctions

When we looked at other areas where claimants frequently complain that they have not been fairly treated, we felt it was clear that there needs to be more flexibility within the sanctions regime. The current regime of fixed penalties for technical breaches of benefit conditions isn’t working and treats claimants with suspicion.  It fails the basic test that we should treat people with dignity and respect, so we propose scrapping fixed sanction penalties and instead allowing the Jobcentre to take into account the context of the breach and the circumstances of the claimant.  We also want to change the rules so that no one can be left with nothing to live on, even temporarily, as a result of benefit sanctions, and instead certain elements of benefits should be protected from sanctions.  Finally, we also want to see people given encouragement, rather than just being punished by the sanctions system, by enabling advisers to give an additional £10 to those jobseekers who go above and beyond in looking for work.

Income protection

The group also heard a lot of evidence about the need for the system to provide better support for those with larger financial responsibilities who unexpectedly fall ill or lose their jobs.  We are therefore proposing the Government should consider introducing a widespread, radical system of unemployment insurance and income protection insurance.  This would encourage employers to arrange company-wide insurance for employees or auto-enrol employees into an insurance scheme, with the option for employees to opt-out. The aim would be to ensure that when someone loses their job or becomes ill, there is a real cushion to ensure they do not immediately have to eat into vital savings or rely purely on what the state can provide.

These are just some of the elements of our policy paper, which I believe is packed full of new, distinctive Lib Dem polices to mend the social security safety net and rebuild trust in the system.  If you want to read the whole paper then it’s available in the Conference section of the website, and I hope that, in Brighton, the Party will endorse the work of the group.

Editor’s Note: George Potter, a member of the working group, has written here about why he thinks the paper should be rejected by Conference. 

* Jenny Willott was the Lib Dem MP for Cardiff Central and chaired the working group on working age social security policy in 2016.

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26 Comments

  • Conor McGovern 23rd Aug '16 - 1:19pm

    Universal Basic Income! Give people the freedom to enjoy life, to follow the path of their choosing and live without fear of falling into poverty. Cut out the red tape from welfare and build a modern, rational, fair economy. What could be more liberal?

  • Lorenzo Cherin 23rd Aug '16 - 2:08pm

    From what I have read all the proposals look like good developments .

    One caveat . UKIP are more humane and traditional at the same time , and humanity traditionally was at the heart of our benefit system before the later nineties, on the work capability assessment. They have a policy to scrap it , as do we if these proposals go ahead . But UKIP believe that to be considered to have a disability in the firs place in order to qualify for the benefits , one should be assessed only by the letters from gps or consultant doctors known to the patient and who know those patients , not tests and the say so of outside so called consultants making a mint ! We should adopt that approach . It was the norm until New Labour . Increasingly the Thatcher and Major years on some of this stuff are looking to be moderate and progressive !

  • Matt (Bristol) 23rd Aug '16 - 3:32pm

    A well-meaning set of proposals, but maybe (although understandably) a little hobbled by starting from where the Tories have got us.

    Bit disturbed about devolving decisions to Job Centres with no structure of democratic accountability to balance them.

    I quite agree that – IF you accept a need for a sanctions regime, which is not universally accepted – if it desirable for decisions to be locally based and not on nationally-set targets, though.

    In my ideal world, these decisions would be administered by regional / devolved administrations – but that would imply a break up of JobCentres and many aspects of the DWP empire into regional departments, rather than answering to Whitehall.

    I appreciate the party leadership may feel that costly further wholesale structural reform may be better avoided at this time, but we are left with a policy that is ‘Coalition-plus’ rather than either a return to former agendas, or a complete ‘reset’ on a new basis.

  • How much working age social security is ‘failure demand’ – that is demand created by the failure of successive governments to create a thriving economy where there is plenty of work available, workers have (or can readily get) the skills to do that work and housing and other essentials are affordable?

    My guess is that need for working age SS is overwhelmingly driven by ‘failure demand’ with some ‘insurance demand’ (to cover needs arising from untoward but temporary events of one sort or another) and vey little by the needs of those with permanent disabilities.

    One thing we should be clear about – and one that puts clear water between us and the Tories – is that the victims of economic mismanagement should not be blamed. I am reminded of Geoffrey Howe’s resignation speech when he said, “It is rather like sending your opening batsmen to the crease only for them to find, the moment the first balls are bowled, that their bats have been broken before the game by the team captain.” He meant Thatcher of course but it’s equally true of most who need social security in their working lives.

  • Matt (Bristol) 23rd Aug '16 - 4:40pm

    PS – the ‘locally administered’ assessment and ‘locally administered’ sanctions could both be managed by corsortia of local authorities, and/or devolved governments?

  • The motion at conference which this group’s policy paper is based on has some good points. Unfortunately it has been badly undermined by the decision to go out of its way in attacking a Citizens Income (CI). I believe in evidence-based policy making and think a trialling of a CI would be appropriate – they are, after all, planned elsewhere in Europe at the moment. I am, however, glad to see an amendment is planned to correct this mistake.

  • Ed Shepherd 24th Aug '16 - 7:23am

    Citizens Income or Universal Basic Income is the only way forward. The benefits system we have still seems to be based on a long-gone world of full-time permanent employment being the norm.

  • Very much agree with Geoffrey Payne. The paper’s blaming of the other parties for the tone of the “workers and shirkers” stuff is a little rich when it was Nick Clegg who went on about “Alarm Clock Britain”. Early in the coalition the Methodist, Baptist and United Reformed Churches issued a joint statement about the dangers of labelling people as “workers and shirkers”. It was a warning to both the coalition parties for their mood music on welfare, not just the Tories.

  • Proponents of a citizens income confuse the need for the system to be simple for the users of it with the need for it to be simple to administer. A negative income tax makes more sense and is essentially what we already have in the tax credits system. If you’ve ever worked with the welfare system you will understand the need for a level of complexity – because people are complex and have complex needs – particularly those claiming benefits. It should however be simple for the end user to access and provide a sufficient safety net, which this paper tries to address.

    The government are as we speak trying to pull themselves out of the mess they’ve created with the LHA cap, which will close up to 60% of supported housing services across the country – including mental health and older people’s services – if they don’t produce a funding solution for these services before April next year. Without a mechanism to take into account the costs of supported housing a citizen’s income would do precisely the same thing.

    Once you start to do that you immediately see why a citizens income is both costly and far, far too simple to deal with the complex demands on our welfare system. Supported housing is just one of a wide range of areas where a one size fits all approach doesn’t work. That’s also one of the problems with the benefit cap, which would be a de facto element of any citizens/basic income without a sufficiently complex system sitting on top of it. As we’ve seen this week with government spending on housing benefit rocketing to £9bn for private renters, housing benefit alone has different requirements depending on where you live, the size of your home and the type of home (private rental or social/affordable rent). How do we take these into account with a citizen’s income? Either we don’t – or we do and end up with a mirror of the existing system.

    In short, unless you completely reconfigure whole other areas of policy first or are willing to hang vulnerable people out to dry then it’s a massive, glaring policy dead end. I assume this is why the working group dismissed it and they were right to do so.

  • Umm, the Working Group did actually examine the EVIDENCE around Citizen’s Income (CI) and found it doesn’t work as well as they expected. For instance from para 1.3.7 of the report:

    “We were surprised by the modelling presented to us by experts on the Citizen’s Income, which shows a high number of those who would potentially lose income under the system would be at the bottom end of the income scale. When considering a change with such large financial costs, we do not consider it reasonable that the brunt of these costs should be borne by those on lower incomes.”

    Now you can challenge the validity of the modelling but you cannot simply dismiss the Working Group’s conclusion because you don’t like it or because you think CI is the “only way forward”. There are alternatives.

    FWIW my understanding is that CI schemes tend to fail because employers adjust over time to pay less knowing that CI will pick up the tab. In contrast a Job Guarantee (JG) approach which, as the name suggests, guarantees a job at minimum wage to anyone who wants one provides an alternative to bad or exploitative employers and therefore tends to drive up wages and standards.

    On the face of it a JG scheme would be fairly easy to integrate with local housing costs, the specific needs of the disabled (c.f. Remploy) and so on and in particular with training. Unfortunately, it doesn’t appear that the Working Group examined JG approach.

  • George Potter 24th Aug '16 - 1:32pm

    Let’s be clear, when the working group (which I was a member of) surveyed party members 56% of them backed Basic Income or Negative Income Tax. Only 24% backed the approach which the policy paper has adopted.

    While there are obstacles to the Basic Income concept it was perfectly possible for the working group to have come up with a system which was practical and yet true to the principles of Basic Income – namely the idea of providing unconditional support to those in need. This could easily be done affordably through the gradual reform of Universal Credit – and indeed I’m submitting an amendment to the motion proposing just that – but this was something that the majority of the group decided not to back.

    Instead we’ve been left with a motion that supports keeping sanctions, which supports continuing to pay generous benefits to middle class families who don’t need them and that proposes as a panacea the idea of opt-out insurance policies which workers on low incomes simply won’t be able to afford.

    I have, incidentally, submitted an article to LDV on the divergence between the motion content and the survey responses from party members several days ago but somehow it’s still waiting on a final decision on whether to publish it or not.

  • George Potter 24th Aug '16 - 1:39pm

    And, while is is true that modelling around a pure Basic Income (giving a flat rate of help to everyone) does cause significant losses to people with higher than average living costs (such as single parents and disabled people) it is not the case that the only way to implement a Basic Income type scheme is with that model.

    There are other models (such as having different rates for people in different circumstances) which could have been considered in detail but which weren’t.

    And what’s sad about this is it’s clear that the majority of members supported a welfare system founded on the idea that people in need should receive support unconditionally and not be forced to jump through hoops or be threatened with sanctions – yet the policy paper before conference actively supports conditionality, sanctions and making claimants jump through hoops.

  • Lorenzo Cherin 24th Aug '16 - 2:18pm

    George

    I commend you for your genuine commitment to humane principles.But , wait a second if you could .
    I have said it many times and shall continue to, on this policy area ,a basic income is a possibility if we leave the EU ! It is not if we do not ! We have to be for basic income and Brexit , or against them both !

    David cameron could only get the bare minimum of reform of our benefits for foreign nationals through the EU top brass . If we want to stay in the EU , we cannot even consider such a policy as it would be a magnet for much of the poorer EU members . And we would legally be obliged to pay it to all who were settled here , even having come a couple or so years ago. It would , in such a way , be as popular with the electorate as a ferret in someones trousers!

    We can , if we get real and face up to Brexit , and make it work , embrace the basic income , payable to all citizens and their spouses if from another country and a permanent resident of , say , five years , because we can make our own laws and policies accordingly !

  • James Baillie 24th Aug '16 - 3:15pm

    Regarding comments above on employers pricing CI into wages – this is clearly a concern but presumably this problem doesn’t apply to NIT, wherein people only get paid if their income is at a certain level rather than being given a flat lump sum and thus minimum wage legislation prevents employers “pricing it in”.

    I am overall pretty disappointed with this report, which would have been a very adequate and workmanlike set of goals were we still in coalition but falls disappointingly short in its consideration of bigger liberal ideas for our social security policy going forward. The fact that the question “do we need to spend more on working age social security” appears to have been snuffed out in the introductory sections of the report is very worrying and seemed to set the tone for the rest of the document. I may try and assemble some better written thoughts on the whole thing in the near future…

  • Gordon – can you provide me with a source to support your claim that ‘CI schemes tend to fail because employers adjust over time to pay less knowing that CI will pick up the tab’. I’d like to learn more about this.

    And for those sympathetic to a negative income tax I am afraid the motion attacks that as well.

    George – I hope your article is published, I would like to read it.

  • From George Potter we discover something that was not in the report (unless my speed read missed it), namely that CI was capable of being adapted to meet the difficulties identified with the simple model presented. Instead we have a draft that proposes to keep some of the worst features of the existing system.

    I count that a fail. It’s policy made in smoke-filled rooms (albeit now with less smoke!) by people who are not personally accountable for the necessary trade-offs in the sense their career is not at risk even if they perennially get it wrong) or for its acceptability to members (explaining the trade-offs and selling it to members) or for its eventual political presentation to the nation.

    So, how’s that approach working out for the Lib Dems? About 6% last time I looked.

    It’s about time spokespeople were responsible for formulating policy in their area and presenting it to Conference for approval. By all means let them draw on Working Groups and other sources of expertise including the wider membership. Then we would have a more open and accountable system that might actually deliver the goods.

  • Peter Davies 24th Aug '16 - 11:21pm

    The remit of this working group is social security. The solution is assumed in the terms of reference. If you start by looking at the problems of poverty and unemployment you don’t end up with the system we’ve got or the very similar one proposed. You do look at taxes and how they interact with benefits and the working group was specifically banned from doing that.

  • Overall, I think this is a realistic document that balances the competing requirements well.

    Just a few questions that I think would, or should, be asked (at some point):

    Do the report writers agree that it might be a good idea to remove any references to ‘health insurance’ as the connotations are toxic?

    Won’t the public believe that they are already paying for unemployment insurance through their national insurance contribution?

    While support for second earners in families is welcome and will be popular, why is the meagre married persons tax break being removed? Why would the Lib Dems penalise married families who chose to prioritise their child/ren, over work, by having a parent stay at home?

    There are an ever increasing number of self employed people in this country. Apart from a very brief paragraph on support for people who want to start a business, there seems to be nothing about them in here. Where do they fit into this insurance model? Who match funds their contribution? What are they entitled to in return for their contribution? Self employed people with an existing businesses that fail, currently get almost no support, despite paying national insurance. With more people taking this path, the system needs the flexibility to handle this choice. Will the group be developing policy in this area? Does that policy already exist somewhere else?

  • Mike Turner 25th Aug '16 - 3:17pm

    During my long business lifetime I have seen vastly too many good initiatives wrecked, usually by simple incompetence in their implementation (only occasionally by deliberate intent). Now, during the coalition, and before, the level of incompetence in implementation has been breathtaking (I suggest we all read a few editions of Private Eye). Maybe we should give a strict test against each policy idea along the lines of a) Who is going to make it work? b) How are they going to make it work (it has been manifest that in many areas -especially DWP; BIS & MoD areas – neither the policy/legislation drafters nor the agency/contractor charged with implementation have the foggiest idea how they are going to actually operate.) c) How can ministers know that (a) is a correct choice and that (b) is happening.

  • Peter Davies 26th Aug '16 - 8:12am

    Citizens Income and negative income tax are fundamentally identical. A CI of £2200 p.a. produces an identical net income for everyone as a negative income tax based on a personal allowance of £11,000. I think negative income tax is easier to explain to the public and would not leave us facing a constant barrage of attacks based on the Utopian Green party scheme.

    Simply allow anyone who is not using their current personal allowance to claim back 20% of the unused part.. Anyone on benefits would have them reduced by the same amount (or removed completely if less). Nobody would lose. Gainers would be:
    * students (in the long term the government would get over half back)
    * unemployed partners of earners not entitled to family credits.
    * the sanctioned
    * casual workers and self-employed on low incomes

    This clearly requires tax-funding but not very much.

  • I see some merit in a Citizens Income (or negative income tax if you prefer) but surely it would need to be set at a level that is sufficient for most people to live a modest existence without claiming other benefits. By doing that, you can do away with most of the administrative burden of the current benefits system e.g. the form filling, record keeping, calculations, investigations, sanctions etc. This would also make temporary and casual work more attractive since no one would ever lose anything by doing any work no matter how temporary, and would not have to worry about declaring it or form filling (and risk sanctions if they get that wrong).

    The benefits system would then only need to deal with things like child benefit and those such as the disabled who have specific additional needs.

    A system of CI or negative income tax that leaves most of the current benefits apparatus in place would be the worst of both worlds.

  • James Baillie 26th Aug '16 - 12:39pm

    Nick – you’re right that NIT should replace eg jobseekers, sanctions, etc – the issue in cost and admin terms is that it mustn’t be allowed to replace housing and disability benefits, which need variable rates that can be fine-tuned locally. As such the administrative savings are not, unfortunately, what they could be. This isn’t, on the other hand, a remotely good reason not to pursue NIT, which has numerous benefits in the areas you mention. If I can get to conference I will almost certainly and somewhat regretfully have to vote against this policy paper; we need a much broader and more sensible debate over our long term plans for the welfare system.

  • Gemma Roulston 26th Aug '16 - 12:41pm

    What the Tories and Labour have done via sanctions is to make people feel like 3rd class citizens and not people with equal merit to others.
    ATOS and Maximus, together with Capita are not well liked or considered to be fully aware of the different disabilities that there are.
    These assessments should be done by GPs, who know patients and also have input from social services, and education. Why no real mention of that?
    Why not make sure that CA (Carer’s Allowance is not taxed?

  • Nonconformistradical 19th Sep '16 - 9:59am

    @Lorenzo Cherin

    “I have said it many times and shall continue to, on this policy area ,a basic income is a possibility if we leave the EU ! It is not if we do not ! ”

    Can you explain this please given that EU member Finland is considering a basic income system e.g. http://www.independent.co.uk/news/world/europe/finland-plans-to-give-every-citizen-800-euros-a-month-and-scrap-benefits-a6762226.html

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