What policies should we have in response to the UN report on UK poverty?

I am suggesting a replacement for Universal Credit.

We have discussed recently on LDV <https://www.libdemvoice.org/not-even-a-tin-of-baked-beans-a-visitor-shows-the-need-for-radical-reforms-59181.html> the report by Philip Alston the UN’s Special Rapporteur on poverty and human rights on poverty in the UK <https:www.ohchr.org/Documents/Issues/Poverty/EOM_GB_16Nov2018.pdf>.

He points out that 14 million people in the UK are living in poverty, 4 million of them 50% below the poverty line and 1.5 million are destitute. How can we be letting this happen when we are the fifth wealthiest country in the world?

It is recognised that Universal Credit is a contributory factor in causing people to live below the poverty line. Therefore we should scrap it and restore all the pre-2012 benefits including the national Council Tax Benefit. We should introduce a new benefit, National Credit, to replace Tax Credits for people in work. We are already committed to restoring the pre-2016 work allowances to Universal Credit. The pre-2016 work allowances should apply to the new benefit: we should go further and increase them for those without another eligibility status so a single person can keep the first £30 a week and the second earner £20.

The taper for the new benefit should be 63%. Everyone receiving the new benefit will automatically be eligible for Housing Benefit if they pay rent, and Council Tax Benefit, if they pay Council Tax, and these will be withdrawn at a combined rate of 63%.

The report also points out that “Universal Credit has built a digital barrier that effectively obstructs many individuals’ access to their entitlements”. This new benefit should be claimable by phone, at a Jobcentre or via the Internet. Claimants must have the choice to be paid either every month or every two weeks. Housing Benefit should continue to be paid directly to the landlord.

We need to scrap the idea that most claimants can afford to pay back benefits they get in advance. If you have no money and you receive your benefit early but have to pay it back at 33%, you would be short of 33% needed to live on for each of the next three months. Even if it were only clawed back at 10%, you would be 10% short of enough needed to live on for ten months. Therefore we should scrap the idea that most claimants can afford to repay ‘a hardship loan’. It should only be a loan if the person has savings to compensate it from, or is owed the money from someone (such as an ex-employee).

We are already committed to abolishing the Benefit Cap and the sanctions regime. The level of benefit should pay all of a person’s housing costs, and no one should be left with no money to live on.

We should increase the level of benefits to those receiving the basic amount live on the poverty line and not below it. After adding inflation (5.2%) to the Joseph Rowntree Foundation 2015/16 figures, these would be £151.49 a week for a single person and £260.90 a week for a couple for April 2018. The first stage of this I think should be to return the basic benefit levels to their 2012 real value – £71 increased to £78.31 for a single person; £111.45 increased to £122.93 for a couple (based on inflation of 10.3 % between September 2012 and September 2018).

We also need to do something about the low levels of wages in the UK where according to KPMG 22% of jobs now pay less than the real living wage (£9 an hour outside London and £10.55 for London).

* Michael Berwick-Gooding is a Liberal Democrat member in Basingstoke and has held various party positions at local, regional and English Party level. He posts on this site as Michael BG.

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39 Comments

  • Gillian Sathanandan 28th Nov '18 - 8:40am

    PIP is also a scandal, that needs complete reform. If people lose their disability, they can end up homeless as they then may have to wait 18 months for a tribunal and it being overturned. If they are on their own with no family or friends to help, well people die, that is the worst conclusion for a few.

  • Gillian Sathanandan
    As far as I can tell the basic premise of the welfare reforms is to strip away money and to keep dragging disabled people through tests in the hope of finding a reason to withdraw benefits. DLA was designed to help patients and was largely decided on medical evidence provided by doctors. PIP is a tick sheet overseen by a dubiously assigned “healthcare professional” who is under pressure to remove benefits from
    “clients”.

  • Katharine Pindar 28th Nov '18 - 9:30am

    This excellent article reaffirms our party’s opposition to the welfare cutbacks and shows how the safety net should be developed to help lift people out of poverty. Michael has taken on board the searing criticisms of the government’s policies contained in the authoritative report of the UN rapporteur, Professor Alston. He proposes workable measures to deal with the hardships caused by the roll-out of Universal Credit which have already been suffered by many people, and restoration of sufficient benefits for all working people who rely on them. I hope our party will agree with these proposals, and that our leaders will wholeheartedly accept the Alston report and pledge to campaign for the fairer solutions which are desperately needed.

  • Some good proposals there Michael. Another issue that needs to be addressed is the clawback of debt from the legacy benefits system against Universal credit payments – often related to overpaid tax credits in the past. I believe the level of this debt is 10 billion, so no small amount.

  • John Roffey 28th Nov '18 - 9:52am

    I wonder if the best way to tackle the matter of poverty, generally, within the UK is to provide local councils with significantly more cash from a national fund.

    We are aware that Osborne’s austerity plan intended to increasingly widen the gap between the rich and the poor – and this has been very successful in its intent. [When the plan was first unveiled I recall a Tory MP recommending that shanty towns be set up along the lines of those in India – but I cannot recall which MP it was].

    Rather than the Party recommending specific funds for any particular aspect of poverty a general fund might be better – if councils are allowed to spend the money in the best way that they saw fit in their area. A significant variety of initiatives are available to help those in need and it is only those working in the area who can make the best choice with regard to each individual. It seems to me that this might be the most efficient way to spend what money is available – rather than trying to allocate this by what are seen as competing needs at the national level.

    Since Mr Alston did conclude that the austerity measures, which have thrown so many into poverty, were a political choice – which seemed fairly clear at the time – perhaps the Party should apologise for its part in this heartless decision.

  • Neil Sandison 28th Nov '18 - 9:55am

    It s clear universal credit has become so tainted by austerity claw backs and indebtedness that it will no longer attract public confidence as a fair and equitable income suppliment .We therefor need to create a new beverage safety net based on liberal values should it be paid like universal income to every one regardless of personal contribution or set the base line on income levels . Or should it be contributory ie that you should be in training ,education or declared unfit for work before you receive .The public doesnt like some thing for nothing so should you have had to contributed into the pool to recieve a payment.

  • Nye Bevan’s defence of the NHS is equally valid here. I’ve ‘adjusted’ it…“Poverty is neither an indulgence for which people have to pay, nor an offence for which they should be penalised, but a misfortune the cost of which should be shared by the community.”

  • David Becket 28th Nov '18 - 11:38am

    @ David Raw

    “Liberal Democrats should face up to this. The party needs a fresh start under a new Leader uncontaminated by past mistakes who can set a new direction. ”

    Agreed, the sooner the better, and it is not just austerity.

  • Actually, however well intentioned, this is just tinkering.
    We need a basic income for all and in reality this is the cheapest solution since it would mean abolishing a plethora of means tests and a whole raft of benefits.
    It would also mean that we treat people as human beings even when they are not in work. It would move away from the often expressed comments about shirkers, skivers and recognise that everyone deserves human dignity and enough to live on.
    If we accompany this by a reform that means just one application for other benefits, where anyone applying for a benefit is automatically assessed for all, then we could start to create a different society.
    More radically if we set the basic income at a proper level we could do away with the need for benefits at all and let everyone decide their own spending priorities.
    Of course the alt right and the Neo-liberals would scream and shout because they could no longer drive down income/wages and could no longer assume that poor people had no choice but to work for zero hours contracts or slave wages.
    Let’s not bother with amending or liberalising universal credit. Let’s go straight to the heart of the problem, poverty, and give everyone as decent income.

  • The problem for a party which wants to alleviate poverty is that in a relatively affluent society many voters are unsympathetic whereas in the past when poverty was more widespread there was more support except from the well off middle class who resented paying the taxes needed to pay for the policy. Even the Labour party, which might be expected to support policies to deal with poverty seems to be not just uninterested but even hostile as much of its support now comes from relatively highly paid people in the public sector or railways.

  • Peter Martin 28th Nov '18 - 12:26pm

    The problem is that most Lib Dems are essentially neoliberals with kinder hearts than Tory neolibs! The Greens are neo-libs on bikes. Even many in the Labour Party are just neolibs who can sing the Red Flag. 🙂

    The neolib argument is used everytime there is a meantion ‘putting a penny on income tax’ to solve this or that social problem.

    UBI is also a neoliberal con trick which appeals to many who should be more wary of who they are siding with.

    https://www.jacobinmag.com/2017/12/universal-basic-income-inequality-work

  • Richard Underhill 28th Nov '18 - 12:47pm

    Achieving the changes to society that Lenin wanted necessitated very powerful enforcement, which Lenin recognised, and after Lenin died (murdered?) Stalin enforced on a huge scale with very little justice, even under Soviet law.
    Caroline Lucas has been elected as an MEP, as an MP, as Green Party leader, as Green Party co-leader. She is very persuasive, but some of the objectives of the Green Party could be difficult to achieve without excessive enforcement, as the current French President is experiencing.

  • Sue Sutherland 28th Nov '18 - 1:06pm

    These ideas are admirable but we also have to show how we would fund them. Is the Spring Conference likely to have any economic policies to counter austerity? If it does then I hope these proposals, with greater detail, can also come to conference.
    We need a package of measures to accompany our stance on Brexit, to show how we would change peoples’ lives if we avoid Brexit and its accompanying economic disaster. Unfortunately our system of policy making doesn’t encourage the clarity we need to show that we have changed our minds on austerity.

  • Katharine Pindar 28th Nov '18 - 2:12pm

    ‘Abolishing a … whole raft of benefits’ was just what Universal Credit was meant to achieve, Mick Taylor, and look where that has got us. There is no one simple solution to providing welfare support, so it seems to me suggesting a universal basic income as a solution is simplistic thinking. The author’s carefully worked-out proposals are not tinkering, but one attempt to begin to tackle the massive problems of attitude and delivery uncovered by Professor Alston.

  • David Becket 28th Nov '18 - 2:23pm

    Universal Basic Income cannot take into account the difference in cost of living (including housing) between regions. Or should it be Regional Basic Income, which will open a can of worms.

  • Lorenzo Cherin 28th Nov '18 - 2:46pm

    Good that Michael did this as a priority. The party Brexit stance is really not working for it. People are doing their best to decipher the deal of the pm, but it is clear the fondness for the so called Peoples Vote is on the downward route. These issues, benefits, poverty caused by lack of help, isolation, they are the priority. We need to ditch the Brexit as horror, doom, it is destroying the essence of the unifying we once represented.

    I believe we should, as a nation, do three things.

    See people as individuals as well as part of a couple, or family. A significant increase from the poverty trap of couple getting less than two singles.

    We should abolish universal credit but not do what is advocated , a new credit, but return those on universal credit onto tax credits, and keep the people on tax credits as they are. They are a success. HMRC is, for all its faults, more competent and business like than JCP DWP.

    If we have Brexit we can eventually implement a ubi, but not if we are in the EU. Decide, because harmonisation does not allow two systems, anyone who thinks if we had a ubi for all new residents from the EU, there would not be riots, and massive shortages in our services, due to massive increases in immigration, needs to get out more.

  • David Allen 28th Nov '18 - 5:03pm

    Universal credit, universal basic income, flat income taxes, and Brexit are all examples of the same fallacy – That if an idea is simple and sounds powerful, then it must be good. The opposite is the case.

    There is – very roughly – a certain maximum share of the national income which the nation is prepared to spend on benefits or their equivalent. Old-style welfare-state thinking, which worked reasonably well, was that this available money should be carefully targeted towards those who needed it most. Complex provisions would be fine, if that was what was needed to make sure that targeting was effective.

    By contrast, the UC and UBI theories both postulate that it is a good idea to spread the money more widely, for dubious reasons such as incentivising work. It follows as night follows day that, if more people who do not really need the money are given a share of it, less is available for those who desperately do need it.

    Cue the inevitable hardship caused by UC. Cue even greater hardship, if we ever adopt the even more grossly utopian fallacy of UBI.

  • John Roffey 28th Nov '18 - 5:17pm

    @ Simon McGrath

    There are many ways that these issues can be measured and if one body is to be relied on over another – perhaps the UN’s Special Rapporteur on poverty and human rights would be a chosen over a body which relies on much of its funds from governmental sources. The report came as something of a surprise given the UK’s elevated position within the UN.- but that the the widening of the gap between rich and poor was a deliberate political choice was the definite conclusion.

    From the layman’s point of view it was the rise in homelessness, food banks and those ‘payday loans’ at rates of more than 1000% – whilst the tax on the wealthiest was reduced -is what will remain in the memory long after the austerity measures have ended.

  • John Roffey 28th Nov '18 - 5:39pm

    @David Allen

    Very well put David – if you should like to see a ‘shock & horror’ video on why the austerity measures were required in the first place – this will not disappoint.

  • @ Gillian Sathanandan

    This article is about relieving poverty and PIP is not for living on, it is for extra support that people need to live their lives. Also I am calling for the benefit system pre-2012 to be restored which would include PIP being abolished and Disability Living Allowance being reinstated.

    @ William Fowler

    The reason our welfare system doesn’t ensure everyone is living above the poverty line is because the levels of benefit are too low. As I stated the poverty line is £151.49 a week for a single person and £260.90 for a couple excluding housing costs. Universal Credit only pays £73.34 a week for a single person and £115.13 for a couple. That means a single person on Universal Credit is living 52% below the poverty line and a couple 56% below. This doesn’t take into account any problems they may have had in claiming it, or the need for them to pay back any hardship loan or the benefit cap.

    David, Joe, Katharine and expats

    Thank you for your supportive comments.

    @ John Roffey

    Giving councils more money would not lift people out of poverty, the claimant needs enough money to live at the poverty level. However, Philip Alston does point out that the cuts in council funding make the situation worse because councils have cut supportive services to those making a claim. And very few councils provide 100% Council Tax relief for those living on the basic benefits, which is why I am calling for the national Council Tax Benefit scheme to be restored.

    @ Mick Taylor

    The cost of administering the means testing is not great enough to cover the cost of giving every working age adult £151.49 a week even if the Income Tax Personal Allowance of £12,500 was abolished. The cheaper option is to increase the means tested benefits to the levels I suggest.

  • @ Sue Sutherland

    I haven’t managed to work out how much this reform would cost. The best I could do was that it would cost be between £28 billion and £53 billion depending on how many of the 7 million government expect to be claiming Universal Credit when it is completely rolled out are couples or single people.

    According to government figures the cost to increase the Personal Allowance by £100 is estimated at £600 million for 2019-20; therefore increasing the Personal Allowance from £6475 to £12,500 cost over £36 billion (60 x £600 million). Therefore it would be possible to fund 68% of the costings over eight years without any identified tax increases. This is £4.5 billion a year, which is only 0.54% of forecast government spending for 2019-20 and only 0.2% of forecast GDP. It would therefore be possible to finance the whole lot over 10 years without increasing any taxes.

    However, it could be done sooner if some taxes were increased. Increasing all rates of Income Tax by 1% according to government figures will raise £6.4 billion for the year 2020-21. Expanding National Insurance to all forms of income would raise £6 billion. Increasing the National Insurance higher rate for those earning below £100,000 a year to 12% should raise £10.1 billion. Restricting tax relief on pension contributions to the basic rate will generate £10 billion.

  • Katharine Pindar 28th Nov '18 - 10:40pm

    It’s good to see the resolute stance of our present leader against the inadequate provision for the working poor on the grounds of fiscal discipline being recalled here. We have been well led in reasserting our humane approach to people’s deprivation by both our leaders since 2015.

    We have every reason for adopting wholeheartedly as a party the messages and suggested remedies of the UN rapporteur, which are as Joseph Bourke suggests so close to our existing policies as outlined in our 2017 Manifesto. There is no need to wait for the findings of the recently established working group to embrace the Alston findings, and we should certainly not leave the field to the Labour Party to claim. That is the party which could not bring itself to vote against the greater enrichment of better-off people in the recent Budget, consistently with their general wooing of middle-class support regardless of principle. It is our party which can rightfully claim to lead the fight for justice for the poor, for fairness meant for everyone, and for strengthening community.

  • The entire economy is built around the idea of punishing production (labour and investment in capital goods – not financial capital) and rewarding the idle rent-seeker.

    It is idiotic and undemocratic, leaving a whole swathe of people who pay for that rent-seeking by having their wages garnished by private expropriators as well as the tax man if they earn enough for him to get a look in.

    The biggest and most important change we could make, and must make if we are to become a real democracy, is to ensure that everyone has an equal right to the value of the commons we all help to create.

    What to do with that is a matter of policy – whether to spend it all on public services and infrastructure, or to give some of it away equally to everyone. But the first phase must be to create the level playing field before we can really see how many people would be in need of further assistance (likely very few) instead of a society of people who effectively extract a tribute from their fellow citizens/residents on everything they earn.

    #sharetherents

  • Sue Sutherland 29th Nov '18 - 12:12pm

    Michael BG Thank you for your costings and for your suggestions and I will take your word for it on how to pay for these reforms. I just think it’s important that we show how we can fund social justice initiatives like these. I am in favour of redistribution because the safety net of the welfare state has far too many holes in it but I don’t want to see anything else paid for by an extra penny on Income Tax. What is required is a rethink on the tax / benefits system to make us a more equal society in my view.

  • @jock Coats.
    Jock, I confess to not being an expert on economic theory, so help me out here. If I invest my pension in a company who use that money to invest in capital goods, is that good, because I am facilitating investment, or am I an idle rent seeker as I look for a modest return on my investment .
    What ever the ills of rent seeking, I am not sure it is undemocratic. Democracy is, surely, about access to political institutions and the ability influence the community you live in. I don’t doubt that in practice there is a significant overlap between the class who live off rents and those who dominate civic life, even at a local level, but they are essentially, two separate problems.

  • Sue Sutherland 29th Nov '18 - 12:21pm

    David Raw. I understand that you want to see a new leader untainted by Coalition but it doesn’t seem to me to be a very Liberal solution to the problem we have. What I would like to see is a grass roots movement of Lib Dem members demanding the party to stop austerity. If I knew how to get it going I would start it myself.
    Labour has taken to announcing its’ ideas as proposals which the media then cover as manifesto commitments even though a lot of them won’t be. So they get the credit for any reforms without actually enacting them. I don’t think we have that luxury.

  • @ Sue Sutherland. I agree, Sue, and the two matters are not mutually exclusive.

  • marcstevens 29th Nov '18 - 6:37pm

    The costs of funerals are soaring, see the news today. How about the Party offering a funeral grant families can apply for and capping the charges these funeral directors get away with. Older people and relatives need financial help at a stressful and emotional time and I would like to see far more helping people at a time of desperation.

  • From the current budget figures we can see that total government expenditure is forecast to increase by £28.8 billion next year to £841.6 billion and by £25.5 billion the following year. It is forecast that tax revenue will be £4.2 billion less next year because of the tax changes being made.

    It is forecast that government income will be £810 billion in 2019-20. Economic growth for 2020 and 2021 is forecast to be 1.4% each year. That means the economy will grow by at least £30.7 billion each year and if the government continue to take the same percentage as income this means government income will increase by £11.9 billion. It would be possible to finance £6 billion extra for the NHS and social care each year and have £5.9 billion to fund moving benefits levels upwards each year. Benefits levels could be increased for each claimant by over £16 a week each year funded from economic growth.

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