Archive for the 'Poverty and Inequality' Category

The Tax Credits system needs fixing: addressing Universal Credit is not enough

Sam Royston, author of Broken benefits, argues that the government must reform the  flawed Tax Credits system before they can even begin to improve Universal Credit.

It is tempting to think that a “devastating picture of administrative chaos, computer errors and political misjudgements” in the social security system must be a reference to Universal Credit over the last few months. It well could be, but this is, in fact from George Osborne back in 2005 emphasising that problems with the Tax Credits system had become so serious he believed that there were serious questions over the future of the responsible Minister.

Many of the problems were to do with the way in which Tax Credits are calculated and paid. Whilst, as we shall see, many of the problems were addressed at the time, cuts to the benefits system mean that they have been rapidly re-emerging in recent years.

Why were Tax Credits such a mess when they were first introduced?

Tax Credits are an annual award – the total amount a claimant is entitled to is calculated for the whole year. However, people, and particularly those living on the lowest incomes, need to receive payments more frequently than once a year. For this reason, they are normally paid on a weekly or four weekly basis, based on an estimated entitlement for the whole of the year.

Since Tax Credits are means-tested, the claimant’s household earnings over the course of the year can affect the overall amount due – predicted annual entitlement is based on what the claimant thinks their income will be for the year.

“At the height of the Tax Credit problems, around £1.9 billion was overpaid to households in receipt of Tax Credits.”

The difficulty arises at the end of the year, when the award amount is checked against the household’s actual income for the year. If the household’s income is lower than the estimate, then the award may have been underpaid and is topped up to the actual entitlement. If the household’s income is higher than the estimate, then this can result in the award being classed as overpaid and the government asking for some of the money back.

We aren’t talking about small amounts of money – in 2004, at the height of the Tax Credit problems, around £1.9 billion was overpaid to households in receipt of Tax Credits.

To reduce the likelihood of overpayments occurring, the Tax Credit system has a built in “buffer zone” (known as the “income disregard”) which means that a household’s income can rise by up to a given amount during a year without affecting their Tax Credit entitlement. In the mid 2000s, as a result of the amount of Tax Credits being overpaid, the government decided to increase the income disregard from £2,500 to £25,000. In effect this meant that if a claimant had been paid Tax Credits for a few months at the start of the year based on their previous year’s earnings of £10,000, and then changed job so that by the end of the year they had earned £35,000, their overall Tax Credit entitlement wouldn’t be affected.

Some overpayments are in fact impossible to avoid without a buffer zone – a household that has a low income for most of the year and then gets a sharp but unforeseeable increase in income may have already had more than their yearly entitlement before the rise in their income.

What’s gone wrong with welfare reform?

Despite this positive effect, following the 2010 election, the coalition government decided to reduce the size of the overpayments buffer zone – first from £25,000 to £10,000, and then to £5,000.

“They are treated as if their earnings are the same as the previous year – which could cost them more than £1,000 at a time.”

Astonishingly, the coalition government also decided to introduce the reverse of a buffer (an anti-buffer?) which disregarded falls in income of up to £2,500 from 2012. This means that when (for example) a worker sees their hours reduced so that they earn £2,500 less than they did the previous year, the earnings figure used to calculate Tax Credits is not immediately adjusted down. Instead they are treated as if their earnings are the same as the previous year – which could cost them more than £1,000 at a time when they are likely to be struggling.

As the income disregard has been reduced, overpayments (again, unsurprisingly) have increased. As large a proportion of Tax Credit claimants face overpayments than during the height of Tax Credit problems in 2005, with one in three claimants facing an overpaid award, and £1.6 billion of overpayments in 2015-16. This includes some exceptionally large overpayments – including around 50,000 families overpaid by more than £5,000.

Tax Credit awards overpaid as a proportion of total awards
2003/04 – 2015/16

awards-overpaid

In 2005 when these problems were first recognised, the then shadow (and later actual) Chancellor of the Exchequer called for the resignation of the Minister responsible. The response of the government was dramatic – not only did the Prime Minister apologise, but the large increase in the size of the income disregard was a direct response.

In 2015, when he himself was faced with a similar scale of problems within the system, the response of the Chancellor was to further reduce the level of the income disregard, back to the 2003-4 level of £2,500. We don’t yet know the impact that this will have on overpayments, but the Chancellor expects to save quarter of a billion pounds from this measure at its peak in 2018-19.

Giving credit where credit’s due

“It isn’t good enough to just focus on improving Universal Credit – the Tax Credits system needs fixing.”

It is tempting to think of the Tax Credits system as a thing of the past, focussing instead on the profound mess which is being made of the introduction of Universal Credit. However, it is important to remember that more than 4 million families (with more than 7 million children), still rely on vital Tax Credits to make ends meet – and will do for the next few years at least.

Nor will these families escape their overpayments when they transfer over to Universal Credit – they will come with them and be automatically deducted from their Universal Credit entitlement.

It isn’t good enough to just focus on improving Universal Credit – the Tax Credits system need fixing. For a Government which wants to improve the fairness and simplicity of the benefits system, removing vital income disregards which prevented families from falling into benefit debt is a move in entirely the wrong direction.

 

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Europe’s largest ghetto: squalor and violence in the shadows of Madrid

Welcome to Valdemingómez. Just 12km from Madrid, political neglect, spatial exclusion and social policy stagnation have created a lawless landscape of drugs and violence. Squalor and hopelessness reduce chances of a way out.

“Julia” nervously emerges from her shabby tent to face another day of survival: she is homeless, wanted by the police, and addicted to heroin and cocaine. She is also five months pregnant.

The harrowing stories of Julia and others like her feature in a new book Dead-end lives: Drugs and violence in the city shadows by Daniel Briggs and Rubén Monge Gamero – out today.

sleeping

Image: Dead-end lives, page 192: ‘Respite’

Read the foreword by Professor Dick Hobbs below.

“Long before urban ethnography came of age with the Chicago School, Henry Mayhew had trawled London’s streets for narratives of the poor, dispossessed and excluded. For all of their rightly celebrated qualities, the sociologists of the Chicago School seldom provided the kind of vivid detail that is central to Mayhew’s journalism for the Morning Chronicle. He was particularly concerned with men and women for whom transgression was an inevitable consequence of the material conditions in which they found themselves. Seamstresses squeezed by the punitive pressures of piecework turned to prostitution to feed their families, street traders who relied on their own invented language and transgressive leisure pursuits to resist harassment by the new social control agencies, and some of the poor reduced to collecting dog shit from Albertoian pavements before delivering their fetid buckets to the capital’s leather tanneries. For Mayhew, crime/deviance/transgression was a social product, and very much part of the relentless unforgiving meat grinder of life in the city.

However, the Chicagoans’ establishment of urban ethnography as a central and enduring prop of social scientific endeavour did open the door to the city’s dirty secrets, and through this door have passed many thousands of scholars intent on bringing to the fore issues that most urban dwellers seek to scrape from the soles of their shoes. Most, but not all, of Chicago-influenced ethnography was based on an urban template created as an explanatory model of industrialism.

The industrial city was essentially zonal, and when drilling down into these zones, deviant behaviour – predominantly, but not exclusively, youthful delinquency – could be unwrapped, analysed and, crucially, rehabilitated. While later proponents of urban ethnography sometimes withdrew from engagement with rehabilitative policy engagement, its replacement was often a romanticised misfit sociology that valorised both the deviant and the intrepid researcher who would then shamelessly trade on this brief brush with outlaw status for the remainder of an academic career.

The post-industrial city, where the now superfluous poor of the industrial project have been supplanted by previously unfamiliar forces of economic apartheid, offers few of the assured inevitabilities of industrialism. The shape and form of urban existence has changed, and as a consequence, the trajectories of existence in the alcoves where working-class lives are lived are now dominated by population churn, by fragmentation and by a vernacular cosmopolitanism based on informal modes of survival that have little connection with institutions of governance.

landscape

Valdemingómez is one such alcove, and in describing life, death and commerce in this area on the edges of Madrid, we are introduced to a world that is uncomfortably close to Mayhew’s London. Thankfully, Daniel Briggs and Rubén Monge Gamero are as sensitive to the multiple complex forces that created Valdemingómez as they are to the harrowing conditions of survival of its population, where addiction and the servicing of addiction dominate social life. Cities churn, global populations shift and with capitalism in a state of permanent crisis, the flotsam and jetsam of ‘Europe’s largest ghetto’ compete and co-exist within a range of informal economies, in particular, the drug trade. Briggs and Monge Gamero explore this world of poverty, profit, hope and addiction with enormous skill. For this is the future, the ghetto at the edge of the city, life at the periphery largely abandoned by the state, occasionally subjected to police operations, but not often enough to impact on the illegal economies that are the poisonous lifeblood of Valdemingómez, where ‘the Wild West meets the third world’.

The authors do not valorise deviance, but do describe and explain a world where destructive social and personal practices are the norm. Indeed, the descriptive passages, which constitute this book’s strength, are among the most vivid and insightful to be found in contemporary ethnography. Highlighted are the impacts of often ignored causal factors such as the withdrawal of the state, and the consequences not only for the addicted and their families, but also for the poor bloody infantry of police and drug agencies that seek to make an impact on this blighted domain. The limits of intervention, particularly during an era of austerity, along with the predatory culture of many of Valdemingómez’s residents, are emphasised by harrowing description and interviews.

This is a deeply upsetting book about an alcove of the global economy where death and degradation are embedded into every pore. Enhanced by photography, this excellent and innovative ethnography stands as a powerful and unnerving document of contemporary and probable future urban life.

paloma-resting
Image: Valdemingómez, where people like Paloma sleep in dirt and sell sex for a couple of euros for drugs.

Yet, as with Henry Mayhew’s seminal work, written in a long distant era of exploitation, deprivation and squalor, it is the heart-rending stories of the poor that leave the most indelible impact on the reader. The utter impossibility of their plight is genuinely disturbing, and the term ‘social exclusion’ has seldom been more appropriate, its causation more complex, or its reality more distressing.

Professor Dick Hobbs, Emeritus Professor at the University of
Essex, and Professor of Sociology at the University of
Western Sydney, Australia

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10 ways we can reverse inequality in Britain

Professor Roger Brown Book launch Liverpool Hope 16.4.13

Roger Brown

Roger Brown, author of The inequality crisis, explains how economic inequality in Britain and other advanced Western countries has got so bad, and highlights the measures we need to undertake that will start to reverse this devastating trend.

“Almost every day now the media carries stories about inequality and its effects.

In the past few weeks, the Department for Health has confirmed that the health gap between rich and poor in England is growing.

Reports by Lloyds Bank and the Social Market Foundation have drawn attention to our disparities in wealth, with a tenth of adults owning half of the country’s wealth while 15% own nothing or have negative wealth.

Respected independent ‘thinktanks’ like the Institute for Fiscal Studies and the Resolution Foundation have repeated their warnings that, at a time when wages generally are only growing slowly, the combination of tax cuts and cuts in welfare benefits means that income inequality will increase further over the next few years.

“Economic inequality has increased in nearly every advanced Western country…”

This is not just an English or British issue. In March, International Monetary Fund (IMF) researchers estimated that the US economy had lost a year of consumption growth because of increased income polarisation. And of course inequality was a major factor in the Brexit vote and in the election of President Trump.

My interest in the subject was first aroused by my work on the introduction of markets into higher education. I found that the associated increase in competition through mechanisms like tuition fees had exacerbated the inequalities between universities and the constituencies they serve, without any significant compensating benefits. This led me to wonder if there might be parallels in the economy and society more generally.

What I established was that economic inequality has increased in nearly every advanced Western country over the past thirty or so years, and that this has led to a huge range of costs and detriments. Moreover, these costs and detriments are not only social. As the IMF research confirms, increased economic inequality has an economic cost as well. Above all, growing inequality is disabling democratic politics as the concentration of economic power is increasingly reflected in a concentration of political power (as can be seen most clearly in the US).

“Growing inequality is disabling democratic politics…”

But whilst nearly everyone agrees that – to paraphrase Dunning’s famous 1780 Parliamentary motion, economic inequality has increased, is increasing, and ought to be reduced – there is no agreement on how this should be done.

Broadly speaking, there are two schools of thought:

One – the ‘market’ view – is that increased inequality is the inevitable outcome of underlying structural developments such as globalisation, skill-biased technological change, and financialisation (the growing economic role of such processes as banking and securities trading) over which individual countries and governments have little control. These changes are leading to what have been termed ‘winner-take-all’ markets where those at the top gain rewards out of all proportion to their contribution to society.

The alternative, ‘institutional’, theory is that it is due to the political choices made in individual countries, and especially the neoliberal policies of deregulation, privatisation, tax reductions, welfare cutbacks and deflation pursued in most Western countries since the mid- to late-70s, but particularly associated with Margaret Thatcher and Ronald Reagan.

I believe that it is the combination of these underlying structural developments with those neoliberal policies that has driven the post-80s rise in inequality, with the US and Britain well above the other wealthy Western countries in the extent to which inequality has grown there over that period.

So the key to reversing, halting or slowing inequality lies in the first place in reversing these neoliberal policies, but without losing the benefits of properly regulated market competition in sectors where it is appropriate.

The following is a short list of measures that would start to reverse inequality in Britain:

  1. Require the potential impact on inequality to be a major test of every other policy or programme introduced by the Government.
  2. Show that we are serious about tax avoidance by reversing the long-term decline in the number of professional HMRC officials.
  3. Progressively adjust the balance between direct and indirect taxation (VAT), increasing the former and reducing the latter.
  4. Increase the income tax rates for higher earners (say, above £60,000).
  5. Introduce some form of wealth tax.
  6. Begin the rehabilitation of the trade unions by repealing most of the 2016 Trade Union Act.
  7. Reverse the cuts in welfare benefits made by the Coalition and Cameron Governments.
  8. Introduce measures that really will force companies to take account of interests wider than those of top management.
  9. Begin to end segregation in education by removing the charitable status of the private schools.
  10. Focus macroeconomic policy on demand and wage growth rather than inflation and corporate profits.

The Labour election manifesto has some proposals on these lines, but no political party has yet really got its mind round the full range of measures that are needed to combat inequality.

Until they do, inequality will continue to increase.

 

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What’s next for poverty?

Barry Knight 3

Barry Knight

Barry Knight, author of Rethinking poverty: What makes a good society?, explains why we need to change the way we frame ‘poverty’ in order to make progress.

“Progress on poverty has stalled, in fact the proportion of people living in poverty in the UK has remained the same since 2005. This applies both to absolute and to relative poverty.

Poverty campaigners know that they need a new language if they are to make progress. Justin Watson from Oxfam has suggested that charities are getting it wrong:

“There is growing consensus that the narratives used by the third sector, however well-meaning and ‘right’, have been rejected. Take ‘poverty’ for example, a term that is politically divisive, laced with stigma and highly contested to the point of still having to persuade people it exists at all in the UK.”

Reports on poverty may raise awareness but, as Olivia Bailey, Research Director of the Fabian Society points out, “talking about a problem doesn’t generate enthusiasm for a solution”. Leading journalist Simon Jenkins has recently written that endless research into Britain’s growing gap between rich and poor is a waste of time. We need to set aside partisan politics and act.

Yet, solutions are hard to come by. The traditional remedies of the post-war settlement – work and welfare – are no longer sufficient. Social security payments leave many people struggling to make ends meet, while economic development produces low paid jobs.

So, how do we end poverty when the traditional means of doing so no longer work?

Technocratic policy fixes treat symptoms, rather than address the complex processes that produce poverty in the first place. Moreover, such an approach wastes effort in repairing an old system that seems incapable of eradicating poverty. We can no longer rely on public and private sectors to guarantee people’s well-being and there is little sign that anything in present arrangements will make our society better.

“This approach redesigns our society so that poverty becomes obsolete.”

We need to reframe our approach. Rather than addressing what we don’t want – poverty – we need to develop what we do want – a society without poverty. This approach redesigns our society so that poverty becomes obsolete.

To do this, we need to draw on a sociological tradition originally deriving from the work of C. Wright Mills, and modernised by John Paul Lederach, in which we use our moral imagination to develop the society we want. Research by the Webb Memorial Trust shows that the society people want differs markedly from the society we have. Rather than opting for a society based on current political categories, they want a society where social factors come first, where relationships are given priority, and the economy supports people in their lives, rather than the persistent drive for ‘growth’.

The model of how we develop a good society needs to change. This can no longer come from the elites as something done to us. Rather, it involves us doing it for ourselves. ‘You can’t go around building a better world for people. Only people can build a better world for people. Otherwise it’s just a cage’, wrote Terry Pratchett in Witches Abroad. Nowhere is this truer than the ending of poverty, a process that now can and must involve the poor being their own agents of change.

“The way forward lies not in a set of transactional policies that shift resources, but rather in the development of transformational relationships that shift power.”

The way forward lies not in a set of transactional policies that shift resources, but rather in the development of transformational relationships that shift power. Young people understand this and that is why working with them to help them take power must be the first goal of social policy.

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‘Baby P’ 10 years on and the devastation of child protection

The updated and expanded second edition of ‘The Story of Baby P: Setting the Record Straight’ by Ray Jones, was published by Policy Press in February. Here, Jones discusses the impact of the Baby P case 10 years on, especially the ineffectual regulations on abusive press behaviour and the devastating effect on the social work profession.

Ray Jones

“On 3 August 2017 it is the tenth anniversary of the terrible death of 17 month old Peter Connelly in Haringey, North London.

Abused within his family home, his death became a focus of national and international media coverage when his mother, her boyfriend and the boyfriend’s brother were each found guilty of ‘causing or allowing’ Peter’s death.

Within the press, Peter was known as ‘Baby P’. One newspaper in particular, The Sun, and its editor, Rebekah Brooks, day-after-day, month-after-month, and year-after-year ran a campaign of harassment and hatred targeted at Peter’s social workers and their managers, and a paediatrician, who sought to help and protect children.

The Sun launched a ‘campaign for justice’ with a front page accusing those it was targeting as having ‘blood on their hands’. This notorious banner headlined front page is no longer to be found on The Sun’s website but is still accessible through other sites.

Much has happened since August 2007. David Cameron, who is now known to have been a close personal friend of Rebekah Brooks, wrote a column in The Sun demanding the sacking of the social workers and managers and that ‘professionals must pay with their jobs’. At the time he was leader of the opposition. He has subsequently come and gone as Prime Minister.

Mr Gove, who was the Shadow Secretary of State in 2008, joined in the targeting of Sharon Shoesmith, who was quickly (and the High Court in 2011 decided wrongly) dismissed from her post as Director of Children’s Services in Haringey. Mr Gove has also come and gone as a government minster … and has now recently come again.

Mr Gove has been a champion for Rupert Murdoch, owner of The Sun and The Times. Murdoch had also owned The News of the World. It closed amid the exposure of the long-standing criminality perpetrated by editors and reporters at the paper in hacking phones, including the phones of bereaved parents and a murdered school girl.

It took several years for the Metropolitan Police to conduct an appropriate and proper investigation into the criminal activities rampant within Mr Murdoch’s British press.

“At last acknowledged that the… threat and harassment of Sharon Shoesmith was “cruel, harsh and over top””

The self-serving parasitic relationships between the Murdoch press, Metropolitan police and politicians was exposed through the Leveson inquiry. At the inquiry Rebekah Brooks at last acknowledged several years late that her paper’s threat and harassment of Sharon Shoesmith was “cruel, harsh and over top” and that “balance went right out of the window”.

Mrs Brooks, who was found not guilty of charges at the phone hacking trial, claimed that she knew nothing about the wide-spread criminality in the organisation she led, even though this criminality also included the actions of her deputy editor, Andy Coulson. Mr Cameron had appointed Mr Coulson as his media advisor, an appointment which ended when Coulson was convicted and then imprisoned.

Politicians have come and gone. So have senior police officers. The hacking investigations and trial led to the closure of a newspaper, prison sentences for newspaper editors, and a major public inquiry. That inquiry, however, has been cut short.

Its major recommendations on regulating abusive press behaviour are not being enacted and the press continues to intrude, bully, and abuse much as before. The Sun, for example, recently and remarkably used its ‘blood on their hands’ banner headline, this time to target Jeremy Corbyn, John McDonald and Diane Abbot during the 2017 general election campaign.

And Mr Murdoch and Mrs Brooks have had their down times but are now again both flourishing.

“None of the social workers or managers targeted by The Sun have been able to regain employment as social workers.”

But what of the social workers and social work? None of the social workers or managers targeted by The Sun have been able to regain employment as social workers, despite those whose cases were heard by the social work regulator allowing them to continue their registration as social workers.

Sharon Shoesmith has completed a PhD and written a book about child and familial homicide but has not been able to get paid employment since being dismissed by Haringey Council at the instigation of Ed Balls (another politician who has come and gone).

Not surprisingly, it is now difficult to recruit and retain social workers (and specialist doctors working in child protection) to work in statutory children’s services with the continuous threat that they too could be a focus of vilification and vengeance by the media. There is now a dependency in most local authorities on short-term interim agency social workers and managers with services no longer having the stability, continuity and experience which is needed to provide good children’s and family social work and child protection.

There has also been a dramatic shift in social work and social services practice from helping children and families to an emphasis on surveillance, assessment, risk management and child protection.

Since 2008 there has been a 90% increase in England in child protection investigations (now running at over 170,000 a year) and a 130% (and still rising month-by-month) increase in court proceedings to remove children from families. In part, this reflects more defensive practice by professionals and agencies fearful of media attacks.

But it also reflects big cuts in government funding to local authorities (a 40% reduction since 2010 and still to be reduced further) with the closure of Sure Start programmes, children’s centres and youth services. This is at the same time as draconian cuts in social security and housing benefits are moving more families into severe poverty and destitution and making it harder for stressed and overwhelmed parents to care well for their children.

The response of the Conservative-led governments has been to see this all as an opportunity to say that social work is not good enough and the answer is to take children’s social services outside of local councils. They have sought to create a commercial and competitive market place open to all comers who can now be contracted to provide these services, and to favour fast-track social work education outside of universities provided by independent companies and shaped by management consultancy and international accountancy firms.

‘Child protection services in many areas are now at the point, and for some beyond the point, of breakdown’

Who would have anticipated in 2007 that within ten years one of the safest child protection systems in the world, based on 40 years of learning and development, would have been churned up and undermined by politicians using the ammunition provided by the tabloid press whipping up public hostility and in the context of politically-chosen austerity?

In the book, ‘The Story of Baby P’, I comment that “my greatest horror is what happened to a little child, Peter Connelly, and my concern is that the campaigning by The Sun and others has done nothing to make it safer for children like Peter”.

It certainly has not made it safer. Child protection services in many areas are now at the point, and for some beyond the point, of breakdown. This is today’s story which the media choose not to cover – unless of course every so often they skew the story and focus on another child death and find new social workers to abuse and attack.

Dr Ray Jones is a registered social worker, a former director of social services, and an emeritus professor of social work and frequent media commentator and columnist.

 

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What effect do sanctions & conditionality have on disabled people?

Guest editor Ben Baumberg Geiger introduces the new Journal of Poverty and Social Justice special issue, focusing on disability and conditional social security benefits.

 

Ben Baumberg Geiger

“There are times that policy runs ahead of academic knowledge.

Indeed, this is often the case, for policies must first be introduced before social scientists can study them – and if policy makers were restricted to policies that had been tried and tested, then policy innovation would be impossible.

Yet such innovation can come with considerable risks, as new policies can be introduced and widely imitated, only for social scientists – after some delay – to show that such policies are difficult to implement, can fail to achieve some of their aims, and may even have unforeseen and harmful consequences.

In a new special issue of the Journal of Poverty and Social Justice, we focus on one area where this might be happening: conditionality for sick and disabled social security claimants. While, historically, disabled benefit claimants were largely exempt from seeking work, high-income countries from Australia to Norway have increasingly required disabled claimants to take steps towards finding work, under the threat of financial penalties.

“…high-income countries from Australia to Norway have increasingly required disabled claimants to take steps towards finding work, under the threat of financial penalties.”

The conventional wisdom repeated by bodies such as the OECD is that this is a necessary step towards reducing high benefit claim rates, and, moreover, helps improve the finances, health, and social inclusion of disabled people themselves.

However, there are several challenges to this story. By any principle of justice, claimants cannot reasonably be required to perform actions that they are incapable of doing, but it is difficult for benefits agencies to know exactly what someone can or can’t do. If they get this wrong, conditionality for disabled people can create injustices, and inflict considerable stress on disabled people. Moreover, conditionality may move disabled people further away from work, by both undermining their relationship with their employment support caseworker, and making them less willing to take risks in performing tasks that they are not sure they are capable of doing.

 

Two conflicting stories – but what does the evidence say?

Until now, there has been very little published research trying to establish which of these accounts is correct. This is the aim of the special issue, which includes four research papers looking at experiences from around the world. In the UK, Aaron Reeves looks at on the impacts of conditionality for disabled people claiming unemployment benefit. In Denmark and Sweden, Sara Hultqvist & Iben Nørup look at the different forms of conditionality implemented for young disability benefit claimants. In Germany, Patrizia Aurich-Beerheide & Martin Brussig look at the (failed) implementation of conditionality for disabled people in Germany. And my own paper (see below) brings together these papers with a wider review of evidence and practice, to come to some initial conclusions about what we know so far.

“It is crucial for the wellbeing of disabled people around the world that deeper knowledge and more informed policy go hand-in-hand.”

The special issue also includes four further, slightly more unusual papers about the UK, perhaps the country where these issues have become most hotly contested. Indeed, conditionality for disabled people has been the subject of an award-winning film (I, Daniel Blake) and an award-winning play (Wish List), both of which are reviewed in the special issue (by Alison Wilde and Kim Allen respectively). Jed Meers covers a recent Supreme Court judgement about the ‘bedroom tax’ in the Supreme Court. And we felt it was important to convey the lived experience of conditionality, so a team from the Welfare Conditionality project describe two real-life stories of people who took part in their research.

So at the end of this, what do we know? In my (open access) review paper, I summarise the evidence into four ‘stylized facts’:

1. Requirements for disability benefit claimants are common, but sanctioning is rare (particularly outside of the UK and Australia).

2. Assessment and support are critical in making conditionality work on the ground, and can be combined into ‘passive’, ‘supportive’, ‘demanding’ or ‘compliance-based’ systems.

3. The limited but robust existing evidence suggests that sanctioning may have zero or even negative impacts on work-related outcomes for disabled people.

4. Individual case studies in ‘compliance-based’ systems suggest that sanctioning in the absence of other support can lead to destitution, and that conditionality can harm mental health.

While we need to know more, it is already clear that we cannot assume that conditionality for disabled benefit claimants is easy to implement, nor that it will have purely positive consequences. Policy may have run ahead, but research is now starting to catch up. It is crucial for the wellbeing of disabled people around the world that deeper knowledge and more informed policy go hand-in-hand from this point.

This is an edited version of the (free) introduction to the special issue, and is simultaneously being posted on the Policy Press blog and my own Rethinking Incapacity blog. The full special issue can be accessed here.

 

You can read the Disability and Conditional Social Security Benefits’ special issue of the Journal of Poverty and Social Justice here. 

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Taxation, inequality and post-industrial society

Ruane4Jul17

Sally Ruane

In this blog post, Sally Ruane, co-author of Paying for the Welfare State in the 21st Century, explains why we need to challenge the political culture surrounding taxation to effectively tackle inequality.

 

“The dramatic electoral developments in the US, France and most recently the UK, point to a state of flux in which there is a high degree of uncertainty regarding future direction and outcomes.

These political symptoms emerge following the transition of advanced Western countries from industrial to post-industrial societies, a transition managed in such a way that economic inequality has deepened and financial deregulation has brought about a destabilisation of the whole system.

The rise of in-work poverty

In the UK, from 1980 to 2003, median income began to lag behind economic growth, rising at the rate of only 70% of national economic growth; and in the five years leading up to the financial crash, household income stagnated despite economic growth during the period. More recently, the Institute for Fiscal Studies found that in the seven years after the crash, average gross employment income had yet to recover its pre-recession levels. Into this mix we must add that, unlike the postwar period when poverty was associated with a problematic or disrupted relationship to the labour market, most people living in poverty today are living in households where at least one person is working. What is more, average pensioner household income is now higher than average income in working age households. Meanwhile, at the top end of the scale, the best off 1% of households has raced away, holding 7.9% of all income in 2014/15 against 5.7% 1990.

“Average pensioner household income is now higher than average income in working age households.”

Tax and the allocation of resources

The allocation of resources in society is an outcome not just of ‘market incomes’ but also of the totality of fiscal policy. This entails government spending on benefits and in-kind services, on the one hand, and the tax system on the other. The social policy gaze has tended to focus on the former rather than the latter but to understand questions of inequality we have to examine taxation. The tax system encompasses more than the entities taxed, the taxes levied, and the rates and thresholds at which those taxes are levied. It entails also attitudes to the payment of tax, the capacity to and vigour with which the tax collection authority pursues those who owe tax and the infrastructure through which income and wealth are handled, disclosed (or not) and made subject (or not) to tax liability.

‘Flexible’ working and rising inequality

The way in which the tax system works not only is influenced by the nature of the wider socio-cultural and economic system but at the same time influences that wider system.

The acceptance of a model of globalisation in which the financial system was deregulated and many relatively well paid working class jobs were transferred to other, low wage economies, reinforced by a strong pound which suited the interests of the financial sector, gave rise to exhortations that labour must be flexible to attract capital investment. ‘Flexibility’ meant that the wages and terms and conditions of workers were systematically worsened to the advantage of capital. New Labour’s revival of Speenhamland type policies in which the low wages of those in work were supplemented by tax credits afforded a degree of redistribution but at the expense of establishing the acceptability of paying low wages, reinforcing the problem of in work poverty. In other words in addressing workplace exploitation, the tax system has simultaneously exacerbated it.

“… in addressing workplace exploitation, the tax system has simultaneously exacerbated it.”

The cost of tax avoidance

The increasing effectiveness with which corporate and financial interests have been able to lobby ministers has given rise to criticism of Her Majesty’s Revenue and Customs for lacking zeal in its pursuit of complex and sophisticated forms of tax avoidance and evasion, reinforcing the resources which corporations can bring to bear in further lobbying of ministers. The debilitation of the organised working class through acceptance of the dominant globalisation model has weakened the countervailing forces which might have checked concessions to big business and big finance. The success with which large corporations and affluent individuals are able to avoid and evade paying taxes materially affects the resources governments claim are available for funding social security and public services. The resulting austerity erodes the social wage and further weakens the base for social democratic policies.

“Challenging the political culture surrounding taxation is essential if inequality is to be effectively tackled.”

These are just some of the inter-linking examples of the way in which the tax system is both shaped by wider cultural and social factors as well as recursively shaping that wider society.

We argue in Paying for the Welfare State in the 21st Century that reforming the tax system goes beyond altering rates and bands and that challenging the political culture surrounding taxation is essential if inequality is to be effectively tackled and some of the destructive consequences of the shift to post-industrial society are to be reversed.

 

Paying for the welfare state in the 21st century [FC]Paying for the welfare state in the 21st Century by David Byrne and Sally Ruane is available with 20% discount on the Policy Press website.  Order here for just £10.39.

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