Real Welfare Reform · 1.The Welfare State is a good thing - it’s just designed wrong 2.The current unfair cuts target disabled people 3.This reflects a repeated pattern of discrimination

Redesigning the Welfare State to Increase Social Justice

Talk for Disability Wales - October 2011

Real Welfare Reform

Dr Simon Duffy

• Director of The Centre for Welfare Reform - genuinely independent R&D network based in Sheffield

• ‘Invented’ Individual Budgets and Self-Directed Support

• Founded Inclusion Glasgow, In Control, Shop4Support and many other charities and social enterprises

• Honorary Senior Research Fellow at University of Birmingham’s Health Service Management Centre

• Policy advisor to The Campaign for a Fair Society

• Lives in Sheffield

The basic proposition

1. The Welfare State is a good thing - it’s just designed wrong

2. The current unfair cuts target disabled people

3. This reflects a repeated pattern of discrimination against disabled people

4. Its time to start building a broad alliance for a fairer system and a fair society

The welfare state is good...

• We need a collective system of income security and rights

• The post-war welfare state was a great achievement

• The conditions that make the welfare state necessary have increased not diminished

... but it’s designed wrong

• Designed in a paternalistic and industrial age

• It’s current design stigmatises and damages the poorest

• It’s complexity and obscurity undermines citizenship for everyone

• Let’s not just hark back - let’s build something better

Example 01: The Poverty Net

• 137 different ways to give people not very much

• UK is the 3rd most unequal developed country

• Confused: linked, means-tested, disability-related, family-sensitive or NOT

• 100% tax on earning, 25%+ tax on families, taxes on savings

• The poorest 10% pay the highest share of income in tax: 46.6%

The poverty net means

Teresa Perchard , Director of Social Policy, Citizens Advice:“Citizens Advice acknowledges that the £1.5 billion cost of fraud in the benefit system must be recovered, but we are very concerned at the government’s persistent tendency to roll fraud and error figures together. Errors account for the remaining £3.7 billion of the £5.2 billion figure quoted...

“In the meantime, the £5 billion cost to government through fraud and error is dwarfed by the £17 billion of benefits and tax credits that remain un-claimed every year, because people don’t know they are entitled to claim, or because the system is too complicated.”

In other words: The government defrauds the poor at more than 11 times the rate at which the poor defraud the government

The poverty net means

Example 02: Social Care

• Weak and confused entitlements

• Funding for segregated services not for people

• Citizens are not in control of their own lives

Focus on OutcomesPlan TogetherClarify Entitlement Support in Community

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... and so, citizen-directed support

• Current efforts to revise the old system

• Some success in promoting control and creativity

• Limited by legal framework and other rigidities

The current cuts target disabled people

• Cuts to social care

• that can be blamed on local or national governments

• Cuts in direct income

• that can be hidden within efforts to ‘reform’ the current system

Its organised as a pincer attack:

Approximately 1.5 million children and adults, including older people, receive social care each year in the UK because of significant disabilities. This group face social care cuts from:

• Cuts to local government funding and funding for Scotland, Wales and Northern Ireland.

• Cuts to Supporting People funding

• Termination of Independent Living Fund

Note that:

• Local government, by 2014, will have been cut by 20%

• Social care is biggest role for local government (c. 40%)

• 34% of all cuts fell on local government (excluding education) despite accounting for only 5% of government spending

• over the long-run local government funding has been behind other public services

Attack 01: social care cuts

Central control - local weakness...

UK is the most centralised welfare state in the world

• Increases in eligibility thresholds - so some people stop getting support

• Increases in charges - so people who are already poor will lose even more direct income

• Cuts to local services, especially community organisations

• Reduction in wages for staff

• Reductions in individual budget levels

• Attempts to rationalise services or contract out to private providers - limiting choice and damaging markets

• Attempts to limit flexibility of how people can use their budgets - damaging creativity

• Less preventive support - increasing crises and expensive placements

social care cuts will mean:

Benefits, tax credits and pensions take up c.£185 billion per year, c. 18% of GDP. The major changes planned include:

• Rolling income support benefits into Universal Credit

• Rolling disability benefits into Personal Independent Payments

• Cuts to Housing Benefit and Mortgage Interest Relief

Already:

• £6 billion a year to be saved by weaker indexation

• Stricter medical tests delivered by ‘incentivised’ provider (ATOS)

• Planned reductions in hyper-taxation on poor will be paid for by reducing benefit incomes rather than increasing DWP spending

NB: The poor can be very poor indeed - the poorest must live on £2,780 per year - compared to mean household income of £50,000 per year (<6%).

Attack 02: direct income cuts

Benefit (£ billions) 10/11 (mn) PA

Retirement Pension £72.4 protected 12,509,000 £5,787

Tax Credits £24.0 protected 7,200,000 £3,333

Housing Benefit £21.5 vulnerable 4,750,000 £4,530

Disability Living Allowance £12.5 vulnerable 3,214,000 £3,879

Attendance Allowance £5.4 vulnerable 1,635,000 £3,325

Child Benefit £11.0 questionable 7,200,000 £1,528

Income Support £5.8 vulnerable 1,746,000 £3,301

Pension Credit £7.7 vulnerable 2,664,000 £2,880

Council tax benefits £4.1 vulnerable 5,794,000 £705

Jobseeker’s Allowance £4.8 questionable 1,402,000 £3,453

Carer’s Allowance £1.0 vulnerable 566,000 £1,767

ESA + IB £6.9 questionable 2,469,000 £2,782

Independent Living Fund £0.2 terminated 21,000 £9,524

TOTAL £177.245

2010-11 Figures from DWP for major benefits - child benefit and tax credits from other sources

Why do the cuts target disabled people?

Protected CutPensions Disability benefits

Healthcare Social Care

Education Social Housing

£350 billion out of £500 £40 billion

Universal, mainstream, for ‘ordinary people like us’

Special, marginal, ‘the poor & unfortunate’

Delivered by nationalised systems with high visibility

Delivered by complex systems with low visibility

Not just cuts - but targeted cuts

Political pandering

0%

10%

20%

30%

40%

50%

1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th£0

£10,000

£20,000

£30,000

£40,000

£50,000

£60,000

£70,000

Tax Paid (%) Net Income

Source: ONS tax-benefit data 2007-08 - unadjusted household deciles

1. No constitutional guarantees for citizenship - we have weak rights and only hazy responsibilities placed on multiple public bodies

2. No natural justice - the courts apply ‘natural justice’ to define entitlements, but public bodies simply ration on the basis of ‘equitable charity’

3. No support for families - families have to reach breaking point in order to be entitled to support, and then they are treated as ‘carers’

4. No control guaranteed - funding is guaranteed to providers, but not to people, even with direct payments control is often limited

5. No housing rights - many people end up in institutional settings, with no housing rights, no privacy or control over who they live with

6. No decent incentives - the current benefit system punishes families, savers, earners and disabled people

7. No universality - means-testing or charges are just an extra tax on groups who are already poor, this leads to many people making themselves poorer just to ensure they become entitled to social care

This is a long-standing issue

from the professional gift

to citizenship

• Beginnings - began on 8th February 2011 by people horrified at the likely impact of the Spending Review

• Members - Over 1,000 individuals and 100 organisations are members.

• UK-wide - There are Scottish, Welsh & English Steering Groups - connected federally in a UK group.

• Communications - information on web, twitter, facebook etc - www.campaignforafairsociety.org

The Campaign for a Fair Society

Everyone is equal, no matter their differences or disabilities. A fair society sees each of its members as a full citizen - a unique person with a life of their own. A fair society is organised to support everyone to live a full life, with meaning and respect.

Core Values

Scottish Campaign Manifesto - 7 Commitments

1. to human rights

2. to make the entitlement to support an objective right defined in law

3. to provide families and individuals with early support

4. to put people back in control of their own life

5. to good housing

6. to a guaranteed minimum income free from means-testing

7. to end the current super-tax on older and disabled people levied through local authority charges

It is time to campaign

against unfair cuts

and

for a fair society

Decile Number Income plus Benefits less Taxes Net Income Tax

1st 2,528,000 £2,043.00 £4,592.00 £3,092.00 £3,543.00 46.6%

2nd 2,528,000 £3,738.00 £7,287.00 £3,274.00 £7,751.00 29.7%

3rd 2,530,000 £7,464.00 £7,431.00 £4,642.00 £10,253.00 31.2%

4th 2,527,000 £11,387.00 £7,702.00 £6,155.00 £12,934.00 32.2%

5th 2,529,000 £18,354.00 £5,969.00 £8,656.00 £15,667.00 35.6%

6th 2,530,000 £26,523.00 £4,093.00 £10,978.00 £19,638.00 35.9%

7th 2,529,000 £33,862.00 £3,656.00 £13,379.00 £24,139.00 35.7%

8th 2,525,000 £43,552.00 £2,743.00 £16,710.00 £29,585.00 36.1%

9th 2,531,000 £56,842.00 £2,310.00 £20,833.00 £38,319.00 35.2%

10th 2,531,000 £100,138.00 £1,958.00 £35,271.00 £66,825.00 34.5%

Mean £30,390.30 £4,774.10 £12,299.00 £22,865.40 35.3%

Sum 25,288,000

Source: ONS tax-benefit data 2007-08 - unadjusted household deciles

Decile Number Adjustment Cost Contribution Services Net Use Balance

1st 2,528,000 £1,500 £3,792,000,000 £4,314 -£1,675 -£175

2nd 2,528,000 £4,013 £10,144,864,000 £4,854 -£1,135 £2,878

3rd 2,530,000 £2,789 £7,056,170,000 £5,503 -£486 £2,303

4th 2,527,000 £1,547 £3,909,269,000 £5,839 -£150 £1,397

5th 2,529,000 -£2,687 £6,795,423,000 £6,025 £36 -£2,651

6th 2,530,000 -£6,885 £17,419,050,000 £5,908 -£81 -£6,966

7th 2,529,000 -£9,723 £24,589,467,000 £6,281 £292 -£9,431

8th 2,525,000 -£13,967 £35,266,675,000 £6,733 £744 -£13,223

9th 2,531,000 -£18,523 £46,881,713,000 £7,473 £1,484 -£17,039

10th 2,531,000 -£33,313 £84,315,203,000 £6,958 £969 -£32,344

Mean -£7,525 £5,989

Sum 25,288,000 £24,902,303,000£215,267,531,000£151,444,774,400

Surplus £38,920,453,600

Source: ONS tax-benefit data 2007-08 - unadjusted household deciles

Household Income 1st Decile Adjusted ShareIncome 2043 3424 39%Retirement pension 2463 2048 23%Job seeker's allowance (Contribution based) 61 72 1%Incapacity benefit 268 285 3%Widows' benefits 59 35 0%Statutory Maternity Pay/Allowance 3 5 0%Income support and pension credit 468 651 7%Child benefit 87 422 5%Housing benefit 650 755 9%Job seeker's allowance (Income based) 100 129 1%Carer's allowance 9 36 0%Attendance allowance 7 2 0%Disability Living Allowance 144 204 2%War pensions/War widows' pensions 11 2 0%Severe disablement allowance 2 1 0%Industrial injury disablement benefit - 2 0%Student support 26 73 1%Government training schemes 3 3 0%Tax credits 73 564 6%Other non-contributory benefits 158 107 1%Gross income 6635 8820

Source: ONS tax-benefit data 2007-08 - unadjusted household deciles