UK Welfare Reform: Further Than She Ever Dared!

by Christopher Read

Since the 2010 General Election, the Conservative party has sought to remodel welfare along neoliberal lines, continuing and intensifying the work of New Labour, while finding a ‘compassionate’ rationale to do so.

First published: 02 November, 2012 | Category: Employment & Welfare, Housing

Since the 2010 General Election, the Conservative party has sought to remodel welfare along neoliberal lines, continuing and intensifying the work of New Labour, while finding a ‘compassionate’ rationale to do so. We have seen the Conservatives struggle to rebrand neoliberal reforms as ‘red Toryism’ and ‘the Big Society’ although, as if in exasperation, these vagaries recently gave way to a revival of the Thatcherite ‘Essex man’ at the recent Conservative conference. Regardless, these welfare reforms began back in October 2010 and the act which sets out their most significant and wide reaching reforms so far is the UK Welfare Reform Act of March 2012.

The act is founded on the principle that work must always be a financially more attractive option for welfare recipients than claiming benefits. This in turn is apparently based on the true fact that working is generally good for mental and physical health and wellbeing while long term unemployment has been linked to depression and ill health. It is also based on a certain political view of the individual and their relationship to society. Former Conservative leader Iain Duncan Smith (who didn’t manage to lead his party to an election due to losing a motion of no confidence) is largely responsible for this blend of socially conscious rhetoric and harsh Victorian orthodoxy. His Centre for Social Justice claims it can “fix broken Britain will an army of social entrepreneurs1” who can presumably sort out Britain’s “booming industry in baby farming2” which he seems to believe exists.

The founding principle behind the reforms does not take into account either childcare obligations or disability, which are two of the most common reasons why claimants do not enter the labour market. Lone parents (90% of which are women) and disabled people are also the two groups hardest hit by the reforms.

Charities and anti-poverty groups3 have already criticised the reforms, arguing they will be deeply counter productive if they are not matched by government action to create jobs, expand childcare provision or invest in social and affordable housing. Other strategies they recommend to complement the reforms include the provision of financial literacy and budgeting skills and more funding for adjustments and alterations to help disabled people enter the workforce4. These too have been ignored. In fact, local authority funding for childcare has fallen since 2010, and Disability Living Allowance (DLA), the money which is used by disabled people to make changes to their work stations, vehicles, computers and office equipment that allow them to stay in work, has been significantly reduced.

The reforms consist of 39 individual changes to welfare payments, eligibility, sanctions and timescales for payment and are intended to save the exchequer about £18 blln. However, research by Shelter and Cambridge University suggests that the reforms will in fact cost more in terms of the extra strain on local authorities, such as homeless accommodation services, and the NHS.

Income Support, Child Benefit and Child Tax Credit for lone parents will be reduced and lone parents will now face new sanctions if they do not find work promptly. They will only receive Income Support if their children are less than 5 years old. Lone parents whose children are older than 5 will have to apply for Job Seekers Allowance and find work regardless of local childcare opportunities. However, cuts to local authority budgets since 2010, and to early years projects such as Sure Start, have significantly reduced the opportunity to find affordable childcare. This will make it harder for lone parents to enter the workforce. A similar paradox is faced by disabled claimants of DLA because the cuts will make it harder for disabled people to stay in work (DLA is specifically designed to be used to make adjustments to home and workspace).

All welfare payments will be turned into one single monthly payment, paid directly to the recipient, called ‘Universal Credit’. This direct payment does not account for recipients’ possible rent arrears, mental health problems, learning disabilities or substance addictions. Research by Shelter5 suggests that this tends to lead to higher rent arrears and homelessness because vulnerable tenants rarely budget effectively. Housing Associations have therefore suggested that the reforms should be coupled with new financial literacy skills training so that claimants can budget better. The alternative is arrears, debt and homelessness.

Housing Benefit (and Universal Credit overall) will be capped at £500 per week6 regardless of the claimant’s location, family size and circumstances. In London, where rents are high, this could mean a large scale movement of poorer social groups to the periphery of the city, thereby intensifying the city’s geographical and economic segregation. The overall benefit cap of £500 per week appears generous, but London Property Watch7 calculates that average rents for central London range from £560 per week (for a single bedroom property) to £1500 per week (for a three bedroom property). So even if a claimant had no dependents, such as children, they would still be unable to cover their rent with the new cap (this is before taking subsistence into account), and would have to move outside of London to find affordable housing. This process is likely to be mirrored to a lesser extent in other cities as well and has lead to accusations of ‘economic cleansing’ by anti-poverty groups.

Other broader changes include raising all benefits annually by a percentage lower than the annual rate of inflation (using the Consumer Price Index rather than Retail Price Index), an overall reduction in Housing Benefit for all claimants, a reduction in Working Tax Credit for all parents and a reduction in Child Benefit and the Sure Start maternity grant for all parents. Women, single parents and young people are also most likely to be in part time, insecure and low paid work and will therefore be most likely to claim Tax Credits, Housing Benefit and Income Support, all of which are targeted by the reforms. Cambridge University’s research, Shelter and anti-poverty groups therefore all predict that women and children will be disproportionately affected.

Furthermore, Incapacity Benefit has been replaced with Employment Support Allowance, and disabled recipients of IB / ESA are being tested for their eligibility by the controversial private multinational ATOS Healthcare, who previously designed ATM’s. Condemned by the BMA and the NHS, ATOS has found 75% of former IB recipients able to work8, including people with terminal cancer, cerebral palsy, multiple sclerosis and Parkinson’s disease. Subsequent appeals have overturned 40% of these decisions (70% if the claimant is accompanied9), which are made by a computer rather than qualified medical professionals. The appeals procedure is very expensive for the government and the cost (at least £50mlln annually10) has wiped out the savings that were made by cancelling recipients’ IB. It has also lead to dozens of suicides among disabled people with severe health conditions found fit to work11.

Universal Credit replaces other benefits from 2013 onwards and includes new sanctions. If a claimant refuses work once, they lose the £65-a-week allowance for three months. If they do this twice, the forfeit their JSA for six months, and if they do it three times, it is forfeit for three years. The rules makes no provision for the special circumstances that could lead to a claimant refusing work 3 times such as poor mental health, learning disabilities or a dispute regarding prospective working conditions. This will mean that the claimant will have no recourse to public funds and will simply be left to fend for themselves.

Applications to Universal Credit will all be made online and will no longer be made via a hand- written form. Statistically the demographic most likely to apply for Universal Credit are those with the least access to the internet but no extra provision has been planned for this. Charities and anti-poverty groups have requested new PC’s in Job Centres Plus, Citizens Advice Bureau and libraries to cope with the changes. However, both government funding to CABs and local authority spending on libraries has fallen since 2010 and no extra provision of PC’s is planned. This will most likely mean that eligible claimants will simply not apply and be forced to turn to alternatives ways to survive. The Centre for Social Justice assures us that former claimants will instead become new entrepreneurs, only it may not be in the manner they intended, as fans of The Wire will attest. 

The effects of the Welfare Reform Act will be felt most keenly by the middle income quintile, especially if they are single or unemployed, followed by the poorest quintile, either single or unemployed. However, they will reduce the entitlements of all groups, regardless of income, household status or age. Overall, they will also affect the poorest quintile dramatically more than the richest quintile. The reforms will also see over £9 blln removed from the annual household budget of disabled people. The Scottish Drugs Forum, Poverty Alliance and Demos have argued that the reforms will see a marked rise in drug use and drug death.

Cambridge University12, The Poverty Alliance, The Joseph Roundtree Foundation13, Shelter14 and the Scottish Drugs Forum15 have deliberately identified key outcomes of the reforms. Unfortunately, their research makes for grim reading. The Scottish Drugs Forum is so concerned that it has included its criticisms in its annual report, for the simple reason that they counter the Scottish Government’s cross-party consensus on drug recovery. Given that the Conservative party’s stated position on substance misuse runs counter to scientific and expert advice16 regarding classification, prisons sentencing and the role of rehabilitation, this is hardly surprising.

These organisations agree that the reforms will negatively impact Britain’s mental and physical health with a disproportionate affect on the poorest, which will in turn put increased strain on local authority services and the NHS. This strain is in danger of eliminating any savings from the cuts, not least because cure is so much more expensive and early intervention or prevention.

A surge in alcohol and drug dependency is predicted, as is a rise in drug dealing, a common instance when communities are pushed into destitution through the removal of any recourse to public funds. This will in turn impact policing and the prison service and is predicted to be matched by a wider rise in crime. It is interesting to note (given our current government) that it is cheaper to send someone to Eton for a year than to prison.

These organisations also predict a worsening of our diets, especially among young children and lower income groups. Cheap food tends to have the least nutritional value and the most calories17. Other projected outcomes include a rise in teenage pregnancy and a significant negative impact on the early years experience of children from poorer backgrounds. This also comes at a time when a range of children’s charities and public sector bodies are discovering how vital the early years experience is to life chances and future development.

These reforms will hit unemployed families and families with low paid work, as well as all households with children regardless of income. They will disproportionately affect lone parents and in particular single mothers as well as disabled people and people with long term health conditions. There is no demographic which will not see a drop in income and there is no social group who will be protected from the affect this will have on our economy, our society and our friends. Frightening as the prospect is, it serves as a stark reminder that to successfully challenge these moves we must challenge the very concepts behind them. We must challenge the idea that childcare is somehow less meaningful than paid employment. We must challenge the idea that we are only worthy of respect when in full time paid work. And we must replace them with an obvious, human and omnipresent principle: from each according to their abilities, to each according to their needs.

Christopher Read has an MPhil in Politics from Sussex University and works for a community education service based in Edinburgh.



[2] Iain Duncan Smith: The Father of Four Who Wants to Provide Bread for Just Two, http://www.huffingtonpost.co.uk/hayley-meachin/child-benefit_b_2016625.html?utm_hp_ref=uk

[3] The Poverty Alliance, Briefing on the Stage One Debate Welfare Reform Bill

[8] ‘Benefit applicants: 75% fit to work or drop claims', BBC News, 28 April 2011

[9] Unfit for Purpose - Scottish CAB evidence on ESA, Citizens Advice Service, May 2010

[10] Sick and disabled people are being pushed off benefits at any cost, The Guardian, 31 July 2012

[11] The Poverty Alliance, Briefing Paper 18: Latest Developments in Employment Support Allowance

[12] Cambridge Centre for Housing and Planning Research, the University of Cambridge:

www.cchpr.landecon.cam.ac.uk/projects/detail.asp?ProjectID=169
www.cchpr.landecon.cam.ac.uk/outputs/detail.asp?OutputID=271

[15]Politics, welfare and recession could impact on drugs recovery, says SDF Chair, http://www.sdf.org.uk/index.php?cID=385

[16] UK Drug Policy Commission, A Fresh Approach to Drugs, 2012

 

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