Farewell to WelfareThreats to the welfare state

Talk by Simon Duffy at the University of Vaasa on 23rd May 2014

“The last assessment reduced me to floods of tears. I couldn't stop crying all the way home and spent a week hidden away in a dark room, not letting anyone see me out of shame. I stopped medications because I felt like a fraud. (This did not help. Unsurprisingly.) I am depressed and socially isolated, the latter partly due to total unilateral deafness, which went undiagnosed at birth. I try my absolute hardest to get well, but life & progress ripped apart by constant forms and worry. 3 weeks ago got latest form, lost my grip totally and also became seriously physically ill because of the stress (tonsillitis 1 wk on followed by viral meningitis 2 wks). My Doctor said - ‘I think Atos [assessment organisation] is making you very ill. You need to relax and not do anything.'(!) I have no social life and dream of having a job, but a mental illness does not improve when the media is full of comments about how worthless you are. The weakest people have been systematically targeted by the Government and few people speak up. People might not like that, but it's the truth. I only hope one day we'll have the space to look back and understand how utterly cruel and unnecessary this has been.”

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‘Austerity’ in theoryIn 2010 the UK Government began an ‘austerity’ programme in order to cut public spending.

This was a response to a financial crisis caused by:

• A house price bubble

• Mounting personal debt and mortgages

• Excessive lending by the banks

• Poor governance by the Government and the Bank of England

• The Government’s own efforts to bail out or renationalise the banks.

In theory the cuts were to be introduced fairly.

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“But it’s fair that those with broader shoulders should bear a greater load.”

David Cameron, Speech, October 2010

Austerity in practiceIn reality the Government’s plans have had the opposite effect. In particular:

• Increased VAT to 20% - a tax that hits the poor hardest

• A wide-range of cuts to the benefit system - so-called ‘welfare reforms’

• Cuts to Housing Benefit and Mortgage Interest Relief

• Cuts local government, which is responsible for social care for adults and children

• Cuts to legal aid and systems used to defend rights

• Significant increases in the cost of basic needs, e.g. utilities, housing

• Regressive subsidy to better off via low interest rates

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Targeting of disabled people

Especially worrying has been the government’s unwillingness to carry out a ‘cumulative impact assessment’ in order to calculate the way in which many of these policies - at the same time - seem to target disabled people or other disadvantaged groups.

In general the public don’t understand the reality of disability. There are 11.3 million people with a disability in UK.

Of these 4.5 million have a significant disability that entitles them to a disability benefit like Disability Living Allowance or Attendance Allowance.

2.7 million disabled people live in poverty.

Most disabled people are not born with a disability, anyone of us can acquire a disability in later life, through accident or illness.

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The depth of the cutsThe Government’s cuts programme is the most radical in the post-war era. But to understand the size of the cuts you must do two things:

1. Adjust for inflation: If prices increase faster than spending then this is a cut. (I have adjusted by using 2012-13 prices.)

2. Adjust for growth: If the economy grows faster than spending then this is also a cut, because it will lead to loss of support or an increase in relative poverty.

When we only adjust for inflation the total level of cuts is £5 billion. If we adjust for growth the cuts amount to £91 billion. But somethings are not cut, so the overall cut is £78 billion - 12.24%

It is noticeable that the biggest of all cuts - £28 billion is the cut to English local government and housing (this includes social care for children and adults). This is a cut of 38.23%. This is a very deep cut indeed.

Cutting somethings more than others means targeting the cuts.

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Where the cuts fallThe details of the planned cuts were first set out in the Treasury’s 2010 Spending Review and then in a series of announcements over the following years.

At the end of 2013 new reports were released that described:

• Expenditure from 2008-09 to 2012-13

• Expected expenditure up to 2015-16

By working through these reports it’s possible to see where the cuts, have already fallen and where they are likely to fall in the future.

In short, Pensions, Foreign Aid and Central Government will all grow. The NHS will stay the same, and everything else will be cut - although to different degrees.

Together local government and benefits bear nearly 50% of cuts.

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Social care cutsThe biggest cut is to local government.

This is probably because:

• Local government finance is organised in a very complex way

• Most of its funding comes from central government, but some of this funding is ring-fenced (e.g. education) and some comes from Council Tax

• The public neither understands nor highly values local government

• Local government can take the blame for any cuts that it is forced to make.

From the data it is clear that local government has often tried to protect social care from the worst of the cuts; but also that it cannot fully protect social care.

Between 2007-08 and 2012-13 services had already been cut by 25%. Further pressure on social care is inevitable and it is likely to lead to a cut of £7.5 billion by 2015-16. This is a cut of 33%.

The government hopes to use funding from the NHS to fill the gap in social care funding; however this would mean reversing its promise to protect NHS spending and seems unlikely to deliver.

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Benefit cutsThe second biggest cut in spending is to benefits, which will be cut by £15.6 billion by 2015-16.

However this cut is smaller than the target of £22 billion declared by the Chancellor of the Exchequer in Autumn 2013, and which included cuts in several specific disability benefits, for example, saving £1.2 billion by introduction of the Personal Independence Payment (PIP).

To date I have found no explanation for such a large disparity, between the official figures and the Chancellor’s statement. It may just a reflect the DWP’s failure to deliver cuts on schedule.

The official figures don’t target disabled people as much as the Chancellor seemed to intend. But they do further target people in poverty - particularly people on low incomes or needing support with housing. This also has a significant impact on disabled people.

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Child Benefit freeze Abolition of Sure Start Maternity for second child

Changes to CPI indexation of benefits Reductions in support for carers

Replacing DLA with PIP Child Benefit clawback from higher rate taxpayers

Time-limiting of contributory ESA Transfer of Social Fund to local government

Council Tax Benefit: 10% reduction and localisation Changes for JSA lone parents

Bedroom Tax: ‘under-occupancy’ Household Benefit cap

Abolition of the Independent Living Fund Continued use of Atos or others

Universal Credit Reductions in ‘Access to Work’ funding

Closure of Remploy services Abolition of the Child Trust Fund

Tax credit reductions Abolition of the Health in Pregnancy Grant

Abolition of the Child Trust Fund Abolition of the ESA youth rules

Housing Benefit: Non-dependant deductions Reductions in Supporting People funding

Welfare ‘reform’ means

At the end of December 2013 there were 4,120 council tenants affected by Under-occupancy. Of those approximately 85% were assessed as having 1 bedroom too many, losing an average of £10.21 pw; and approximately 15% were assessed as having 2 or more bedrooms too many, losing an average of £19.77 Of the 4,120 tenants affected by Under-occupancy, at the end of December 2013: 241 (6%) had not made any payment towards the Under- occupancy cut in their benefit. This figure compares to 10% of tenants who had paid nothing towards the Under-occupancy cut in their benefit at the end of October 2013. 1,874 (45%) had paid in full the amount of the Under-occupancy cut in their benefit. However, of those tenants who had paid in full, 649 have received a Discretionary Housing Payment (DHP) which has paid some or all of their Under-occupancy charge. Therefore 1,225 tenants (30% of all tenants affected by the ‘bedroom tax’) have paid the shortfall in full without receiving a DHP. This figure has increased from 18% at the end of October 2013. 2,005 (49%) had paid something but not all. At the end of October 2013 this figure was 55%.

Since April 2013, 336 tenants have been awarded a rehousing priority to move to a smaller property. Of the tenants awarded a priority 262 tenants have stated this is due to the impact of welfare reforms. 87 tenants have had agreement to move, despite them having rent arrears that would normally have stopped them from being rehoused. So far 153 council housing tenants have downsized already since April. There are approximately a further 2,000 tenants in Sheffield affected by Under-occupancy who are living in other social housing.

Example 1: Bedroom Tax

Example 2: Sanctions

Example 3: New disability assessments

“Britain is the world’s seventh largest economy and yet people are going hungry. Half a million people have visited foodbanks in the UK since last Easter and 5,500 people were admitted to hospital in the UK for malnutrition last year. One in five mothers report regularly skipping meals to better feed their children, and even more families are just one unexpected bill away from waking up with empty cupboards… “Yet beyond even this we must, as a society, face up to the fact that over half of people using foodbanks have been put in that situation by cut backs to and failures in the benefit system, whether it be payment delays or punitive sanctions. On March 5th Lent will begin. The Christian tradition has long been at this time to fast, and by doing so draw closer to our neighbour and closer to God…” from the Bishop’s Letter

Example 4: Foodbanks

Who the cuts target

a) People in poverty (20% of the population) bear 37% of all cuts.

b) Disabled people in poverty (4% of population) bear 14% of cuts.

c) People using social care (3% of population) bear 14% of cuts.

The impact on individuals

a) People in poverty will lose an average of £2,689 per year

b) Disabled people in poverty will lose an average of £4,605 per year

c) People using social care will lose an average of £6,354 per year

The unfairness of the cutsa) People in poverty bear 2.5 the burden of cuts compared to most

citizens.

b) Disabled people in poverty bear a burden which more than 4 times the (modal) average.

c) People using social care bear a burden that is 6 times the burden on the average citizen.

ConsequencesThe impact of these cuts is already being experienced.

In particular, we already see:

• Growing numbers forced to use food banks

• Rapid (25%) reduction in social care services

• Growing crises in health care services as social care diminishes.

• Increased personal debt

• Increased mental illness

• Increased family breakdown

• Growing inequality

Paradoxically many of the consequences of these cuts will be perverse - creating new social costs and leading to unnecessary spending in other areas (e.g. A&E).

As things stands these problems are only just beginning. The benefit cuts and the social care cuts are set to continue for many years.

“I worry about the future as I have been told that my funding may not be enough for me to have the right amount of support to enable me to live my life.”

Nadia Clarke My Rights, 2013

Myths and confusionsThere are many myths and confusions about the welfare system which contribute to our problems. In actual fact, the truth is

• We have high employment levels - scroungers are not a problem

• Benefit fraud is very low - under-claiming of benefits and tax fraud are much bigger problems

• Government spending has been largely stable for a long period and is not unsustainable.

• The poorest 10% pay the most tax of any group and pay excessive marginal taxes.

• Benefits - after tax - are very low - hence, we are the 3rd most unequal developed country in the world.

• The welfare system benefits the better-off, not the poor, but the truth of this is often disguised, e.g. interest rate subsidy

Benefit fraud is only 6% of tax fraud, yet it is covered by the news 600% more.

The “Benefit Thieves” campaign was

established by the previous Labour

Government.

Public expenditure has changed little

Real explanationThe reason that cuts have been targeted in these areas is not moral or economic - it is political:

• It’s easier to scapegoat disabled people and people in poverty.

• Few people use or understand social care or local government.

• Benefits and social care are highly means-tested and stigmatised.

• Most people are scared at the size of their own mortgage and fearful of another banking crisis or a drop in house prices.

• Fairer options (e.g. tax increases, or salary controls) are not popular with swing voters.

• Disabled people and people in poverty have no effective political representation.

The use of stigma, shame and scapegoating is distracting us from the real issues.

There are real problems in the welfare system

The UK is the most centralised welfare state in world

There are lots of services, but they don’t always work well for the people who need them most

The money tends to be locked within institutional and professional services, not in hands of citizens or communities

It’s time to explore a new settlement for the welfare state

Farewell to Welfare © Simon Duffy 2014 Published by The Centre for Welfare Reform http://www.www.centreforwelfarereform.orgOn Twitter follow:@simonjduffy and @cforwrFor more information about citizenship join our Citizenship for All project. Just go to:http://www.keystocitizenship.com

We fell asleep. We forgot that they don’t take care of us, we take care of each other. We forgot that it’s the rich who need the poor, not the poor who need the rich. We forgot that politicians work for us, we don’t work for them. We forgot that government doesn’t innovate, people do. We forgot that government doesn’t create wealth, people do. We forgot that government doesn’t know best, people do. We forgot about citizenship, we forgot about families, we forgot about community. We confused good with big. We confused achievement with wealth. We confused love with control. We forgot that the welfare state was made by us, that it belongs to us and it needs to work for us. It’s time to wake up.