Tag: Frank Field

Select Committee says governance code for large companies with social impact is crucial, following inquiry into collapse of BHS

February 12, 2017February 15, 2017 · 2 Comments ·

Philip Green

The Work and Pensions Committee have called for new duty on company directors to have regard to pension schemes and for Insolvency Service reports to be published in the public interest.

On 28 April last year the Committee launched its joint inquiry into the collapse of British Home Stores (BHS) and the origins of its huge pension scheme deficit. BHS was a private company but the effects of its collapse spanned widely: not least to its thousands of employees and pensioners.

The three month inquiry examined corporate governance in Sir Philip Green’s companies, which are privately held and ultimately owned offshore by Lady Green. It found a near-complete absence of the constructive challenge that is the hallmark of good corporate governance. Green, a “dominant personality”, ran his companies as a personal empire with boards taking decisions with reference to a shared understanding of his wishes rather than the interests of each individual company.

An extraordinary and scandalous tale unfolded in which the greedy main players took lavish rewards at the expense of the employees and pensioners of the company. Inter-company loans and property deals, related-party transactions and the hurried disposal of BHS to a wholly unsuitable buyer all proceeded with woefully inadequate checks and balances. The poor corporate governance in Green’s companies was epitomised by the complacent performance of Lord Grabiner, a director of several of the Green empire subsidiaries.

In July last year, MPs catalogued a litany of failures culminating in an “at any cost” disposal of the company and pension deficit to a wholly unsuitable “chancer”. In their inquiry report about BHS, the Work and Pensions and Business and Innovations and Skills Committees concluded that Green chose to rush through the offloading of a beleaguered high street institution, which was losing money and encumbered with a massive pension fund deficit, to a buyer who he was clearly aware was “manifestly unsuitable”, with Green forced to finance the sale himself.

Though the ownership of Dominic Chappell and his associates was “incompetent and self-serving”, the ultimate fate of the company was sealed on the day it was sold. Advisers were paraded by both sides as an “expensive badge of legitimacy for people who would otherwise be bereft of credibility” while the Taveta group directors (owned by Green’s billionaire wife, Tina Green) failed to provide a semblance of independent oversight or challenge in a corporate group run as a personal fiefdom by a single dominant individual.

MPs heard hours of oral testimony and considered thousands of pages of written evidence in the inquiry, which began when BHS crashed into administration just 13 months after the ill-advised and under-funded sale to Chappell. The Committees said that the evidence at times resembled a “circular firing squad”, with a series of key witnesses appearing to believe they could absolve themselves of responsibility by blaming others. Green himself “adopted a scattergun approach”, liberally firing blame to all angles except his own.

The unacceptable face of capitalism

The report documents the systematic plunder of BHS at the cost of the 11,000 jobs and 20,000 people’s pensions now at risk. Green, Chappell and the respective directors, advisers and hangers-on who all got rich or richer are all culpable, with the losers being the ordinary employees and pensioners.

The Committees said this is “the unacceptable face of capitalism” and that the story of BHS begs much wider questions about the gaps in company law and pension regulation that must be addressed. The two Committees turned to those question in subsequent inquiry hearings.

The headline figures that Green bought BHS for £200 million and sold it 14 years later for £1 cannot disguise the true picture. He did not invest in the company and then “unfortunately” failed to make it succeed. Green systematically extracted hundreds of millions of pounds from BHS, paying very little tax and fantastically enriching himself and his family, leaving the company and its pension fund weakened to the point of the inevitable collapse of both. Lady Green is still being paid tens of millions of pounds of tax free repayments on the loan that was engineered to sell BHS from one Green family business to another, and will be for some years to come.

A moral duty to act on the pension schemes

When Green bought BHS the pension schemes were in surplus. As these schemes declined into substantial and unsustainable deficit he and his directors repeatedly resisted requests from trustees for higher contributions. Such contributions were not charitable donations: they were the means of the employer meeting its obligations for deferred pay. Green had a responsibility to be aware of the growth of the deficit and he was aware of it. That there is a massive deficit is ultimately his responsibility.
The Committees say Green must act now to find a resolution for the BHS pensioners, a “moral duty” which will undoubtedly require him to make a large financial contribution. Green’s failure until now to resolve the pension fund’s problems contributed substantially to the demise of BHS, along with chronic under-investment and the systematic extraction of hundreds of millions of pounds from the increasingly ailing company.
The Arcadia board cited a variety of explanations for pausing Project Thor, ranging from Christmas to the Scottish independence referendum and instability in Ukraine. In fact, the primary reason was Green’s resistance to TPR’s moral hazard requests. He did not wish to respond to requests for information regarding historic dividends, management charges, sale and leaseback arrangements, inter-company loans and the use of BHS shares or assets as collateral for company purchases. At best this demonstrated a lack of willingness to act to secure the pension fund’s future.

Incredible wealth followed by retail demise

In his early years of ownership, Green cut costs, sold assets and paid substantial dividends offshore to the ultimate benefit of his wife. The so-called “King of the High Street” failed to invest sufficiently in stores or reinvent the business to beat the prevailing high street competition. The Committees found “little to support the reputation for retail business acumen for which he received his knighthood” and say “we don’t doubt that Green had some affection for BHS – to an extent it created him. Now it could also bring him down”
Green’s family accrued incredible wealth during the early, profitable years of BHS ownership. Over the duration of their tenure, significantly more money left the company than was invested in it. There is no evidence of improved turnover, market share, or major increase in investment that might be expected from a leading retailer. BHS was involved in a number of transactions with a complex web of companies, many registered offshore: whether BHS benefited financially from these transactions is far from clear. What is clear is that the Green family did.
The report documents the ways Green was able to boost BHS’s profitability in the short-term while ultimately fatally undermining its ability to survive. The early years improvement in BHS’s profitability appears to have been achieved primarily through cost-cutting measures and squeezing suppliers. Crucially, BHS’s turnover remained flat through much of Green’s tenure and declined in the latter years. Green initially cut costs but he did not grow the business.
One mechanism of (tax-lite) cash extraction to other Green family companies was through the sale of property: in 2001, BHS Group sold ten BHS stores for £106 million to Carmen Properties Ltd – a Jersey-registered company owned ultimately owned by Lady Green – as part of a sale-and-leaseback arrangement. BHS Ltd then paid rent to Carmen for the use of these properties. They were ultimately sold back to BHS as part of the sale to RAL for only £70m (with the proceeds of the sale going to Lady Green as the sole beneficial owner) but, over the lifetime of the sale-and-leaseback arrangement, rent of £153 million was paid by BHS to Carmen.

Egregious failures of corporate governance

Green’s rush to drive through the sale of BHS – “a chain that had become a financial millstone and threatened his reputation” – was the culmination of a sorry litany of failures of corporate governance and greed. Regulatory concerns were circumvented, advisers were heavily incentivised to progress the deal. Dominic Chappell, his friends and associates were enticed by the personal rewards on offer without taking any personal risks. The Committees published for the first time with their report the Due Diligence reports produced by Olswang (and associated RAL Board minutes), which show their advice against the purchase and express concern that RAL were reliant on Green making good his unwritten assurances. (RAL= Retail Acquisitions Ltd.)
The complacent performance of Lord Grabiner as the non-executive Chairman of the Taveta group boards represented the apogee of weak corporate governance. It was his responsibility to provide independent challenge and oversight. Instead he was content to provide a veneer of establishment credibility to the group while happily disengaging from the key decisions he had a responsibility to scrutinise. For this deplorable performance he received a considerable salary. It is permissible in law for a director to delegate certain functions to other persons, but if a director allows himself to be dominated, or manipulated by one of their number, he may have gone beyond the boundaries of what is proper. He could be found to be in breach of duty and subject to disqualification. All directors of Taveta and RAL have serious questions to answer about their performance in those roles.
Green faced a considerable challenge in finding a credible buyer for a business that was consistently losing money and had a pension scheme with a large and growing deficit. It was clear that Chappell’s team were out of their depth, woefully short of the requisite experience and expertise, notably lacking the credible senior retailer Green once insisted on. They brought no new money to the deal, took no personal risk, could offer no equity and had no means of raising funds on a sustainable basis. Ultimately, Chappell and RAL failed all of Sir Philip’s nominal tests for a buyer. They were manifestly unsuitable owners of BHS. It is inconceivable that someone with Green’s experience seriously considered otherwise.

Collapse under incompetent and self-serving RAL

The report documents the true numbers behind the sale. The board of Taveta Investments Ltd was presented, two weeks after the event, with a rosy picture, while the reality was very different. The balance sheet included cash for immediate liabilities, property deals that took many months to materialise, funds that went to RAL never to return and equity that was a loan on punitive terms. It was patently obvious that there was not enough cash in BHS to give it a realistic chance of even medium term survival.
RAL’s failures include some blame for the pension scheme, which they accepted responsibility for with a “negligent and cavalier disregard for the risks and potential consequences”, negligence which “continued into their incompetent and self-serving ownership of the company”. In putting his “home team” first, Chappell and his fellow directors were personally enriched as BHS failed around them. Two directors jumped ship on the day that RAL acquired the business with personal financial rewards that it would take many BHS employees decades to earn. The others continued to profit handsomely from their positions without fulfilling their requisite responsibilities.
In effect, Chappell “had his hands in the till”. His description of £2.6 million that he personally took, in addition to an outstanding £1.5 million family loan, as a “drip” in the ocean is an insult to the employees and pensioners of BHS that he let down.

Chairs’ comments

Frank Field MP, Chair of the Work and Pensions Committee, said:

“One person, and one person alone, is really responsible for the BHS disaster. While Sir Philip Green signposted blame to every known player, the final responsibility for up to 11,000 job losses and a gigantic pension fund hole is his. His reputation as the king of retail lies in the ruins of BHS. His family took out of BHS and Arcadia a fortune beyond the dreams of avarice, and he’s still to make good his boast of ‘fixing’ the pension fund. What kind of man is it who can count his fortune in billions but does not know what decent behaviour is?”

Iain Wright MP, Chair of the Business, Innovation and Skills Committee, said:

“BHS’s demise has created many losers, particularly the 11,000 staff facing the loss of their jobs and the 20,000 pensioners facing significant reductions to their pensions. The actions of people in this sorry and tragic saga have left a stain on the reputation of business which reputable and honourable people in enterprise and commerce will find appalling. The sale of BHS in March 2015 is crucial to its eventual collapse a year later. The sale of BHS to a consortium led by a twice-bankrupt chancer with no retail experience should never have gone ahead; and this was obvious at the time. The reason it did, however, was Sir Philip Green. He was determined to get the deal done, no matter that the buyer could not deliver what BHS needed. There was a complete failure of corporate governance, with Sir Philip bulldozing the sale through, without proper oversight or challenge from his weak and impotent board.

While BHS staff face uncertain job prospects and pensioners worry about their future entitlements, it’s clear that a large cast of directors, advisers, and hangers-on enriched themselves off the back of BHS, including Dominic Chappell and his fellow RAL directors. Chappell took no risk and put no money into the venture and yet gained huge rewards as BHS crumbled around him. His failure is bad enough but that he effectively had his hands in the till is an insult to the employees and pensioners of BHS that he let down so badly.”

In response to the Government’s consultation on corporate reform, the Work and Pensions Committee’s most recent report says that the corporate governance and reporting requirements for public listed companies should be extended to private companies that have an important social impact: large private companies and those with over 5,000 defined benefit pension scheme members.

It also says that company directors should have a new duty to pension fund trustees, as the representatives of pension scheme members, in addition to those stakeholders they are already obliged to have regard to. Allied to the more substantial recommendations on pension law and regulation in its December 2016 Report, the Committee concluded these changes would reduce the chance of another company collapsing in the manner of BHS.

The key themes that emerged during the inquiry included:

lamentable corporate governance in what was a large private company
a paucity of publicly available information about the state of the company and its pension fund
the absence of a voice in the running of the company for those who relied on its success for the security of their pension saving.

Committee recommendations

Holding company directors to account

Public listed companies are required to comply with the Financial Reporting Council Corporate Governance Code and its reporting requirements or publicly explain why they are not. This is a proportionate approach for companies of social importance. Transparency about governance arrangements, performance and risk can better equip stakeholders to hold company directors to account. Wider awareness of the state of the BHS pension schemes may have pressured Sir Philip Green into taking more reparative action, sooner.

Large companies should be subject to the Financial Reporting Council Corporate Governance Code

Private companies that are large, as defined by Government, or have over 5,000 defined benefit pension scheme members, should be made subject to the the Financial Reporting Council (FRC) Corporate Governance Code on a comply or explain basis. The report includes a table of the top 30 largest private companies in the UK, with many household names like John Lewis, Clarks, Matalan, Virgin Atlantic, River Island, Pret a Manger – and the Arcadia Group – that would fall under the parameters of this recommendation. Many well-governed large private companies already follow best practice on transparency.

Include pension scheme trustees in section 172 of Companies Act

Pension scheme trustees should be added to section 172(1) of the Companies Act 2006. The list of stakeholders company directors must have regard to – and report on the exercise of their duties to – does not include defined benefit pension scheme beneficiaries or the trustees who must act in their interests. Incomes of pensioners in retirement are reliant on the sustained success of the sponsoring company but they are at particular risk of being neglected in corporate decision making as no one makes the case for former employees. The inclusion of pension scheme trustees in section 172 might increase the chances both that directors would take into account the interests of current and future pensioners in carrying out their duties, and that those who have failed to do so will be held accountable in the courts.

Publication of Insolvency Service investigation reports

Last week the Committee published an update on the progress of the Insolvency Service’s investigation into the affairs of BHS. There is a legitimate public interest in the complete story of the failure of BHS being laid bare, and the Committee welcomes Government’s indication that the BHS report will be published. Future IS reports should be published whenever there is significant public interest.

Publication of correspondence with Arcadia

The Committee publishes with the report a series of correspondence with Ian Grabiner, Arcadia Chief Executive, and the Arcadia Group pension trust, charting its efforts to get information about the group’s pension schemes into the public domain. Arcadia’s pension schemes are over £200 million in deficit, but all parties have refused to provide information regarding the 2013 valuation and recovery plan, or the levels of employer contributions.

Chair’s comment

Frank Field MP, Chair of the Committee, said:

“For a company with a big social and economic footprint like BHS it is simply not enough to be accountable to shareholders – particularly when one shareholder owns most of the stock. The sorry tale of its sale and collapse, putting 11,000 people out of work and leaving a pension fund £571million in the red, with 20,000 pensioners facing an uncertain financial future, was a result of gross failures of corporate governance. Would the story have played out the same way if its directors had to be open about the financial decisions they were making for its future? The finances and leadership of a company with so many people depending on it should be open to scrutiny.

We have already expressed our grave concerns about corporate governance in the Green empire, and we know the Arcadia pension fund is also now in substantial deficit. We have been pressing Arcadia’s directors and pension trustees for detailed information on their schemes but very little is published and neither the company nor the trustees – who unlike the BHS schemes do not have an independent Chair – will tell us. Does Sir Philip not want us to know that he was being relatively generous to the Arcadia schemes while the BHS schemes floundered and the company headed inexorably for insolvency? Was he neglecting both? It can’t be right that basic information like the schedule of employer contributions and the length of the recovery plan is not in the public domain. If it goes under then levy-payers and pensioners foot the bill.”

You can read the full consultation response on corporate governance reform from the Work and Pensions Committee here.

You can watch Philip Green present evidence on the collapse of BHS to the Business, Innovation and Skills Committee and Work and Pensions Committee, Wednesday 15 June 2016 here: https://goo.gl/eeUggP

Related

In 2010, UK Uncut’s spokesman, Daniel Garvin, said: “Philip Green is a tax avoider, and yet is regarded by David Cameron as an appropriate man to advise the government on austerity. His missing millions need to be reclaimed and invested into public services not into his wife’s bank account.” See: Philip Green to be target of corporate tax avoidance protest – The Guardian.

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‘Reforming’ ESA: the final frontier and the last moral boundary

November 15, 2016May 27, 2017 · 24 Comments ·

Context

Employment and Support Allowance (ESA) is a benefit for people who are assessed as being unable to work because of a health condition and/or disability. Despite this, ESA has also been politically defined as financial support for people having difficulty finding a job because of a long-term illness or disability, to “help them back to work” despite their illness or disability. This presents a problematic tension because in order to qualify for ESA at all, people must be found to be unable to work, by their own doctor, and by the “independent” Work Capability Assessment.

There’s a significant difference between being unable to work, and facing significant additional barriers to work. People who are assessed are most commonly described as having “limited capability for work” – a phrase which is not precise in its meaning, and which does not include or prompt any consideration of social, cultural, political and economic contexts that also present disabled people with significant barriers to employment.

The name of the allowance (“employment and support”) is also purposefully misleading, and betrays the original controversial political cost-cutting aims that prompted its inception. This re-branding of what was previously called “incapacity benefit” has been problematic. It implies that even those people placed in the Employment and Support Allowance Support Group, who are considered “unlikely” to be able to work in the foreseeable future, are nonetheless being “supported” into employment.

This blurring of definitions, categories and purposes has provided scope and political opportunity for discussion of introducing the mandatory requirement for pre-employment preparation, conditionality and sanctions to be applied to claimants with the most severe health conditions, in the Support Group. This has been casually suggested in the recent work, health and disability government consultation and green paper. Currently, anyone in the Support Group can voluntarily ask for pre-employment support, it isn’t compulsory.

A major assumption throughout the green paper is that disabled people claiming ESA are somehow mistaken in assuming they cannot work: “how can we improve a welfare system that leaves 1.5 million people – over 60% of people claiming Employment and Support Allowance – with the impression they cannot work and without any regular access to employment support, even when many others with the same conditions are flourishing in the labour market?

This group were assessed by doctors and the state (via the Work Capability Assessment) as being unable to work.

The aim behind the introduction of ESA was to actively reduce those previously eligible for Incapacity Benefit to a small group of people with severe disabilities (Support Group) and another moderately sized group who were to undergo fixed term pre-employment preparation and training (Work-Related Activity Group.) The latter group are deemed unable to work, but expected to recover sufficiently to work within two years of the assessment.

However, the controversial Work Capability Assessment (WCA) has been widely criticised, not least for its insensitivity and lack of capacity in differentiating between those people who “may” work, and those who cannot. Furthermore, the WCA does not identify the social, cultural, political and economic barriers that disabled people face in finding suitable employment, and so the focus is on individuals without a context and their perceived personal “deficits” caused through illness and disability. This means that any pre-employment “support” for those who may or who wish to work is by its design unlikely to address the structural barriers to suitable employment that disabled people face.

The architects

Much of the politics of welfare in the 1980s revolved around “cuts” and restrictions in public spending designed to allow tax cuts, particularly reductions in the rates of income tax. Blair’s new programme, the New Deal, was all about moving people from social security benefits into work, as were many of the measures in the 1998 Budget.

David Freud, a former vice-chairman of bulge bracket investment banking at UBS, was an advisor on out-of-work benefit reform in December 2006. Freud’s 2007 report – dubbed “the Freud report” but officially titled Reducing dependency, increasing opportunity: options for the future of welfare to work – called for the greater use of private sector companies who would be paid by results, for substantial “resources” to be made available to help people on Incapacity Benefit back into work, and for a single working-age benefit payment to replace individual benefits such as Housing Benefit and Jobseeker’s Allowance (the forerunner of Universal Credit). His central idea was that spending on “delivery” – such as schemes to get people back to work, like the work programme – would save money in the long run because there would be fewer people being paid money in the form of benefits.

Other contributions to the body of ideas behind ESA came from Frank Field, who was made Minister for Welfare Reform following the 1997 election, with Labour in power. Field felt that the state should have only a small role to play in the provision of welfare, and he viewed his task as “thinking the unthinkable” in terms of social security reform, but others report that Prime Minister Blair wanted some simpler vote-winning policy ideas. Blair writes that: “the problem was not so much that his thoughts were unthinkable as unfathomable”.

In January 2006, John Hutton published a White Paper outlining the government’s latest plans for welfare reform: the benefit that would replace Incapacity Benefit would be called Employment and Support Allowance and its “gateway” assessment would be transformed. Over the course of a decade, Hutton expected the number of people on Incapacity Benefit to fall by one million, saving £7billion a year.

In July 2008 a Green Paper was published, which James Purnell said was “inspired by the reforms proposed by David Freud”. The author announced that “between 2009 and 2013, all Incapacity Benefit claimants will be reassessed using a medical assessment called the Work Capability Assessment” that would divide them into three groups: fit for work; unfit for work but fit for work-related activity; or fit for neither. At the same time, Professor Paul Gregg was asked by the Department for work and Pensions (DWP) to conduct a feasibility study of conditionality and how it might be applied to people claiming sickness benefits. When responding to the Gregg Review, the DWP said that the study had recommended that conditionality be applied to “the vast majority of people in receipt of Employment and Support Allowance.”

In early 2011, under the Coalition government, the Incapacity Benefit reassessment programme was underway using a much more stringent version of the WCA. Atos were recontracted to carry out the work. Targets were written into Atos’s new contracts to reduce successful claims. Dr Steven Bick, a GP with 20 years’ experience, applied for a job as an assessor with Atos to carry out the WCA, and secretly filmed his training for Channel 4’s Dispatches programme, which was broadcasted on Monday 30 July. Undercover filming shows Bick being told by his trainer that he will be watched carefully over the number of applicants he “found eligible for the highest rate of disability payments.”

The documentary also highlighted the unease about the radically heightened eligibility criteria felt by some trainers employed by Atos to teach new recruits how to carry out the tests. It had become much more difficult for very severely disabled claimants to qualify for support. No matter how serious claimants problems are with their arms, for example, “as long as you’ve got one finger, and you can press a button,” they would be found fit for work, one trainer said. Bick said that assessors testing Incapacity Benefit claimants were told they should rate only about one in eight as needing to be placed in the Support Group. That’s regardless of the level of illness and disability they would be presented with, case by case.

In January 2016, the Conservative Welfare Secretary, Iain Duncan Smith, announced that ESA was “fundamentally flawed” and declared that a brand new policy, which would get nearly all ESA recipients back to work, would be unveiled within weeks. A hint of what that policy might be was given in a detailed report on ESA published the following month by Reform, the right-of-centre neoliberal think tank:

Effectively, ESA would be abolished: the amount of money paid each week to the claimant would be reduced to the level of Jobseekers Allowance
The WCA may be replaced by another assessment that set out to identify any barriers to work faced by the claimant, but which would play no role in determining eligibility to benefits
As a way to nudge claimants towards overcoming those barriers, extra money might be made available to fund a tailored programme of rehabilitation – although participation in this could be made a requirement of continued receipt of the benefit.

State diagnosis and treatment – a blunt instrument

The government say that according to previous research undertaken by the DWP, musculoskeletal conditions were the most common main condition of people claiming ESA. Mental health conditions have more recently overtaken this category of illnesses as the main condition that “triggers” an ESA claim.

In the recent work, health and disability green paper, the government also say: ““[..] how can we improve a welfare system that leaves 1.5 million people – over 60% of people claiming Employment and Support Allowance – with the impression they cannot work and without any regular access to employment support, even when many others with the same conditions are flourishing in the labour market?”

The research paper also says: “The belief that work improves health also positively influenced work entry rates; as such, encouraging people in this belief may also play a role in promoting return to work.”

The belief. Not evidenced fact.

That is a very dangerous idea. Many conditions are complex, unpredictable and difficult to diagnose. Some conditions have multiple symptoms affecting many different parts of the body. Musculoskeletal conditions, for example, are a category that includes conditions ranging from injuries to systemic and serious diseases. So “musculoskeletal conditions” include low back pain, injuries such as broken bones, torn or pulled ligaments and tendons, and slipped discs, wear and tear on joints, osteoarthritis, osteoporosis, and connective tissue diseases such as rheumatoid arthritis, lupus and scleroderma.

Connective tissue diseases are systemic illnesses that usually affect other parts of the body, such as major organs, as well as the widespread pain and damage in the musculoskeletal system. Most people with these illnesses don’t just contend with pain in their joints, tendons, ligaments and nerves; they usually feel very unwell, suffering from weight loss, profound fatigue, susceptibility to infections and general malaise. They may have serious lung, heart, kidney or blood disorders, neurological disorders, eye and ear problems, vascular problems and a wide range of other serious symptoms that can be caused through widespread inflammation throughout the body. Physiotherapy, splinting damaged joints, and other traditional measures for helping injury doesn’t help in the long term with connective tissue disease, because the damage is caused by a disease process: through autoimmune mediated widespread inflammation.

This is precisely why I see my doctor and not the government when I am ill. I want an objective and precise medical opinion, diagnosis and specialist treatment when needed, not an ideological diagnosis, dogma in soundbites and a prescription for hard labour, to “set me free.”

“[…]with the impression they cannot work and without any regular access to employment support, even when many others with the same conditions are flourishing in the labour market?”

Not all of the “same category” of conditions are the same. To assume they are is very dangerous. Furthermore, as previously stated, rehabilitation is unlikely to be helpful, since damage to the joints, tendons and ligaments isn’t caused through injury and it won’t heal. Medication is the only way to slow the damage that is caused by autoimmune complexes and inflammation. Connective tissue diseases are incurable.

However, many of the treatments for connective tissue disease are also very risky and experimental. They include methotrexate, which is a chemotherapy, and immune suppressants such as enbrel and rituximab, which leave people at risk of dying from overwhelming infection, as well as other serious side effects, which may also kill.

Having people believe that work is good for their health in order to reduce the numbers of people claiming ESA is authoritarian, disgracefully irresponsible and very dangerous.

On 22 December 2014 a bin lorry collided with pedestrians in the city centre of Glasgow, Scotland, killing six and injuring fifteen others. The driver of the council-owned vehicle, Harry Clarke, said he had passed out at the wheel. A similar blackout had happened to him in the driving seat of a bus, although he had not disclosed the incident on his heavy goods vehicle licence renewal application, despite such self-reporting being mandatory.

Having been admitted to the Western Infirmary after the crash, Clarke was discharged on 7 January 2015 He was eventually diagnosed as having suffered neurocardiogenic syncope, a fainting episode caused by drop in blood pressure. The inquiry also revealed that Clarke’s medical history contained episodes of dizziness and fainting dating from the 1970s and that he had previously suffered a blackout while at the wheel of a First Glasgow bus, which was in service but stationary at a bus stop.

It was stated that Clarke had been passed fit to return to work as a bus driver owing to failures by both the bus company’s doctor and Clarke’s own GP to spot that Clarke had changed his account of events, telling his GP that the episode had occurred in the canteen, which the GP then attributed to the hot conditions and deemed to be unlikely to be repeated. Clarke had a four-year history of episode-free driving after the 2010 incident, and First Glasgow’s occupational-health specialist had cleared him to drive after the 2010 incident and told him he need not notify the DVLA.

A good question to ask is this. In the event of injury or death to either the person coerced by the state into work, assured that work is good for health, or to their work colleagues, as a consequence of that person not being fit for work, who is ultimately responsible? Bearing in mind that to qualify for ESA, a person has already been assessed as unfit for work.

The shrinking category of illness and disability

ESA was originally calculated to include the acknowledged additional every day costs that disabled people face in their day to day living. There was also a recognition that disabled people who can’t work face the cumulative effects of poverty because of a low income over time, too. The ESA Support Group have the higher rate because they are anticipated to be highly unlikely to work in the longer term. That outcome is assessed via the state WCA. So the state has already acknowledged that those in the Support Group are unlikely to be able to work. Those in the Work-Related Activity Group (WRAG) are deemed unable to work, but “may” be capable of work in the future, more specifically, “within two years”.

Although PIP covers some additional costs that disabled people face, it’s designed to cover highly specific needs, with “components” for mobility, and a daily living component which is paid if you need personal care. Both the mobility and daily living allowance are narrowly task related, not cost related. There is no component, for example, that would cover extra heating, special diet and additional laundry requirements. Many special adaptations that people may need are not included, too.

Many people who were previously eligible for mobility support through the Disability Living Allowance (DLA) assessment are no longer eligible because of the much harsher eligibility criteria for PIP. This has meant many thousands of people have lost their specially adapted motability vehicles or motorised wheelchairs. This includes people who relied on their vehicles to get to and from work, since PIP and DLA are not means tested, it can be claimed by people in or out of work.

Earlier this year I wrote that a government advisor, who is a specialist in labour economics and econometrics, has proposed scrapping all ESA sickness and disability benefits. Matthew Oakley, a senior researcher at the Social Market Foundation, recently published a report entitled Closing the gap: creating a framework for tackling the disability employment gap in the UK, in which he proposes abolishing the ESA Support Group. To meet extra living costs because of disability, Oakley says that existing spending on PIP and the Support Group element of ESA should be brought together to finance a new extra costs benefit. Eligibility for this benefit should be determined on the basis of need, with an assessment replacing the WCA and PIP assessment.

Both ESA and PIP were introduced with the same claim: that eligibility should be determined on the basis of need. The category of disabled people that the government regard as “most in need” is shrinking as the political goalposts constantly shift. I think the word “need” is being conflated with politically defined neoliberal outcomes.

Oakley also suggests considering a “role that a form of privately run social insurance could play in both increasing benefit generosity and improving the support that individuals get to manage their conditions and move back to work.”

A toxic article from the Conservative and neoliberal Reform think tank suggests that “treatments” for some ESA claimants are made mandatory, subject to sanctions and so on.

And I can see that coming down the pipeline to the tune of an insane political mantra: “work is a health outcome.”

In Working welfare: a radically new approach to sickness and disability benefits, Reform have this to say:

“Those with mild or moderate health conditions that, with support, could be managed should be expected to take reasonable rehabilitative steps – some level of conditionality should therefore be applied. Employment advisers must be appropriately trained to support those claimants, and given a high degree of discretion in how they apply that conditionality.”

“Could be managed” by work coaches and state sponsored occupational therapists? That comment implies that sick and disabled people and our health service are somehow “failing” to “manage” sickness and disability. Seriously? The inference we are supposed to make is that people are sick and disabled because they can’t be bothered helping themselves. I think that tells you all you need to know about the attitude that informs what kind of “rehabilitation” will be on offer. It won’t be tailored to your medical condition, it will be tailored to you simply getting a job.

Another Reform article, Reforming ESA: the final frontier? says: “There is a risk, though, with making health support mandatory and asking health professionals to police this.”

Compulsory medical treatment is against the law. There are also human rights implications. That’s regardless of the government’s narrow aim of coercing people into work by using “health” interventions as a prop. A medical intervention without valid informed consent is a criminal offence and the offending health care professional can be charged with assault or battery. Examples of such situations include treatment against the patient’s will, different treatment than the one consented for and treatment after consenting when a person has been deliberately provided with wrong information.

There are very few exceptions, which include: patients with acute or permanent incapacity (i.e loss of consciousness after an accident or patients on mechanical ventilation) or chronic illness (i.e dementia), patients suffering from severe mental illness, (but if a patient has clearly given an advance directive while still competent, the treating physician is legally bound to respect this) and patients suffering from communicable diseases, such as tuberculosis (TB).

The four main principles of medical ethics are justice, non-malificence, autonomy and beneficence. Autonomy is the main ethical consideration underlying informed consent. The patients’ right to determine what investigations and treatment to undergo must be respected by all doctors.

For consent to be valid it must be informed consent. For this to be the case it must be:

Given voluntarily with no coercion or deceit. Sanctioning and the threat of sanctioning would constitute coercion.
Given by an individual who has capacity
Given by an individual who has been fully informed about the issue.

There are further implications regarding job coaches accessing medical records for patient confidentiality:

Breaching confidentiality fails to respect patient autonomy.
Violation of patient confidentiality is a form of betrayal.
Patients have a right to confidentiality that has frequently been demonstrated in common law and in some specific areas outlined in statute law.

The Reform think tank has also recently proposed entirely scrapping what is left of the disability benefit support system, in their report Working welfare: a radically new approach to sickness and disability benefits and has called for the government to set a single rate for all out of work benefits and reform the way sick and disabled people are assessed.

You see dangerous, circular and irrational justifications such as: “Nonetheless, international evidence does show that the rate at which sickness benefits are set can have behavioural effects – particularly on claim duration. ”

Well no. Those on the higher rates are assessed as unlikely to be able to work in the long term and thus the “behavioural effects” are simply that this group are too ill to work. That means they will be claiming for long periods. Yet this blunt, dangerous and backwards logic is being used to claim that higher disability rates serve as a “disincentive”for work.

The Reform think tank proposes that the government should cut the weekly support paid to 1.3 million sick and disabled people in the ESA Support Group from £131 to £73. This is the same amount that Jobseeker’s Allowance claimants receive. However, those people placed in the Support Group after assessment have been deemed by the state as unlikely to be able to work again. It would therefore be very difficult to justify this proposed cut, given the additional needs that disabled people have, which is historically recognised, and empirically verified by research.

Reform had also promoted the idea that the ESA WRAG should be paid the same as those claiming job seeker’s allowance. That happened of course. Now they are arguing that there should be NO disability premium at all for the Support Group, on the grounds that it serves as a “disincentive” to work. The government’s recent green paper clearly shows the idea has been taken on board in principle, given the discussion for introducing conditionality, work related activity and sanctions for the previously exempt group of very ill and disabled people, placed in that group originally because doctors and government contracted “independent” assessors deemed them too ill to work.

Yet the authors of the report doggedly insist that having a higher rate of weekly benefit for extremely sick and disabled people encourages them“to stay on sickness benefits rather than move into work.” People on sickness benefits don’t move into work because they are sick. Forcing them to work is outrageous. “Too ill to work” is simply that. It has nothing to do with “incentives”, and that patronising and dangerous claim is simply a politically expedient reinterpretation.

The government’s aim is to manage sickness and disability in the short term sufficiently enough to meet narrow neoliberal outcomes including fueling the supply side of the “labour market”.

But it’s a well known historical fact that a large reserve army of labour drives wages down. The other trend, over this last decade, has been the unprecedented growth of “flexible” or insecure contracts, which are considerably attractive to employers, who dispute many of the downsides that unions, workers and analysts have highlighted. (See: More than 7m Britons now in precarious employment). In this highly competitive context, it is highly unlikely that employers who have increasingly come to regard their employees as a disposable means of making profit are going to be “disability confident.” The fact that the government are proposing offering temporary financial “incentives” to employers that recruit disabled people tells us there is a major barrier there.

Further comment from Reform: “Reform call for a single rate of ‘income replacement’ for out of work claimants, whether disabled or not. This would mean a reduction for many ESA claimants. However, Reform ask why ESA is paid at a higher rate. If it is because there are extra costs associated with disability, then isn’t this what Personal Independence Payment (PIP) is for? If it is because ESA claimants are expected to take longer to find work, then doesn’t this also apply to some Jobseeker’s Allowance claimants and other groups?” From Reforming ESA: the final frontier?

PIP covers very only highly specific additional costs: those related to mobility and personal assistance, as I outlined earlier, and it is very difficult to fulfil the eligibility criteria, since this was another re-branded benefit designed to cut cost. Being sick and disabled does mean that at the very least, people may need recovery time, and meanwhile cannot meet even basic signing on conditionality, such as being available for work seven days a week. However, many in both ESA groups cannot work because they are chronically ill, or have degenerative conditions. Some people in the Support Group are terminally ill. This is very worryingly something that Reform have chosen to ignore.

The title of Reform’s paper – Reforming ESA: the final frontier? provides a glimpse of a wider political intention – ESA is the “last unexplored area” for welfare “reform.” “Thinking the unthinkable” is one of those trite things that ministers say when they expect something of a public backlash, but have nonetheless already made up their minds about cutting some public service or essential social support provision. Beforehand, think tanks and ministers periodically “kite fly” their proposals to test out public responses, using justification narratives: techniques of persuasion, usually reserved for the dodgy end of the advertising industry, and techniques of neutralisation to soothe and to sell their ideas about how things ought to be. And where our money should not be spent. The “public purse” is being “protected” from more and more of the public – ordinary citizens – and is now regarded as disposable income for the very wealthy and powerful. Austerity for us, tax gifts for the 1%

Six years ago it would have been unthinkable for a government to take away financial support from sick and disabled people, and to coerce them into work. It would have been unthinkable for a government to propose making any kind of medical treatment mandatory for a protected social group – sick and disabled people who need support to meet their basic needs. It would have been unthinkable that a UK government would systematically violate the human rights of disabled people. Yet they have.

That we have progressed to become a society that permits a so-called democratic government to do this indicates that the public’s moral and rational boundaries have been pushed, this has been an incremental process, permeated by a wide variety of deliberative practices which have added to the problem of recognising it for what it is.

There has been a process of gradual habituation of the public, to being governed by shock and surprise; to receiving decisions and policies deliberated and passed in secret; to being persuaded that the justification for such deeds and controversial policy was based on real evidence that the government parades as slogans propped up by glittering generalities and techniques of persuasion. It happens in stages. Many don’t notice the calculated step-by-step changes, but those that do – usually those affected – are often overwhelmed with the sheer volume of them.

“The final frontier” is the political garnering of sufficient levels of public indifference and complicity with state cruelty, coercion and the uncivilised systematic sanctioning and removal of support for those sick and disabled citizens that doctors and state assessors have already said are not able to work. This is a government that likes to get its own way.

Once the public’s rational and moral boundaries have been pushed sufficiently to accommodate this atrocity, it won’t be very difficult at all to argue a case for the complete dismantling of the welfare state.

That has always been the ultimate aim of the Conservatives.

If you think that’s okay, then perhaps it’s worth contemplating that illness can happen to anyone, and so can an accident. We have all paid into our social security system, as have our parents. It is ours; it’s there for if or when we need support. It reflects the collective best of us as a society, yet somehow this government have managed to attach shame and stigma to it. And as a society, we’ve allowed them to do that.

Disability can happen to any of us at any time. And when it does, you soon realise that it isn’t a “lifestyle choice” that you would ever have chosen to make.

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G4S are employing Cognitive Behavioural Therapists to deliver “get to work therapy”

The power of positive thinking is really political gaslighting

Nudging conformity and benefit sanctions: a state experiment in behaviour modification

The new Work and Health Programme: government plan social experiments to “nudge” sick and disabled people into work

GP practices to provide advice on job seeking in new pilot scheme

New return to work service goes live to help GPs, employees and employers across England

A critique of benefit sanctions: the Minnesota Starvation Experiment and Maslow’s Hierarchy of Needs

Let’s keep the job centre out of GP surgeries and the DWP out of our confidential medical records

The Psychological Impact of Austerity – Psychologists Against Austerity

A critique of Conservative notions of social research

Research finds strong correlation between Work Capability Assessment and suicide

I don’t make any money from my work. But you can support me by making a donation and help me continue to research and write informative, insightful and independent articles, and to continue to provide support to others. The smallest amount is much appreciated – thank you.

The compliance framework: Concentrix’s ‘reign of terror’ and ever-decreasing tax credits

October 15, 2016October 16, 2016 · 5 Comments ·

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A US outsourcing company, Concentrix, which was awarded a £75m contract by Her Majesty’s Revenue and Customs (HMRC) – the department responsible for collecting taxes and paying out certain benefits – has been accused of exercising a “reign of terror” over people who claim tax credits.

The private company was contracted to “reduce fraud and error” in the tax credit system, and to carry out “compliance checks” in a bid to save the government money. More than 500 civil servants have been deployed to help the private company resolve problems it caused by stopping people’s tax credit payments. This includes tax credit awards for the children of both in work and out of work parents, as well as child care payments.

The company has issued an apology for failures that have left many people with no benefit payments for up to two months, leaving them without money for essentials. The US firm has been accused of “incorrectly” withdrawing tax credits.

Officials from HM Revenue and Customs told a committee of MPs that a breakdown in customer services at Concentrix had resulted in only 10% of calls being answered on some days.

Many thousands of people had their tax credits stopped after Concentrix said they were making “fraudulent claims”. In what can at best be described as Kafkasque taunting, one poor woman was told she was in a relationship with a chain of newsagents, another with the philanthropist and poverty researcher, Joseph Rowntree, (who died in 1925,) according to a BBC report. A teenage single mum receiving tax credits was told she was married to a dead pensioner, after having her child tax credit withdrawn. Another mother was told she was living with the previous tenants of the house that she had lived alone in for two and a half years with her son, after her child tax credit was also withdrawn.

It’s difficult to conceive that these allegations could possibly have been made in genuine error. Mumsnet, an online forum for parents, has had over a thousand comments from parents who received letters from Concentrix demanding evidence out of the blue that they live alone. This was just on one page of ten on the site about the unreasonable demands for “compliance” that the company has been making of parents.

Many have been forced to print off documents like utility bills which were online, or pay for numerous backdated bank statements, to provide endless evidence of their circumstances. This is a costly process for people who need additional support in the first place, and many had already had their payments ended. The main reason for “compliance checks” has been suspicion of an “undisclosed partner,” challenging the legitimacy of a single claim, based on other data indicating that another adult is living at the address.

In October 2010, HMRC and the Department for Work and Pensions released a joint error and fraud strategy. As a result, HMRC increased its compliance activity across the tax credits system and introduced the use of data from credit reference agencies to inform compliance decisions. Through this process, single claims were identified where there was an indication that there may be a second adult living with the claimant – an “undisclosed partner”. However, credit reference agency data is notoriously unreliable.

Compliance

The “compliance framework” is a government method of preempting and preventing “non-compliance”, based on data collection and “analysis” by private companies that are hired by the public service sector. Instead of being “reactive” and acting after a “transaction”, the private companies are using “insights” to calculate “high risk” claimants. Ultimately, the aim is to cut costs, “through real-time auditing and prevention of fraud and error, agencies can collect the right amount of taxes to help ensure the right people receive the benefits they deserve.” (My bolding).

And: “Services can be embedded in processing functions to prevent non-compliance.”

The rationale: “Struggling with increasing demand for services amid widespread economic constraint, human services organizations face a major dilemma—how to minimize costs while improving services and ensuring accurate benefit distribution.

By using analytics, forward-thinking human services organizations are rising above this challenge. They are preventing, detecting and mitigating transactions where there is error, fraud or abuse. And they are using information gleaned from analytics to significantly reduce operating costs and drive business results.” (From: Accenture Intelligent Processing Services).

I’ve discussed elsewhere that the increasing use of a narrative of “objectivity” and emphasis on “analytics”, detachment and quantification, associated with small state ideology and austerity, tends to place some social groups at a psychological distance from administrators, and objectifies them, as if people claiming support because they can’t work, or because their wages are low and exploitative, are a homogenous group of people, bound by characteristics rather than circumstances in a context of political decision-making.

It becomes easier to disassociate from someone you view “objectively” and to distance yourself from the impact of your calculated and target-led decision-making, constrained within a highly political framework. Such an objectification of a person or group of people serves to de-empathise us, which is a key characteristic requirement of neoliberal ideology, embedded in inhumane “small state” policy and extended via administrative (and outsourced, privatised) practices. It leaves us much less likely to relate to the circumstances, emotions or accept the needs and choices of others. Such interactions become much more open to bureaucratic abuse and political exploitation.

The Institute for Fiscal Studies (IFS) have previously undertaken research into the costs of compliance on individuals, and their report refers to the time, money and psychological costs that are being imposed on applicants for, and recipients of, benefits and tax credits and on others by meeting all the various rigid requirements placed on them by social security and tax credit law and statutory authorities.

However, this study was undertaken before the Conservatives increased conditionality and compliance requirements further, in the radical Welfare Reform Act 2012. The burdens on those needing welfare support have grown substantially since the research was completed. (See: Understanding the Compliance Costs of Benefits and Tax Credits. )

Some of the people affected gave emotional testimonies, as they told the work and pensions select committee that they had been forced to borrow money and go to food banks as a result of the hardship caused by Concentrix’s actions.

The committee was told that of the 45,000 payments stopped, nearly 15,000 had appealed so far and that “90% – 95%” had been successful in overturning the decision.

HMRC officials said they first became concerned of problems at Concentrix in August when they started receiving reports that only 10% of calls were being answered within five minutes – the target was 90%.

Jon Thompson, chief executive of HMRC, said “a collapse in basic customer service” had occurred caused by too few staff being on hand, and that he’d personally taken the decision not to renew Concentrix’s contract. It ends in March next year.

Frank Field, the chair of parliament’s work and pensions committee, has said that a company’s “reign of terror” over tax credit recipients will be drawing to a close, after HMRC decided not to renew its contract.

On Thursday, the work and pensions committee heard from claimants who wrongly had their tax credits stopped and suffered the distress and humiliation of having to borrow money or visit food banks to feed their children.

The committee also heard that, at the height of the crisis, only 1% of the calls being made to Concentrix were actually being answered.

The committee issued a comment on the “extraordinary” evidence it heard, from four single parents who had wrongly had their tax credits stopped, senior staff from Concentrix, including senior Vice President Philip Cassidy, and HMRC, including Chief Executive and Permanent Secretary Jon Thompson.

Claimant humiliation and appalling customer service

The Committee heard about:

The humiliation of claimants who were forced to borrow money from friends and family in order to feed their children as they were left without benefits, to which they were ultimately found to be entitled, for up to seven weeks
Appalling customer service which saw claimants calling up to 70 times to get through as just 1% of calls were answered by Concentrix at the height of the crisis. One claimant finally waited 90 minutes to speak to a Concentrix adviser on an 0845 number, at great personal expense
Appeal success rates of 73% according to HMRC or 90-95% according to Concentrix; either way a terrible indictment of the original decision-making process
Refunds to claimants taking place over a series of months. In one case, a single mother lost housing benefit because a refund of wrongly withdrawn tax credits took her over an income threshold. Others will have taken on debts in the meantime
Repeated buck-passing between Concentrix and HMRC, who signed the contract, as to who was responsible
HMRC Permanent Secretary Jon Thompson was unable to explain what had gone wrong and why

Committee to seek clarifications from Concentrix and HMRC

The Committee has agreed to write to both Concentrix and HMRC demanding urgent information regarding:

How the performance of Concentrix was monitored by HMRC
Levels of staffing at Concentrix, in particular during August 2016, and the training provided to staff
Steps HMRC will take to compensate claimants, ensure they are not further disadvantaged, and review decisions taken by Concentrix
Assurance that Concentrix will not be compensated for HMRC taking much of their responsibilities back in-house

The Committee also plans to issue a report into the scandal.

Chair’s comment

Frank Field MP, Chair of the Work and Pensions Committee, said:

“The Committee was astonished by the extraordinary evidence we heard. From Concentrix we saw a company desperately out of their depth and unable to deliver on the contract awarded to them by HMRC. From senior HMRC officials we saw a palpable disregard for the human implications of this gross failure of public service. From the tax credit claimants we saw dignity in the face of appalling and traumatic experiences.

We have no doubt that many people similarly affected have been unable to come forward. I welcome HMRC’s swift action on the Concentrix contract, but that does not excuse them for ever having allowed this to happen.”

—

You can listen to the work and pensions committee meeting about the Concentrix and tax credits controversy here: https://goo.gl/q0mGiR

See also:

The government’s tax credit Claimant Compliance Manual

Tax credits: undisclosed partner interventions – Child Poverty Action Group

I don’t make any money from my work. But you can help by making a donation and support me in continuing to research and write informative, insightful and independent articles, and to provide support to others. I’m disabled because of my illness (lupus) and co-run support groups for other disabled people going through the assessment and appeals processes. The smallest amount is much appreciated – thank you.

Report shows significant challenges facing the Universal Credit system

May 13, 2016May 13, 2016 · 11 Comments ·

It’s disappointing and very worrying that a published report from the Work and Pensions Committee says: “The employment support service for in-work claimants of Universal Credit (UC) holds the potential to be the most significant welfare reform since 1948, but realising this potential means a steep on-the-job learning curve, as the policy appears to be untried anywhere in the world.”

The Work and Pensions Committee recommendations in the report are:

Given there is no comprehensive evidence anywhere on how to run an effective in-work service, the DWP will be learning as it develops this innovation. The Committee says:

for the reform to work, it must help confront the structural or personal barriers in-work claimants face to taking on more work, such as a lack of access to childcare and limited opportunities to take on extra hours or new jobs
the question of applying proposed sanctions is complex: employed people self-evidently do not lack the motivation to work. The use of financial sanctions for in-work claimants must be applied very differently to those for out-of-work claimants
a successful in-work service will also require partnership between JCP and employers to a degree not seen before.

Frank Field MP, Chair of the Committee said:

“The in-work service promises progress in finally breaking the cycle of people getting stuck in low pay, low prospects employment. We congratulate the Government for developing this innovation. As far as we can tell, nothing like this has been tried anywhere else in the world. This is a very different kind of welfare, which will require developing a new kind of public servant.”

This imprudent comment from Field implies that individuals need financial punishments in order to find work with better prospects and higher pay. Yet there are profoundly conflicting differences in the interests of employers and employees. The former are generally strongly motivated to purposely keep wages as low as possible so they can generate profit and pay dividends to shareholders and the latter need their pay and working conditions to be such that they have a reasonable standard of living. It’s not as if the Conservatives have ever valued legitimate collective wage bargaining. In fact their legislative track record consistently demonstrates that they hate it, prioritising the authority of the state above all else.

Workplace disagreements about wages and conditions are now typically resolved neither by collective bargaining nor litigation but are left to management prerogative. This is because Conservative aspirations are clear. Much of the government’s discussion of legislation is preceded with consideration of the value and benefit for business and the labour market. They want cheap labour and low cost workers, unable to withdraw their labour, unprotected by either trade unions or employment rights and threatened with destitution via benefit sanction cuts if they refuse to accept low paid, low standard work. Similarly, desperation and the “deterrent” effect of the 1834 Poor Law amendment served to drive down wages.

In the Conservative’s view, trade unions distort the free labour market which runs counter to New Right and neoliberal dogma. Since 2010, the decline in UK wage levels has been amongst the very worst declines in Europe. The fall in earnings under the Tory-led Coalition is the biggest in any parliament since 1880, according to analysis by the House of Commons Library, and at a time when the cost of living has spiralled upwards.

It’s worth considering that in-work conditionality and sanctions may have unintended consequences for employers, too. If employees are coerced by the State to find better paid and more secure work, and employers cannot increase hours and accommodate in-work progression, who will fill those posts? Financial penalties aimed at employees will also negatively impact on the performance and reliability of the workforce, because when people struggle to meet their basic physical needs, their cognitive and practical focus shifts to survival, and that doesn’t accommodate the meeting of higher level psychosocial needs and obligations, such as those of the workplace. It was because of the recognition of this, and the conventional wisdom captured in the work of social psychologists such as Abraham Maslow that provided the reasoning behind the policy of in-work benefits and provision in the first place.

In-work conditionality reinforces a lie and locates blame within individuals for structural problems – political, economic and social – created by those who hold power. Despite being a party that claims to support “hard-working families,” the Conservatives have nonetheless made several attempts to undermine the income security of a signifant proportion of that group of citizens recently. Their proposed tax credit cuts, designed to creep through parliament in the form of secondary legislation, which tends to exempt it from meaningful debate and amendment in the Commons, was halted only because the House of Lords have been paying attention to the game.

Last month I wrote about the Department for Work and Pensions running a Trial that is about “testing whether conditionality and the use of financial sanctions are effective for people that need to claim benefits in low paid work.”

The Department for Work and Pensions submitted a document about the Randomised Control Trial (RCT) they are currently conducting regarding in-work “progression.” The submission was made to the Work and Pensions Committee in January, as the Committee have conducted an inquiry into in-work conditionality. The document specifies that: “This document is for internal use only and should not be shared with external partners or claimants.”

The document focuses on methods of enforcing the “cultural and behavioural change” of people claiming both in-work and out-of-work social security, and evaluation of the Trial will be the responsibility of the Labour Market Trials Unit. (LMTU). Evaluation will “measure the impact of the Trial’s 3 group approaches, but understand more about claimant attitudes to progression over time and how the Trial has influenced behaviour changes.”

Worryingly, claimant participation in the Trial is mandatory. There is clearly no appropriate procedure to obtain and record clearly informed consent from research participants. Furthermore, the Trial is founded on a coercive psychopolitical approach to labour market constraints, and is clearly expressed as a psychological intervention, explicitly aimed at “behavioural change” and this raises some very serious concerns about research ethics and codes of conduct, which I’ve discussed elsewhere. It’s also very worrying that this intervention is to be delivered by non-qualified work coaches.

Owen Smith MP, Shadow Work and Pensions Secretary, commenting on the Work and Pensions Select Committee’s report into ‘in-work progression’ in Universal Credit, said:

“This report shows there are significant challenges facing the new Universal Credit system, not least how to ensure work pays and people are incentivised in to jobs. As a result, it is deeply worrying that at the early part of the rollout, huge Tory cuts to work allowances will undermine this aim, as 2.5 million working families will left over £2,100 a year worse off.

“If Universal Credit is to be returned to its original intentions of supporting and encouraging people in to work then Stephen Crabb needs to change his mind and reverse the Tory cuts to working families urgently.

“It’s also problematic that the committee found there is insufficient information available after a year of piloting in-work conditionality, especially given the complete mess that has been made of the existing sanctions regime. The DWP should move quickly to make available as much information as possible, to ensure the roll out of Universal Credit is properly scrutinised.”

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Pictures courtesy of Robert Livingstone

Study of welfare sanctions – have your say

The politics of punishment and blame: in-work conditionality

It’s time to abolish “purely punitive” benefit sanctions

This post was written for Welfare Weekly, which is a socially responsible and ethical news provider, specialising in social welfare related news and opinion.

I don’t make any money from my work. But you can support Politics and Insights and contribute by making a donation which will help me continue to research and write informative, insightful and independent articles, and to provide support to others. The smallest amount is much appreciated, and helps to keep my articles free and accessible to all – thank you.

The politics of punishment and blame: in-work conditionality

April 24, 2016May 20, 2017 · 34 Comments ·

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The Department for Work and Pensions has submitted a document about the Randomised Control Trial (RCT) they are currently conducting regarding in-work “progression.” The submission was made to the Work and Pensions Committee in January, as the Committee have conducted an inquiry into in-work conditionality. The document specifies that: “This document is for internal use only and should not be shared with external partners or claimants.”

So please share widely.

The Department for Work and Pensions claim that the Trial is about “testing whether conditionality and the use of financial sanctions are effective for people that need to claim benefits in low paid work.” The document focuses on methods of enforcing the “cultural and behavioural change” of people claiming both in-work and out-of-work social security, and evaluation of the Trial will be the responsibility of the Labour Market Trials Unit. (LMTU). Evaluation will “measure the impact of the Trial’s 3 group approaches, but understand more about claimant attitudes to progression over time and how the Trial has influenced behaviour changes.”

Worryingly, claimant participation in the Trial is mandatory. There is clearly no appropriate procedure to obtain and record clearly informed consent from research participants. Furthermore, the Trial is founded on a coercive psychopolitical approach to labour market constraints, and is clearly expressed as a psychological intervention, explicitly aimed at “behavioural change” and this raises some serious concerns about research ethics and codes of conduct. It’s also very worrying that this intervention is to be delivered by non-qualified work coaches.

The British Psychological Society (BPS) have issued a code of ethics in psychology that provides guidelines for the conduct of research. Some of the more important and pertinent ethical considerations are as follows:

Informed Consent.

Participants must be given the following information relating to:

• A statement that participation is voluntary and that refusal to participate will not result in any consequences or any loss of benefits that the person is otherwise entitled to receive.

• Purpose of the research.

• Procedures involved in the research.

• All foreseeable risks and discomforts to the participant (if there are any). These include not only physical injury but also possible psychological.

• Subjects’ right to confidentiality and the right to withdraw from the study at any time without any consequences.

Protection of Participants

Researchers must ensure that those taking part in research will not be caused distress. They must be protected from physical and mental harm. This means you must not embarrass, frighten, offend or harm participants.

Normally, the risk of harm must be no greater than in ordinary life, i.e. participants should not be exposed to risks greater than or additional to those encountered in their normal lifestyles. Withdrawing lifeline support that is calculated to meet the costs of only minimum requirements for basic survival – food, fuel and shelter – as a punishment for non-compliance WILL INVARIABLY cause distress, harm and loss of dignity for the subjects that are coerced into participating in this Trial. Participants should be able to leave a study at any time if they feel uncomfortable.

The Economic and Social Research Council has recently issued a new research ethics framework, and the website has lots of useful guidance that is also worth referring to.

In the UK, the Behavioural Insight Team is testing paternalist ideas for conducting public policy by running experiments in which many thousands of participants receive various “treatments” at random. Whilst medical researchers generally observe strict ethical codes of practice, in place to protect subjects, the new behavioural economists are much less transparent in conducting behavioural research interventions.

Consent to a therapy or a research protocol must possess three features in order to be valid. It should be voluntarily expressed, it should be the expression of a competent subject, and the subject should be adequately informed. It’s highly unlikely that people subjected to the extended use and broadened application of welfare sanctions gave their informed consent to participate in experiments designed to test the theory of “loss aversion,” for example.

Unfortunately there is nothing to prevent a government from deliberately exploiting a research framework as a way to test out highly unethical and ideologically-driven policies. It is not appropriate to apply a biomedical model of prescribed policy “treatments” to people experiencing politically and structurally generated social problems, such as unemployment, inequality and poverty, for example.

Some background

I wrote last year about the Work and Pensions Committee’s in-work progression in Universal Credit inquiry. The Department for Work and Pensions (DWP) intends to establish an “in-work service”, designed to encourage individual Universal Credit claimants on very low earnings to increase their income. Benefit payments may be stopped if claimants fail to take action as required by the DWP. The DWP is conducting a range of pilots to test different approaches but there is very little detail about these. The new regime might eventually apply to around one million people.

We really must challenge the Conservative’s use of words such as “encourage” and “support” and generally deceptive language use in the context of what are, after all, extremely punitive, coercive policies.

I wrote a statement at the time regarding my own submission to the inquiry, prompted by Frank Field’s spectacularly misguided and conservative statement. Here are a few of the issues and concerns I raised:

Field refered to the Conservative “welfare dependency” myth, yet there has never been any empirical evidence to support the claims of the existence of a “culture of dependency” and that’s despite the dogged research conducted by Keith Joseph some years ago, when he made similar claims.

In fact, a recent international study of social safety nets from The Massachusetts Institute of Technology (MIT) and Harvard economists categorically refutes the Conservative “scrounger” stereotype and dependency rhetoric. Abhijit Banerjee, Rema Hanna, Gabriel Kreindler, and Benjamin Olken re-analyzed data from seven randomized experiments evaluating cash programs in poor countries and found “no systematic evidence that cash transfer programmes discourage work.”

The phrase “welfare dependency” diverts us from political discrimation via policies, increasing inequality, and it serves to disperse public sympathies towards the poorest citizens, normalising prejudice and resetting social norm defaults that then permit the state to target protected social groups for further punitive and “cost-cutting” interventions to “incentivise” them towards “behavioural change.”

Furthermore, Welfare-to-Work programmes do not “help” people to find jobs, because they don’t address exploitative employers, structural problems, such as access to opportunity and resources and labour market constraints. Work programmes are not just a failure here in the UK, but also in other countries, where the programmes have run extensively over at least 15 years, such as Australia.

Welfare-to-work programes are intimately connected with the sanctioning regime, aimed at punishing people claiming welfare support. Work programme providers are sanctioning twice as many people as they are signposting into employment (David Etherington, Anne Daguerre, 2015), emphasising the distorted priorities of “welfare to work” services, and indicating a significant gap between claimant obligations and employment outcomes.

The Conservatives have always constructed discourses and shaped institutions which isolate some social groups from health, social and political resources, with justification narratives based on a process of class-contingent characterisations and the ascribed responsiblisation of social problems such as poverty, using quack psychology and pseudoscience. However, it is socioeconomic conditions which lead to deprivation of opportunities, and that outcome is undoubtedly a direct consequence of inadequate and discriminatory political decision-making and policy.

It’s worth bearing in mind that many people in work are still living in poverty and reliant on in-work benefits, which undermines the Libertarian Paternalist/Conservative case for increasing benefit conditionality somewhat, although those in low-paid work are still likely to be less poor than those reliant on out-of-work benefits. The Conservative “making work pay” slogan is a cryptographic reference to the punitive paternalist 1834 Poor Law principle of less eligibility.

The government’s Universal Credit legislation has enshrined the principle that working people in receipt of in-work benefits may face benefits sanctions if they are deemed not to be trying hard enough to find higher-paid work. It’s not as if the Conservatives have ever valued legitimate collective wage bargaining. In fact their legislative track record consistently demonstrates that they hate it, prioritising the authority of the state above all else.

There are profoundly conflicting differences in the interests of employers and employees. The former are generally strongly motivated to purposely keep wages as low as possible so they can generate profit and pay dividends to shareholders and the latter need their pay and working conditions to be such that they have a reasonable standard of living.

In the Conservative’s view, trade unions distort the free labour market which runs counter to New Right and neoliberal dogma. Since 2010, the decline in UK wage levels has been amongst the very worst in Europe. The fall in earnings under the Coalition is the biggest in any parliament since 1880, according to analysis by the House of Commons Library, and at a time when the cost of living has spiralled upwards.

In-work conditionality enforces a lie and locates blame within individuals for structural problems – political, economic and social – created by those who hold power. Despite being a party that claims to support “hard-working families,” the Conservatives have nonetheless made several attempts to undermine the income security of a significant proportion of that group of citizens recently. Their proposed tax credit cuts, designed to creep through parliament in the form of secondary legislation, which tends to exempt it from meaningful debate and amendment in the Commons, was halted only because the House of Lords have been paying attention to the game.

The government intends to continue formulating policies which will punish sick and disabled people, unemployed people, the poorest paid, and part-time workers. Meanwhile, the collective bargaining traditionally afforded us by trade unions has been systematically undermined by successive Conservative governments, showing clearly how the social risks of the labour market are being personalised and redefined as being solely the economic responsibility of individuals rather than the government and profit-driven big business employers.

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Images courtesy of Robert Livingstone

Related

Written evidence from the Department for Work and Pensions (IWP0044) – In-work Progression (IWP) – developing a core in work service IWP Supporting Information for Coaches. Randomised Control Trial (RCT)

Nudging conformity and benefit sanctions

G4S are employing Cognitive Behavioural Therapists to deliver “get to work therapy”

The new Work and Health Programme: government plan social experiments to “nudge” sick and disabled people into work

The importance of citizen’s qualitative accounts in democratic inclusion and political participation

Sanctions can’t possibly “incentivise” people to work. Here’s why

Universal credit. The devil’s tool – The Poor Side Of Life

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Call for submissions – inquiry launched into employment support for disabled people

March 30, 2016March 30, 2016 · 19 Comments ·

disability-employment-gap

Disability Employment Gap 2015. Source: UK Parliament.

Inquiry background

The Work and Pensions Committee has launched an inquiry into the Government’s commitment to halve the “disability employment gap.” According to the most recent data, 46.7% of disabled people were in work at the end of 2015 compared to 80.3% of non-disabled people. In order to close this gap, the Committee says an extra 1.2 million disabled people would need to be supported into work.

The Committee’s welfare to work report, published in October 2015, raised concerns about the lack of success of existing employment programmes in supporting disabled people into sustained employment.

The Government has since announced:

A new Work and Health Programme to replace the current generalist Work Programme and specialist disability Work Choice programmes
A real terms increase in spending on the Access to Work Programme, which provides practical support for disabled people, beyond the “reasonable adjustments” required to be made by employers
A White Paper to be published this year which will “set out reforms to improve support for people with health conditions and disabilities, including exploring the roles of employers, to further reduce the disability employment gap and promote integration across health and employment.”

Concerns raised over Disability Confident campaign

In addition, the DWP’s Disability Confident campaign, launched in 2013, aims to promote the benefits of employing disabled people to employers.

However, concerns have been raised about the abolition of the Work Related Activity component of Employment and Support Allowance (ESA) worth £29.05 per week – and its equivalent in Universal Credit – for new claimants from April 2017, and the potential effects of this measure on disabled people’s ability to overcome their barriers to working.

Call for written submissions

The Committee invites written submissions addressing the following points:

Steps required to halve the disability employment gap:

To what extent are the current range of proposed measures likely to achieve the Government’s ambition of closing the disability employment gap?
Should the Government set interim targets along the way to meet the commitment to halve the disability employment gap? What should they be?

Support for employers:

How effective is the Disability Confident campaign in reducing barriers to employment and educating employers?
What more could be done to support employers?

Effective employment support for disabled people:

What should support for people with health conditions and disabilities in the proposed Work and Health programme look like?
How should providers be incentivised to succeed?

Likely effects of proposed ESA reform:

What are the likely impacts on disability employment of the abolition of the Employment and Support Allowance Work Related Activity component?
What evidence is there that it will promote ‘positive behavioural change’? What evidence is there that it will have unintended consequences, and how could these be mitigated?

Aim of the inquiry

The Committee intends to consider possible improvements in:

the DWP’s employment support programmes for disabled people
Support for employers to take on disabled people
Disabled people’s access to the labour market more broadly

The Committee will also examine possible adverse consequences of the Government’s current approach, particularly around proposed changes to ESA, and how these might be addressed.

Chair’s comment

Frank Field MP, Chair of the Committee said:

“The Government has made a welcome commitment to help more people with disabilities into a position where they can find and then keep a job. If it can successfully be seen through, this commitment could signal a major stride towards achieving full employment in our country.

The really important part now is to back-up this commitment with a series of reforms that are tailored to each person’s own skills and ambitions, as well as those conditions that currently limit their ability to work, so that each person can follow a feasible journey into work. We hope the evidence we receive will enable us to help the Government in its search for such a reform package.”

Send a written submission through the disability employment gap inquiry page.

Further information

The deadline for written submissions is Monday 9 May 2016.

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The new Work and Health Programme: government plan social experiments to “nudge” sick and disabled people into work

The biggest barrier that disabled people face is a prejudiced government

Let’s keep the job centre out of GP surgeries and the DWP out of our confidential medical records

Latest DWP information release reveals a huge rise in the numbers of sick and disabled people being sanctioned

G4S are employing Cognitive Behavioural Therapists to deliver “get to work therapy”

Iain Duncan Smith is complaining about valid criticisms of his draconian policies by journalists and social media commentators

February 11, 2016March 21, 2016 · 25 Comments ·

The Work and Pensions Select Committee has just published some letters between Frank Field, the chair, and Iain Duncan Smith, who responded to questions about the correlation between benefit assessments and suicide.

Mr Field had asked what data the Department for Work and Pensions collects on the deaths of benefit claimants.

The issue had been raised in a research report by Oxford University and Liverpool University entitled First Do No Harm, which I also reported on last year.

The letter addressed to Frank Field MP, features a barely legible hand-written footnote warning against listening to those “in the media and on social media” who “accuse the Government of outrageous actions.”

Duncan Smith writes in the footnote:

“There are some out there in the media and social media who have used [raw?] [ons ?- Office for National Statistics?] figures to accuse the govt of outrageous actions.

I would hope that the committee would not seek to follow suit. I [illegible] [note?] that having introduced ESA and the WLA, the Labour Party now seeks to attack it as though they had nothing to do with it.

Surely the committee should seek to recognise the good intent of those engaged in this difficult area.”

I would say that this blatant political discrimination constitutes an “outrageous action.” It’s difficult to recognise any “good intent” here, Mr Duncan Smith.

The correlation between the work capability assessment and suicide was established by academic researchers, not by journalists or social media commentators. We simply reported the findings.

Iain Duncan Smith will be accusing the United Nations (UN) of failing to see the government’s “good intent” when the inquiry into “grave and systematic violations” of the rights of disabled people in the UK concludes, next. Despite the fact that we are the first country to face such an inquiry, and given that the UN investigate only when there is evidence of grave and systematic violations of human rights, the prime minister has already dismissed the significance of the inquiry, ludicrously claiming “it may not be all it’s cracked up to be.”

It’s particularly noteworthy that when it comes to government claims, the same methodological rigour that they advocate for others isn’t applied. Indeed, many policies have clearly been directed by ideology and traditional Tory prejudices, rather than valid research and empirical evidence. The fact that no cumulative impact assessment has been carried out with regard to the welfare “reforms” indicates a government that is not interested in accountability, and examining the potential negative outcomes of policy-making. Policies are supposed to be about meeting public needs and not about inflicting Conservative dogma and old prejudices in the form of financial punishment on protected social groups.

As someone with a background in the social sciences, I have written extensive criticism of Iain Duncan Smith’s peculiar brand of epistemological and methodological fascism. He’s not exactly well known for his skill in statistical analysis, having been rebuked more than once for being notoriously conservative with the truth and numbers. Yet he feels compelled to dismiss the accounts of academics, campaigners, empirical evidence and the many qualitative accounts of those adversely impacted by his policies, in his vain attempt to exercise a stranglehold on his own peculiar brand of “truth.”

The goverment often claim that any research revealing negative social consequences arising from their draconian policies, which they don’t like to be made public “doesn’t establish a causal link.” Recently there has been a persistent, aggressive and flat denial that there is any “causal link” between the increased use of food banks and increasing poverty, between benefit sanctions and extreme hardship and harm, between the work capability assessment and an increase in numbers of deaths and suicides, for example.

The government are referring to a scientific maxim: “Correlation doesn’t imply causality.”

The tobacco industry made exactly the same claim about the established link between lung cancer and smoking.

It’s true that correlation is not the same as causation.

It’s certainly true that no conclusion may be drawn regarding the existence or the direction of a cause and effect relationship only from the fact that event A and event B are correlated.

Determining whether there is an actual cause and effect relationship requires further investigation.

This is something the government has persistently refused to do. (Here’s a full critique of Conservative methods of “social research”. I sent Mr Duncan Smith a copy, along with some information about proper definitions and measurement of poverty, but he clearly hasn’t read either. Unless he has included those in his arrogant and dismissive horror of ~~“accusations”~~ criticisms on social media of course)

It is completely inaccurate to say that correlation doesn’t imply causation. It quite often does.

Here’s a final comment from a social media-based campaigner, analytical writer and a qualified social scientist who knows about statistical inference, causality and correlation and suchlike:

Iain Duncan Smith, you’re a blatant numpty.

You can read the full letter here.

Frank Field’s New Report: Fixing Broken Britain?

January 18, 2016January 19, 2016 · 7 Comments ·

In a study report that was published today – Fixing Broken Britain? An audit of working-age welfare reform since 2010, Labour MP Frank Field and co-author Andrew Forsey argue that:

The Department for Business, Innovation and Skills should take a lead role in tackling the dependence of employers and landlords, whose subsidies in the form of tax credits and Housing Benefit have grown exponentially, by raising wages and productivity.

… the next front in welfare reform will see a fundamental switch from the Department for Work and Pensions – historically always responsible for welfare reform – to the Department for Business, Innovation and Skills, reflecting the new reform agenda.

Field and Forsey, writing for the cross-party think tank Civitas, propose that the next step of welfare reform:

… involves a renewed drive to help those who have not yet been found a job under the Work Programme – principally the over-50s and the disabled. This should involve weighting the payment-by-results systems further in favour of those claimants facing the steepest barriers to work. This major task, and the prompt and efficient payment of benefits, should be the primary objective of the Department for Work and Pensions.

We believe the payment-by-results system the government introduced now requires a significant recalibration to give the most disadvantaged participants a fighting chance of getting and keeping a job.

The language used in the publication is controversial and I was both concerned and disappointed to see the phrase “welfare dependency” used more than once. It alludes to the Conservative claims of a so-called “culture of dependency”, for which there has never been any supportive empirical evidence presented, (and that’s despite Sir Keith Joseph’s notorious best efforts and meticulous but ultimately forlorn research into a neoliberal New Right myth.)

However, there is much empirical evidence to support structural explanations of unemployment and poverty, but the current government has tended to psychopoliticise these issues, blaming the character and attitudes of unemployed people, reflected in language shifts – for example, the frequent use of words such as “worklessness” which implies responsibility and choice – making unfortunate circumstances a very personal burden – as opposed to “unemployment”, which at least accommodates factors such as labour market constraints, economic conditions, structural inequalities, state responsibilities and the consequences of political decision-making.

Field and Forsey also recommend “identifying claimants’ strengths and difficulties” as early as possible once they begin claiming benefit; early referrals to the new Work and Health Programme for those on any benefit in most need of support; and lifting the cap on numbers who can enrol on the voluntary welfare-to-work programme for claimants with disabilities, and extending the time for which they can participate.

The problem is that referrals are unlikely to be on a voluntary basis. One of the aims of the Work and Health Programme is to enlist the support of GPs in “prescribing” work coaches to sick and disabled people. Given the confidential nature of the patient/doctor relationship, such an intrusive measure is likely to ultimately undermine people’s trust in their GP, and leave sick people who genuinely cannot work feeling harrassed and coerced by the state. There is good evidence that the work programme has not increased sustainable employment outcomes, and furthermore, it has harmed people with mental health problems.

In fairness to Field and Dorsey, they do accommodate some structural factors in their analysis. They say:

A second major new front against benefit dependency involves raising the earnings of low-paid workers, which requires a national productivity strategy that can be built around the new National Living Wage. The major objective here is to prevent yesterday’s workless poor becoming today’s working poor.

The conditionality attached to the receipt of benefit may have made work an easier option, but real wage growth at the bottom end of the labour market has been the missing piece of the government’s welfare reform puzzle.

In order to enshrine work as the best route out of poverty, the next front in welfare reform must build upon the National Living Wage to deliver the higher productivity that can sustain rising real incomes across the board. This policy needs to be driven by the Secretary of State for Business, Innovation and Skills.

Field and Forsey criticise Universal Credit, stating that if it is ever rolled out nationally, it will not “incentivise” work. They go on to say:

The government’s flagship welfare scheme will only deliver a lower marginal tax rate for certain groups of claimants and even for them it will be undermined by Universal Credit’s failure to encompass council tax support and free school meals.

Because of Universal Credit’s higher taper rate for many claimants the strategy of fixing “broken Britain” by offering lower withdrawal rates than the current system lies in ruins.

If creating an incentive to work is the goal the present system for the vast majority of claimants meets that goal more effectively. Any reduction in the marginal tax rate will only come for particular groups of Universal Credit claimants should the benefit be introduced.

But then, the failure of Universal Credit to encompass also Council Tax support and free school meals will throw all of these calculations into a mild chaos, to put it at its gentlest.

However, it’s clear that the whole point of Universal Credit is to facilitate a further withdrawal of funding for welfare support.

Field and Forsey argue in the report that because there is little prospect of Universal Credit being rolled out fully by 2020, George Osborne should act now to “protect lower-paid families with children within the framework of the welfare cuts he is planning.”

They formulate a five-point plan for in-work benefit reform in the current parliament:

The tax credit system should be centred on lower-paid workers with children, with entitlements to families earning up to twice the level of the National Living Wage, a ceiling of £32,000.
By 2020, childless couples and single workers without children should no longer be eligible for support from the tax credit system.
Jobcentre Plus should be revamped so that staff have the skills to help claimants in work increase their hours and/or pay, either in their current job or by finding a new one.
Tax credit claimants should be allowed to increase their earnings by up to £5,000 in any 18-month period without any clawback of entitlement, so that they do not lose large chunks of income for working more or for better pay.
Vulnerable workers who cannot currently work a full week should be allowed to work up to 24 hours a week and claim Jobseeker’s Allowance or Employment and Support Allowance, rather than the current 16-hour maximum.

They say:

These five reforms would be much more effective in protecting those in work on modest earnings than anything the government is proposing. They build around the revolutionary idea the chancellor has introduced into British politics, particularly welfare reform, namely of introducing a National Living Wage.

This move begins the process of transferring the responsibility for lower earners’ welfare to employers and the Department for Business, Innovation and Skills, and away from the Department for Work and Pensions and Her Majesty’s Revenue and Customs.

However, this is a heavily corporate-sponsored “business friendly” neoliberal government with a clear anti-welfare agenda. What could possibly go right?

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This post was written for Welfare Weekly, which is a socially responsible and ethical news provider, specialising in social welfare related news and opinion.

Audit finds whereabouts and circumstances of 1.5 million people leaving welfare records each year “a mystery”

January 18, 2016August 18, 2016 · 10 Comments ·

Labour MP Frank Field has called on the government to conduct a survey into the circumstances of those hundreds of thousands of citizens whose benefit income is withdrawn each year under the current harsh sanctioning regime.

Mr Field, who also chairs the Commons Work and Pensions Committee, carried out a forensic audit of the government’s welfare reform programme – Fixing Broken Britain? An audit of working-age welfare reform since 2010, which is to be published today (18 January 2016) by Civitas and co-authored by Andrew Forsey.

Worryingly, the research found that the whereabouts of 1.5 million people leaving the welfare records each year is “a mystery.” The authors also raise concern that the wellbeing of at least a third of those who have been sanctioned “is anybody’s guess.” It’s not the first time these concerns have been raised.

It emerged in 2014, during an inquiry which was instigated by the parliamentary Work and Pensions Select Committee, that research conducted by Professor David Stuckler shows more than 500,000 Job Seekers Allowance (JSA) claimants have disappeared from unemployment statistics, without finding work, since the sanctions regime was toughened in October, 2012.

This means that in August 2014, the claimant count – which is used to gauge unemployment – is likely to be very much higher than the 970,000 figure that the government is claiming, if those who have been sanctioned are included.

The research finding confirms what many of us already knew.

Professor Stuckler, who has analysed data from 375 local authorities, said:

“The data clearly show that many people are not leaving Job Seekers Allowance for work but appear to be being pushed off in unprecedented numbers in association with sanctions.”

The Work and Pensions Committee decided to conduct a further in depth inquiry into benefit sanctions policy at the time, following the findings of the research. This inquiry considered aspects of sanctions policy which were outside the remit of the Oakley Review. (You can see the terms of reference for the inquiry, and submissions were invited, all details of which are here – Committee launch inquiry into benefit sanctions.)

Labour MP Debbie Abrahams said:

“Sanctions are being applied unfairly to job-seekers, as well as the sick and disabled.

The reason the Government is doing this is that it gets them off the JSA claimant figures, so it looks like there are fewer people unemployed.”

Mrs Abraham added:

“Hundreds of thousands of people have had their benefits stopped for a minimum of four weeks and then approximately a quarter of these people, from the research that I’ve seen, are disappearing.

They are leaving and we don’t know where they are going. That’s an absolute indictment of this policy and it’s a little bit worrying if we’re trying to tout this internationally as a real success story.”

The MP for Oldham East and Saddleworth, and shadow disability minister memorably added:

“People have died after being sanctioned, Minister.”

The Government claims that sanctioned claimants who leave the benefit system are going into work – they also claim that their punitive sanctions regime “works”. But the Oxford study found this is untrue in a “majority” of cases. At the time, the government were accused of massaging unemployment figures via benefit sanctions.

Frank Field and Andrew Forsey write:

“The number of sanctions was halved in the year leading up to the 2015 election, but it still remained at half a million. Sanctions are therefore being applied at a scale unknown since the Second World War, and the operation of sanctions on this scale makes for a most significant change in the social security system as it has existed in the post-war period.

A number of people – we know not how large a number – are being totally disconnected from both work and welfare, and risk being exposed to destitution.

Justice calls for a major survey of what happens to the hundreds of thousands of people thrown off the welfare rolls each year through the sanctioning process. It is unacceptable, not only for this government but for its predecessor and those who will follow, to take away benefit from a mass of people each year and not trouble themselves with how this army of people survive. For that is what is happening under the government’s sanctions policy. The ability to track the wellbeing of the whole population is now a part of being a grown up government, let alone a ‘One Nation’ government.”

In the report, Field and Forsey call for four safeguarding reforms, “to restore greater fairness and transparency to the sanctions regime.” They:

Propose that the government must forthwith begin a survey so that they can answer the simple but crucial question of what happens to those citizens expelled from the welfare rolls who appear not to find work.
Welcome the government’s decision to trial a Yellow Card early warning system, but suggest that should it fail to prevent injustices from occurring, the government should supplement this policy with the option for Jobcentre Plus staff of issuing a non-financial sanction for a claimant’s first failure to meet the terms of their Claimant Commitment.
Recommend that the Department for Work and Pensions trials a ‘grace period’ for vulnerable claimants of Jobseeker’s Allowance or Employment and Support Allowance, during which the requirements placed upon them are eased at times of transition or acute difficulty.
Request information from the government showing how much expenditure is withdrawn through its policy of sanctioning claimants.

Last year year, the Work and Pensions Select Committee heard independent estimates that since late 2012 sanctions had resulted in at least £275m being withheld from benefit claimants (the comparable figure for 2010 was £50m). Committee member Debbie Abrahams MP said that the Department for Work and Pensions will not give or does not have actual figures.

However, it’s truly remarkable that the government somehow manage to pull numbers out of their secret Thunderball when they believe it’s in their own interests to do so. The latest “employment” figures, for example. How likely is it that those numbers are remotely accurate when we have a government that happily presides over the disappearance of many thousands of sanctioned people every year from their accounts?

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This post was written for Welfare Weekly, which is a socially responsible and ethical news provider, specialising in social welfare related news and opinion.

Universal Credit “in-work progression” inquiry launched – call for evidence

December 15, 2015April 1, 2016 · 11 Comments ·

The Work and Pensions Committee opened an in-work progression in Universal Credit inquiry on the 9th December.

Background of the inquiry

The Department for Work and Pensions (DWP) intends to establish an “in-work service”, designed to encourage individual Universal Credit claimants on very low earnings to increase their income. Benefit payments may be stopped if claimants fail to take action as required by the DWP. The DWP is conducting a range of pilots to test different approaches but there is very little detail about these. The new regime might eventually apply to around one million people.

The Committee is considering the Department’s plans and options for a fair, workable and effective approach.

These measures will make benefit payments to people who are in work, but on low earnings, conditional on them taking certain steps to increase their pay or hours.

Scope of the inquiry:

Written submissions are invited addressing the following points:

DWP’s plans for in-work progression pilots in 2015/16, and how they should be evaluated
Which organisations are best-placed to deliver the in-work service for DWP e.g. Jobcentre Plus/other providers from the private, public or voluntary sectors?
What should in-work progression support entail and how should it be delivered (e.g. regularity and nature of contact with claimants)?
Which groups of claimants should be included and which should be exempt?
How should employers be encouraged to facilitate progression?
In what circumstances would it be appropriate to sanction a Universal Credit claimant who is in work?
Is there any UK or international evidence on effective ways of encouraging in-work progression?

Terms of reference: Universal Credit “in-work progression”

The deadline for submissions is Monday 18 January 2016.

Chair’s comment

Rt Hon Frank Field MP DL, Chair of the Work and Pensions Committee, said:

“The welfare-to-work strategy of successive governments has begun to crack the dependency on out-of-work benefits that had appeared to be an almost intractable problem. Efforts now also need to be focused on a welfare-to-work strategy that not only moves claimants off out-of-work benefit, but more importantly helps them move up the pay ladder and out of poverty. Too many people on low benefit incomes have been encouraged into low-paid jobs whose rewards are only brought up to a more acceptable income level by tax credits and other in-work benefits. I hope our Committee therefore will examine the available evidence and carefully develop an approach to in-work support which is effective, and which people accept as fair.”

I will publish my own submission, prompted by Frank Field’s spectacularly misguided and conservative statement, in due course. Here are a few of the issues and concerns I will be raising:

Field refers to the Conservative “dependency” myth, yet there has never been any empirical evidence to support the claims of the existence of a “culture of dependency” and that’s despite the dogged research conducted by Keith Joseph some years ago, when he made similar claims. In fact, a recent international study of social safety nets from The Massachusetts Institute of Technology (MIT) and Harvard economists categorically refutes the Conservative “scrounger” stereotype and dependency rhetoric. Abhijit Banerjee, Rema Hanna, Gabriel Kreindler, and Benjamin Olken re-analyzed data from seven randomized experiments evaluating cash programs in poor countries and found “no systematic evidence that cash transfer programmes discourage work.”

Furthermore, Welfare-to-Work programmes do not “help” people to find jobs, because they don’t address exploitative employers, structural problems, such as access to opportunity and resources and labor market constraints. Work programmes are not just a failure here in the UK, but also in other countries, where the programmes have run extensively over at least 15 years, such as Australia.

The Conservatives have always constructed discourses and shaped institutions which isolate some social groups from health, social and political resources, with justification narratives based on a process of class-contingent characterisations and the ascribed responsiblisation of social problems such as poverty, using quack psychology and pseudoscience. However, it is socioeconomic conditions which lead to deprivation of opportunities, and that outcome is undoubtedly a direct consequence of inadequate political decision-making and policy.

It’s worth bearing in mind that many people in work are still living in poverty and reliant on in-work benefits, which undermines the libertarian paternalist/conservative case for increasing benefit conditionality somewhat, although those in low-paid work are still likely to be less poor than those reliant on out-of-work benefits. The Conservative “making work pay” slogan is a cryptographic reference to the punitive paternalist 1834 Poor Law principle of less eligibility.

Workplace disagreements about wages and conditions are now typically resolved neither by collective bargaining nor litigation but are left to management prerogative. This is because Conservative aspirations are clear. They want cheap labor and low cost workers, unable to withdraw their labor, unprotected by either trade unions or employment rights and threatened with destitution via benefit sanction cuts if they refuse to accept low paid, low standard work. Similarly, desperation and the “deterrent” effect of the 1834 Poor Law amendment served to drive down wages.

In the Conservative’s view, trade unions distort the free labor market which runs counter to New Right and neoliberal dogma. Since 2010, the decline in UK wage levels has been amongst the very worst in Europe. The fall in earnings under the Coalition is the biggest in any parliament since 1880, according to analysis by the House of Commons Library, and at a time when the cost of living has spiralled upwards. And whose fault is that?

It’s certainly not the fault of those who need financial support to meet their basic survival needs despite being in employment.

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Send a written submission through the in-work progression in Universal Credit inquiry page.

Don’t forget the deadline is Monday 18 January 2016.

The unacceptable face of capitalism

A moral duty to act on the pension schemes

Incredible wealth followed by retail demise

Egregious failures of corporate governance

Collapse under incompetent and self-serving RAL

Chairs’ comments

Committee recommendations

Holding company directors to account

Large companies should be subject to the Financial Reporting Council Corporate Governance Code

Include pension scheme trustees in section 172 of Companies Act

Publication of Insolvency Service investigation reports

Publication of correspondence with Arcadia

Chair’s comment

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Context

The architects

State diagnosis and treatment – a blunt instrument

The shrinking category of illness and disability

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Compliance

Claimant humiliation and appalling customer service

Committee to seek clarifications from Concentrix and HMRC

Chair’s comment

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Some background

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Inquiry background

Concerns raised over Disability Confident campaign

Call for written submissions

Steps required to halve the disability employment gap:

Support for employers:

Effective employment support for disabled people:

Likely effects of proposed ESA reform:

Aim of the inquiry

Chair’s comment

Further information

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Background of the inquiry

Scope of the inquiry:

Chair’s comment

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