Tag: In-work sanctions

Research shows that Tory ‘hostile environment’ of welfare sanctions doesn’t help people to find work

Image result for welfare sanctions

The UK’s most extensive study of welfare conditionality has found that welfare sanctions are “ineffective” at “supporting” people into work and are more likely to reduce those affected to poverty, ill-health or survival crime. 

Despite dogmatic claims by Conservative ministers in recent years that rigorously enforced conditionality – including mandatory 35-hour job searches – “‘incentivised’ claimants to move off benefits into work”, the research found the positive impact was negligible.

The Economic and Social Research Council-funded study of welfare conditionality was carried out between 2013 and 2018 by researchers at six universities. It included repeat qualitative interviews over two years with 481 welfare service users in England and Scotland as well as interviews with 57 policy experts and 27 focus groups.

The five-year research programme that has been following the lives of hundreds of claimants concludes that the controversial policy of cutting benefits as a punishment for alleged failures to comply with jobcentre rules has been “little short of disastrous.”

For those people interviewed for the study who did gain employment, the most common outcome was a series of short-term, insecure jobs, interspersed with periods of unemployment, rather than a shift into sustained, well-paid work.

Sanctions generally delivered poor outcomes, including debt, poverty and reliance on charities such as food banks, the study found. Often imposed for trivial and seemingly cruel reasons, they frequently triggered high levels of stress, anxiety and depression.

The director of the study, Professor Peter Dwyer, based at the University of York, said “The outcomes from sanctions are almost universally negative.” 

One research finding is that, in many cases, the threat of sanctions had the unintended effect of encouraging a “culture of counterproductive compliance and futile behaviour” among some claimants, who learned “the rules of the game” rather than becoming genuinely “engaged with work.”  This of course is through necessity, as social security payments are claimed by people who need support to meet their basic survival needs: welfare (barely) covers the costs of food, fuel and shelter. 

The authors of the research paper conclude: “Benefit sanctions do little to enhance people’s motivation to prepare for, seek or enter paid work. They routinely trigger profoundly negative personal, financial, health and behavioural outcomes.” 

Many campaigners, including myself, have been pointing this out for years. It’s a fundamental truth – established by Abraham Maslow, and verified by a range of comprehensive studies, including the Minnesota semi-starvation experiment – that if people cannot meet their basic survival needs, that becomes their “cognitive priority” – their primary motivation. People caught in absolute poverty cannot then higher level psychosocial needs, until their basic survival needs are met. It takes a monstrously authoritarian government to ignore these empirical facts and to continue to punish citizens by withdrawing their fundamental means of survival.

The researchers call for a review of the use of sanctions, including an immediate moratorium on benefit sanctions for disabled people who are disproportionately affected, together with an urgent “rebalancing” of the social security system to focus less on compliance and more on helping claimants into work. 

The research report says that in the “rare” cases where claimants did move off benefits into sustained work, personalised job support, not sanctions, was the key factor. With few exceptions, however, jobcentres were more focused on enforcing benefit rules rather than helping people gain employment.

“Although some examples of good practice are evident, much of the mandatory job search, training and employment support offered by Jobcentre Plus and external providers is too generic, of poor quality and largely ineffective in enabling people to enter and sustain paid work,” the report says.

It’s very worrying that the research highlighted those citizens with “chaotic lives” – who were homeless or had addictions, for example – reacted to the “inherent hassle” of the conditionality system by dropping out of the social security system altogether. In some cases, they moved into survival crime, such as drug dealing.

Low-paid workers on universal credit who were subject to so-called “in-work conditionality” – a requirement for them to work more hours or face sanctions – in some cases elected to sign off, foregoing rent support and tax credits, to avoid what they saw as constant, petty harassment from jobcentre staff.

Welfare conditionality – the notion that eligibility for benefits and services should be linked to claimants’ compliance with certain rules and behaviours – has been progressively embedded into the UK social security system since the 1990s, although the scope and severity intensified dramatically after 2012, when the Conservative-led coalition “reformed” the welfare system.

Sanctions are imposed when claimants supposedly breach stringent jobcentre rules, typically by failing to turn up for appointments on time, or at all, or for failing to apply for “enough jobs”. They are effectively fined by having their benefit payments stopped for a minimum of four weeks (about £300) and a maximum of three years. This means that money to meet their basic living requirements is cut. 

At its peak in 2013, under the then secretary of state for work and pensions, Iain Duncan Smith, there were more than a million sanctions. Between 2010 and 2015, a quarter of all people on jobseeker’s allowance were sanctioned, with the Department for Work and Pensions (DWP) issuing £132m in sanctions penalties in 2015.

Sanctions fell to 350,000 in 2016 as a series of critical reports emerged questioning their effectiveness and calling for changes, including from the all-party work and pensions select committee, the DWP’s social security advisory committee and the National Audit Office.

fresh inquiry by MPs into sanctions is under way.

Dalia Ben-Galim, the policy director at the single parents’ charity Gingerbread, said: “Rather than threatening single parents with sanctions and widening the ‘conditionality’ agenda, it would be much more valuable to enable the conditions to support employment such as affordable childcare, access to flexible work and personalised support through job centres.”

A DWP spokesperson said: “Our research shows that over 70% of JSA claimants say sanctions make it more likely they will comply with reasonable and agreed requirements, and it is understandable that people meet certain expectations in return for benefits.

I wonder if this was a reference to the DWP “case studies” made up of fictitious characters and testimonies, as uncovered by Welfare Weekly ?

The DWP spokesperson continued with platitudes: “We tailor requirements to individual cases and sanctions are only used in a very small percentage of cases when people fail to meet their agreed requirements set out in their claimant commitment.”

Labour’s shadow secretary for work and pensions Margaret Greenwood said: “The current sanctions system is immoral and ineffective. It is not helping people into employment and at the same time is leaving vulnerable people on the brink of destitution, without any source of income for long periods.”

The authors of the report further conclude that the DWP’s sanctions regime:

“…compromises attempts to end child poverty. At best, current practice fails to support lone parents in the way proposed; at worst, it compounds the disadvantage they already face. The ethical legitimacy of the present system is highly questionable as a consequence.”

wrote in 2015:

Conservative anti-welfare discourse excludes the structural context of unemployment and poverty from public conversation by transforming these social problems into individua ones of ‘welfare dependency’ and ‘worklessness.’ The consequence is an escalating illogic of authoritarian policy measures which have at their core the intensification of punitive conditionality.

Such policies and interventions are then rationalised as innovative […] ultimately the presented political aim is to ‘mend’ Britain’s supposedly ‘broken society’ and to restore a country that ‘lives within its means’… bringing about a neoliberal utopia built on ‘economic competitiveness’ in a ‘global race.’

Disadvantage has become an individualised, private matter, rather than […] an inevitable feature of neoliberal […] competitive individualism. This allows the state to depoliticise social problems, while at the same time, justifying […] changing citizens’ behaviours to fit with neoliberal outcomes.

The government’s policies, founded on scapegoating already marginalised social groups, and creating “hostile environments” for the poorest citizens, including those with disabilities, who have been disproportionately weighed down with the burden of austerity, have caused immeasurable human suffering and untold damage to the very fabric of what was once a civilised society.

The answer to the problems generated by the politically imposed system of neoliberalism that fails the majority of citizens, according to the dogmatic government, is to apparently apply even more rigid neoliberal policies as an almost farcical sticking plaster. 

The Conservative’s answer to social problems such as inequality and poverty, which own policies createand extend, is to impose ideologically formulated “behavioural change” programmes on the poorest citizens, as a prop for dismally failing neoliberalism. All authoritarians are bullies and all bullies aim to change the behaviours of others. This technocratic and authoritarian approach to policy always entails the creation of scapegoats that the government then punish.

In 2002, as party chairwoman, Theresa May told the Conservatives that they were seen as the “nasty party”. Sixteen years later and under her premiership, that description of  an authoritarian and rigidly ideologically driven government has never been more apt.

Related

The politics of punishment and blame: in-work conditionality

Disabled people are sanctioned more than other people, according to research

The connection between Universal Credit, ordeals and experiments in electrocuting laboratory rats

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

 


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Our social security has been redesigned. It’s now a welfare deterrent

PIP

Hunger and desperation used quite ruthlessly by a “health care professional” to controversially justify refusing a disability support claim. Access to food banks can only happen if you are referred by a professional, such as a doctor or social worker. Furthermore, you can generally have a maximum of only 3 referrals per year. The ESA and PIP eassessment guidance says that a person must be able to walk the distance specified “reliably, consistently, safely and in a timely manner.”

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Iain Duncan-Smith struggled financially once, but then he got off his backside and was given a Tudor mansion by his father-in-law, the fifth Baron Cottesloe, which proves rewards come to those prepared to make an effort.  Reuters.

“Universal Credit doesn’t go far enough – work won’t pay until people are running naked through stinging nettles to get their benefits.

As Universal Credit develops, it can encourage other skills, so if your electricity has been cut off, you have to screw your application form into a ball and dribble it through a line of cones before kicking it into a bucket. That way you can soon come off benefits and earn £5m a year as a winger for Manchester City.” Mark Steel, writing for the Independent

The Conservative notion of “deserving” and “undeserving” poor is a false dichotomy. No-one deserves to be poor

“Deserving” is a politically divergent word if there ever was one. The Conservatives have used it to apparently wage an all out class war, using austerity as a smokescreen. They certainly don’t take the side of the proverbial underdog. In fact the more need you have, the less this government considers you “deserving” of support and sympathy.

Policies aimed at people with what are politically regarded as “additional needs” are largely about ensuring your compliance, conformity and commitment to “behavioural change”, on the assumption that people somehow erroneously “choose” to need financial support. Claiming any form of state support has come to entail a deeply hostile and extremely challenging process that is causing psychological distress and often, physical harm, to our most vulnerable citizens. There are plently of examples of cases where this has happened documented on this site alone.

Such a disciplinarian mindset is now embedded in social security policy, rhetoric and administration. But we’ve been here before, back in 1832, when the Poor Law Amendment Act was aimed at categorising and managing “deserving” and “undeserving” poor. Those considered “deserving” were unfortunately placed in workhouses and punished by a loss of citizens freedoms and rights, in order to “deter” people from being poor. (See also The New New Poor Law, 2013.)

I’ve yet to come across a single case of someone being punished out of their poverty. Someone ought to send every government minister a copy of Maslow’s hierarchy of human needs, and remind them all that our post-war social security was originally designed and calculated to ensure people could meet the costs of basic survival needs, such as for food, fuel and shelter.

It was recognised back then that people struggling with basic survival requirements were highly unlikely to fulfil other higher level psychosocial potential, such as looking for work. If we want people to find work, we must first ensure they have the necessary resources to do so. And that the work available will make a real difference to their standard of living. 

Poor people don’t create poverty, state decision-making does. The economy and labor market conditions do. The punitive approach to poverty didn’t work in the 1800s and 1900s, and it isn’t working and can’t possibly be made to work now. It’s an ideological dead horse. It died because of the brutal and unrelentless use of too much political brutality, the heavy hand of the state offering all stick and no carrots for poor people.

Being poor is itself punishing enough. Now the poor are being punished for being punished with poverty.  No-one chooses to be poor, our overarching socioeconomic organisation is founded on the very principles of competition. Neoliberalism invariably means there will be a few “winners” (1%) and a lot of “losers” (99%). It’s embedded in the very nature of such a competitive system that emphasises individualism, rather than collectivism, to create increasing inequality and poverty. 

It’s worth considering that people on low pay, or with part-time hours in work are also being sanctioned, if they claim “top up” benefits to supplement their exploitative rate of pay or poor and unstable work conditions. This fact is hardly a good advertisment for the government’s claim of “making work pay”, unless of course we refer back to the poor law reform “deterrence” of 1834. Apparently, making welfare sufficiently punitive to deter people from claiming it is how we make work pay, not by raising wages in line with the cost of living. Silly me. I mistook a propaganda soundbite at face value. It seems old ideolologies die hard, with a vengeance.

Apparently it’s an individual’s fault for not “progressing in work”. Nothing to do with increasingly precarious employment situations, executive decision-making, or a deregulated labor market, of course. 

In-work benefits have effectively subsidised employers’ wage costs. Yet low paid workers are being punished by the government for this state of affairs.

It’s not so long ago that we had a strong trade union movement that used collective bargaining as a method of improving wages and working conditions. But the free market ideologues don’t like trade unions, or welfare provision. They like a neat, tidy and very small, limited interventionist state. Or so they claim.

The paradox, of course, is that in order to reduce supportive provisions, and dismantle the welfare state in order to fulfil the terms and conditions of neoliberalism, the government has to implement strategies that ensure citizen compliance. Many of those strategies are increasingly authoritarian, rather than “non interventionist”, in nature.

It’s not the welfare state, but the state of welfare that is the pressing problem

Private companies have become more firmly embedded in the core concerns of all departments of government in designing and delivering on public and social policies, and policies have become increasingly detached from public need, and more directed at meeting private interests, largely involving making huge and private profits. The Conservatives don’t seem to consider that rogue private businesses like G4S, Atos, Maximus, A4E, and so on, are extensions of the state, fulfilling what are, after all, state-determined functions.

Of course this creates an imbalance between the role of the welfare state in aiding private capital and its role in maintaining and supporting labor, and fulfilling the basic needs of citizens. Corporate welfare underpins neoliberal economies, and it costs the public far more than reduced public provisions promises to save.

In January 2016, the National Audit Office (NAO) published its evaluation of the DWP’s health and disability assessment contracts. It said the cost of each Work Capability Assessment (WCA) had risen from £115 under Atos to £190 under Maximus. The report also states that only half of all the doctors and nurses hired by Maximus – the US outsourcing company brought in by the Department for Work and Pensions (DWP) to carry out the assessments – had even completed their training.

The NAO report summarised:

5.5
Million assessments completed in five years up to March 2015

65%
Estimated increase in cost per Employment and Support Allowance (ESA) assessment based on published information after transfer of the service in 2015 (from £115 to £190)


84%
Estimated increase in healthcare professionals across contracts from 2,200 in May 2015 to 4,050 November 2016

£1.6 billion
Estimated cost of contracted-out health and disability assessments over three years, 2015 to 2018

£0.4 billion
Latest expected reduction in annual disability benefit spending

13%
Proportion of ESA and Personal Independence Payment (PIP) targets met for assessment report quality meeting contractual standard (September 2014 to August 2015).

Before 2010, cuts to disability support were unthinkable. Now the Treasury regards our provision as their pocket money for tax cuts for the very wealthy

This summary reflects staggering economic incompetence, a flagrant, politically motivated waste of tax payers money and even worse, the higher spending has not created a competent or ethical assessment framework, nor is it improving the lives of sick and disabled people. Some people are dying after being wrongly assessed as “fit for work” and having their lifeline benefits brutally withdrawn. Maximus is certainly not helping the government to serve even the most basic needs of sick and disabled people.

However, Maximus, and other private companies involved in the delivery of welfare programmes are serving the needs of a “small state” doctrinaire neoliberal government, and making a massive profit in doing so. It would cost much less to simply pay people the support they were once simply entitled to. However, the Conservatives are systematically dismantling the UK’s social security system, not because there is an empirically justifiable reason or economic need to do so, but because the government has purely ideological, anticollectivist prescriptions. 

As well as the heavy cost of each assessment to the public purse, there is also the considerable cost of many tribunals, because of the many “wrong decisions”on the part of the Department for Work and Pensions. That’s despite the fact that the government introduced another layer of bureacracy in the form of “mandatory review” in order to deter appeals. People going through mandatory review for a decision to stop their ESA cannot claim ESA again until after mandatory review (if you need to appeal, you can claim ESA once you have the review decision), and so are forced to either try and claim Universal Credit, going 6 weeks at least without any support, or to wait out the Review outcome, which has no set time limit, but usually takes at least 6 weeks for the decision about the original decision. Which is usually the same decision as the original decision, due to outrageous targets that were revealed in the department’s response to a Freedom of Information request, that stated staff conducting mandatory reconsideration reviews were held to a “key performance indicator” that said “80 per cent of the original decisions are to be upheld”.

This is a government that claims social security is “unsustainable” and a “burden” on the public purse, yet has no problem with an extraordinary profligacy with public funds and dispossessing tax payers when it comes to implementing “cost-cutting” and draconian welfare “reforms.” Conservative anti-welfare dogma and traditional prejudices are costing the UK billions of pounds. 

The Tories are all about ideology and not facts. As two authors astutely noted recently, the government seems to be driven by an idea that creating the conditions of purgatory for those they consider “undeserving” will somehow cleanse, redeem and purify people into not being so sinfully poor.  So it’s not actually “welfare” any more, but rather, it’s a “correctional” institution, for coercing citizens into conformity, compliance and a class contingent meekness, with a liberal dash of the protestant work ethic in with the catholic inquisition flavoured ingredients in the mix. Yes, the nasty authoritarian Conservatives really do think like this.

Disability support is virtually impossible to access for many people that doctors consider severely disabled, and involves a measured and ritualised humiliation. The assessments are solely designed to look for “discrepancies” in people’s accounts of how their illness/disability impacts on your day to day living. In other words, it is aimed at looking for reasons, no matter how flimsy, to ensure that welfare support for disabled and ill people is pretty much unobtainable.

Those questions you are asked by the (inappropriately named) Health Care Professional (HCP) that seem like innocent conversation, such as “Do you watch TV? Do you like the Soaps?” translate onto a report that says “Can sit unaided for at least half an hour”. “Do you have a pet?”becomes “Can bend to feed cat/dog.” “Do you use the internet at all?” becomes “No evidence of focus or cognitive difficulties, adequate hand dexterity.”

If you wear any jewellry, that may be noted and used as evidence that you have dexterity in your hands, even if you have severe arthritis and can’t fasten your buttons or a zip,  you won’t be asked if you ever remove your locket/ring/earrings. It will be assumed that you do. It’s a kind of opportunism of neglect and assumption used by HCPs to justify refusing some elements of PIP, or all of your claim. Or it’s the difference between being placed in the ESA Support Group, being placed in the WRAG on the lower award, or simply being refused an award altogether, and told you are “fit for work”. 

If you are unfortunate enough to need a referral to a food bank, and you actually manage to get to the appointment,  because you are desperate, that may also be used as evidence that you can walk further than 200 or 500 metres, even if you can’t, and managed to get a lift there and back.

Challenging such ridiculous assumptions wears you down. It creates distress when someone acting as a gatekeeper to the support you need dismisses your medical reports and account with such disdain, just stopping short of calling you a liar. Challenging the reasons provided for the DWP refusing you a PIP or ESA award is tedious, very stressful and time consuming and tiring. I’m sure that if you manage to do so successfully, even the fact that you managed to collate evidence, ask you doctor for supportive evidence and so forth may be used as evidence that you can function too well to warrant any support. If you demonstrate any ingenuity in coping with your condition, you’ve basically had it.

Once upon a time, support for disabled people was designed to help us remain independent, and to enable us to participate in society. PIP is non means-tested and people can claim it (allegedly) whilst in work.

However, I worked for social services until I became too ill to work. I loved my job, and my salary was very good, too. It was a terribly dehumanising experience to have to face the fact I was no longer well enough and fit for my post. 7 years later, at my PIP assessment, it was decided that my previous job “proved” that I don’t currently have “any cognitive problems.”

That’s despite the assessor acknowledging  in the report I now even need an aid to remember to take my treatments and medications, and that during the appointment, I had to be reminded several times what I’d been asked, as I kept forgetting what I was supposed to be answering. I have systemic lupus erythematosus (SLE), and cognitive dysfunction is very commonly experienced  symptom of this illness

People have even been refused PIP at appeal because they “spend too much time on Facebook.” Too much for what, exactly? Last time I checked, there were no laws in place that meant sick and disabled citizens were prohibited from using social media. Since when did it become acceptable for government officials to endorse and promote the social exclusion of disabled people online? 

But apparently, contradictions and paradoxes are allowed if you happen to be the assessing HCP. The report said that I was “thin” abut “adequately nourished”. She didn’t check my vitamin and mineral levels at all. Nor did she ask me about what I ate and how often. She just said that the aids I have were “adequate” (a perch stool, easy to use tin opener and specially designed easy to use cutlery, which are not especially designed for disabled people, but are easier for me to use because of the handle design and the steak knives instead of standard ones.)

What’s the point of welfare “support” if so few people are able to access it, despite their obvious need?

The United Nations (UN) inquiry into the allegations many of us made regarding the systematic abuse of the human rights of disabled people in the UK has exposed the multiple injustices of targeted cuts and the disproportionate burden of austerity heaped on sick and disabled people, their carers and their families, evidencing and detailing the effects of a range of policy measures affecting them that have been introduced since 2010. These include the bedroom tax and cuts to disability benefits, funds to support independence and social care.

The report concludes that the overall effect of what is now an essentially punitive welfare regime, which has been based almost entirely on unevidenced political claims and assumptions, has had an extremely detrimental and regressive effect on the rights of disabled people, to live independently, to meet their basic needs, to seek and stay in work,  and to be able to live an ordinary life as citizens.

The UN report documented multiple violations of disabled people’s rights, including the way that they are politically portrayed as being lazy and a “burden on taxpayers”, the harm to health caused by unfair assessments, the cuts to legal aid and curtailed access to justice, the imposition of the bedroom tax and the ending of the Independent Living Fund.

I wrote a lengthy article about the unsurprising but nonetheless disquieting report findings and recommendations, as I read throughit at the time, here.

The government have of course indignantly refused to accept the findings of the UN, or accept the accounts of individuals and campaigners like me, disability groups and charities, and other organisations. That’s because the government prefer to cling relentlessly to free market dogma and their traditional prejudices rather than face empirical evidence, facts and truths.

The days of genuine support, to ensure disabled people can maintain dignity and independence, and to be socially, economically, politically and culturally included, are gone. PIP and ESA focus exclusively on what you can’t do: on “functionality”. If you walk your dog or take a holiday, this is taken to somehow indicate that you are not ill or disabled enough to need support. In fact the media turns you into some kind of nasty folk devil and state parasite for trying to live as normal life as possible. If the government and media had their way, we would be trapped indoors in abject misery, or institutionalised.

How dare we try to live an ordinary life.

The government have formulated draconian policies aimed particularly at disabled people. And unemployed people, low paid people, and young people. And migrants. And old people who, like many disabled people, have paid in contributions towards a welfare system, should they need it, but now they also have to work until they drop.

Hey, and you thought governments are elected to meet public needs and spend our money wisely? No, apparently we’re here to serve government needs, to behave exactly as the Conservatives think we should. 

Welfare as a deterrent to… well, welfare.

 

Image result for poverty welfare punishment

And social security has been redesigned to punish those citizens who have the misfortune to find themselves in poverty.

 


 

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“Gig economy” companies exploit workers and are free-riding on the welfare state

Image result for gig economy uk

Deliveroo couriers plan legal action against the food delivery firm to claim better employment rights including the minimum wage, sick pay and holiday.

The 20 delivery riders say they are employees and not, as the company argues, self-employed contractors. In the latest challenge to employment conditions in the gig economy, they are seeking compensation for not receiving holiday pay and for being paid wages below the legal minimum for employees.

The Deliveroo worker’s move follows successful employment tribunal cases brought by cycle couriers at CitySprint, Excel and drivers for taxi app Uber. All three cases found the riders were workers, meaning they are entitled to basic employment rights including holiday pay and the minimum wage, rather than self-employed contractors with no employment rights. 

Uber claimed that its 40,000 drivers in the UK are self-employed, and therefore not entitled to pensions, holiday pay, or other basic employment rights. An employment tribunal in London disagreed, calling Uber’s argument that it was simply a technology company “ridiculous”, and they were relying on “fictions and twisted arguments.”

HMRC is investigating delivery giant Hermes for paying workers less than the minimum wage. Staff receive no holiday or sick pay, and risk losing work if they can’t make their rounds due to illness or lack of childcare.

Some 78 couriers working for Hermes, a company that describes itself as “the UK’s largest nationwide network of self employed couriers”, have subsequently made complaints to Frank Field, the chairman of the House of Commons work and pensions select committee.

It is estimated that falsely classifying workers as self-employed is costing the UK up to £314m per year in lost tax and national insurance contributions. 

A recent study has found that the average self-employed contractor is now paid less than in 1995

The Resolution Foundation – a think tank that aims to improve pay for families – partly has blamed the changing nature of the self-employed workforce. Their report says: “With the introduction and growth of the [so-called] New Living Wage, by 2020 more than 1 in 7 are expected to be paid at or only just above the legal minimum. This increases the need for employers and government to provide personal progression opportunities to get people beyond the wage floor.”

Currently, the government expects individuals to make in-work progression without support, or face financial penalties (sanctions) to their top up Universal Credit. This draconian approach forces unreasonable responsibility onto individuals and their familes, because the problem of low pay is one of exploitative employers and government policy rather than of individual behaviour.

Employers are responsible for setting pay levels and terms. The problem is more broadly one of the key features of neoliberalism, which has led to increasing employment precarity, characterised by insecure, exploitative forms of work. Meanwhile, the organisation of labour and collective bargaining by trade unions are being portrayed as “market distortions” by a government (and a party) that has legislated mercilessly to undermine the basic rights and fair levels of pay for employees.

The Labour party have pledged to reverse the Conservative’s anti-union laws if they are elected June.

The political logrolling of the profit incentive presents us with the most unedifying and hard face of neoliberalism, in which human need is profoundly devalued; the employee is merely availed of as an object of value extraction. The Conservatives certainly don’t value the idea of “a fair day’s wage for a fair day’s work”, despite all their rhetoric about “making work pay”. Over the past six years, we learned that this slogan was only a semantic decoy: a cover for the dismantling of our welfare state by a creeping, unremitting stealth.

The report went on to say that many more people had taken up lower-paid jobs in the so-called “gig economy, essentially self-employed workers taking on a variety of different roles, while the proportion of self-employed business owners with their own staff had fallen. The number of hours worked by the self-employed had also declined.

The foundation said this had limited wage growth before the financial crash, but that pay had been “squeezed” in real terms more recently, falling £100 a week by 2013-14.

Last year, TUC general secretary Frances O’Grady said: “Britain’s new generation of self-employed workers are not all the budding entrepreneurs ministers like to talk about.

“While some choose self-employment, many are forced into it because there is no alternative work. Self-employment today too often means low pay and fewer rights at work.”

The Resolution Foundation’s most recent briefing looks at the final quarter of labour market data for 2016. It says: “Most importantly, inflation has risen rapidly in recent months, weighing heavily on real pay growth – though published pay statistics will take some time to fully reflect this. Well over a third of the workforce are experiencing shrinking pay packets according to the latest figures, in sectors ranging from accommodation to finance and the public sector. Many more will join them in the coming months as inflation continues to rise, with pay across the economy as a whole set to have fallen in the first three months of 2017.

Indeed, our ‘Spotlight’ article notes that real pay in the public sector has likely now begun a fall that could well last for several years. Conversely, private sector pay growth will continue to outpace the headline average earnings figures.”

A Department for Business spokesperson said the government was “committed to building an economy that works for everyone”.

Last year, Damian Green said, in a speech at the Resolution Foundation, that the private sector and voluntary sector “should be more involved in the provision of welfare services”. Green’s endorsement of the “exciting” gig economy and the “huge potential” that it offered came just the month after an employment tribunal found that drivers for the Uber car service should in fact get the minimum wage and paid holiday. 

Green also said: “The Government is a necessary, but not sufficient provider of welfare.” 

Shadow Digital Economy minister Louise Haigh tabled an amendment to the Government’s Digital Economy Bill, New Clause 24, following the tribunal ruling against Uber. 

She said there was still a danger that despite the ruling, Silicon Valley multinationals and other employers could use “loopholes” to break the rules and get around workers’ protections. 

Haigh said: “This is a landmark ruling for workers in the digital economy, and a great victory for the GMB and its members.

“The digital economy was supposed to promise choice and flexibility, but the reality for too many in the sector is that they are overworked, underpaid and exploited by bosses they never meet and who do not even fulfil their basic duties as an employer.

The Work and Pensions Committee report

In a new report the Work and Pensions Committee also concluded that the government must close the loopholes that are currently allowing “bogus” self-employment practices, which are potentially creating an extra burden on the welfare state while simultaneously reducing the tax contributions that sustain it. Increasingly, some companies are using self-employed workforces as cheap labour, excusing themselves from both responsibilities towards their workers and from substantial National Insurance liabilities, pension auto-enrolment responsibilities and the Apprenticeship Levy. 

In an inquiry that has had to be curtailed because of the election, the Committee heard from “gig economy” companies like Uber, Amazon, Hermes and Deliveroo, and from drivers who work with them. The evidence taken painted starkly contrasting pictures of the effect and impact of “self-employment” by these companies.

Companies utlilising self-employed workforces frequently promote the idea that flexible employment is contingent on self-employed status, but the Committee says this is a fiction.

The report

The Committee says:

  • The apparent freedom companies enjoy to deny workers the rights that come with “employee” or “worker” status fails to protect workers from exploitation and poor working conditions. It also leads to substantial tax losses to the public purse, and potentially places increased strain on the welfare state.
  • Designating workers as self-employed because their contract offers none of the benefits of employment puts the cart before horse. It is clear, though, that this logic has taken hold, enabling companies to propagate a myth of self-employment. This myth frequently fails to stand up in court, but individuals face huge risks in challenging their employment status that way.
  • Where there are tax advantages to both workers and businesses in opting for a self-employed contractor arrangement, there is little to stand in the way.
  • An assumption of the employment status of “worker” by default, rather than “self-employed” by default, would protect both those workers and the public purse. It would put the onus on companies to provide basic safety net standards of rights and benefits to their workers, and make the requisite contributions to the social safety net. Companies wishing to deviate from this model would need to present the case for doing so, shifting the burden of proof of employment status onto the better resourced company. 
  • Self-employed people and employees receive almost equal access to all of the services funded by National Insurance, especially with the introduction of the new state Pension, yet the self-employed contribute far less. The incoming government should set out a roadmap for equalising employee and self-employed National Insurance Contributions.
  • The Department for Work and Pensions (DWP) needs to ensure that its programmes and resources reflect the positive contribution that self-employment can make to society and the economy. This may require an expansion of specialist support in JobCentre Plus.
  • The DWP is seeking to support entrepreneurship without subsidising unprofitable self-employment. The existing Minimum Income Floor (MIF) in Universal Credit (UC) does not get this balance right and risks stifling viable new businesses. The incoming Government should urgently review the MIF with a view to improving its sensitivity to the realities of self-employment. Until this is complete, the MIF should not apply to self-employed UC claimants.

Chair’s comments

Frank Field MP, Chair of the Committee, said;

“Companies in the gig economy are free-riding on the welfare state, avoiding all their responsibilities to profit from this bogus “self-employed” designation while ordinary tax-payers pick up the tab. This inquiry has convinced me of the need to offer “worker” status to the drivers who work with those companies as the default option. This status would be a much fairer reflection of the work they undertake which seems to fall between what most of us would think of as “self-employed” or “employed”. 

It would also protect them from some of the appalling practices that have been reported to the Committee in this inquiry. Uber’s recent announcement that it will soon charge its drivers for sickness cover is just another way of pushing costs onto the workforce, to reinforce the impression that those workers are self-employed.

Self-employment can be genuinely flexible and rewarding for many, but “workers” and “employees” can and do work flexibly. Flexibility is not the preserve of poorly paid, unstable contractors, nor does the brand of “flexibility” on offer from these gig economy companies seem reciprocal. It is clearly profit and profit only that is the motive for designating workers as self-employed. The companies get all the benefits, while workers take on all the risks and the state will be expected to pick up the tab, with little contribution from the companies involved.

It is up to Government to close the loopholes that are currently being exploited by these companies, as part of a necessary and wide ranging reform to the regulation of corporate behaviour.”

Uber


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