Tag: tax credits

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

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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single mum receiving tax credits was told she was married to a dead pensioner, after having her child tax credit withdrawn.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of the house that she had lived alone in for two and a half years with her son, after her child tax credit was also withdrawn.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


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The Resolution Foundation’s review of the Conservative’s “Living Wage”

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The Conservatives’ summer budget saw a new national minimum wage set. However, it has been  re-branded as a “national living wage” as the Conservatives claim that it should be what people need to live on. Employers will no longer be allowed to pay the £6.70-an-hour rate, but will have to pay the new “national living wage” of £7.20 an hour to people over the age of 25. Call me a cynic, but the psychosemantic re-branding of a minimum wage increase of less than a pound an hour is a diversion because the government intend to stop subsidising low wages through tax credits. 

Increasing the minimum wage is simply not adequate to reduce poverty. Forty per cent of individuals earning between the minimum wage and the actual amount that would be the Living Wage campaigners want, are in households in the top half of the income distribution. They aren’t poor. Tax credits on the other hand are much more highly targeted at those in need of support. Whilst the public understand what the minimum wage was about, renaming this new policy the “National Living Wage” will inevitably create confusion, as many will incorrectly assume that the government are targeting the same rate as that advocated by the Living Wage campaign – a figure based on estimates in line with the cost of living. They aren’t.

The Living Wage Foundation say:

  • The current UK Living Wage ought to be £8.25 an hour
  • The current London Living Wage ought to be £9.40 an hour

However, the Resolution Foundation have issued a press release that says the Prime Minister should allow the in-built flexibility of the “national living wage” to “take its course.”

Conor D’Arcy, Policy Analyst at the Resolution Foundation, said: “Some businesses are unhappy about a higher minimum wage, particularly amid the post-referendum uncertainty. But backsliding on the government commitment is unnecessary given the in-built flexibility of the policy to adjust to changing economic circumstances. It would also be costly for millions of low paid workers, so the Prime Minister should stick to her guns.”

Backsliding on the so-called “National Living Wage” (NLW) could leave some full-time workers up to £1,000 a year worse off by 2020 – with women, the young and older workers most likely to lose out – according to the new analysis published yesterday (Wednesday) by the Resolution Foundation.

Earlier this year, the introduction of the NLW delivered an average 7.5 per cent pay rise to around 4.5 million workers aged 25 and over. Low-paid workers are set for another four years of above average pay rises as it approaches its target ‘bite’ of being worth 60 per cent of typical hourly pay by 2020.

More recently, May has put tackling squeezed living standards at the centre of her new government. However, some business organisations have called on the government to water down its plans following the EU referendum. In a letter to the Business Secretary Greg Clark, 16 trade associations called on government to “exercise caution” in light of “the economic uncertainties the country faces”.

Such calls are understandable given the challenge of a higher wage floor for some businesses. However the Foundation says that the in-built flexibility of the NLW – which automatically adjusts to economic shifts by being pegged to typical hourly pay, rather than the £9 cash figure that many people associate the policy with – means that there is no need to water down the policy.

The Foundation’s analysis, based on the latest summary of independent economic forecasts published by the Treasury, shows that the NLW is currently on track to rise to around £8.70 in 2020. That’s lower than the £9 forecast in the March 2016 Budget, due to expectations of weaker wage growth. The Foundation notes that the projected figure for 2020 is likely to rise and fall in coming years as wage forecasts are updated and the actual impact of implementing Brexit becomes clear.

The Foundation says the Prime Minister should therefore stick to her guns and press on with implementing a policy that will deliver a pay rise for six million workers – and support her vision for an economy that works for everyone, not just the privileged few.‎

Torsten Bell, Director of the Resolution Foundation, said:

“Theresa May is right to stick to her guns on the National Living Wage. Britain has a serious low pay problem and now of all times is not the moment to put off dealing with it.”

The Foundation adds that sticking to the current policy is very different to pursuing a cash target of £9 or higher in the face of weaker overall wage growth. That approach, which some advocate‎, could jeopardise the success of the NLW.

Ahead of a crucial meeting of the Low Pay Commission in October to decide their recommendation for next April’s NLW rate, the analysis shows that should the government scale back its ambition over the next four years – for example by raising the NLW at a similar pace to the recent minimum wage increases applied after the 2008 financial crisis – its value would fall by around 55p per hour in 2020. This would lower the annual pay of a full-time worker on the NLW by around £1,000, relative to current plans. Should the current ‘bite’ of the NLW be maintained, rather than increased to 60 per cent by 2020, the annual pay would be reduced by £1,500.

Around one in five women and one in five workers aged 26-30 would lose out from any backsliding on the National Living Wage, as would over a quarter of workers aged 66 and over.

The Foundation says that the main focus for the government should now be on implementation. To do this, it is calling for the government’s upcoming industrial strategy and productivity plan to include a focus on the often unheralded low-paying sectors of the economy, and not just on areas like digital and high-value manufacturing. This will help employers handle the higher labour costs brought about by the NLW.

The analysis is part of the Foundation’s upcoming report Low Pay Britain 2016, which will be published later this month.

Conor D’Arcy, Policy Analyst at the Resolution Foundation, said:

“The National Living Wage is a hugely popular policy that is set to deliver a pay rise to six million of Britain’s lowest paid workers and play a pivotal role in the Prime Minister’s vision for an economy that works for everyone, not just the privileged few.

“Understandably some businesses are unhappy about a higher minimum wage, particularly amid the post-referendum uncertainty. But backsliding on the government commitment is unnecessary given the in-built flexibility of the policy to adjust to changing economic circumstances. It would also be costly for millions of low paid workers, so the Prime Minister should stick to her guns.

“The government’s attention should instead turn to the huge task of implementation. This should ensuring that its upcoming industrial strategy includes the less glamorous but hugely important sectors like retail and hospitality, which are at the coalface of Britain’s huge low pay challenge.”

Review recommendations

  • While the National Living Wage is a welcome boost to low earners, the Living Wage with its genuine link to an acceptable cost of living, remains as vital as ever.
  • But as we have made clear, improvements are possible in both methods and seeking alignment will inevitably lead to change. We believe the recommendations we have outlined in this review represent a genuine improvement over the current methods. The aligned method should be more representative, more robust and, most importantly, driven to a greater extent by changes in the cost of living.
  • Inevitably, calculating a Living Wage requires judgement calls. Policy changes like the introduction of Universal Credit would always have required judgements on how the new system is phased into the rate. Having a body like the Living Wage Commission to make such decisions when required in future can only be an asset to the Living Wage campaign as it moves forward.
  • The natural question which follows these recommendations is what impact is likely on the rates themselves. However, the next steps are for the Living Wage Commission to consider our recommendations. The options they choose will determine the extent to which the rates vary from their current levels.
  • Broadly speaking however, the aligned method we have recommended is likely to have an upward effect on the London Living Wage. We consider this to be an unavoidable consequence of a Living Wage rooted in an up-to-date basket of goods with a more diverse mix of family types. There is a clear discrepancy in the target income between London and the rest of the UK, and as highlighted by recent analysis on the size of London salary weightings[1] the differential between rates should be larger than at present. The exact size of the increase will depend on the Living Wage Commission and Mayor’s response to our review. They also have a role in setting out a how to implement and transition to the new rates in London and the rest of the UK.
  • The Living Wage Commission is expected to respond to our review in September 2016. With a strong, aligned methodology and an enhanced governance structure, we see no reason why the Living Wage cannot continue to raise the wages of workers across the UK, delivering more families an acceptable standard of living.

Notes 

  • The ‘bite’ of the National Living Wage – its value relative to typical hourly pay – is set to increase by 4.3 percentage points over the next four years. The ‘bite’ of the National Minimum Wage (NMW) increased 1.7 percentage points in the four years following the financial crisis. Should the NLW instead follow this path, rather than the one currently set out, its value in 2020 would fall to £8.17 an hour. That’s 55p an hour less than the latest economic forecasts imply, equivalent to £1,075 to a full-time worker on the NLW.
  • The Resolution Foundation forecasts that by 2020 around 12 per cent of workers will be earning the National Living Wage, including 19 per cent of women, 19 per cent of 26-30 year olds and 26 per cent of workers aged 66+. 

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UN to question the Conservatives about the two-child restriction on tax credits

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The government’s decision to limit child tax credits to two children only per family, unless a further child is the result of rape, has been referred to a United Nations human rights panel. 

The government has made an exception to the tax credit limit for children conceived through rape – though what policies will be put in place to process this exemption have yet to be specified.

A formal complaint by the Scottish National Party MP Alison Thewliss to the UN will be examined by its official committee on the rights of the child, before hearings on the impact of the Conservative’s welfare “reforms” next week. A UK government delegation will have to explain how the “reforms” conform to the UN obligations on child poverty. 

The UN has asked the UK government to provide evidence on whether ministers had carried out an impact assessment into how the welfare cuts including the implementation of the benefits cap “and other benefits cuts” would affect children.

In a letter to Alison Thewliss, the UN said it had also asked for information on “the measures being taken to mitigate negative impact of this reform on the enjoyment of the rights of children, particularly those in vulnerable situations”.

The UN committee is expected to deliver its final recommendations to the UK government in early June.

Alison Thewliss.
                                                                   Alison Thewliss.

Thewliss, who held a meeting with the welfare reform minister Lord Freud earlier this week, described the rape clause as “medieval”. She said it “stigmatises mother and child, and risks discriminating against those who may for religious or traditional reasons have larger families.”

Eugenics by stealth

Last year I wrote about the government plans to restrict child tax credit payments to two children in families, with the stated intention of directing behavioural change, so that poor families wouldn’t have more children that they “can afford.” This assumes, of course that family situations remain static, and that people don’t experience downward mobility because of job market insecurity, accident or ill health. The Conservatives had announced plans to cut welfare payments for larger families at that time. Whilst this might not go quite as far as imposing limits on the birth of children for poor people, it does effectively amount to a two-child policy.

A two-child policy is defined as a government-imposed limit of two children allowed per family or the payment of government subsidies only to the first two children. 

The restriction in support for children of larger families significantly impacts on the autonomy of families, and their freedom to make decisions about their family life. Benefit rules purposefully aimed at reducing family size rarely come without repercussions.

It’s worth remembering that David Cameron ruled out cuts to tax credits before the election when asked during interviews. Tax credit rates weren’t actually cut in the recent Budget – although they were frozen and so will likely lose some of their value over the next four years because of inflation.

Some elements were scrapped, and of course some entitlements were restricted. But either way a pre-election promise not to cut child tax credits sits very uneasily with what was announced in the budget.

Iain Duncan Smith said last year that limiting child benefit to the first two children in a family is “well worth considering” and “could save a significant amount of money.” The idea was being examined by the Conservatives, despite previously being vetoed by Downing Street because of fears that it could alienate parents. Asked about the idea on the BBC’s Sunday Politics programme, Duncan Smith said:

“I think it’s well worth looking at,” he said. “It’s something if we decide to do it we’ll announce out. But it does save significant money and also it helps behavioural change.”

Firstly, this is a clear indication of the Tories’ underpinning eugenicist designs – exercising control over the reproduction of the poor, albeit by stealth. It also reflects the underpinning belief that poverty somehow arises because of faulty individual choices, rather than faulty political decision-making and ideologically driven socioeconomic policies.

Such policies are not only very regressive, they are offensive, undermining human dignity by treating children as a commodity – something that people can be incentivised to do without.

Moreover, a policy aimed at restricting support available for families where parents are either unemployed or in low paid work is effectively a class-contingent policy.

The tax child credit policy of restricting support to two children seems to be premised on the assumption that it’s the same “faulty” families claiming benefits year in and year out. However, extensive research indicates that people move in and out of poverty – indicating that the causes of poverty are structural rather than arising because of individual psychological or cognitive deficits.

The Joseph Rowntree Foundation published a study that debunked  the notion of a “culture of worklessness” in 2012.  I’ve argued with others more recently that there are methodological weaknesses underlying the Conservative’s regressive positivist/behaviourist theories, especially a failure to scientifically test the permanence or otherwise of an underclass status, and a failure to distinguish between the impact of “personal inadequacy” and socioeconomic misfortune.

Limiting financial support to two children may also have consequences regarding the number of abortions. Abortion should never be an outcome of reductive state policy. By limiting choices available to people already in situations of limited choice – either an increase of poverty for existing children or an abortion, then women may feel they have no choice but to opt for the latter. That is not a free choice, because the state is inflicting a punishment by withdrawing support for those choosing to have more than two children, which will have negative repercussions for all family members.

Many households now consist of step-parents, forming reconstituted or blended families. The welfare system recognises this as assessment of household income rather than people’s marital status is used to inform benefit decisions. The imposition of a two-child policy has implications for the future of such types of reconstituted family arrangements.

If one or both adults have two children already, how can it be decided which two children would be eligible for child tax credits?  It’s unfair and cruel to punish families and children by withholding support just because those children have been born or because of when they were born. Or because of the circumstances of their birth.

And how will residency be decided in the event of parental separation or divorce – by financial considerations rather than the best interests of the child? That flies in the face of our legal framework which is founded on the principle of paramountcy of the needs of the child. I have a background in social work, and I know from experience that it’s often the case that children are not better off residing with the wealthier parent, nor do they always wish to.

Restriction on welfare support for children will directly or indirectly restrict women’s autonomy over their reproduction. It allows the wealthiest minority to continue having babies as they wish, whilst aiming to curtail the poor by disincentivisingbreeding” of the “underclass.” It also imposes a particular model of family life on the rest of the population. Ultimately, this will distort the structure and composition of the population, and it openly discriminates against the children of large families.

Article 25 of the Universal Declaration of Human Rights, of which the UK is a signatory, reads:

  1. Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
  2.  Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

The United Nation’s Convention on the Rights of the Child (UNCRC) applies to all children and young people aged 17 and under. The convention is separated into 54 articles: most give children social, economic, cultural or civil and political rights, while others set out how governments must publicise or implement the convention.

The UK ratified the Convention on the Rights of the Child (UNCRC) on 16 December 1991. That means the State Party (England, Scotland, Wales and Northern Ireland) now has to make sure that every child benefits from all of the rights in the treaty. The treaty means that every child in the UK has been entitled to over 40 specific rights. These include:

Article 6

1. States Parties recognize that every child has the inherent right to life.

2. States Parties shall ensure to the maximum extent possible the survival and development of the child.

Article 26

1. States Parties shall recognize for every child the right to benefit from social security, including social insurance, and shall take the necessary measures to achieve the full realization of this right in accordance with their national law.

There are other relevant Convention Articles here, which the Conservative’s two-child policy also potentially compromises or violates.

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Why I strongly support Trade Unionism

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Trade Unions are fundamental to a functional democracy. Research shows that Trade Unionism is linked with higher levels of social equality and better public services, as well as better working conditions and rates of pay that ensure people have a decent standard of living. The Conservatives have always hated Trade Unions because Tory governments tend to value, perpetuate and endorse inequality and poor pay. We currently have the highest levels of social inequality in the EU, and it’s even greater than in the USA. We also have the biggest wage drop, pay hasn’t fallen this much since the 1800s. Tories like cheap labor, and profit for big business

That isn’t in ordinary people’s best interests. The largest study of UK deprivation shows that full-time work is no longer a safeguard against poverty. Yet Conservatives claim to be the party for “hard-working people.”

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In a democratic society, governments don’t attempt to oppress opposition by using partisan policies to restrict their funding in order to turn a first world nation into a one party state. This government has established quite an impressive track record of punishing its critics to silence them. The proposed abolition of the Lords’ right to vote on or veto secondary legislation, delivered by the Strathclyde Review, but written in the rancorous and authoritarian hand of David Cameron, is another measure of draconian decision-making to stifle dissent, a tactic commonly deployed, it seems, when the Conservatives are faced with challenges and the prospect of not getting their own way, regardless of how unpopular and unreasonable their own way is.

Cameron’s rancour arose following the defeat in the House of Lords of a sneaky legslation in the form of a Statutory Instument that would have removed in work support for workers on low pay – tax credits. The defeat and ensuing publicity of the Lords debate and the exposure of an underhand legislative move forced the government to back down. But the shadow secretary for Work and Pensions, Owen Smith, has pointed out that cuts to benefit in-work entitlements being introduced through Universal Credit mean that the controversial tax credit reductions have been simply been “rebranded” by the government rather than reversed.

Secondary legislation is unamendable and is allocated 90 minutes debate in the Commons at best, by the Conservatives. Secondary legislation in the form of Statutory Instruments was only ever intended for non-controversial and small tidying up legislative measures. A Tory aide admitted that the Government are trying to get as much unpopular legislation in through the secondary route as possible. But this has been very evident anyway. The government is intent on dismantling any inconvenient piece of the constitution.

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Then there are the electoral reforms and proposed constituency boundary changes which are aimed at decreasing opposition votes and increasing Conservative seats. These are all examples of a very worrying authoritarian approach that the Conservatives have adopted to stifle challenges and concerns regarding the ideological basis and the impact of their policies without any democratic dialogue whatsoever.

Trade union funding is the cleanest money in politics: it comes from you and me, and therefore will ensure our interests are reflected in policy-making, rather than just those of big business tax-avoiding Tory donors.

It’s very worrying that vulture capitalists like Adrian Beecroft, a longstanding Conservative donor, has been permitted to re-write our employment laws as part of the government’s wider “labor market “reform.” Amongst Beecroft’s known personal investments are Gnodal, a computer networking company, and Wonga.com, an eye-wateringly high interest, opportunist loan company, that commodifies the poorest people with low credit ratings for massive profits. Beecroft has donated more than £500,000 to the Conservative Party since 2006.

The Beecroft Report caused considerable controversy because it recommended that the government should cut “red tape” in order to make the hiring and firing of employees much easier. In the report, Beecroft claimed this would help to “boost the economy” although no evidence for this was provided. It was alleged that significant sections of the report had been doctored. It was also reported that some recommendations had been removed from the original draft of the report.

The (then) Secretary of State for Business, Vince Cable, condemned the report, saying it was unnecessary for the government to scare workers. Beecroft responded by accusing Cable of being “a socialist who does little to help business” and cited his own personal experience of “having to pay out” £150,000 for unfairly dismissing an HR employee as one of the reasons he included the idea in the report. In an excellent article, James Moore, writing for the Independent, said that the Beecroft report contained “the seeds of the ruthless social Darwinism” and he connected the recommendation to Beecroft’s career of cutting jobs, and highlighted Beecroft’s long history of “wholesale attacks on workers’ terms and conditions.”

In a society that puts profit before people; where employees are regarded as a disposable cost and not an asset to employers; where noone but the powerful have rights; where wages are kept to the bare minimum, there can be no economic growth. Instead we are witnessing increasing economic enclosure and widespread exclusion – small pockets of privilege characterised by stagnant, accumulated wealth and increasingly widespread poverty elsewhere. With little public spending to stimulate small business and general growth, there can be no economic security.

All Conservative politics pivot on a fundamental commitment – the defence of privilege, status, and thus sustaining social inequality. But it is only by shifting money from the high-hoarding rich to the high-spending rest of us, and not the other way around, that investment and growth may be stimulated and sustainable.

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Despite their recent rhetoric, the Conservatives are not and never have been the “party for workers.” New measures under Universal Credit 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.

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.

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. That isn’t a coincidence. It’s an intended consequence of Conservative policy.

The Conservatives talk a lot about the need for citizen responsibility, but seem to have exempted themselves. They also seem to have forgotten that responsibities are generally balanced with citizen rights. The right to withdraw labour as a last resort in industrial disputes is fundamental to free societies, as the European Convention on Human Rights recognises.

Not that this government concerns itself with international human rights laws. We are currently the first country to face a UN inquiry into serious disability rights violations. Conservative policies are also in breach of the human rights of children and women. Conservatives operate from within a non-cooperative, competitive individualist, relatively non-altruistic framework . Their anti-humanist, social Darwinist, anti-welfare policies reflect this. 

The government’s proposed changes to Trade Union laws are a major attack on civil liberties. The Conservative’s proposals have been criticised by Liberty, Amnesty International and the British Institute of Human Rights, amongst others. The three organisations issued this joint statement:

“By placing more legal hurdles in the way of unions organising strike action, the Trade Union Bill will undermine ordinary people’s ability to organise together to protect their jobs, livelihoods and the quality of their working lives.

“It is hard to see the aim of this bill as anything but seeking to undermine the rights of all working people. We owe so many of our employment protections to trade unions and we join them in opposing this bill.”

Trade unionists are at the forefront of the struggle for human rights; they are committed to social justice and international solidarity, and typically have strong community roots. These values make them prime targets of this government’s repression. 

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“I oppose the government’s Trade Union Bill and I will stand up for rights and freedom at work.” Sign the petition here.

Frank Field’s New Report: Fixing Broken Britain?

 

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.

The Prime Minister is negotiating far-reaching welfare reform with the EU

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The BBC report that the prime minister has made welfare reform one of his key European Union (EU) demands. The current EU legal restrictions preventing EU citizens from being discriminated against have led to government ministers increasingly focusing on ideas that would also prevent thousands of UK citizens from getting in-work benefits.

Ministers have said that an EU treaty change will be required to make any major welfare changes.

The legal barriers to direct discrimination within the treaty have meant that ministers are focusing on finding welfare savings that are based on indirect discrimination – these are options that disproportionately affect EU migrants but would also impact on UK citizens.

One proposal under consideration would mean that all claimants will be denied in-work benefits unless they have received unemployment benefit in the previous year. The proposal could see someone who has worked for many years failing to qualify for support if their income fell because, for example, their employer cut their hours.

Whitehall officials have told the BBC that people claiming some in-work benefits may be better off giving up their job temporarily as a consequence of the government’s EU negotiations.

David Cameron has insisted that he has a mandate to pursue such EU reform following the Conservatives’ general election victory.

He wants to renegotiate the terms of the UK’s membership ahead of an in/out referendum by the end of 2017. He has said that he will campaign for Britain to remain in the EU only if he gets the reforms that he wants.

However, Cameron has said he would “not give a running commentary” on the negotiations.

A document seen by BBC News in the summer from government lawyers to ministers indicated legal problems with current government proposals, it said: “imposing additional requirements on EU workers that do not apply to a member state’s own workers constitutes direct discrimination which is prohibited under current EU law.”

The legal opinion came several months after a speech by David Cameron last November in which he first announced his intention to stop EU migrants from claiming in-work benefits – housing benefit and working tax credits – for four years. However,  a four-year residency test for all benefit claimants has now been fully costed and is being considered by Treasury officials.

It would also mean that UK residents, even if they had lived in the UK all of their lives, would be ineligible for in-work benefits for four years from their 18th birthday.

A third suggestion has been proposed by Oliver Letwin, the former policy minister who now oversees the cabinet office. Letwin has proposed that in-work benefits should be denied to people who had not paid enough National Insurance contributions for three years.

This proposal was seen as being problematic however, said one official, as it would change the nature of Universal Credit and may conversely make EU migrants eligible for out-of-work benefits.

The prime minister remains insistent about pushing for welfare reform in his EU negotiations, despite officials believing the changes already introduced have tightened the system considerably.

“New EU migrants now face one of the toughest in-work benefit systems in Europe when they come here,” said one official.

“We have made benefit tourism a thing of the past.”

BBC News said that Whitehall officials told them they were not fully consulted about the legality of the proposals prior to Cameron’s speech in November.

However, it’s not just the legality of the proposals that are problematic: some officials have said that the politics of them are, too. Conservative  ministers are wary as these options will affect tens of thousands of British people and could undermine one of the government’s central messages, that people should always be better off in work.

Nigel Farage said that the prime minister’s renegotiation strategy was unravelling. Speaking on the Radio 4 Today programme, he said: “Even the one area where he was going to go to the European Council and try to get a rule change, actually we’ve surrendered already by saying we will change the British social security system.” 

“So young couples in this country, aged 21, who work and have got children, will, if this goes ahead, be better off not working than being in work. I think it’s appalling.”

The EU welfare proposals follow on from the recent controversial proposed cuts to tax credits, which were widely criticised by both Conservatives and the opposition, partly because they undermine the work ethic that the Tories value so much. Last month, Paul Johnson, the director of the Institute for Fiscal Studies, has said it was “arithmetically impossible” for the increase in the minimum wage to compensate for the loss in tax credits. In the post-budget briefing, the IFS said 13 million families would lose an average of £240 a year, while 3 million families would lose over £1,000 a year.

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

Conservatives in disarray as Osborne signals raid on Duncan Smith’s Universal Credit funds

Chancellor George Osborne

George Osborne and Iain Duncan Smith have clashed over the chancellor’s plans to soften the impact of tax credit cuts by raiding the budget for Universal Credit.

The Centre for Social Justice (CSJ), which was founded by Iain Duncan Smith, insists that the Chancellor could use this month’s Autumn Statement to ease the impact of the controversial changes without risking his drive for a budget surplus.

In a critical report, the thinktank warned against taking money from Duncan Smith’s flagship Universal Credit scheme to sweeten the tax credit pill. Duncan Smith said that he’s concerned that the raid will serve to “undermine people’s incentive to work.”

The CSJ said in their report that the UC reforms meant by 2020 only 9% of those currently getting tax credits would still be receiving them.

Instead, it was suggested that the Government could “help people to work more hours” or introduce a transitional fund for those hardest hit.

But Osborne is nonetheless preparing to fund plans to soften the impact of tax credit cuts by making people claiming Universal Credit forgo as much as 75p of every extra pound they earn. At present Universal Credit recipients lose 65p for every extra pound they earn. Osborne is thought to be examining plans to increase the figure, known as the “taper”, to 75p.

The most expensive course of action would be to only impose the tax credit cuts on new claimants – but the authors note that it would have the “least social and political cost”.

The chief executive of the Centre for Social Justice, Baroness Stroud, who is a former special adviser to the Work and Pensions Secretary said:

“There are no easy choices, but these are the options the Chancellor has. What he should not do is raid Universal Credit to pay for any transitional changes or he will be recreating the same problem there.

“The projected savings through changes to tax credits is £4.4 billion, the Government plans to turn a surplus of £10 billion in 2019-20 and of 11.6 billion in 2020-21.

“Why have a surplus if we can’t protect those on the lowest pay, doing the right thing by taking work?

“The Chancellor can protect these workers and have a surplus by 2020.

“This Government is set to achieve its historic aim to make sure work always pays more than welfare, we shouldn’t put that at risk.”

Paul Johnson, the Director of the respected Institute for Fiscal Studies, questioned whether the move would raise enough to limit the impact of tax credits. He said: “If you are also increasing the taper rate then you are losing quite a lot of the key design of Universal Credit.”

Both the Treasury and the Deparment for Work and Pensions have declined to comment, but Conservative Tim Montgomerie, a columnist for The Times and founder of the Conservative Home website, said he believed George Osborne “could be forced to resign” over his tax credit omnishambles, and he warned that the chancellor faces a “massive rebellion” from his own party because the policy  is “terrible politics”.

“You cannot fight an election saying you are standing up for hard-working families then you cut benefits for hard-working families,” he said.

Perhaps it is time for the Conservatives to recognise that policies are not an ideological tool designed to ensure the government gets its own way in exercising traditional Tory prejudices towards the working and non-working poor.

However, in fairness there has been a series of right-wing backbenchers that have aired their disquiet at the cuts, although that unease may have be motivated by a pragmatic rather than an any ethical objection. The proposed tax credit cuts do make a mockery of the Tory claims to ensuring that “work always pays,”and presents the public with an incoherent narrative that has now lost any credibilty.

Montgomerie said:

“I don’t think George Osborne will tweak,” he said. “If he does just try to get away with this, he will not just be defeated in the Lords, he will be defeated in the Commons.”

539627_450600381676162_486601053_n (2)Courtesy of Robert Livingstone

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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.