Being on benefit: an abusive relationship with the state ?
Kevin Higgins, Head of Policy at Advice NI on the past, present and future of social security in the UK.
The period 2010 – 2020 may well go down in history as a watershed, with the financial and economic crisis morphing into prolonged austerity which manifested itself primarily in cuts to working-age benefits and cuts to spending on public services. According to the Institute for Fiscal Studies “The key backdrop to all fiscal events in the UK since the financial crisis has been the weak performance of the economy … this weak growth has had severe implications for both household incomes and the public finances.”
It is estimated that cuts introduced during the Coalition Government between 2010 – 15 cut around £18 billion from the social security budget, for example through the introduction of a less generous uprating formula (the reduction in uprating of most working age benefits and tax credits to 1%); cuts to disability benefits (including the introduction of Personal Independence Payment); cuts to Housing Benefit (HB) and Support for Mortgage Interest (SMI); harsher benefit sanctions which remove entitlement to benefit (in whole or in part) for a longer period of time and the introduction of the benefit cap.
It is similarly estimated that benefit cuts introduced by the Conservative Government since 2015 – many of which are already in place but will apply to more claimants over the next few years – will cut @ £12 billion from the social security budget, for example through a freeze in most working age benefits and tax credits until March 2020; further cuts to Housing Benefit and the conversion of SMI to an interest-bearing loan; reductions to Universal Credit work allowances and cuts targeting children (for example the introduction of the two child limit).
All of these cuts to the incomes of the poorest households reliant on social security – both in work and on benefits – and an increased sense of job insecurity has stimulated a debate in relation to income adequacy and income security. Attention has focussed on the phenomenon of zero hours contracts, in-work poverty and the continuing lack of social mobility for people depending on their income, their class or where they live. Ideas such as work-life balance and the need to manage stress in the workplace are now accepted in norms in society with the notion that work is a means to an end, not an end in itself. And the phenomenon of ‘automation’ – or the mechanisation of jobs traditionally performed by humans - has received greater attention given fears that this will lead to substantial job losses in particular for sectors like manufacturing, logistics, retail and wholesale and some lower skilled occupations.
All of these factors have driven forward the idea of ‘Universal Basic Income’ (UBI) that is the idea that each and every citizen should be provided with an unconditional income floor sufficient to cover life’s most basic needs like food and shelter.
Its genesis originates back to the 18th Century where the philosopher Thomas Paine wrote that “the basic needs of all humanity must be provided for”. He also wrote that “There are two kinds of property. Firstly, natural property, or that which comes to us from the Creator of the universe,--such as the earth, air, water. Secondly, artificial or acquired property,--the invention of men … every individual in the world is born therein with legitimate claims on a certain kind of property, or its equivalent.”
Fast forward to Mark Zuckerberg, CEO of social media giant Facebook, who expressed support for the idea of UBI while on a visit to the State of Alaska. Since 1982, the State of Alaska has distributed annual cash dividends to all of its residents, including children, funded from income from the state’s sovereign wealth fund. Because the payment is universal and unconditional, it has often been discussed as a “real world” example of a basic income. Other examples emanate from Finland (which has launched a UBI trial); Scotland (where Glasgow and Fife councils are designing UBI trials) and Ireland (which has published a Green Paper on Basic Income).
The Zuckerberg intervention is important as it provides a clue as to how UBI can become a sustainable model of income security – by virtue of a review of a State’s approach to generation of income and in particular a renewed focus on the emerging types of ‘property’ with the emergence of telecommunications, information & communication technology (ICT) giants such as Amazon, Apple, Microsoft, Google and Facebook.
One could be forgiven for thinking that the infra-structure is already in place in the United Kingdom in terms of the social security system.
For children, we have Child Benefit which was a genuine Universal Income for all children set at £20.70 (only or eldest child) & £13.70 (for other children) (2017/18 rates) until George Osbourne introduced the tax charge, known as the ‘High Income Child Benefit Charge’, if someone has an individual income over £50,000 and they or their partner get Child Benefit.
For older people, we have Pension Credit (Guarantee Credit) which is a means tested benefit which guarantees a minimum income standard, set at £159.35 for a single older person (2017/18 rates).
For workers, government has introduced a higher minimum wage rate for all workers over 25 years of age inspired by the Living Wage campaign, set at £7.50 for people aged over 25 (£7.05 for people aged 21 – 24 & £5.60 for people aged 18 – 20) (2017/18 rates).
For working age people reliant upon benefits or in work support (regardless of whether disabled or looking after children; whether renting or owning their home), the problem is that as highlighted above their social security has been subjected to continuous erosion as a result of various cuts and changes as a result of welfare reform.
The notion of social security has been undermined by welfare reform which has been severely felt by those working age households reliant upon social security in terms of fear, stress and uncertainty. The issue of reassessments for disability benefits has led to campaigns against the providers conducting the assessments; reports that attempted suicides by disability benefit claimants more than double after introduction the assessments; and the High Court has recently ruled that disability benefit changes ‘blatantly discriminate’ against mental health patients and that Government regulations to personal independence payment (PIP) breach human rights and 'cannot not be objectively justified'.
This chimes with many contributions in the recent debates in Parliament. Speaking in a Westminster Hall debate in relation to the claimant experience of the Personal Independence Payment process on 31st January, Laura Pidcock MP for North West Durham made the following striking comments:
“Over the past week, I have read several hundred testimonies from people who have suffered under the system. This one was the most striking: “being on benefits is like being in an abusive relationship with the state. We cannot escape our abusers, we need them, we are financially dependent on them”.”
The film by British filmmaker Ken Loach, I Daniel Blake tapped into this growing groundswell of opinion, winning the Palme d'Or at the 2016 Cannes Film Festival. The following exchange sums up the experience of many:
“I’ve had a major heart attack; I’ve been told by my doctor I’m not supposed to go back to work … You must continue to look for work or your benefit payments will be frozen … There must be some mistake …This is a monumental farce, isn’t it? Looking for non-existent jobs; and all it does is humiliate me”.
A Better Way
Believers may insist that the unconditional nature of the idea must form the basis of any path towards the promised land of Universal Basic Income (UBI): in other words whether citizens receive an ongoing regular basic income; or a one-off lump sum at a particular point in their lives – or variants thereof – the essence of the idea is one of liberty, social justice and freedom from State and market forces. Supporters of the idea address concerns about cost by suggesting that a radical, new approach is required and that new forms of ‘property’, including within the Knowledge Economy, social media and ICT sectors should contribute appropriately towards funding this solution, together with a fairer, progressive system of both direct and indirect taxation.
For those whose UBI faith may be weaker, the more obvious path towards a more compassionate, secure and fairer society for all lies in the proven architecture of our social security system. The levers are in place. Unfortunately the problem with levers is that they are two dimensional, with mutually exclusive options available. The period 2010 – 2020 has seen a significant shift towards austerity with unprecedented cuts; it remains to be seen whether there is the will to shift the lever towards a fairer and more just society.
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