Written evidence submitted by Ruth Lister
SUMMARY
(I) It is unclear how successful the UC will
be in achieving the laudable objectives of greater simplicity,
improved work incentives and a reduction in poverty.
(II) Assumptions about the nature and extent
of "welfare dependency", which drive the kind of draconian
sanctions proposed in the White Paper, are open to challenge.
(III) Given the number of unresolved matters
in the White Paper and the significance claimed for the reforms,
it is imperative that a more prudent timetable is followed rather
than moving to legislation as early as January.
(IV) There are a number of matters of concern
from a gendered perspective:
- The proposed payment of the full UC, including
the child credit, to one member in a couple.
- The erosion of contributory benefits, which have
provided a growing number of women in couples with an independent
social security income.
- The potential incentive for the re-creation of
a male breadwinner model.
- The impact on mothers of the proposal to pay
benefits monthly.
1. The Committee's decision to hold a short inquiry
into the proposals in the White Paper on Universal Credit is welcome.
This short submission does not offer an overall analysis of the
White Paper but simply raises a number of concerns. It is divided
into two parts. The first deals with some general issues; the
second considers some possible implications for women.
GENERAL ISSUES
2. The proposed universal credit (UC) is the
latest in a long history of attempts to simplify the social security
system and improve incentives. These are laudable objectives but
experience suggests that they are easier to achieve on paper than
in practice. Already, complexities appear to be creeping in to
the proposals, for instance through the interaction between the
new disregards and housing costs and the decision to make local
authorities responsible for council tax benefit (with detailed
proposals yet to be worked out).
3. There is an assumption that complexity itself
creates a work disincentive. This may certainly be the case with
regard to the decision to move into paid work (the unemployment
trap) and one advantage of the UC is that it addresses the insecurity
many claimants feel with regard to the transition into paid work.
However, perceptions and attitudes are also shaped by the insecure
nature of the kind of jobs available to many people out of work
(insofar as there are jobs available) and by personal factors
such as those associated with the care of young children and health
status. Moreover, from the perspective of the incentive to improve
earnings once in work (the poverty trap), there is a danger that
the greater simplicity of a single taper could be counter-productive
because the effects of an increase in earnings will be more immediate
and visible to the worker than under the present system.
4. Efforts to tackle the poverty trap created
by the interaction between tax credit/benefit withdrawal rates,
tax and national insurance are welcome. However, while the single
taper proposed for the UC will reduce marginal deduction rates
for the minority who currently face rates of over 80%, it will
mean an increase for many others. Family Action estimates that
as many as 1.35 million households could face a higher marginal
deduction rate and that among tax-payers in receipt of means-tested
benefits the number of gainers with regard to marginal deduction
rates exceeds the numbers of losers.
5. Another aim of the White Paper is to tackle
what the Secretary of State describes as the "underlying
problem of welfare dependency". Assumptions about the nature
and extent of this problem appear to drive the further ratcheting
up of the regime of conditionality and associated sanctions. Yet
neither here nor in the discussion document, which preceded it,
is the notion of "welfare dependency" properly defined.
Here and in previous documents, it appears to be equated with
the simple receipt of benefits (primarily among people of working
age). And reference to the reintroduction of a "culture of
work" implies a widespread "dependency culture",
referred to in the earlier document 21st Century Welfare.
Yet the research evidence does not support the view that there
is a widespread culture of "welfare dependency".[43]
The use of such terms is stigmatising and contributes to the "othering"
of people living on benefits. They are highly ideological terms,
which serve to delegitimize receipt of state support through the
benefits and tax credits systems and thereby the kind of draconian
sanctions proposed in the White Paper.
6. The White Paper claims that "by virtue
of the changes to entitlement and improved take up" UC could
"lift as many as 350,000 children and 500,000 working-age
adults out of poverty", without taking into account the potential
impact of more people moving into paid work. This would, of course,
be very welcome. However, some scepticism has been expressed as
to how this will be achieved in the context of the cuts taking
place elsewhere in the benefits system and the overall spending
constraints within with the DWP is working. It would be helpful
if the Committee could explore the assumptions upon which these
projections are based.
7. There is an important procedural issue, which
needs to be raised. It is understood that it is intended to bring
forward legislation in January. The White Paper leaves many important
issues unresolved—an example is the treatment of childcare
costs. Given the claims made for the significance of the reforms,
it would be prudent to move more slowly and allow more time for
resolution of such issues and for full debate before moving to
legislation.
GENDERED PERSPECTIVES
8. The social security system plays an important
role in shaping gender relations and the gendered distribution
of income, with particular significance for the well-being of
women and children. It is therefore important to consider the
proposals from a gendered perspective.
9. A serious concern is the default position
that the whole of the UC, including the credit for children, will
be paid to one partner in a couple. Following concerns raised
about this issue in response to 21st Century Welfare, at
the very end of the White Paper it is stated that "we will
consider the scope to arrange payments to parents in couples,
so that support for children goes to the mother or main carer,
as now in Tax Credits". The implication is that this is an
operational issue. However when questioned on the factors that
would decide this issue at the recent SSAC stakeholder seminar,
Neil Couling, Director of Benefit Strategy, stated that it was
a matter that would be taken to Ministers. It therefore appears
that this will be a political decision.
10. It is a crucial decision. It is a widely
accepted principle that benefits for children should be paid to
the "main carer", usually still the mother. In practice,
the household member making the application in a couple is more
likely to be the father than the mother. Thus, if the full UC
were paid to one partner, there would be a gendered redistribution
from "purse" to "wallet", with a potentially
adverse impact on intra-household poverty. The last time a Conservative
government attempted this with its family credit proposal, it
was forced to back down in the face of widespread opposition.
Similarly, the New Labour government attempted initially to pay
the working family tax credit through the pay-packet. Again it
faced widespread opposition and conceded that child tax credit
should be paid to the caring parent. This was, in part, in response
to the evidence in a Joseph Rowntree Foundation study conducted
by Jackie Goode, Claire Callender and myself, which demonstrated
the continued importance of paying benefits for children to the
caring parent and the continued significance of the intra-household
distribution of benefits.[44]
11. Furthermore, the more reform cements means-tested
benefits as the foundation of the social security system, the
more difficult it is to address this issue and ensure that women
achieve an independent income in their own right. As more women
have built up an entitlement to contributory benefits, this is
an argument for strengthening rather than diminishing the role
of contributory benefits, suitably reformed. Instead, the proposal
to time limit Employment and Support Allowance for those deemed
capable of work will further erode women's access to an independent
social security income. The future of the Carers Allowance is
also important in this context. This is another unresolved matter.
It is important that the benefit is retained. Moreover, as the
White Paper notes, it is paid at a lower rate than other income-replacement
benefits thereby reducing its effectiveness. The answer is to
increase it to a level which enables it to play a more effective
role.
12. The UC proposals could also have the effect
of reducing women's access to an independent income from paid
work. While the overall improvement in disregards (other than
for single people) is very welcome, there is no independent disregard
for a second earner and it would appear that marginal deduction
rates could rise significantly for second earners. The White Paper
suggests that in some cases "second earners may choose to
reduce or rebalance their hours or to leave work. In these cases,
the improved ability of the main earner to support his or her
family will increase the options available for families to strike
their preferred work/life balance". However, it seems more
likely that the system will tilt the "architecture of choice"
towards a traditional male breadwinner model, which may not necessarily
reflect the preferred work/life balance of both members of a couple
and which would weaken women's labour market position. It would
also undermine the Coalition Government's commitment to "encourage
shared parenting".[45]
And at the SSAC stakeholder event, the Secretary of State's response
to a question on this suggested that he regarded a return to a
male breadwinner model as a welcome outcome.
13. The White Paper states that the DWP is considering
whether payments of UC should be made monthly. It acknowledges
that "many people on low incomes will be used to managing
fortnightly payments of benefits". It proposes "appropriate
budgeting support to ensure recipients are supported effectively".
It is unclear who will provide this "budgeting support".
In families with children it will largely be mothers, as the managers
of poverty, who will bear the strain of monthly payments. Managing
a low income on a fortnightly basis is difficult enough but moving
to monthly payments could upset completely the delicate juggling
act that many mothers perform and could result in greater debt.
Budgeting support is no answer and implies that the problem lies
with low income mothers rather than an inflexible system. It seems
perverse deliberately to increase the difficulties faced by low
income mothers in the name of encouraging them to "manage
their financial affairs in a manner that best reflects the demands
of modern life".
December 2010
43 See R Walker with M Howard, The Making of a Welfare
Class? The Policy Press, 2000; R MacDonald and J Marsh, Disconnected
Youth? Palgrave, 2005. Back
44
J. Goode, C Callender and R Lister, Purse or Wallet?, Policy
Studies Institute, 1998 Back
45
HM Government, The Coalition: our programme for government, 2010. Back
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