In the thread I wrote yesterday on the need for a peaceful revolution that might restore the countries of the UK and help them recover from the ravages of both neoliberalism and populism I said this:
The right to support from the state should be enshrined in law.
The state should have a legal obligation to ensure that those who need help get it.
Oddly, when I asked last week about what I should write about almost no one suggested that I address the difficult relationship between tax and benefits. That was a slight relief: that is an area full of difficulty. Then I went and wrote the above two sentences as one tweet in a thread written in not much time yesterday and set myself off on a course of thinking that I have occasionally considered before, which is why we have such a passive state when it comes to tax and benefits.
Parliament is aware that such is the scale of need in the UK that cannot be met by market forces that we need a social security system. This is reinforced in some cases by providing tax reliefs and allowances. The difficulty is that access to the resulting benefits has always been made as seemingly hard as possible.
Anyone who has looked at universal credit knows that claiming it makes compliance with most aspects of the tax system look easy. But let's also be honest, compliance with the tax system is not easy whenever multiple jobs or any aspect of self-employment become a part of life. That is very often the case for those least able to afford help, and who live on very low incomes. Even knowing, as I do, that under-declaration is an issue, average self-employed earnings are only just over 50% of average employee earnings: self-employment and hardship are intimately related issues.
Despite this fact the state really does do its utmost to firstly make it hard to claim benefits and second to access information on the right benefits to claim. Too often it fails to draw the attention of people to the benefits to which they are entitled but do not claim.
As example, only 6 out of 10 of people entitled to pension credit make that claim each year. £2.5 billion goes unclaimed, due to maybe 1 million pensioners for whom the average £2,500 a year that would provide would be a staggering additional sum each year that could transform well being. Given that most so-called flu deaths each year are in fact from pneumonia, and are related to living in under-heated property, in the case of this benefit payment of the missing sums that are owing would not just transform lives, it could save them.
It's my suggestion that the state should have an obligation imposed upon it to ensure that such benefits are taken up. I am aware that there are difficulties with the declaration of self-employed incomes (but they are not insurmountable) but when it comes to most benefits HMRC now has real-time online data supplied by all employers on a person's income on a monthly basis. This should be the basis for the transformation I am suggesting.
It is, firstly, absurd that many on low pay but in complex employment situations have to still also make benefits declaration despite their data already being available, and second that this data is not then reliably used to work out benefits entitlement.
Don't get me wrong: I know the complexity of what I am suggesting. But those making that objection have wholly missed the point of the state.
The state does not exist to punish, withhold and impose. The state should exist to support, uphold and provide where needed.
What I am suggesting is revolutionary. I am proposing that we do not treat those in need of support as failures, outcasts and claimants, which is all too commonly the attitude in much of our inhumane social security system. I am saying that we treat an economy that can leave people in poverty as the evil that requires correction, because it is. It should not be possible in a country where there is plenty for people to die from cold, for mothers to go hungry to feed their children, and for food banks to be thriving.
The entire premise of the social security system is wrong. It should be built on the logic that it exists to help. It should be an enabler. Of course appropriate checks to prevent fraud must be made, but the current bias against the claimant, who is undoubtedly made to feel that they are a burden, is wrong. The system should be built around an apology from society that it has not as yet thought up a better way of organising society so that there are still those in need.
What would this require? A system that used as little claimant data as possible. A system that was willing to compromise on data need. One that permitted human failing, but not abuse. One that was programmed to flag those likely to be needing additional support, and sought it out for them. One that anticipated requirements wherever possible, rather than waited for a claim. One that, in other words, sought to treat people with respect.
And whilst we were doing that, tax should do the same. It too should help wherever possible, by pre-filling tax returns for example, and also accepting tolerance where now there is little or none.
These are all tax justice in my issues. I see social security and tax as being in a continuum. I see the state as an enabler. I want people respected. This is what a courageous state would do. It doesn't. Why don't we demand better? Why can't we expect respect? Why isn't help the default position within social security and tax? Isn't it time the state led by example? That's what I want to see.
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Being from a housing background, the big issue was the benefit taper – how much benefit was lost per pound actually earned. Many felt it to be too high and that benefit did not accompany earnings enough. This withdrawal of benefit was seen as too rapid during times of changes in income – transition periods. I have no idea how the tax system might work with that but it needs dealing with as you rightly pointed its sort of all joined up.
Professor Paul Spicker would also agree with you about the simplicity of claiming for sure. Prof Spicker was my ‘go to’ bloke at University when I was studying housing and also during the welfare ‘reforms of this frankly wrong headed Government. He is a bit of guru on social security in my opinion (but I’m not sure he’d agree with my title).
Here is an info page about him: http://spicker.uk/about.htm
It might be a good idea if you had a chat?
I will look him up
You are right to want to see these improvements, but you won’t likely see them with the chief proto-fascist in office.
It would appear to me that most of these complexities could be resolved by replacing the needs-based benefits system with a Universal Income. Or am I being naïve?
Yes, I’m wondering about that too. Anything I’ve read about Universal Basic Income – it has been tried for short periods around the world – indicates it is a real enabler in that it promotes well being, independence in that people can choose what they want to do like study, start a business, create, stay home to look after the kids, aging parents. Lots of people here in Canada have been asking for this and it is on the political agenda. I suspect opposition will come from employers finding it difficult to get people to work in low paid, unpleasant occupations. The CERB programme rolled out by the feds during the pandemic -$2000 every four weeks – has been very popular in Canada. Bars, restaurants, daycares etc closed because of covid lockdowns are finding it difficult to get people back. There are other occupations such as amazons etc who were still operational through the lockdowns but who don’t give sick leave so this has been a source of covid in many areas – people need to work, and have to get to work on public transport – spreading covid. So, sick leave should be mandatory. Thanks for my little rant but what about UBI? Love your blog Richard, I’m learning lots.
I will add it to themes to be addressed
Thanks
I didn’t and still don’t understand why Osborne stopped standard tax rate being deducted from interest on savings accounts and now after the first £1 or 2K? it has to be being declared. Its obvious that some tax will now be lost as a result and it was easy to claim exemption form the deduction if that was appropriate.
It was bizarre….
I agree with what you say, but wouldn’t a “Universal Basic Income” approach avoid a number of the failings in the current system, including easier to administer?
That depends almost entirely what you mean by a basic income. If you mean something that people can live on the disruption may be simply too great for the economy without a very long transition
I have done the modelling and think a combination of social security, job guarantee and basic services may be better
That’s what I’ve concluded from talking to a couple of otherwise broadly sympathetic economists. The alternative might be:
– Make UC work properly, without the delays for a start
– Tackle the shortage of good jobs and skills, and the industries that provide them
– Restore public services (health, education, housing et al) to the level they should be.
For UBI to be meaningful, the cost is very high and we still need to fix public services as well. A less often made point is that the U.K. public feels quite strongly about the ‘undeserving’, be they the poor or the rich. UBI falls into that narrative trap at both ends.
UBI fans ought also to be concerned that it is popular amongst sections of the further right on the basis that if people have a guaranteed income they can be left to choose what were once public services from the market. An excuse for further privatisation.
Thanks for the responses.
Basic Services would be another way to go. To your combination of social security, job guarantee and basic services, I would also add housing guarantee.
One very positive outcome of UBI would be a huge flourishing of all the arts. Freelance creatives were badly let down during Covid lockdown as many were unable to access UK Gov schemes. Even in the best of times, their incomes are highly unpredictable, which forces them into low-grade, badly paid and insecure work (bar staff, delivery jobs, shelf-stacking etc) to make ends meet. UBI, however, would allow them to concentrate on what they excel at without the stress and distraction of having to give up time just to earn enough to put food on the table, pay the rent etc.
Ken
Id argue that this illustrates the problem with UBI. To be enough for people to really live and work on (at least a living wage?) it would be unaffordable overall. MMT does not provide the easy answer…
Arts is of course underfunded – as it happens both of my children work in different parts of the creative sector so I’m well aware. The answer Id argue is for much better funding of the sector. Solve the real problem rather than a blunt, blanket approach.
To paraphrase Jesus and Lord Denning amongst others, who then is thy Social Security Scrounger?
Given that recent growth in expenditure has been amongst ‘In Work’ claimants I suggest that its the employers.
Making them pay a wage that supports a family is an obvious start, possibly it might change views on rising rents and house prices. I suggest that there should be caps on dividends & ‘Top Pay’ in Companies that have a high percentage of low paid workers and some sort of ‘cost recovery’
Also of course we need to go back to the Beveridge ideal of ‘Non Means Tested’ benefits such as earnings related unemployment benefit, a better state pension and higher Child Benefit to reduce the need for means testing.
There is also the question about what happens when ‘Generation Rent’ retires with poor pensions and having to pay private rents.
Yes. Unfortunately we are suffering from elite rule. In the final analysis, the powerful are imposing this undemocratic system. The government’s role is to maintain elite rule and keep the people down with mountains of debt and empty promises. The pandemic has clearly revealed the government’s ability to fund anything it wants to fund. The fact that it underfunds social security speaks to its true agenda.
Thinking a bit more about it
We have ‘National Insurance’ so what about thinking about some ‘Insured Perils’ as a for example Life Insurance & there is nothing at the moment that covers anyone with a mortgage.
I can expand if you want.
There was The Supplementary Benefit Commissioners in the 1970’s who made recommendations for Supplementary Benefit rates, based on – theoretically at least, what was needed for recipients to live a reasonable life.
What about a 21st Century version that would look at not only Social Security/National Insurance but things like income, housing costs, basic services etc to ensure that people has what they need to live a decent life.