Five reasons why Labour MPs should oppose the welfare cap

Despite Ed Balls saying Labour will back the welfare cap, because Ed Miliband has already expressed support for a welfare cap, here are five reasons why Labour MPs should vote against on Wednesday (26 March). If you have a Labour MP, email them (template letter via Left Futures).
 
1.    It means need is subject to an arbitrary cap

The welfare state was founded on the principle of "from each according to their ability, to each according to their need".

This government has failed to address that need: it's welfare programmes are failing - from the Work Programme to the Youth Contract to the Work Capability Assessment. Failing privatised schemes need capping, people in need do not.

2.    It feeds the Tory myth that spending is out of control

In fact the UK spends less on social security than other developed nations, and before the recession welfare spending was falling (read more here, via TUC).

France, Italy, Belgium, Austria, Germany, Denmark, Sweden, Finland, Norway, and the Czech Republic all spend more than the UK on social security (see chart below, using OECD data)


3.    It does nothing to challenge the reasons for high welfare spending

Low pay, weak trade union rights and an unregulated rental market. When pay is too low or there isn't enough work, people become eligible for tax credits and housing benefit. As the 1945 Labour manifesto said, “there is no reason why Britain should not afford such programmes but she will need full employment and the highest possible industrial efficiency in order to do so”. This government has failed to meet those criteria.

Both tax credits and housing benefit for people in work are subject to the welfare cap. If wages continue to  lag behind inflation, and rental costs continue to exceed inflation, that will mean welfare costs rise. Under this proposal, disabled people's benefits or pensioners' winter fuel allowance could be cut because landlords jack up rents or because employers don't give decent pay rises.

4.    This is feeding the demonisation of people on benefits
Disabled people have already suffered the most under this government's cuts to social security - with the failed Work Capability Assessment  for Employment and Support Allowance (ESA), the cuts to Disability Living Allowance (DLA), the closure of Remploy and the forthcoming abolition of the Independent Living Fund. Both DLA and ESA are within the welfare cap.

They have also suffered a massive rise in disability hate crime, which follows the demonisation of those on benefits by Tory politicians using the divisive language of 'skivers', 'shirkers' and 'scroungers' - which has then been echoed in the media.

5.    It does nothing to help those in real need
With half a million families using food banks, an extra million people in poverty, homelessness rising, and the number of families housed in B&B accommodation at a ten year high - what will a welfare cap do for them?

It is a gimmick, but a nasty gimmick. And Labour MPs should reject it.

p.s. if Labour MPs want to know how to cut welfare spending from a socialist perspective, read this

Once more on the great disappearing unemployment mystery ...

Last week we reported on the great unemployment disappearing act, focusing on growing divergence between the claimant count and the ILO measure of unemployment (see graph).

But this growing disparity isn't uniform across the UK. As the chart below shows, there is a massive regional disparity between the claimant count and ILO unemployment in some UK regions, but a close correlation in others.

To make matters clearer the table below shows, for each region or nation of the UK the claimant count as a percentage of ILO unemployment:

Our 13 November analysis highlighted the growing divergence between the two unemployment measures (showing that in 1993 the claimant count was 96% of ILO unemployment, but today is only 53%.

Health warning: the figures used are from the latest ONS Labour Market Survey stats, which for claimant count are October figures and for ILO measure are July-September. However, this difference in monthly accounting does not explain the sharp differences either within or between regions.

However, across the UK there are massive disparities. So why is it that in London and the South if you're unemployed you are far less likely to claim jobseeker's allowance than if you're in the North East or Northern Ireland? And why does jobseeker's allowance reach so many more of the unemployed than everywhere else in the UK?

What explains the differences? I honestly don't know, but I've posited some options below - please leave your views in the comments ...

• Unemployed people in London and southern England are more likely to be ineligible for JSA due to household circumstances or personal savings
• Bad data - the regional data for ILO unemployment is dodgy (the claimant count won't be as it's simply the number of people claiming JSA)
• Sanctions are being unevenly imposed across different regions - disproportionately reducing the claimant count in some regions
• The stigma of claiming benefits is stronger in some regions than others
• Something else? Let us know in the comments ...

UPDATE (21/11/13): As was pointed out by Labour market stats wonk, Paul Bivand, Northern Ireland has some devolved powers over social security - and the UK sanctions data (analysed here) doesn't include Northern Ireland. So is that the answer - is it due to a less stringent sanctions regime there?

The great unemployment disappearing act

Today's unemployment figures revealed that the internationally recognised measure of UK unemployment fell by 48,000 and the claimant count (i.e. the number of people claiming jobseeker's allowance) fell by 41,700.

These two figures were remarkably close. To the uninitiated naively logical this might seem to corroborate that there are roughly 40-50,000 fewer unemployed people in the last 3 months.

However, with those subtractions ILO unemployment stood at 2.47 million, while the claimant count was only 1.31 million. So in relative terms the fall in the claimant count was nearly twice as sharp.

As the graph below shows - this is not a one-off occurence but part of a 20-year trend that has seen the ILO unemployment measure part company with claimant count.

Whereas the claimant count accounted for 96.6% of ILO unemployment 20 years ago in 1993, three years later the claimant count was only 83.2%. Five years on again - or twelve years ago - in 2001, the claimant count was just 64.5%.

Today, the claimant count was just under 53% of the ILO measure.

It is not entirely clear why this has happened. Certainly a part of the reason is the increased conditionality, and reduced eligibility that has applied to claiming unemployment benefit since the 1995 Jobseekers Act - and toughened by successive welfare reform acts under successive governments.

The recent sharp downturn in the claimant count - and sharp relative to ILO unemployment - is no doubt partially explained by the increase in sanctions (see LEAP analysis 6 November 2013).

But the rut set in slightly earlier. Under the Major government the claimant count averaged 93.3% of the ILO measure. In the Blair/Brown New Labour years, the claimant count averaged just 63.1%, and under Cameron's coalition government to date that has already dropped again to 59.9% (and was 53% in today's figures).

It means that the claimant count is becoming a less reliable indicator of true unemployment. With an increased sanctions regime, and extra conditionality generally (including workfare), and the demonisation of claimants as 'scroungers' and 'skivers', jobseeker's allowance has become a daunting benefit to claim.

As PCS research has found (see infographic here) the real value of unemployment benefit has fallen from 18% of average wages in 1990 to just 13% today.

With increasingly greater sanctions, more conditionality, less eligibility, more stigma and less value - is it any wonder the claimant count now represents barely half the true level of unemployment.

Robbing from the poor ... £328,000 taken from unemployed daily

IDS...thieving from the poor

DWP sanctions data published today revealed benefit sanctions are robbing £328,767 from unemployed people every day - based on the new sanctions regime imposed since October 2012.

If you're thinking well, that's fair enough, they can't have been looking for work then I can only point you in the direction of the excellent report by Manchester Citizens Advice Bureau on people's real experience of being sanctioned.

If you don't have the time to read that report, then I'll appeal to your logic. The data shows that sanctions have increased by 137% compared with figures for between 2000-2010. Have claimants suddenly become so much worse? In the last two and a half years, the number of unemployed people sanctioned has averaged 64,307 a month, compared with 27,108 a month between 2000 and 2010.

N.B. And even the above may be a severe underestimate, due to sanctions decisions being deferred in 120,000 cases due to the 'Poundland case'.

In cash terms, the figures are even more stark: in 2009/10, £11 million of jobseeker's allowance (JSA) benefits were sanctioned, but in first six months of 2012/13 alone it was £60 million. This is because not only are more people being sanctioned, but more of their benefits are being removed - and for a longer period. The stats since October 2012 (when the new sanctions regime was introduced) show over 52,000 people have lost their benefits for 3 months or more.

This is about a far more brutal regime, not claimant behaviour. As the PCS union's Mark Serwotka said:

"The new sanctions regime damages the relationship between Jobcentre advisers and claimants, and is entirely counterproductive in helping people to find work

"The government’s perverse and punitive approach is a collective punishment on the unemployed and the disabled for its own failure to create sufficient jobs."

Over 4,300 lone parents have been sanctioned every month under new sanctions regime - and 230 a month have received high level sanctions involving loss of benefits for 3 months or more. The effect of this on children will be appalling - and surely constitutes cruel and unusual punishment, by reducing to abject poverty the children of those who have (supposedly) breached the rules.

In nearly a third of cases (31%) under the new rules, the sanction was directly related to failure to participate in the Work Programme, mandatory work activity or some other scheme. Given international research and Work Programme figures show the abject uselessness of these schemes in assisting in securing paid work, this is being sanctioned for avoiding doing something counterproductive.

For disabled people on employment and support allowance, sanctions have increased by 156% in the last year. These sharp increases highlight how the use of sanctions has been cranked up as part of the coalition's drive to reduce the deficit on the backs of the poor, while slashing corporation tax and the top rate of tax for the richest 1%.

The JSA data also shows non-white claimants are slightly more likely to get an adverse decision than white claimants. For all three categories of sanctions, non-white claimants got a higher proportion of adverse decisions: for low level, white claimants 56%, but for non-white 60%; for intermediate level white claimants 81% compared with 83% for non-white; and for high level sanctions (losing benefits for 3 months or more) white claimants referred for sanctions had adverse decisions 33% of the time, compared with 38% for non-white claimants. Although the differences are marginal, they are consistent across all three sanction levels.

Likewise for young people, while 16-17 year olds were sanctioned 64% of the time (after being referred for sanctions), for those over 55 it was 48%, and there was a direct correlation through the age brackets: the younger the claimant the more likely to be sanctioned. This is even worse given that young people inexplicably receive a lower rate of JSA (£56 per week compared with £71).

These data beg the question about whether the policy was subject to equality impact assessment - and if so whether this was predicted? (any insights welcome).