Going Beyond the Universal Credit - The next steps in welfare reform

 The current government has launched the largest reform of the UK welfare system since 1945. The British welfare system developed out of the Centuries old Poor Law in the early 20th Century. From 1945-1950 it was transformed from a limited and conditional system into a universal safety net to protect people 'from cradle to grave'. The system grew steadily more expensive and under the 1979-97 Conservative government conditionality and limits were re-introduced in an attempt to control costs. The Labour government of 1997-2010 introduced various new benefits and dramatically increased spending but also continued introducing means testing and attaching conditions to welfare.

Now means testing is perfectly sensible as far as it goes. However, it also leads to a significant unintended consequence. The means testing of various branches of welfare (JSA, ESA, housing benefit, council tax benefits and tax credits) involves people steadily losing welfare income the further their income goes above a threshold until they get nothing. For each extra pound they earn they lose, say, 20p of benefit. But millions of people are on 3 or 4 benefits at the same time. Losing 20p or so of income from each benefit and paying taxes means an effective tax rate of 90%+. In other words if someone on benefits gets a job they can find themselves no better off that being on welfare, and can even end up with less money. This welfare trap hits millions of people. Our standard suite of unemployment benefits involves JSA, council Tax benefits and Housing benefit. That is enough that if a person gets a job for a few hours a week they will lose all the extra money they earn and possibly more.

This is especially true for those with marginal, part-time or temporary employment prospects. The risk with any such work may be that a person may end up both with less money, and being thrown out of the welfare system, meaning that if their job ends or they find themselves incapable of completing it they may face re-applying for a range of benefits, a process taking months and involving climbing a mountain of bureaucracy. For those in difficult financial situations the stress of the risk of this occurring provides a significant incentive for people to actively avoid part-time or marginal work that does not provide an assurance that the person will be propelled well beyond benefits. But these marginal and temporary jobs are very important because they keep people in contact with the jobs market allowing them to maintain skills and experience, and to provide them with the basic sense of control over their own future that is essential to maintaining the morale to keep slogging away finding a real job. Hence the welfare trap is a particular problem precisely for those people from the most deprived and welfare dependent communities and backgrounds.

The Universal Credit was a centre plank of the Conservative manifesto in the 2010 election.  The idea is to solve this problem by combining all benefits into a single payment that would then have a single 'withdrawal' rate to make sure that for each pound of extra income earned welfare recipients kept at least some of the money, or as the slogan put it 'making work pay'. Allowing people to keep some of their benefits for a while when starting work, and removing benefits steadily in a manner insuring people always have a financial incentive to do an extra hour of work. The estimated extra cost of this is £3 billion a year upfront but will hopefully pay for itself in the long term by ensuring people always have an incentive to be seeking any work they can, keeping them in contact with the job market, maintaining skills and experience and hopefully meaning over time more people move from welfare into work permanently.

This is an ingenious solution to the welfare trap that exists for earned income. This welfare trap comes about through the fact that the system is a hodge-podge of different responses to particular problems. The overall effect of all these solutions was never considered holistically and hence the dramatic perverse incentives were not noticed and a system that is meant to not just keep people alive but also empower them to improve their own situation can become for many a system that traps that at a level just above subsistence. Those on welfare find themselves in a situation totally different from that facing most people. Working harder and 'earning' money often does not bring the prospect of increased income and security but at best working harder for the same money, or at worst facing greater poverty and stress. The Universal Credit attempts to correct this situation, ensuring that the welfare system acts as a trampoline not just a safety net and always involves an at least quasi-normal relation between working harder and having more money

It is possible to go beyond the reforms that make up the Universal Credit and and structurally improve the welfare system even further using the same principles and , making it even more of a springboard.  There is not just a welfare trap in Income, there is also a less well known (and admittedly less significant) welfare trap in savings.  In addition to the income means test there is also a savings mean test that is applied. For many benefits if you have cash savings of more than £16,000 then you cannot access welfare.  In particular there is a standard £6,000 threshold, below which one receives full benefits and then for each £250 of savings one has over the threshold the person loses £1 a week of benefit income.  This is quite reasonable.  If people have considerable cash savings it is reasonable that they draw on these rather than getting help from the government. The problem is the upper threshold of £16,000. As one'sone's income suddenly drops to zero. For example, someone who is unemployed with savings of £15,000 can receive around £102 a week in welfare.  Someone with £16,500 in savings will receive nothing.      

This means that if you are in a position where you have some cash savings, but not considerably more than £16,000, say in the £6,000-£20,000 range, and you think you may need to access welfare at some point in the short or medium term then you have a strong incentive to not save any of the money you earn.  You are better off spending it all, knowing that if you lose your job or your income you will then be able to safely access welfare, rather than saving the money, both forgoing buying stuff now and risking that you would just have to spend it all and then access welfare, leaving you in exactly the same position after considerable stress in the intervening period.

This is socially damaging in the long term. For most people wealth is empowering, it gives people security and a control over their own life.  Once people have a bit of wealth it makes it easier to get more wealth and stand on their own two feet going onward. More widely there is a strong correlation between wealth and social mobility, health, and a whole other raft of statistics. From a financial perspective people having some wealth in turn makes them less likely to need to access welfare or government support in the future. As with the income welfare trap it is also those with little wealth, or otherwise marginal financial situations, who are in most need of encouragement and support in gaining this security and safety net whereas in reality through our welfare system they are the ones being particularly discouraged.

This issue also applies to considerable numbers of people. Especially because in our society wealth is even more unequally distributed than income, and this distribution has been becoming more and more unequal over the last several years. There is an easy way to solve this problem though, and by using the mechanism already built into the welfare system, without the need for  dramatic re-engineering, like the Universal credit.  Two simple steps would largely remove this problem: firstly, increasing the ceiling for benefits withdrawal from £16,000->£26,000 and slightly adjusting the withdrawal rate to a loss of £1 a week in income for each £200 of savings over the threshold.  These two steps would largely remove the cliff-edge, leaving only a small step. For example, current unemployment benefits are about £135 a week for a single person. As savings increase from £6,000->£16,000 this reduces from £140->£100 and then falls straight to £0.  Under these changes as savings move from £6,000->£16,000->£20,000 welfare income falls from £140->£90->£40 and only then falls to £0.

This approach reduces the size of the drop by more than half, while also allowing people to get considerably further clear of Broke before it kicks in and hence significantly reduces the disincentive to save money. It does also maintain a reasonable upper limit, avoiding dragging more and more people into the welfare net, and also avoiding a situation of needing to process claims for a few pounds a week of welfare. These limits are always a compromise, but I think this would be a far better compromise than the current one. It also should not cost that much money. Steepening the withdrawal slightly from £1 for every £250 to £1 for every £200 would save some money.  Also for a number of people it would mean placing them on a smaller amount of weekly welfare, rather than forcing them to wear down their savings until they go below £16,000 and then putting them on a larger weekly sum of welfare, making the overall increase in cost minor.

The way to look at this is like this: The welfare system and public services are the way we redistribute wealth.  They provide access for all citizen to services and support that would normally require each citizen to have considerable amounts of money to buy.  The top 10% have 100 times as much wealth as the bottom 10%.  But it has been calculated that the wealth that would be required to buy the bundle of public services and welfare that each person has an entitlement to is about £100,000.  This is the common inheritance we give to each citizen, and that reduces the disparity in wealth to 10:1. Like I said, real wealth is empowering and gives people security and chances.  These reforms would shape this common inheritance to ensure that, like real wealth, it also acts to empower and secure people; acting as a springboard not just a safety net.

Another possible reform in relation to the savings means test for welfare relates to the definition of 'savings'. This encompasses financial savings apart from equity in a property.  This produces a sizable distortion though in favour of those who own housing against those who rent. In other words if you have £20,000 in savings and use the money to rent a property, you have no access to welfare; if you use that money to get £20,000 of equity in a house so you don't have to rent you do have access to welfare. This makes sense in terms that wealth bound up in a house is obviously not wealth that can be used to pay bills and buy food and support a family in a time when money is short.  But in terms of fairness it cannot really be justified. There are ways for people who's wealth is in housing equity to contribute that money against the cost of welfare which don't involve kicking them out of their homes. For example in terms of some amount of housing equity above a certain minimum, say £20,000, passing over to the government according to a tariff related to the amount of welfare received. The government would then get that share of the equity when the house was sold, or when the owner died in a manner similar to private equity release schemes. This would be an admittedly slow burning way for home owners to contribute towards welfare, in the same way that those without housing equity would have to.  But over the long term it may be worth it for the government, and would even-out a significant disparity between homeowners and non-homeowners and even go some of the way towards meeting the cost of the reform to savings means testing outlined above.

A third important structural improvement to the welfare system would be to overhaul the point which a partner's income affects a person's eligibility for welfare support.  I will now explain what that means in English.  I've already mentioned the Means test that is used to check eligibility for welfare both with reference to savings and income, and how this can produce severe disincentives for people on welfare to work or save. The means test doesn't just take into account the income and savings of the person applying for welfare, but also that of their spouse or partner.  Again, in principle, this is quite reasonable. Of course in situations where one partner has considerable money or income they should support their partner once their eligibility to contributory welfare runs out rather than relying on the state indefinitely.  The problem comes in the details. The means test is currently set at an absurdly low level. A partner's savings are assessed as the same as the applicant's savings and the threshold for income is only about £8,000. This basically means that if a partner has any job or savings then a person cannot access welfare beyond the time limited contributory benefits.

Christmas & Family

Merry Christmas! (I know this is a bit late.  But my excuse is it is still within the 12 days of Christmas. Just.  And hence still technically Christmas. Oh, and happy Epiphany as well.)

Christmas is the great stereotypical time to spend time with your family. I am lucky that my family have always got on well together without much stress. I've always enjoyed Christmas get togethers, as much now I'm an adult as when I was little. For some people Christmas and other family occasions are not relaxing, to say the least, and that is very sad.  It is a rupturing of what family means at a time dedicated to a uniquely unique family.

Thanks to the good works of a friend whenever I think about what family means I will always think of a line from a certain Disney Film. "Ohana" in Hawaiian, "means family, and family means no-one gets left behind". Family means a commitment to one another -to care, to sacrifice, to have patience and compassion- to not give up on one another because there is a responsibility that cannot be put aside. The difference between Family and other relationships is that Family is a bond you're not allowed to give up on. Family may annoy you, they may irritate you, there certainly may be times you don't like them, but if they're family you're stuck with them. And so you do whatever you can to get along, to mend relationships and get to a situation where you can enjoy your time together because you are stuck together. This is a type of Love. Love always means commitment, of a type. A commitment you can't walk away from.  It  also means a whole lot more. It's true that you don't always even like the ones you love, sometimes you can even hate them too.

Family is a commitment. A commitment that we don't necessarily choose.  That usually means blood. The most common basis for that commitment and relation is a blood relation. The saying is "you choose your friends but your family you're stuck with". The nuclear and extended family are the historical basis of human society, the glue that holds society together, that cares for children, cares for people in their old age, and makes sure that almost everyone has someone who is obliged to care about what happens to them. It is the environment in which we are formed, and the original and most essential human social bond and organisation. It is not surprising our wider social, moral and religious ideas are widely constructed by expanding analogy to it.  Blood family bears the advantage that we share experiences and genetics, meaning we have a good chance of being quite like each other and having some sympathy for one another. Sadly it doesn't always work, but it is at least a start.

Family isn't just blood. The rituals by which we add to blood family have always been the most serious in human society. Marriage has always been considered so important because it means two people committing to becoming family to one another, and the traditional language surrounding marriage borrows overwhelmingly from our understanding of what family means. Adoption is another traditional means of grafting onto family, and the issues about the blood family, adopted family and identity of the person are so deep because family bond is crucial to our identity.

In the modern day nuclear families have become more complicated. In addition to the traditional archetype of husband, wife, children some families have single parents, unmarried parents, divorced parents, sometimes with new partners and step-children. A lady I know spends Christmas with her mother, step-dad, step-dad's ex-wife and step-dad's ex-wife's new partner and various respective children. Now these families may be as happy or unhappy as traditional family arrangements, but certainly they introduce complications that must be overcome because of their differences from the standard archetype introduces difficulty in defining who family is, and who bears the responsibility that brings.

Family does not just mean blood family, not even with all its various grafting and extensions through rituals like marriage and adoption.  There is also the family of choice. The families we make. The people we informally adopt as family throughout our lives. Often, and especially in the hectic modern world, we may find ourselves away from our blood family and unable to draw directly on the network of love, support and familiarity they offer. We may not even have a family that offers that. But people have the most wonderful capacity to build entirely new families for ourselves by adopting people as family and extending that bond of support and commitment. Unlike blood family these families carry no legal sanction or recognition, and are often not even explicitly stated, though those involved generally understand.  They are voluntary, but all the more wonderful for that, being a responsibility we choose and build for ourselves, rather than one merely given at birth. They may come about through an individual act of generosity, through some shared extreme experience, shared ideological or social association or just the enduring commitment of deep friendship. In their best moments they may be as permanent as blood family.  But even when they are more temporary they are defined by a depth of commitment and responsibility, which goes beyond whether you find a person useful in this or that particular moment. They provide support, rest,  belonging, understanding, and home. They give us people who will always care, always listen, always try to help, always be available (if at all possible), always say yes (unless there is a damn good reason to say otherwise).  And they are crucial to surviving in a difficult and complicated world cut off from the families we grow up in, and without them we will struggle, sometimes not even knowing the reason why.

These families we choose for ourselves often mirror blood family in many ways.  Someone is like a brother or sister, or even Mum or Dad to us. These families are still often based around people living together, through the way this throws people so closely together. These families of adoption are often more alike our blood family than we are prepared to admit. They are not entirely random or free. We are thrown together with certain people, with whom we may choose to build that bond or not. But generally who we come across is dictated by circumstances we do not control. On the other hand, really, all family is the family we choose.  Blood provides a strong motivation, and a social expectation, that we will treat certain people as family, but really nothing can force us to hold and to honour that commitment of compassion and respect, of Love and devotion, that defines people as family.  In the end that is a choice and a decision we make and hold to, whether consciously or not.  Our society is sadly littered with examples where people have not honoured that commitment, even to those who do share close relation, and the damage and hurt this causes can extend over entire lives.

Family being a choice we make brings me back to Christmas, where we traditionally gather as families, and hopefully remember that most special family of the Nativity. Because the Nativity very much was a Family of choice, of adoption, with more in common, in many ways, with the messy, modern arrangements of so many families today, than the neatness of the traditional archetype.  There was no blood between Mary and Joseph, only a previous commitment he did not have to honour, given the circumstances, and a duty of kindness and compassion. There was no blood between Joseph and the baby he adopted as family and raised as his own, only a choice that was thrust upon him to make that commitment for the rest of his life. There was blood between Jesus and Mary, but not the assurance the baby was shared and accepted by a human father, only the choice to accept a responsibility, and bear the distance of knowing the baby she bore was not just her son, but had a destiny and responsibility that would take him beyond her and from her as well. This was a family that was barely formed before it was forced into the life of political and religious refugees, forced to flee to a alien country, having given birth in difficult conditions far from family and home.

Nativity means a family that only existed thanks to the choice Mary and Joseph made in the strangest of circumstances, as they said Yes to the chance God had sent them, and the Love and commitment they put into making that family a reality from then on. The amazing things about the Nativity are not just the miracle of God become Man, but also that in placing himself physically in the hands of a young peasant girl and her uncertain fiance in a dirty, poor stable, God took on our aching vulnerability. Putting himself utterly in the hands of human weakness and fragility and relying on the choices they made. The fact the family of the Nativity was this uncertain, this mixed family of choice and adoption just increases the vulnerability and contingency around the coming of God into the world in flesh.  God took on not only the weakness of human flesh, and the danger of sinister human political machinations, but also the fragility of human emotions and the decision taken to build a family outside usual expectations. That God would show that trust in human nature and rely so utterly on the choices individual humans made, that is a miraculous affirmation of the human emotion & spirit, in the same way that God growing in human flesh is miraculous affirmation of the physical world we dwell in.

The most emotional illustration of this vulnerability of the Nativity in that distant stable that I have ever experienced came in an email I received on November 25th a few years ago. At the time I was a volunteer at a Night-shelter for homeless refugees in north Coventry. Refugees and asylum seekers generally can't access homeless shelters because these are funded by government welfare and refugees and asylum seekers can't access welfare. Usually without family or connections in the places they end up in, struggling with physical or emotional trauma, and without the legal right to seek work or access welfare, they often end up homeless. A lady called Penny ran a shelter in a previously abandoned North Coventry terrace house, providing a safe, dry, warm place to sleep and a free dinner and breakfast each day for homeless refugees and asylum seekers. The place ran on a shoestring and donations of food, and the support of volunteers from the local community and the University, where I got involved.  Volunteers were responsible for looking after the place over the evening, sleeping there overnight, making sure nothing went wrong, getting people up, serving breakfast and getting people out at the right time. It was pretty unpleasant throwing people out at 8 am, when it was cold and raining and you knew they had nowhere to go all day but wander round outside, but it was sadly necessary to keep the place running. The refugees were from Eritrea, Congo, Iran, Iraq, Kosovo and various countries across Africa.  They were mostly Male with the occasional woman, a woman usually from somewhere in Africa, and usually the most quiet, usually the most scarred by what they had experienced. In the many dirty conflicts across the world women are generally most vulnerable. Penny sent out a few emails every month to ask for volunteers and arrange a rota. One year in November in the email to prepare the next rota Penny left a note.

"Hi everyone,
   
I hope you are all have a happy festive season, Christmas, new year, winter solstice. Here is the rota for January. Please can you arrange a swap if there is a problem with the date. PLEASE LET ME KNOW YOU HAVE RECEIVED THIS ROTA, it saves me making lots of phone calls. If you know anyone else who would like to volunteer, I am doing some training for new people on Wednesday 17th Jan at 6.30pm. Please ask them to let me know they are coming.
   
And to finish on a Christmas note, we currently have a woman who has just arrived from Nigeria staying the week-end before she goes to
claim asylum in Croydon on Monday. Her name is Mary and she is 8 months pregnant. That's true.
  
best wishes to you all,
Penny"

What world was that baby born into? And what opportunity did the world offer that baby and its mother: Single, far from home, refugee, homeless, destitute? How similar to that world Jesus was born into in a stable far from home. But there is one crucial way that it it is a different world, and that is the fact that Jesus was born into our world two thousand years ago. Because that Nativity wasn't just the birth of one family of adoption of a teenage peasant girl, her fiance and the unique baby that God had given to them. Nativity also means that we all, all humanity, become family to God by adoption in its deepest sense. Through his birth and then life, death and resurrection that came from it he covered us over with his Holiness, washed away our Sins and folded us in with his Holy Spirit.  We became children by adoption, with God as our Father, and a relationship of the enduring Love and consistent commitment that defines family. We become family to one another, us to God & God to us, and brothers and sisters in Christ with the duty and responsibility to one another that comes with that.

The story of the world has been the gradual moral expansion of Love from family to clan, tribe, nation eventually to theoretically encompass all mankind, and even our duty to other species and the environment. Moral commands like 'Do not murder' have been present across all forms of human society. But they have always historically been limited within certain communities, while those outside, whether of a different nation or race or religion, could be killed without moral sanction. Most originally hunter-gatherer communities would have lived in separated extended families, each with their own hunting and gathering lands. Slowly those standards were applied more widely, as human society expanded from family to clan to tribe to people (the words for tribe and clan themselves are literally derived from words for family) and even more expanded human societies: nations, countries, Empires have historically been scattered with symbolic references to family.

The expansion of moral prescriptions (like do not kill), the commitment of Love, and the idea of family, from blood family to clan, tribe, nation and then the whole world, have gone hand in hand.  The development of the great Universal Empires of the ancient world, Hellenistic, Roman, Chinese, Indian brought the first idea of the whole world as one universal community. But although these communities expanded the idea of  'Do not Murder' they were only shadows of the true fulfilment of what family should mean. They had negative moral boundaries on behaviour, like forbidding killing or stealing, but without an idea of filling in the positive commitment of family.

But it was the Good News of Jesus Christ that for the first time transformed the idea of a global community based on law and order into that of a Family based on love and commitment. The Gospel tells us to love our neighbour, and tells us our neighbour must be whoever is in need; it tells us to love our enemies, as well as those who do us good.  It tells us to give, to lend, go the extra mile and turn the other cheek, without boundary or restriction and practice radical forgiveness, forgiving the seventy times seven times that any family will tell you is necessary when imperfect people are glued inseparably together and know they have to make things work. We are called to love one another as God has loved us, as a father to a child, and to love one another as Brother and sister and spread that message and community to the whole world, with the simple practical acts of feeding the hungry, clothing the naked, giving thirsty people a drink; that go with that radical message, as they must do for any family to be real. We are called to build a worldwide community, Church, that should be a well of support in the same manner as those families we choose. This is nothing less than the expansion of our notion of Family, in its true meaning of a choice of Love and continuous commitment, to the whole world, to all of creation, to reflect the Love God has for us all and the duty we all have for each other. It is building a complete world where nobody gets left behind, and all are looked out for and cared for, because we each take it as our positive commitment to do so. So that child born in north Coventry in Winter to a refugee mother would also have a family.

And this is not just an ideal; it is a promise through God's Spirit and power.  Sometimes it may seem distant and unimaginable, but through the power of God's spirit, the birth of God as man as Jesus Christ, the family of adoption of Jesus, Mary and Joseph and the Good News of radical Love that Jesus lived and taught it becomes not just a possibility but an eventual certainty.  God's Holy Spirit gives us the power to extend Love to all humanity, despite our deep personal fallibility; the instruction of what that means in our individual lives and choices; and a vision of what that could achieve if we  make the choice and commitment to join that family the same way Mary and Joseph did in Nazareth a long time ago.  

And that is what, for me, family means and Christmas means.  Through gathering together and sharing gifts and hospitality, the tokens of the love, commitment and patience, the fundamental meaning of family; we celebrate the bonds that give meaning to our lives, through the choices we make whether due to blood or experiences we have shared. We remember the unique family of the Nativity, forged in the choice of Mary and Joseph, and the wonderful birth of the Christ-child; and we remember how that birth  means we are all adopted as family of God, children of God and brother and sister to Christ and one another, if we choose to make that commitment. And through God's power we have the chance and duty to make that bond real for all mankind, building a complete family of all mankind where no-one is forgotten or left behind.

Something worth remembering.