Paul Spicker, What’s Wrong with Social Security Benefits?

Paul Spicker, What’s Wrong with Social Security Benefits? Policy Press, 2017, vi + 117 pp, 1 4473 3732 4, pbk, £9.99

This is yet another useful book from Paul Spicker (and if you don’t know his regular blog on the welfare state, you can find it here).

Chapter 1 rehearses a number of reasons for a government paying benefits. The reasons are an essential first logical step in the argument, and the diversity of the reasons is a major cause of the complexity of the system. The circumstances for which benefits are paid are listed, and then the different types: social insurance, social assistance, tapered benefits (such as Housing Benefit), non-contributory benefits, discretionary benefits, and universal benefits (for instance, Child Benefit). (We might disagree over whether ‘a universal working-age income would be [expensive]’ (p.10).) Spicker provides a useful summary table.

Chapter 2 demolishes a number of myths in relation to cost, dependency, disincentives, immigration, and fraud. The least conclusive discussion is the one related to disincentives, which probably reflects the reality of the situation.

In chapter 3 Spicker outlines what he regards as the real problems: the size of the operation; the system regards what is normal as exceptional (such as changes in the structure of households); unintended consequences of changes in regulations; benefit design not taking account of administrative requirements; the consequences of morally freighted bureaucratic intrusion (as in benefits sanctions and the cohabitation rule); complexity; selectivity boundary problems; low take-up of selective benefits; fraud; the cost of means-testing; and administrative mistakes that are then difficult to rectify.

Chapter 4 tackles benefits levels, with useful tables on replacement rates; and chapter 5 makes detailed recommendations for the reform of existing benefits: rolling out the new higher basic state pension for older pensioners first; changes to disability assessment that would respond better to the diversity of disabilities and reduce the cost of assessment; increased levels of public employment to reduce the number of people unemployed and the cost of out-of-work benefits; and a somewhat inconclusive list of options for family benefits. There is a lot of sense in Spicker’s recommendation.

In chapter 4, Spicker employs the term ‘basic income’ for any provision that ‘offers a foundation that can be supplemented in various ways’ (p.66), offers the examples of the Basic State Pension and Child Benefit, and argues for such universal benefits as Child Benefit and the Winter Fuel Allowance on practical grounds:

Where there is an income tax and a universal benefit, people need to be asked about their income once. Where there is income tax and a means-tested benefit, people still need to be asked once, but others will have to be asked twice … Taxing with one hand and allocating funds with the other is simpler, fairer, less liable to error, much less cumbersome and much less intrusive. … Universality is often seen as a costly alternative; the opposite may be true. (p.69)

When in chapter 6 Spicker asks how the system as a whole might be reformed, he suggests that ‘personalised’ benefits cannot take account of the rapid changes of circumstances that so many people now experience, and he places little hope in Universal Credit. It is therefore not surprising that a section follows on Citizen’s Income, for which Spicker offers moral, economic, practical (administrative), and social justice arguments. He then criticises the proposal on the grounds that if current benefits were retained and recalculated there would still be a poverty trap; on distributive grounds; and on the basis that low income households would suffer losses. It is a pity that of the three illustrative schemes in the Citizen’s Income Trust publication that he references he chooses one that would impose losses on low income households, and not the one that would not; and that he has not referenced further research on the latter scheme published by the Institute for Social and Economic Research in 2016. This particular scheme, of which Spicker is well aware, responds to his criticisms by paying a decent sum (£60 per week for each working age adult), does not generate losses for low income households, redistributes from rich to poor, takes a significant number of households off means-tested benefits, reduces the total costs and levels of claims for a variety of means-tested benefits, requires an increase in Income Tax rates of only 3%, and requires no additional public expenditure. The only criticism that might still stick is that it is not entirely unproblematic to reduce to zero the Income Tax Personal Allowance: but New Zealand manages to tax all earned income, so there is no reason why the UK should not be able to do so.

Spicker lists a number of options for reforming the system: reemphasising social insurance, more means-testing, and more universal benefits; and he then offers his preferred option for reform: ‘to change the balance between benefits of different types’ (p.109). He wants to see complexity made manageable by keeping benefits separate rather than rolling them up into omnibenefits; less emphasis on personal need and more on rights; a recognition that benefits have a variety of roles, and not just the intention of getting people into work; and less intrusive enquiry into individual circumstances. All of these recommendations suggest a Citizen’s Income alongside retained and recalculated existing benefits. Spicker’s solutions are to reduce the role of benefits by, for instance, supplying more housing; separate benefits for different purposes; more accessible claiming processes; diversifying disability testing; and rapid resolution of complaints. These are all sensible suggestions.

There are few people who know more about the benefits system than Paul Spicker, and it is a pleasure to have so much of his wisdom packaged in this short and cheap paperback. Further work at his usual rigorous standard on scheme B in the Citizen’s Income publication that he references would of course be welcome.