Insights into Benefits Takeup and Welfare Policies in the UK

The takeup of benefits: lessons from the UK Paul Spicker Robert Gordon University

Benefits in the United Kingdom Non- State pension Employment and Support Allowance Jobseekers Allowance Disability Living Allowance/ PIP Attendance Allowance War Pensions National Insurance contributory (tests of need) Jobseekers Allowance ESA Pension Credit Minimum incomes Child Benefit Over 80s pensions Winter Fuel Payment Universal benefits Tapered Benefits Housing Benefit Tax Credits Local welfare assistance Social Work payments Discretionary benefits

Public spending on benefits HMRC 40.3 bn Tax Child Benefit Credit State pension 83 bn Total JSA/ Income Support Expenditure 204.4 bn Older people 110.7 bn DWP 53.4 bn Disability Disability ESA/IB Housing Benefit Housing Benefit Other benefits

The Poor Law and the Welfare State The Poor Law The Welfare State Stigma Rights Selectivity Universality Welfare as a public burden From the cradle to the grave Local discretion Uniform, national administration Myth 1: The Welfare State would abolish poverty Myth 2: Older people would gradually forget Myth 3: Rights would overcome stigma

Means testing The reasons identified for low take-up Policies to avoid means- testing (1970s) Extending National Insurance Invalidity Benefit Non contributory benefits Attendance Allowance Mobility Allowance Non-contributory Invalidity Pension Extending universal benefits Child Benefit One-parent benefit Ignorance Complexity Stigma Marginal benefit

Targeting The return to means-testing (1980s and after) Refining the target Type 1 errors: wrongful exclusion Type 2 errors: wrongful inclusion Tapered benefits Rate Rebate, Community Charge Benefit, Council Tax Benefit, Council Tax Reduction Unified Housing Benefit Family Income Supplement, Family Credit, Tax Credits The methods Tightening eligibility criteria Computermania Purging benefit fraud Segmenting refining responses to client groups The collapse of National Insurance for unemployed people The resurgence of selectivity

The problems of targeting Problems of selectivity Problems of means testing complexity exclusion non-takeup equity costly administration intrusiveness boundary problems the poverty trap threshold definition and tapers capital equivalence and household composition changing circumstances self-employment

Two models of takeup Burton Weisbrod: Costs and benefits Scott Kerr: Thresholds Costs: Information Stigma Access Benefits: Marginal benefit Utility 1. Perceived need 2. Basic knowledge 3. Perceived eligibility 4. Perceived utility 5. Beliefs and feelings 6. Perceived stability of circumstances 7. Making a claim

The take-up of various benefits Type of benefit Estimates of % takeup by eligible recipients Estimates of % money due being claimed Child Benefit Universal 95-96% Child Tax Credit Tapered 83-87% 92-95% Housing Benefit Tapered 78-84% 84-90% Income Support plus ESA Minimum income 77-89% 82-92% Working Tax Credit Tapered 63-68% 82-87% Pension Credit Minimum income 62-68% 73-80% Council Tax Benefit Tapered 62-69% 64-71% Jobseekers Allowance Insurance/ minimum income 60-67% 61-70% Disability Living Allowance mobility component Non-contributory 50-70% Attendance Allowance Non-contributory 40-60% Disability Living Allowance care component Non-contributory 30-50%

Some things we know, some we dont Pensioners Similar rates for Housing Benefit Unknown capital holdings Reluctance to identify disability Some grounds for scepticism Why are Tax Credits > basic means tests? Couples Persistently lower claims than for single people Why is Attendance Allowance > DLA care component? Why is Housing Benefit > Council Tax Reduction? Employment Different rates for Housing Benefit Problem of fluctuating income Precarious work/ sub-employment Why are lone parents more likely to claim than single pensioners?

What works? City of Ypres, Forma Subventionis Pauperum, 1531 Many people are so naturally ashamed and fearful, that they would rather hide their need than disclose it, and they live at home in serious want. Because of them, it has been decreed that people who are needy secretly and in private should be searched out. Those who are ashamed to be seen shall be visited, and those who are too ashamed to take anything shall be given support. Men will go to the houses of those who do not dare speak to us or to come to our gates. We think it best not to delay unless they are driven, through the loss of this honest humility, to show their deprivation and need. They must be helped, privately and promptly, lest they are lost by our negligence, when they are just those who a caring charity requires us to help. Stability and predictability Outreach Personal support

Welfare reform: how benefits have been changing Personalisation Work testing Conditionality Means testing Personalised assessments Responses in real time ESA Lone parents Work for your benefit New rules for jobseekers Compulsory entry to programmes Intensive intervention Sanctions Who are the target groups? Does universal coverage still matter?