The Opportunities of Change

The new Government has wasted little time in making it clear that welfare policy will be high on the agenda for 2015, with David Cameron’s speech on Monday pinning system reform to the heart of his ‘One Nation’ agenda. But the past week has also seen the appointment of a new Select Committee Chair for the Work and Pensions Committee, which will undoubtedly also play a strong role in shaping the future of welfare over this Parliamentary term.

The selection process saw Frank Field MP chosen to replace Dame Anne Begg, who lost her Aberdeen South seat to the SNP candidate. This means that Labour retains the Chair – but that is not to say that the change won’t represent a shift in tone for this active Committee.

In Westminster, Frank Field is known as much for his unique approach to the business of party politics as he is for his expertise in matters poverty and welfare. At a time when Parliamentarians have come under increasing criticism for the tone of debate, Field has consistently eschewed anything that smacks of a slanging match. Rather, he has kept his eyes on the prize of a welfare reform that brings about a lasting change in life chances, preferring co-operation over conflict as a way of achieving that goal. In the area of welfare more than any other, this is – sadly – a strikingly novel approach.

A profile in the Economist written more than two years ago concludes, ‘A growing likelihood of coalition government, as the British vote fractures, will make Mr. Field’s style of politics all the more necessary.’ This side of May 2015, the idea of a coalition seems a very long time ago indeed. But arguably there’s now even more value in welfare having an oppositional voice with cross-party credibility.

With that in mind, Demos has a few suggestions for what the Committee should focus its attentions on:

1. The Work and Pensions Committee has to scrutinise both departmental spend and departmental policy. This means it must balance its priorities between the parts of the welfare bill associated with the greatest spend (for example, housing benefit) and those with a smaller direct claim on the public purse, but which are no less significant for that – a prime example here is the sanctions regime, which has been explicitly linked to the rise in food bank use. It is hoped the Committee will continue to press for an independent review of the sanctions regime – specifically, the fairness and consistency of its implementation by the Job Centre.

2. Fairness and consistency should be watchwords, too, of the way eligibility for ESA is assessed. The last Committee scrutinised the findings of four independent reviews into the Work Capability Assessment (WCA), and supported the recommendation for a wholesale redesign. Demos and the University of Kent have been working together to build the evidence base for an alternative, ‘real-world’ assessment, drawing lessons from seven other countries for application in the UK. We argue that the WCA should focus less on the limitations people have to undertake certain types of work, and rather emphasise what people can do – taking into account their genuine opportunities to access suitable jobs in their local economy, rather than setting out abstract judgements on their notional fitness to work. The Committee should spur Government to take forward recommendations to reform the WCA, and look at how it might become better integrated with other assessments.

3. While the Government has intimated that the £12 billion of further cuts are likely to steer clear of impacting disabled people, it is worth remembering that the impact of some of the first wave reforms has yet to be felt. The Welfare Reform Act 2012, for example, provided for some changes that have not yet been introduced, like the possibility of reform to DLA for under-16s. Moreover, the last round of cuts was dogged by a failure to recognise the cumulative impact of different reforms on certain groups. Demos’ work in 2013 with Scope found that disabled families had faced significant reductions in their household income, to the tune of £2-3,000 in a typical household over the five years to 2015 – or, across the country, a projected total of £28.3 billion in lost welfare support to 2018. The Work and Pensions committee must hold Government to account for calculating impact as it is really experienced by households and, more generally, for embedding the highest possible standard of impact assessment into any further plans for welfare reform.

4. Crucially, the impact of investment and increased benefits should be subject to as rigorous an assessment as cuts. Investments, too, can have adverse consequences. In this light, the Committee should examine Government’s plans to increase the entitlement to free childcare for three and four-year-olds to 30 hours per week as it is not yet clear that these plans will address the ‘cliff-edges’ that currently exist. As the Family and Childcare Trust has highlighted, families in the £30,000 – £40,000 income bracket are most at risk, as they are eligible to have 85 per cent of their childcare costs met under Universal Credit, but if they cross an income threshold then Tax Free Childcare will meet only 20 per cent of those costs. Cliff-edges like this risk deepening inequalities, and can act as a real – and understandable – disincentive to parents taking up employment.

5. On this last point in particular – ensuring that Government reduces dependency, improves life chances, and makes work pay – Frank Field needs no encouragement. He has challenged the Conservatives’ flagship Universal Credit from the point of its conception, and is well placed to lead continued scrutiny of its implementation. Ironically, although he has been a dog on the heels of Iain Duncan Smith on this issue, Field’s objections to Universal Credit actually rest on views that put him to the right of his party, closer to IDS et al. Field is anti- means-testing. He believes that the means test fosters dependency and stifles aspiration, because it makes the stakes too high for people to choose sacrifice now for higher incomes in the future. Universal Credit, which is designed to ‘taper’ as people’s incomes rise, is for him ‘the ultimate form of means-testing’.

There is no doubt that a change of Government and Committee chair presents many opportunities – to right wrongs and to take bold new strides forward in designing a more equitable and effective welfare system. In recent years, the Government has shown an interest in policymaking based on an understanding of human behaviour, setting up a Behavioural Insights Team (which originally sat within Government, but has since become a ‘social interest company’, part-owned by the Cabinet Office). As its alternative name, the ‘Nudge Unit’ implies, the team’s work has tended to focus on things like public health – ‘nudging’ people towards healthier or more prudent choices. But might Field’s own particular philosophy on welfare point to a wider application? There is an argument that Government needs to be doing more to consider how people’s behaviour interacts with the constraints of the welfare system. Could behavioural insights be the key to finally ‘cracking’ welfare reform?