Departments falling out of love over benefits shake-up, by Nick Mann
Tuesday 24th September 2013, 5:00PM BST.
WHAT a difference a term makes.
Early in 2012, Social Security and Housing presented a bold new vision for reforming how to help the poorest in our society.
It had commissioned research that showed how the States needed to spend up to £20m. more every year to bring everyone up to near the minimum income standard – a measurement for a socially acceptable minimum standard of living.
Both the ministers at the time, but particularly Housing’s Dave Jones, were passionate in support of this joint report.
It fell down not because of the vision it presented, but because it failed to identify how it would be funded. That, in a time of financial restraint, was akin to friendly fire.
There were also question marks about the financial modelling – in some senses, it had all the hallmarks of a report which came to the States too soon.
Fast forward to 2013 and Social Security is back again. But with the change of political boards, there has been a radical shift in thinking to one that is meek where once it was bold and one that has perversely moved from using the minimum income standard that was the cornerstone to something which seems based more on gut feeling – a return, perhaps, to the more subjective politics of the past that was so criticised.
There has been a clear political break-up too.
For all the nods in the report about how the department has worked with its colleagues at Housing, they are no longer the courting couple so swooning in love that they once were.
The relationship has soured so much that Housing had initially appended a pretty damning letter to the latest report – and then took the almost unprecedented move of announcing an amendment to Social Security’s plans on the same day they were released.
The letter was penned on 9 August, so from then to now there has been an emboldening of Housing’s approach.
Housing condemns the report for being rushed, with little explanation of the policy changes announced.
It is right – hunt through the report for detail, such as why it believes new benefit rates should be based around 60% of median income instead of the minimum income standard, and you will be sorely disappointed.
Social Security has focused on merging rent rebate with supplementary benefit, something there seems to be pretty much universal support for. After all, it will mean equality of treatment for those in the private and social sectors and cut administration.
But Housing is critical that Social Security has then missed a chance to fully review how adequate benefit rates are.
‘In 2011 and 2012, when the States considered the joint SSD/Housing Green Paper and the first SSD States report on the modernisation of the supplementary benefit scheme, both SSD and Housing felt strongly that the welfare system should treat all low income households equally; but added, crucially, that “equal treatment” was not, in itself, enough: the welfare system had to be built upon a set of benefit rates that would leave low income households, irrespective of tenure, with enough money to fund a socially-acceptable standard of living,’ said Housing minister Dave Jones in the letter.
‘The Green Paper also explained that, in addressing those inequalities, the States has an opportunity to carry out bold and more progressive reforms that would help alleviate poverty in the island. In Housing’s view, the current report falls well short of those aims and does little more than transfer social housing tenants to supplementary benefit – a valuable initiative in itself, but a major missed opportunity to truly modernise supplementary benefit.’
More work has been done on the cost impacts of the changes proposed back in March 2012 and the new recommended approach by the department.
With rent rebate scrapped, and changes to the benefit cap, rates based around the minimum income standard would cost up to £8.95m. a year and those around the department’s new plan up to £3.75m.
Social Security has opted to base its plan on 60% of median income, a measure it states is the most widely used in judging relative poverty.
‘The decision taken by Social Security to benchmark requirement rates in relation to median household income was taken only after trying to strike a fine and appropriate balance between, on the one hand, providing much needed financial assistance to low income households and, on the other hand, the need to achieve financial affordability. In other words, the department believes that social justice and affordability issues must go hand in hand,’ the report states.
It later added that the benefit rates proposed ‘make no guarantee that every supplementary benefit household will achieve an income equal to or greater than the 60% reference point, and to make such a commitment would be considerably more expensive’.
So not only is its ‘reference point’ considerably lower than the report aimed for in 2012, it will not even properly target it.
The report is silent on how many families would hit the 60% measure, or how many will not, and it is also silent on how many, using this measure, are currently in relative poverty. All figures that should be crucial before the States debates this issue.
Then there is still the question of funding.
‘While the proposals contained in this report will cause a net increase in general revenue expenditure, it is anticipated that costs will be offset by recommendations made as part of the personal tax, pensions and benefits review,’ the report states.
So again, members are being asked to take a leap of faith.
No one knows, at the moment, what those recommendations are going to be or if they will be accepted.
This is the second political fissure caused by the report.
Treasury and Social Security were so close when they launched the consultation on revising tax, pensions and benefits, both stressing how it needed to all be thought about together to give the complete picture.
And now, just months later, Social Security is jumping the gun with proposals that will influence that whole review before it has been finished.
A joined-up approach to government it is not, but Social Security is doing some groundwork here for the debate ahead.
It is taking the chance that members will back its approach now, putting it in a stronger
position should the joint review contain something it does not like.
Or at least, that’s what a cynic might think – cast your mind back to the rush from Education, Public Services and Health to get in-principle approval for big-spending capital projects ahead of everyone else in the past.
When the States debates this report, it will also have the latest Budget on the agenda.
In the past the benefit uprating report has instigated little in the ways of passion.
It is clear already this one has sparked strong feelings.
Social Security minister Allister Langlois will face a fight to answer why it is not doing more to help pensioners, working families, single parents and others – especially given the evidence the last department produced.