Ryan Shorthouse: How to add contributions and incentives to benefit payments
Ryan Shorthouse is the founder and Director of Bright Blue
Back in the nineties, Kevin the Teenager was first introduced on TV, screaming “its so unfair”. He’s stayed in popular consciousness ever since, particularly for long-suffering parents. And that adolescence angst about fairness, in truth, never really leaves us.
Throughout our lives, even in infancy, we intensely monitor – are deeply affected by – whether we and others are treated fairly. And this is associated with proportional, rather than equal, outcomes. Most of us think that rewards in life should derive from – and differ according to – efforts. A recent study by Yale University scientists, based on experiments with babies and children, show that fair inequality is favoured over unfair equality.
Attitudes towards the welfare system, which we all pay for as taxpayers, are especially vociferous. The public, sadly, are largely suspicious and condemnatory of the current benefits system.
Perhaps this is partly because benefit entitlement is – even under the new Universal Credit that is gradually being introduced – determined almost entirely on the basis of need. Those who have worked for longer, paid more in tax, will receive the same amount from the state in straitened times as someone who has hardly worked at all.
A strong safety net is not something those on the centre-right should sniff at: it is essential for the popularity and functioning of our market economy and liberal society. This is because people inevitably fall into poverty. Businesses fail. Jobs are lost. Relationships break down. Trouble happens, basically – and it can happen to almost all of us. Indeed, it’s been estimated that a third of us will live in poverty at least once in an eight-year period.
Over the past decade, working-aged benefits have been deeply and disproportionately cut. But if the welfare system is to be suitably resourced in the future, the public need to believe it is fair. Three reforms, which Bright Blue advocated in our report Helping hand?, could help.
First, people who have worked for longer should be entitled to more financial support when they come to rely on the welfare system, through a contribution supplement that is added to their Universal Credit payments.
This supplement should also be added to statutory maternity and paternity pay. The current support new parents receive from the state is a measly £145.18 per week, resulting in low-income women returning to work sooner than they’d like and many men put off from taking time off all together.
Second, claimants should be financially compensated for any late payments of Universal Credit by the Department for Work and Pensions. Most claimants have to meet certain conditions on job preparation and seeking to be entitled to benefits. If they don’t, their benefits are sanctioned. Fair enough. As Bright Blue’s recent research showed, benefit claimants themselves tend to support this.
But this rule ought to be reciprocated. There should be obligation on the Department for Work and Pensions to pay claimants their regular Universal Credit payments on time, especially as claimants now receive their benefit payments monthly, less frequently than before. If government doesn’t do this, as evidence shows is the case with a significant minority of claims, it should face consequences too. Claimants should be granted financial compensation, if an independent investigation finds the Department for Work and Pensions at fault, which to some degree should mirror the amount that claimants lose if they are sanctioned.
Finally, there should be more carrots, not just sticks, for claimants meeting the conditions of receiving benefits. If jobseekers are going that extra mile to get a job, the government should recognise and reward them. For those who put in the hard yards but keep hitting a brick wall, Work Coaches in jobcentres should be able to grant them a little more cash.
Even more radically, those who show extraordinary effort should be entered into a nation-wide lottery, with a handful of claimants having the chance to win a £1,000 prize.
Sometimes, no matter how much they try, some people face bouts of bad luck. They need and deserve extra support through our welfare system.
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