Incapacity Benefit & knowledge

Tory proposals to cut the numbers claiming Incapacity Benefit show the absurdity of our welfare system.
Let's start from Willem's point. There's a simple reason so many are on Incapacity Benefit rather than Jobseeker's Allowance - Incapacity Benefit pays £22 a week more.
But why? There are three reasons, all of them suspect.
1. There's a distinction between the deserving and undeserving poor. The able-bodied unemployed are less deserving than those unable to work, and so should get less.
2. It's possible to distinguish between the able and the ill.
3. Doctors have an incentive to so distinguish.
All three presumptions are dubious. Why should someone unlucky enough to be made redundant get less than someone unlucky enough to be ill?  We can't often easily distinguish between depression and being down in the dumps, or between back pain and  malingering. And why should doctors try to do so? Faced with a sob story from a doe-eyed patient, why shouldn't a GP sign off on giving them an extra £22 a week? Chris Grayling's plan to have an "independent" assessor decide who should get IB and who JSA doesn't solve this problem.
Instead, there's a simpler alternative - a flat-rate payment to all, a citizen's basic income. This would replace the tax allowance for those in work, and IB or JSA for those out of work.
One virtue of this scheme is that it recognizes that the state just cannot know enough about every individual to judge whether they should be on IB or JSA or neither.
Also, because it's paid to all, it not only gives everyone an incentive to work but also makes it impossible for politicians to look tough by bullying the vulnerable.
There is, then, a policy that's economically rational and humane.  And which, therefore, has zero chance of being implemented.

Comments

[reason]

Chris...
I have always held this to be the most sensible position, but it does have a weakness - special needs and chronic irresponsibility. I can't help thinking that paternalism will not be needed somewhere. We are not all competent adults.

[Rohan]

Mmm. To correct one factual error - access to incapacity benefit is already decided by a Government admisistered test of the person's capability (it adds up different points for different things and you have to get a certain number of points). It's obviously an imperfect test but it invalidates point 3 to a certain extent.

As to why we have incapacity benefit I'd say it's because there is a political consensus that being sick or disabled represents a significant additional barrier to work in itself which should be associated with a greater out of work income and less onerous requirements on those individuals. No political party believes otherwise - if you note the Tories have backed away from Wisconsin style reforms (e.g. limiting access to incapacity benefit and dropping a lot more than 200,000 people onto JSA) which they trailed in the press (notably the Spectator) a couple of months ago. I'd say that's because they calculate it to be a vote loser rather than vote winner.

On the basic/citizen income - you didn't respond to my comments some time ago to the effect that i couldn't understand how your migration policy was compatable with a citizen's income. Is there a qualifying period? What happens before that qualifying period? Do you keep housing benefit (and other benefits) for aslum seekers who can't work before awarding them the citizen's income if they win leave to remain. How do you keep track (and limit fraud) with a citizen's income paid to a highly mobile population such as imigrant eastern European workers.

You have (and probably correctly) identified the inability of large organisations such as Government to administer benefits as a arguement for a citizen's income however this would only seem to be the case where you had a settled population with very limitied emigration and imigration - that is quite patently not the case in the UK (would this policy be devolved to NI?) and in particular England.

[reason]

Also, I think the snark in your last sentence is unbecoming and unfair. There are good political reasons that explain why the citizen's basic income has not been introduced. You need the supporters to sell it better. In particular, people need to start thinking of tax/social security AS ONE SINGLE redistributive/social insurance system instead of separate initiatives. People don't think to be very good at whole system thinking, they prefer sound bytes.

[Rohan]

Also would you have to withdraw from the EU to have a citizen's income? A principle imbedded in EU treties is the exportability of national insurance (contributory) related (as oposed to means tested )benefits - if this was paid to everyone in the UK on the basis of them being resident for a period of time then the citizen's income would become exportable for any EU citizen who had lived in the UK. Otherwise you would have to reach an agreement with every other nation in the EU that you would refund them the costs of paying their local benefits to former UK residents (say a French or Dutch person who had spent their working career in the UK paying UK taxs).

To be honest the policy has got more holes in it than swiss cheese and is generally put forward by people with no idea of the legal or practical realities of living in a democracy with both national and european laws.

[MJW]

The idea of a citizen's basic income has plenty of appeal, provided it's paid only to UK citizens, and not to anybody who is simply a resident. However, I think you'll find a lot of ideological opposition on the left to the idea that "rich" people will be getting something out of the system, rather than simply contributing to it, no matter how clearly you explain the ideas of net contributor and net beneficiary.

What you also fail to recognise is that welfare was never intended to provide a lifestyle choice, but a safety net for the vulnerable. Choosing to stay out of work and on benefits may be rational when working only pays slightly more, but it is not what the system was meant to do. If not working is to be a lifestyle choice, that's fine, but it's a lifestyle choice that should be funded at the individual's discretion not by the state.

[Peter]

Perhaps the EU should provide us all with a 'citizen's wage. This would overcome the issue of exportability posed above. It might also limit their spending on other, (sometimes bizarre) things and perhaps cut down the need for any national expenditure on this kind of welfare, tax credits etc etc

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[Jackart]

This is the first post of yours for a while with which I've agreed in its entirety.

[Alex]

Rohan: Make it notionally contributory - conditional on paying NI contribs. (As, I think, if you're claiming child benefit and quite a few others this counts towards your contribs this would work.)

[Matt Munro]

NU lab would never introduce it, too liberating and empowering. It would encourage "the poor" to make their own decisions and that would never do.

[Mark Wadsworth]

S&M, thanks for link to CI booklet (as ever), I should mentioned that they wimped out on IB and said that current IB claimants would get an extra amount, I argued the opposite, but fair anough, we all have to compromise.

[Rohan]

Alex - if it was contributory in that sense then I think it would be exportable in the EU at a rate of something like X/40*BCI where X is number of years worked in the UK paying NI. Given BCI is likely to be above JSA or IB rates that will be horrendously expensive looking at out emigration figures and likely short duration stay imigration (~ 5 years).

[Mark Wadsworth]

Rohan, the fact that we'd have to withdraw from the EU first is a bonus, not a disadvantage!

[Rohan]

Mark - I'm not neccesarily in disagreement with you but I hate the nature of single issue policics whether it on the CI or the EU which ignores the consequences and issues that relate directly to the path of action the person wants.

Although it is a dull point I have never seen the EU point dealt with in UK based sites dealing with the CI which rather tells you it is currently the preserve of wonks playing with abstract concepts as opposed to an off the shelf policy any political party could offer to the elctorate.

[Rohan]

A benefit with additional payments (e.g. for disability) wouldn't realise the benefits the CI is meant to bring. You'd still need the massive Government (or out sourced) beucracy to suupport assessments for disability. You'd have incentives dealt with on the FT blog linked to above to get onto the disability part of the benefit.You still have greater disincentives to work if you're on the disability side of the benefit.

Therefore you'd have as many if not more appeals about decisions about whether someone was disabled. So Mark I might see lots of problems with it but better a pure CI rather than a fudge which is essentially an expanded benefits system.

In other words same as now except a tiny bit bit of simplification achieved at the expense of increasing the intentives to demonstrate you are sick or disabled.

[sanbikinoraion]

Surely, Chris, one could see that disabled people could have a higher cost of living - through no fault of their own - and so in attempting to provide a minimum subsistence income to all, the disabled will often need more money in order to simply subsist.

Secondly, one can also see, surely reasonably, that for those disabled who have no way of improving their own income at any point in their lives, that we might compassionately fund them to a tune greater than that of subsistence so that they might enjoy life a little.

[Ilex]

Peter - given that the EU's budget is 1.23% of EU GDP, member states would have to be throwing a lot more money their way to make an EU-wide scheme workable. Is this what you want? This is excluding the question of how on earth price levels would be set - a single payment level across the EU is idiotic given the differences in PPP across the member states and would stoke inflation something awful (plus, can you really see member states condoning something so openly redistributive?). If however they were set at differentiated rates a). they would have to be reviewed every five minutes as lower-income countries converge towards Western European price levels within the single market, and b). people in countries with lower levels would have an added incentive to move to countries with a higher level of support (albeit price-linked).

So basically, not a particularly politically viable plan. It would however be quite handy for the Eurozone states, as it would effectively allow for regional redistribution in the case of an asymmetric shock. But here again, politically highly unlikely. I can't see Germany and the Netherlands wanting to subsidise the rest of Europe even more than they do currently.