Comment

Universal Credit and the ‘Welfare Trap’ 2017

I’d watched an interesting debate which was broadcast on February this year between  Lord Freud, the architect of Universal Credit, and the Benefits and Welfare Committee. I’ve transcribed some of Lord Freud’s answers to the committee’s questions further below.

I don’t have too much of a problem finding work or getting interviews, but it was when I’d joined UC and was paid £600 from my previous job where I’d earned £300 a week, that  after 6 weeks of waiting I was paid nothing because the £600 was deducted. Then I had to wait another 4 weeks to get paid the £300 from UC, and had to rely on handouts from my family to survive. Without them I don’t know what I would’ve done, since I was told an advance wouldn’t be paid for 5 weeks, and I don’t appear eligible for a budget loan, since I’ve heard nothing from them. I could’ve contacted my council, but I assume they would’ve just told me to call UC about an advance again – after the 6 weeks that it.

But my point is I was already prescribed medication for depression, then I lost my job and went from earning £300 a week to £100 a week to nothing for 4 weeks, and that this never happened when I was on JSA. I never had to worry about my last week’s pay getting deducted.

Lord Freud describes his concept for UC as a way of tackling the two key problems of the benefits system, which is ‘the poverty trap’ and ‘the welfare trap’. I realise this is quite a complex and paradoxical issue whereby, does the welfare system deter people from working and actually perpetuate what Lord Freud describes as an ‘invidious’ division of inequality,  presumably where people like myself who find it difficult or are unwilling to secure permanent jobs with a steady income abuse the system, the ‘safety net’ as he calls. Or is it just harder than it appears to find permanent jobs and earn a living to support oneself? If this is true what then is best way of assisting those people, and should people be punished in order to motivate them?

Perhaps first I should give a little more background about myself. I’m a 35 year old literature graduate and I finished my degree in 2008 nearly 10 years ago, before that I worked full-time and part-time minimum wage jobs (£6.70 hourly) and lived with my parents.

I’d suffered from anxiety and depression, and alcoholism, since I was 16 and my parents were on income support after my father’s redundancy as an engineer for IBM in the early 90s – he was also an alcoholic, and my mother suffered from depression. My father went to Brunel University and both myself, my autistic brother and my sister went to University, although none of us have secured Graduate jobs with salaries more than 28K – we’re arts graduates, so perhaps that’s expected. My sister has actually done quite well for herself (28k), but has married (an engineer) and has left work to care for their baby.

I was also somewhat lucky when in 2012 I managed to get an internship with a scientific publisher called Biomed Central that led to a permanent position until 2014, where my salary was £19k, but I was eventually sacked for misconduct partly due to my mental health issues. After this I’d had interviews with other publishers but struggled to find a permanent positions, and resorted to taking part-time jobs, or temporary work, for minimum wage, this was partly due to the dismissal and my mental health issues.

Currently I live with my parents, who are retired, and my brother who is autistic, also an arts graduate, but who manages to work full time as a customer advisor for an energy company, earning £17k a year at the age 34. Similarly, I’ve worked temporary jobs for less than £17k, or minimum wage jobs, in positions that I was clearly overqualified for. Often I’ve been asked by  UC advisors and employers why I can’t find a permanent job or why I’m unsuccessful at interviews, and truthfully I believe it’s because I’m a graduate, I’m 35, and I’m either overqualified for factory work, or the £17k call centre job (which I don’t really want to do anyway). Or that I’m under-qualified for a lot of publishing jobs (I don’t have a masters and can’t get one without funding, which I’m unable to do because of a poor credit rating), or other Graduate roles in other industries except for sales, and I’m also overlooking the fact that I was dismissed from the only professional/Graduate/career I’ve ever had.

Furthermore, I suffer from mental health issues (depression and anxiety), I’m from a lower income background, and  honestly you don’t need a degree to work in sales, customer service or hospitality, just the ambition and humility, which I don’t have and never desired to have. I went to University to study film and literature because I found it interesting and as I wanted to pursue a career as a filmmaker, and to avoid an unskilled role in a call centre, hospitality or factory.  Since 2014 I’ve done nothing but these, which is probably my tough luck for not working harder, or for choosing an especially tricky industry. I can’t expect Lord Freud or UC to help me with that.

That’s me and I should adapt. I’m lower middle class, and as a Graduate I’m better off than some (working classes) and worse off than others (mostly more successful science and IT Graduates). My situation really hasn’t changed than much except for the two years I’d worked in publishing. I’m what you might term the ‘precariat’ – ‘the precariat lives in economic uncertainty, usually in chronic unsustainable debt, in which one shock, mistaken decision or illness could tip them over the edge into the under-class, cut adrift from society and probably condemned to social illness or an early death.’

I suppose my point is that Lord Freud’s description of the ‘welfare trap’ and ‘poverty trap’ and how UC has somehow been carefully designed to assist people find work, for me this seems like an extreme oversimplification of the demographics of unskilled or unqualified ‘workers’ and the employment market itself. Apart from a referral to a third-party organisation through the Jobcentre for a CV make-over, I don’t think I’ve ever received any career advice or assistance finding work. In fact, none of the jobs I’ve secured have been through the help of the jobcentre, which I believe they can’t simply because they don’t understand the job market. So they threaten me with sanctions, bully me, condescend me, tell me if I don’t find a job soon they’ll force me to  volunteer on a work programme with Sainsburys or Poundland, stacking shelves unpaid, as if this would somehow give me the experience to work in a job which you don’t need any experience or qualifications to do. And I’m not joking.

I do understand how being out of work just isn’t good for anyone, and that perhaps deep down threats of sanctions and tough love is necessary to get people off benefits. In fact, if I was in charge, I might do the same. However, I realise this doesn’t work for everyone either, and that it doesn’t work for me. I hated being out of work and having no money, getting £74 a week, a 35 year old graduate. But it’s better than nothing, and I was grateful for that.

At certain times, I’d felt like life wasn’t worth living. You feel useless, hopeless and pathetic, somehow worse than if I wasn’t a graduate ‘professional’ at all. But then sometimes I hated being in work even more, and this reason truly is ‘invidious’ as Lord Freud puts it, because I’m from the ‘poverty/welfare trap’ class and some employers who pay minimum wages on zero-hour-contracts treat you with as much respect as that merits, which is nothing.  Not all of them, but you feel replaceable, and there are dozens of unskilled, inexperienced school/college-leavers happy to work for £6.70 an hour, not even counting the EU workers, and best of all you can abuse and exploit them as much as you like and they won’t complain.

So when Lord Freud talks about ‘scallywags’ abusing the system to avoid work, it really doesn’t surprise me that some people are a little reluctant to join the workforce.

I’m not entirely sure there is a ‘welfare trap’, although I understand the stigma and how tax-payers feel resentful about people abusing the system. The welfare system exists to help people surviving in the ‘poverty trap’, which is a real trap, who can’t help themselves. Usually  it’s not because they choose to be in poverty or welfare, and like it so much they don’t wish to leave, but because the alternative is not so good.

Contradictorily, Lord Freud’s strategy for reforming the welfare system is not to consider those in the ‘poverty/welfare trap’ but those managing the system who feel that the system is ‘invidious’.  The sanctions, the delays, the deductions, an IT system meant to simplify everything, to put everyone from the elderly; the disabled; the Graduates; the malingerers; the single working mums; the scallywags all under the same umbrella. It just doesn’t seem like these were put in place to assess everyone individually as it simply doesn’t factor in the employment market itself. It’s odd that there are so many charities and third-party organisations offering support to jobseekers, as though it’s not the responsibility of the jobcentre to do this, just to facilitate the ‘signing on’ process, which has now been replaced with UC.

What jobs should people be doing based on their individual circumstances, experience and qualitications, and career aspirations, and how does UC help them? I’ve told been told by advisors at the Jobcentre that I’m a ‘light touch’, probably because I can find a temporary job for 3-6 months at time, and they’re aware I’m looking for permanent roles (probably in publishing), so they don’t feel the need to scare me with sanctions or see me on a weekly basis, which I actually appreciate. But also I feel they’re not qualified to help Graduates with mental health issues and a spotty work history, yet they can still sanction me if they’re dissatisfied.

Please find the video link to the Committee meeting copied below: http://www.parliamentlive.tv/Event/Index/6911af5e-eb1c-478e-b3fb-d26b28ab5997

QUESTION: Chairman

‘going back to the time when you were advising the previous labour government, at that time, or rather just after it, Alistair Darling said in the House of Commons that we looked very closely at what is now known as Universal Credit and we’d decided it was too difficult.’

time: 09:50.31

LORD FREUD: ‘when I had to write a feature for The Financial Times on welfare and poverty – one of the things that interested me was the two traps we’ve got, ‘the poverty trap’ and ‘the welfare trap’.

‘When I was asked in 2006 to do my report about what to do about welfare and welfare to work, I was actually amazed at how we still had the poverty trap and the welfare trap created by the benefits system, which by then was completely impenetrable, it had been bad enough in 1979.’

‘One of the things I’d suggested was a commission to sort out a new benefits system. The last government took all my recommendations but did not have a commission to sort out the benefits system. The benefits system, as you all know, has been built up by accretion and it is impossible to understand, there is nobody who understands it – and it is too complicated and just has to be simplified.’

‘And that is – you can’t do anything if you have the incentives wrong, and I’ll tell you this is so important, if you have a system where people can basically just shelter themselves from the jobs market, and you get the balance wrong on that – the incentives to work and the safety net – if you don’t get that balance right, it is invidious [‘(of an action or situation) likely to arouse or incur resentment or anger in others’] for society as a whole, for our culture as a whole because what you’re doing is creating an over comfortable safety net which is impossible to break out of, and you’re also making the people who are working look down and think ‘hang on, why am I bothering?’.

So it’s a terrible process, and my own view was then was that we’d got into a really invidious position and you had to break out of it. And that was why Universal Credit was and is so important, it’s got huge social implications to get that balance right. I think once you have the machinery in, which is what Universal Credit is and what I was trying to do – get that machine into work – you can play with the parameters and move it, you can optimise it, if you don’t have that system with its nice, simple clean levers, you will never get that social aspect right. And I think it will take many, many years, I think it will take some decades to optimise what we are now building’

QUESTION: LUKE HALL MP ‘The resolution foundation (www.resolutionfoundation.org) has told the committee that Universal Credit has created more losers than gainers, and I’d wondered was this always the intention of the policy or was this because along the way compromises were made to turn this policy into a workable solution?

LORD FREUD: ‘Well, it is of course nothing to do with Universal Credit per se, there was a set of political decisions to reduce some of the welfare payments, and it was done over a time scale at the same time that tax thresholds were raised and the living wage was being brought up, so there was a deliberate government policy to change that balance, so – it’s completely on the record – that the work allowances were reduced as part of the process, and that will come in. I know the resolution foundation feel pretty passionately they want the work allowances back, but if you just look at Universal Credit as a structure, that has got nothing to do with the levels, you could take a political decision about how much you want to pay people, getting an efficient structure to pay people through is what Universal Credit’s about.

QUESTION: CHAIRMAN ‘might the same criticism be held here, that although your prime minister gave commitments publicly to the scheme, when push came to shove he couldn’t actually beat George Osbourne in argument to defend the scheme because he simply didn’t understand it?’

LORD FREUD: ‘Universal Credit is a much more efficient system and saves you money year after year, and I think the original sum was that once fully in you saved 7 billion pounds, not – and that’s the total saving that reflected a more efficient payment system and the benefits to the economy as a whole. So having an efficient system is really valuable to the economy and therefore to the treasury.’

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