The Department for Work and Pensions is not learning Covid lessons

In March last year, the Institute for Government, in conjunction with the government’s Social Security Advisory Committee, produced a report on Jobs and Benefits in the light of the Covid-19 pandemic.

It acknowledged that the Department for Work and Pensions had responded remarkably well to the immediate challenge – redeploying its own and others’ staff to cope with an unprecedented surge in claims for Universal Credit while persuading the Treasury to put in extra money – an additional £20 a week into UC, plus a more generous housing allowance, for example – to provide individuals and families with greater security in the face of the pandemic’s impact on jobs and income.

But the report also argued that here was a chance to re-assess the social security system.

Both the language and the thresholds of the benefits system need updating

One point was conceptual. The report argued that it is time to move away from the stigmatising use of the word “welfare” for the benefits system and return to the language of “social security”. Universal Credit is now the chief component of the benefit system for those of working age. But Universal Credit is not just about support for those out of work, crucial though that it is. It also provides a degree of security to the millions on it who are in fact in work. It is not “welfare” but part of a system of social security that includes the contributory benefits and non-contributory ones. The fiscal response to the pandemic was all about providing security, not “welfare”. The language used to describe the benefit system affects attitudes and it should revert to being social security.

The report also argued for some modest improvements to contributory Jobseeker’s Allowance to provide a somewhat better cushion against unexpected unemployment. And it said that the value of savings rules and other thresholds which have not risen in line with inflation for many years should be restored, and then indexed. The failure to do so is penalising saving and drawing increasing numbers of people into means-testing, or indeed debarring them from benefit. Thresholds that have not increased include, for example, the household benefit cap and the child benefit withdrawal point. The UC savings rule means that families with more than £16,000 in savings do not qualify when, if the rule had kept pace with inflation since it was last revised in 2006, the figure would be around £25,000 today. The argument for uprating these parameters has strengthened further since we wrote the report because inflation is rising sharply and heading for in excess of 8% – levels not seen since at least the early 1990s.

The DWP does not appear to be listening to suggestions to do things differently

It has taken the Department for Work and Pensions a year to respond, and it is clear from the response that it has been neither hearing nor listening. The response repeats – repeatedly – the mantra that “the best route out of poverty is through work” as though that is the sole answer to everything (and when neither the committee nor the IfG were seeking to challenge that).

It initially acknowledges that “it is important to encourage saving” but then says “we have no plans to change the savings limit”. Or indeed any of the other thresholds, despite recent increases in inflation. The government merely “notes” the suggestion that “social security” should replace the language of “welfare”.  And “notes” the recommendations for modest improvements to contributory benefits that might increase the chances of finding a job that matches the skills of someone newly unemployed, as opposed to them having to take, pretty much immediately, just any job. Indeed, from last month, DWP pretty much did the opposite, cutting from three months to four weeks the period during which the newly unemployed can look for work only in their sector.

The benefit system, the response says, “is not intended to replicate the income that a claimant was receiving prior to making a claim” but the original report did not recommend that it should. It rejects, once again, the notion that there might be a “starter payment” for new Universal Credit claims to soften the five-week wait for the first payment. The response to a number of recommendations to improve re-skilling and re-training in what is set to be a rapidly changing labour market – which included improved coordination with local government and between the many departments involved (HMT, DWP, DHSC, BEIS, DfE, MHCLG to run through the alphabet soup) - boils down to “well, we are doing quite a lot already”. The report was aware of what is already happening. The argument was that more was needed – and possible.

Rather than producing a crafted and thoughtful reply, the government’s response seems to be that everything is just fine and dandy. Deeply disappointing.