adequate minimum income: enough already? dr katherine duffy october 2014 1duffy 29 september 2014

Duffy 29 September 2014 1

Adequate minimum income:enough already?

Dr Katherine DuffyOctober 2014

ENGLAND


Content of presentation

1. Introduction: EAPN and EMIN (and me)2. What is minimum income and what is it

not? 3. Minimum incomes in the UK4. Is it an adequate minimum income?5. What needs to change?6. What can we do?


Minimum income: what is it?“Safety net” • Income of last resort (i.e. potential beneficiaries have no sufficient alternative

resources from earnings or savings or other assets)• No precise definition at EU level. But normally:

– Non-contributory (I.e.. not insurance-based)– Means-tested social assistance (e.g. in UK Income based JSA or ESA)– Usually paid to a household whose sources of income are taken into account – Not usually time-limited (except Bulgaria )– Usually demand driven rather than a fixed global sum (except Latvia, and now

UK under AME?)– Amount usually set and paid by central government, but can be fixed or paid

wholly or partly by regional or lower tier government (e.g. Spain, Sweden) – Can be cash from one source or several sources taken together to provide a

guaranteed minimum income (e.g. France)– In some regions of Austria – when beneficiaries get a job they are assessed for

capacity to repay social assistance


UK: Just to clarify....

Minimum Income• Income support schemes that provide a household safety net for people who

cannot work or get a job and who have run out of social insurance payments or who were never eligible for them

“Basic income”• A small income granted unconditionally to all individual citizens; does not exist

anywhere yet; (UK Green party supports citizen’s income)

Minimum wage• A minimum salary for individual employees that is fixed by law (e.g. UK) or by

collective bargaining

The “Living Wage”• – in the UK this is a campaign demand for higher wages that meet a modest

cost of living. (but in Belgium the Living Wage is the Minimum Income)


Minimum income is important because...

• It recognises a fundamental right to resources• It shows solidarity with those who have little or nothing • It promotes social inclusion and social cohesion

• It puts a floor under living standards• It puts a floor under wages• So, it stops a race to the bottom, including across Europe• It keeps up spending and therefore employment• It is an “automatic stabiliser”: spending rises with unemployment and

vice versa

• Common principles, common standards, common methods, promote social Europe to complement economic Europe


How much do UK income support schemes pay for people of working age in 2014-15

• NB (Pension credit (MI GUARANTEE) weekly: single: £148.35; couple £226.50 )Working age not working or few hours work, weekly amounts (benefit paid fortnightly)• Means – tested weekly JSA, ESA, (ESA replaces IB) IS (IS is for people not signed on as unemployed): single, age <

25: £57.35; age > 25: £72.40• JSA, ESA couple both aged over 18: £113.70• JSA Allowance for dependent children: £66.35 (lone parent on IS £72.40)• family/lone parent premium: £17.45• various disability premiums • Earnings disregards single: £5; couple: £10

• (Universal Credit – replaces 6 main benefits; paid calendar monthly : single < 25 £249.28; > 25: £314.67; • Variable housing benefit• Benefit cap weekly: single £350; couple £500• Savings disregard £6000 (£10,000 state pensioners); upper limit £16000 (no limit pensioners)Working age working at least 30 hours or in some circs 16 or 24 hours• Means- tested working tax credit basic amount couple or lone parent up to £1990 a year; various hours

restrictions and disability premiums plus approved childcare max £210 a week for 2+children; earnings limit single person over 25: £13,100; couple no children £18,000

Additional living and mobility costs of disability • Non means-tested (DLA care: £21.55-£81.30; mobility £21.55-56.75 (now being replaced by PIP) • Non means-tested PIP daily living: £54.55-£81.30; mobility £21.55-£56.75


Source MPSE 2013


Spot Scrooges...

The economic cost of inadequate benefits


Where are we? What idea of adequacy are we aspiring to? Benchmarked against what standard?

UK minimum incomes are:• Arbitrarily set amounts with no link to any notion of adequacy• Bleak subsistence: out-of-work benefits for single working age adults are

sufficient only for food, fuel and water rates• For families with children – sufficient also for clothing and some services

but not social participation (MPSE 2013)What do we aspire to?• Dignity? Choice? Participation? Well-being? Redistribution?Relative to what standard?• Deprivation• budget standards for a ‘modest but adequate income (MIS)’ • 60% of median income• ?


60% of median income threshold (the relative poverty line)

2010 EP Econ & Soc Cttee report (Figueiredo) "Central objective of income support schemes must be to lift people out of poverty and enable them to live in dignity”

“Adequate minimum income schemes ...must set...a level equivalent to at least 60% of median income in the Member State (para 15)

√ 60% threshold keeps link with inequality and shows if low income people are “keeping up” over time

√ 60% threshold allows international comparison√ 60% threshold is ‘abstract’ but involves no moralising about what people

who are poor need or do X 60% is arbitrary: EC thinks 60% too high; Denmark uses 50%; 60% leave a

Bulgarian in absolute povertyX For working age families in 2013 60% of median UK income was 30% below

JRF Minimum Income Standard (MPSE)


Adequacy: budget standards methods√ MIS Defines a basket of essential goods and services for various household types and

uprates and updates it regularly√ living standards focus, easy concept, consensualX Risk of “othering” and “moralising” needs of people in povertyX loses the link to relative poverty (e.g. the 60% threshold) and could be used for “safety

nets” too low for social participation • What is the ambition? Who decides and for whom?• The budget standard can be decided by independent experts, civil servants, poor

people, other civil society...• Sweden has budget standards set by experts only, but it is official in that it influence

social welfare incomes• The EC currently leans towards “consensual” budget standards – the type developed

for JRF

• Interviewees for UK EMIN report support MIS as a benchmark but don’t expect it to be used to set minimum income rates

• They also want to keep all the measures in the Child Poverty Act


Other problems with current minimum income schemes for people of working age

1. Decline of social insurance

2. Link between assessment of need and benefit provided

3. Uprating mechanism, prices, wages other?

4. Duration of means-tested benefits: fixed or not?

5. Coverage and eligibility: complexity, restrictions and exclusions

1. Labour market structural change and government policy

2. Broken: caps – individual and AME

3. Annual CPI for some but only 1% pa for main means-tested benefits

4. Not time-limited but no allowance for long-term living on means-tested benefits

5. Broad, but: Treasury; DWP. Home Office and LAs involved in policy and delivery. Also new restrictions e.g. work capability tests; earnings limits for some family benefits


Even more problems with current minimum income schemes for people of working age

1. Take-up

2. Incentives/ disincentives

3. Sanctions

4. Blurring line in and out of paid work

5. Integrated approach: Adequate income; access to quality services; access to the labour markets

6. Monitoring, reporting and follow-up

1. Complexity, admin capacity, low level of benefit, stigma, info; take up rates vary with benefit

2. poverty and unemployment traps,

3. Longer and harsher and doubled

4. Exacerbated by Universal Credit

5. Cuts, localism, privatisation

6. Lack of evidence e.g. There is evidence re sanctions on incentive to work, but not human cost. Pressure to get rid of some statistical series; very weak links evidence to policy


The safety net is not safeUK minimum incomes are inadequate and getting worse

• All people of working age on benefits, in or out of work, live on less money than a modest but adequate income

• More people are living on means-tested benefits and for longer• 4/5 households in poverty have someone in work• The line between status of in and out of work is blurring more and

more• There is no adequate income framework or goal or guarantee for

people of working age• The system threatens dignity, choice, participation, well-being and

rights • A further squeeze is planned


The challenges for making progress on adequate minimum income

Media, public opinion and politicians’ attitudes have hardened – and there’s too much misinformation

• TUC survey : public think unemployment is 41% of total welfare budget; its 3% (state pensions nearly half)

• Narrative of emergency • Coalition government 2: Opposition 1• All UK parties agree no improved support for unemployed people• Press – 80% to the right• Social NGOs shying away from lobbying on low benefits• Domestic poverty charities - not got resources of development charities –

e.g. Christian Aid 200 local groups and £100m • Trades unions focused on low wages and rights at work• People in poverty fear backlash• The government isn’t listening


Some positive signsThere is a well of solidarity to draw on and leadership matters

ATTITUDES• CPAG survey: public worries about 1% uprating; BSA survey shows a small upturn in support for people

on benefits• More traction on public ownership and inequality (Baumberg)• People’s opinions change with better information (BSA; TUC; Fabians; JRF)

POLITICS• Labour party – active state and higher minimum wages; Green Party more positive• Scotland? Northern Ireland? Wales?• Election?

CIVIL SOCIETY• More speaking out/ campaigning: -• Trades unions UNITE Community, UNISON, and USDAW and campaigns and expertise on benefits• Religious leaders, CAP Trussell Trust etc, on morality, destitution, food-banks, cost of living• Local authorities speaking out more on scale and pace of cuts• NGO success fighting on particular issues: work capability tests; asylum seeker support• Campaigns/ groups: End Child Poverty; Who Benefits; Just Fair; 38 degrees; various NHS


Make the case “They’ll stop chasing when you stop running”

“If people are going hungry it trumps the fact people may think they are scroungers”• Paid work does not protect against poverty(need rise in Minimum Wage, Living Wage, childcare support)• MIS benchmark as way in to adequate income debate (start: pensioners,

children (CPAG)• Emphasise the human cost of maladministration and sanctions (more

evidence on child development; living with a disability, destitution)• And the economic costs and perversities of low means –tested benefits • Put responsibility where it belongs – also on employers , government –

and charities• Democracy, right to be heard and to be reported correctly (Scotland;

election)• Pay for better minimum incomes ? Tax justice/ green growth/?


What can we do and how can we do it? – over to you

• External drivers: constitutional reform; elections; more cuts; rising poverty?• More grass-roots pressure on politicians and media? • Faith based organisations and trade unions have “boots on the ground” and

cash & current welfare ‘reform’ is an existential threat to their moral imperative (but Labour party and poverty NGOs need to step up too.

• Local Authorities to promote to central government the benefits of better benefits and the impact of housing benefit and council tax changes etc

• Getting through the media/ social media and public notice threshold: lobbying , campaigning, strategic litigation, new tools?

• More effective and new sources of campaign funding? Patrons/crowd-funding/ pro-bono

• Practical steps on the way to show impact and keep support over years?

• Lobby for change in EU (Fiscal Compact; Framework Directive on Minimum Income and poverty action programme)


MPs can take a gamble


Some people don’t have any choice

adequate minimum income: enough already? dr katherine duffy october 2014 1duffy 29 september 2014

Documents

citizens income minimum

adequate minimum income

guaranteed minimum income

sources of income

small income

basic income

uk income support schemes

safety net income