Are means tested benefits pointless?

In an article for The Independent, Sam Osborne revealed that the government has increased the amount it pays to outsourcers who administer disability assessments by £40 million per year, taking the total yearly output to £295 million per year.

It’s probably fair to say that Independent Assessment Services (formerly known as Atos) and Capita, the companies involved, didn’t have the best of reputations anyway, following bizarre reports of tests which involved asking if a claimant who had lost their legs could walk across an office.

To be paying such companies hundreds of millions of pounds per year is controversial to say the least. Especially when you consider that the government’s new scheme for disability benefits, PIP (Personal Independence Payments), has just been defeated in court for discriminating against people with mental health problems.

PIP will now undergo a complete review, with every single one of its 1.6 million claimants facing review, with a possible 160,000 of those having their payments increased.

It’s not just PIP either, with the government’s attempts to simplify benefit payments by introducing Universal Credit, a single payment encompassing all welfare payments. The service is currently crippled by technical issues, legal challenges and the scandal which revealed benefit claimants were charged for ringing the advice lines. Universal Credit also stopped some claimants from receiving money for more than 6 weeks, driving many to food banks.

In a humiliating turn for the government, they were defeated in court over PIP, and in December Work and Pensions Minister Damian Hinds was forced to apologise for the delays. After mounting opposition, Chancellor Philip Hammond announced changes in the Budget, including cutting the waiting time for a first payment from six to five weeks.

These issues are a result of means tested benefits, which essentially means that the government needs to assess you to ensure that you’re eligible to receive them. In the case of Jobseekers Allowance the government must firstly ensure that you're unemployed, and secondly that you are actively seeking work. Many of these tasks have been outsourced to third-party companies who claimants must report to in order to prove they are seeking work.

In the case of disability-related benefits, outsourced companies such as ATOS are paid to assess the levels of somebody’s disability in order to check how severely they are disabled, and thus what level of financial assistance they need.

The issue that many have highlighted, however, is the astronomical cost of such an exercise. Consider that to run a scheme of this nature the government must employ huge numbers of administrative staff, they need to pay huge sums for advanced software and technology, they must pay assessors and they must also pay huge sums for renting buildings to house these processes whilst also heating and lighting them. As if those costs weren’t enough, there’s then the cost of completely messing the whole thing up.

The cost of having to re-assess 1.6 million PIP claims is estimated at £3.7 billion over the next 5 years. The estimated cost of introducing Universal Credit has been estimated at £15.8 billion over roughly the same amount of time.

The maximum amount you can claim for PIP, per month, is £452 according to Citizens Advice. The highest amount somebody can claim for Universal Credit, per month, is £317 according to the government’s own benefits calculator.

According to The BBC, As of August 2017, 590,000 people were on universal credit. Of these people, 230,000 (39%) were in employment. There were 1.6 million people claiming PIP as of the same time period.

I think you can see where this is going.

£295 million paid to outsourced benefits assessors over 5 years comes to a total of £1.47 billion. The cost of having to re-assess all of those claimants is £3.7 billion. The total cost of the scheme over 5 years therefore works out at £5.17 billion. That works out at roughly £1 billion per year, which divided by every single claimant works out at an extra £625 per year.

Universal credit will be nearly £16 billion over 5 years, which works out at roughly £3.2 billion per year, or £5423 per year, per claimant. That is also an extra £104 per week for every single claimant.

Let’s forget the moral aspect of subcontracting faceless corporations to try and prove disabled people aren’t really disabled, and consider for a second that if means testing were abolished all together, the savings from the administration costs would almost make the schemes effectively free.

It’s not for us to tell you whether a universal basic income, or a monthly payment to every single citizen regardless of income is morally justifiable. It can be said with a reasonable level of confidence, however, the abolishment of all means tested benefits would go at least half way, and possibly even the whole way, to costing exactly the same amount of money without any of the distress, scandal and greed it has created.

Take a moment to consider the health implications of such a suggestion, a recent article by Danny Dorling of Oxford University and Stuart Gietel-Basten of the University of Hong Kong for The Conversation, estimate that life expectancy in Britain has fallen so much that a million years of life could disappear by 2058.

The authors note that life expectancy has risen sharply year-on-year ever since the introduction of wide-ranging reforms to public health in the 19th century. After the liberal governments of the time introduced public sewage solutions and other hygiene controls, infant mortality dropped through the floor, bringing life expectancy right up with it.

Ever since the mid-19th century that life expectancy has continued to rise until the coalition government entered Downing Street in 2010. The authors note that the government had tried to blame the rise of influenza, a temporary explanation for what they hoped was a temporary problem, except it wasn’t. Life expectancy has actually started to fall.

I’ll end this with their conclusion on what may be to blame.

“As the years passed and life expectancy continued to stall, it became clear that it wasn’t because of flu or an illness like it. The most plausible culprit was a combination of the particular kind of austerity for the poor and elderly that the 2010 Conservative-Liberal Democrat government so quickly enacted.”