Less ‘nudge’, more unhelpful shove

Ruth_Lister 4x3.jpgBaroness Ruth Lister is Emeritus Professor of Social Policy at Loughborough University and a Labour Backbench Peer

Earlier this year, the Welfare Reform Bill made news with defeats for the government on proposals such as elements of the benefits cap, bedroom tax and time-limiting of contributory employment and support allowance.  These were examples of how Treasury cuts were contaminating a Bill, the central purpose of which was the introduction of universal credit.  Now that it’s on the statute book, I want to reflect on a central thread running through the Act – the desire to change behaviour.

Of course, the goal of behavioural change has for some time driven welfare-to-work strategies.  And much of the government’s behavioural change agenda is indeed concerned with promoting paid work.  What is new is the range of measures designed to support this goal – despite the evidence about the likely harmful impact.

The benefit cap is a case in point.  In the Commons, the Minister, Chris Grayling, explained that ‘the reality is that the cap is all about influencing behaviour’.  When we asked Lord Freud what behavioural change the government was trying to achieve in the case of those not required to seek work, particularly those carers caught by the cap, he did not have an answer.  He did though later acknowledge that they did not want to encourage carers to stop caring – not surprising really given the amount carers save the state. 

One behavioural change that the cap, plus housing benefit cuts, is likely to achieve is people moving to a lower rent area.  Perversely, this might well reduce the chances of them getting into paid work, both because there are usually fewer jobs in such areas, and because moving could destroy the social networks that can be so important in helping parents in particular to take up work, especially if they are de-canted to a completely different part of the country as in Newham to Stoke.  Here is a clear example of the government ignoring the research evidence in its ideological zeal.

Less newsworthy are changes in the way that benefits will be paid – monthly rather than fortnightly and into a single account, with no provision for money for children to be paid direct to the caring parent.  Both these changes could have very damaging effects, especially on women.  The desired behavioural change from a single monthly payment was spelt out in a written Commons answer: ‘This change is seen as key to helping people develop the financial management skills required to move with ease from benefits into work by mirroring a regular salary’ (Hansard 7.3.12, col 791W). 

Yet, at least one in five workers are still paid weekly or fortnightly, and as many as half those earning less than £10,000pa are not paid monthly.  Warnings, based on research evidence, that families will run out of money and could turn to payday loans and other high interest lenders, were swatted away.  Similarly, evidence about how money for children is more likely to be spent on children if paid to the caring parent was discounted, in the mistaken belief that paying universal credit into a single account somehow mimics the budgeting patterns of working families. 

What mattered is that the government will, as Lord Freud put it, ‘shape the way people arrange their lives,’ and achieve what Iain Duncan Smith has called a culture change.  There was a strong sense that ‘they’ should learn to budget like ‘us’.  In the name of responsibility, and despite talk of government not interfering in household budgeting, the government is in fact telling families how they should organise their lives, regardless of the costs to them: less a ‘nudge’, more an unhelpful shove. 

One chink of light is that it’s open to the Northern Ireland Assembly to adopt different payment methods within the parity framework; I hope they will use this power.  Here in Westminster, we can use our scrutiny of the regulations to reopen some of these issues.

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