The range of policy options considered so far have been incremental changes to the existing Income Support scheme. However, our empirical findings also point to three more radical options which might address some of the problems and dysfunctions of the current arrangements. First, we examine the advantages and disadvantages of a system of voluntary reporting of changes between fixed-term reviews. Secondly, we
consider the possibility of a new benefit for pensioners separate from but based on Income Support. Thirdly, we examine the arguments for and against the introduction of a new in-work benefit for single people and childless couples along the lines of Family Credit and Disability Living Allowance.18
7.4.1 Voluntary reporting
In Chapter Four our analysis of ASE data for the period May to November 1991 has shown that, for the majority of Income Support recipients, the level of their benefit award did not change (see Table 4.4). Furthermore, of the 35 per cent of recipients whose benefit did change, over four times as many experienced an increase than experienced a decrease. A number of these increases will be the result of Benefits Agency administrative action (such as increasing the premium for a child passing one of the age thresholds) and not a change in the claimant's circumstances. Nevertheless, it is likely that altering the current reporting requirements would create more losers than winners, since changes which would have resulted in an increase of benefit would not be acted upon until the next routine assessment review.
One way of avoiding the problem of losers would be to make reporting between review dates voluntary. Under this arrangement, Income Support awards would be made for a fixed period, such as six months, and reviewed at the end of this period. In the interval between reviews there would be no duty upon the claimant to report any changes. However, if they chose to report a change a new assessment would be made which would run for a further six months. Hence, anyone experiencing a fall in their income or an increased demand upon their resources would be able to get an i mmediate response from the Benefits Agency. For them, Income Support would remain a responsive and flexible benefit. Conversely, anyone enjoying an increase in their income or a reduction in their needs would not need to report the change at all; it would be identified and taken into account when the award was reassessed. In effect, these people would be granted a period of grace for up to six months during which they would be better off than under the current reporting regime.
For Income Support claimants the voluntary reporting of changes would be entirely beneficial. At the start of an award period they would be able to rely upon a stable income from Income Support. Their benefit would not be reduced, whatever happened. In addition they would have the reassurance that, if they needed, they could have their benefit reassessed at any time of their choosing. Falls in income and increased need not be a source of undue concern and uncertainty.
Some claimants might even be encouraged to undertake work on a trial basis during the time of their fixed award. They would enjoy the advantage of keeping any money they earn and be relieved of the inconvenience of having constantly to report changes in earnings.
Under a voluntary reporting regime the notion of `late reporting' would disappear. Since late reporting is often a cause of overpayments, these would be reduced in number.
18
Since this research report was first drafted the DSS has published its plan to pilot an in-work benefit for single people and couples without dependent children in Piloting Change in Social Security. Helping people into work(DSS, 1995).
One effect of voluntary reporting would be an increase in the social security bill. However, this would be partly offset by the administrative savings generated by fewer changes in circumstances to process and fewer overpayments to recover. Also, since it would be permissible for claimants to claim benefit and work for a while without having to report it, a source of fraudulent activity would be removed.
A voluntary reporting regime would effectively change the nature of Income Support. It would retain in full its function as a safety-net, but with a relaxed means-test would become responsive immediately to changes in needs but also provide the opportunity for claimants to retain for a time increases in their income. In this way the enabling role of Income Support would be enhanced by providing more incentives to work, and some of its unpopular, more punitive aspects would be removed.
7.4.2 A social assistance benefit for pensioners
We have discussed above policy options based on treating claimant groups differently. These have covered reporting regimes and the substantive content of Income Support regulations. Many of the options evaluated have derived from the empirical finding that the circumstances of pensioners, the numbers and types of change in their lives and their reporting behaviour, differ markedly from other claimant groups.
We have therefore considered the desirability of tailoring some Income Support regulations more closely to the needs and circumstances of pensioners, or possibly of taking them out of Income Support altogether and establishing a separate social assistance benefit for them. There are certainly precedents for this latter approach from other parts of the social security system. Some of the extra costs of disability were recognised in the old Attendance Allowance. However, when the benefit was redesigned, the distinct needs of people under and over retirement age were recognised in the division of the benefit into the new Disability Living Allowance and Attendance Allowance 65+.
Similarly, there may be a case for a `safety-net' benefit for pensioners along the lines of Income Support but without some of the provisions that rarely affect them (such as the employment regulations) or that may particularly disadvantage them (such as the hospital rules). One consequence of such a benefit would be its (potentially) relative simplicity to understand and claim, and to administer.
Fewer conditions of assessment whether within Income Support or a new benefit would also mean fewer changes to report. However, since most pensioners have few changes in their lives there might be a case for introducing a fixed-term award, say for six months or a year. This would require more frequent reviews than are undertaken currently but would allow the Benefits Agency to act in a more proactive manner (identifying needs which may not have been reported by an elderly claimant, for example) than at present.
7.4.3 A n in-work benefit for single people and childless couples
In earlier drafts of this report we put forward the policy idea of an in-work benefit for single people and childless couples, along the lines of Family Credit. In July 1995, the Secretary of State announced a pilot scheme for such a benefit (DSS, 1995). This is an interesting development which is supported by some of the findings of this research. Our idea for a new in-work benefit for single people and childless couples stemmed from the negative effects of the current earnings rules. At best there is a straightforward lack of incentive for Income Support recipients to find remunerative work and, at worst, there is a disincentive effect which positively drives people away from work. The idea is supported by the apparent success of Family Credit, and the way it has been used as the model for Disability Working Allowance.
Although mainly conceived as a benefit to help low-income families in work with the costs of bringing up children, Family Credit was also intended from the outset to
provide incentives for people to re-enter the labour market. It was this aspect of the benefit that encouraged the architects of Disability Working Allowance to use it as a model for a benefit to encourage and support disabled people wanting to work but unable to earn sufficient income solely through working. However, DWA was intended to draw into the labour market people who had previously been forced to remain outside. In contrast, many single people and childless couples come onto Income Support from the labour market and might be expected to want, and be more able, to return quickly. There is evidence from Family Credit that for some claimants the benefit does serve the purpose of establishing them fully in the labour market and thus of floating them off benefits altogether.
That relatively few people work and claim Income Support is not necessarily an indication that few people would take up the new benefit. There are many reasons, which we have already discussed, why people choose or are unable to work. An in- work benefit could provide a fresh incentive. For example, there is some evidence that the hassle and inconvenience of reporting changes under Income Support have encouraged people to take up low-paid self-employment and claim Family Credit instead. By being on Family Credit some families could, according to Corden (1992, p.143) `... avoid negative aspects of being an Income Support claimant, and the particular difficulties of demonstrating self-employed earnings for the purpose of Income Support adjudication'. It is possible that there might be a similar effect on Income Support recipients currently discouraged by the reporting requirements upon them.
A new in-work benefit is clearly a radical departure from the existing Income Support arrangements for unemployed single people and childless couples. Our intention here is to suggest that such a benefit might remove some of the dysfunctional effects of Income Support and, at the same time, promote a number of the Department's own objectives, in particular the desire to minimise disincentive effects, to find ways of encouraging people to come off benefits, and to adapt the benefits structure to suit the lives of people rather than the other way round. It is not possible from our empirical data to analyse in any depth the effects of this suggestion but it does appear to have,
prima facie, some merit. 7.5 Summary
In this chapter we have presented a range of policy options aimed at improving the efficiency with which changes in circumstances are processed, at addressing some of the problems and dysfunctions that are caused by the current reporting requirements, and at promoting and advancing some of the strategic objectives set for the benefit system by the DSS. At an administrative level we have discussed a number of options that could be implemented within the current, or any revised, structure of Income Support. In addition we have considered the possible effects of changing the reporting duties currently placed on benefit recipients, and of making incremental changes to some Income Support regulations. Our empirical findings have also led us to consider three more radical options for the future of Income Support: a system of voluntary reporting of changes; the introduction of an in-work benefit, along the lines of Family Credit, for single people and couples without dependent children; and the introduction of a social assistance benefit for people of retirement age.
In presenting the range of options we have identified the advantages and disadvantages that would follow for Income Support recipients, for the administration of changes in circumstances and, where we have had suitable data, for the social security budget. In considering the various options we have been aware of the fundamental difference between Income Support, the `safety net' benefit of the social security system, and other benefits. Hence, although we have discussed the effects of options, such as removing the requirement to report specific changes as soon as they happen, which will create winners and losers if implemented, we cannot identify any convincing arguments for compelling Income Support recipients to exist on levels of income defined as below an acceptable safety net level.
In the concluding chapter we review the main findings of our empirical study and present the most important lessons to emerge from our analysis.