What should the aims of social security be ?

What should the aims of social security be ?

Reform of the social security and tax systems is at the heart of the Labour government’s aspirations to combat social exclusion, to eradicate child poverty, to increase employment rates among all people of wrking age, and to modernise the welfare state.

Policy reforms have been outlined in various Green and White Papers, programmes for specific groups claimants (New Deals), institutional changes (the creation of the Department of Work and Pensions), the introduction of tax credits to replace some social security benefits.

Millions of people are reliant upon social security benefits for all or part of their incomes.

–         Social security :

  • Ways people gain access to adequate income: assurance that you have a minimum income
  • We are providing a basic floor for everybody
  • System of  benefits and of taxes
  • Sources of immediate financial support provided by the state. The system of cash benefits administrated mainly by central government

–         Welfare:

  • The state providing supprt
  • The Tories aim for “welfare society”, not “welfare state”

–         Social security forms the largest single component of governement expenditure, providing a mechanism for the pursuit of both economic and social goals. The UK is a very unequal society, with high levels of poverty, and the social security system is a very important instrument for income redistribution. Aims of Social Security:

  • Insuring agains risks in life ( family breakdown )
  • Relieving poverty or low income
  • Redistributing resources across the lifecycle – horizontal redistribution: compensation for having a child from those who are childless
  • Redistributing resources from rich to poor – vertical redistribution
  • “Compensating” for some types of extra costs – some people have different needs (disability)
  • Providing financial support when “traditional” families break down (a unit-family)
  • Policy intervines in order to provide an outcome.
  • Maintain incentives for self-provision – you don’t want money to discurage people from having a job
  • Keep non-take-up low (inclusion and exclusion rules – you shuld be able to know when a parent is loan parent or not and you should not exclude people who need benefits)
  • Counteract fraud
  • Keep administrative costs low – it costs, to check that parents are loan or not
  • Poverty reduction
  • Promote opportunity and independence for all
  • Help individuals to achieve their potential through employment, to provide themselves, their children and their future retirement
  • Work with others to combat poverty, both of aspiration and outcome
  • Immediate goals: to replace earnings lost, to contribute to the cost of rising children, to meet the additional costs arising from disability)
  • Ultimate goals: to eliminate poverty, tu create a more equal society
  • 5 key objectives (2005)
    • Ensure the best start for all children and end child poverty by 2020 (4% spending)
    • Promote work as the best form of welfare for people working age, while protecting the position of those in great need ( 27% spending)
    • Combat poverty and promote security and independence in retirement for today’s and tomorrow’s pensioners (57% spending)
    • Improve rights and opportunities for disabled people in a fair and inclusive society ( 12%)
    • Ensure customers receive a high-quality customer service, including high levels of accuracy

The normative question of what policy goals should be rest in turn upon different ideologies of welfare

Contributory benefits:

–         These benefits are funded by contrbutions from workers, employers and the government, and cover interruptions or loss of earnings for specified reasons ( retirement, unemployment, sickeness, and for women widowhood) – they are related to your pas work history

–         Advantage: Encourage and reward paid work & non-stigmatising

–         Disadvantage: some groups are excluded / partially covered (many women were excluded if no partner)

–         Eg: Jobseeker’s Allowance, Incapacity Benefit, Retirement Pension ( EARNINGS REPLACEMENT)

–         Social security expanditure 2001-2002: 48%

Means-tested benefits

–         Advantage: Funded by general taxation and are paid to people with low incomes, taking account of their particular circumstances and family situation (those in greatest need). These include benefits for people with no other sources of income as well as various other benefits intended to meet particular needs (housing costs) or circumstances  (low wages, large families) – if your income is up

–         Disadvantage: expensive to run ( adminustrative problem ) & low take-up & affects work incentives ( poverty trap) & they are stigmatising

–         Eg: Jobseeker’s Allowance (EARNINGS-REPLACEMENT), Income Support & Working Tax Credit (POVERTY ALLEVIATION) , Housing Benefit & Council Tax Benefit (MEETING EXTRA COSTS)

–         Social security expanditure 2001-2002: 29%

Contingent benefits

–         Because of who you are

–         Advantage: cheap to run, non-stigmatising (you don’t claim them) , simple to understand, limited effect on work incentives

–         Disadvantage: not well-targetted & expensive

–         Eg: Industrial Injuries Benefit & Carer’s Allowance & Maternity Pay ( EARNINGS-REPLACEMENT), Child Benefit & Disability Living Allowance (MEETING EXTRA COSTS)

–         Social security expanditure 2001-2002: 22%

In addition to these three main types of benefit, there are also tax-based ( use the tax rather than benefits as the vehicle for making the income transfer) and occupational income transfers (paid by employers – occupational pensions scheme- but regulated by government); they also include some schemes that employers are obliged to provide, such as statutory sick pay and statutory maternity pay.

CONCLUSIONS AND RECOMMENDATIONS (Public Accounts Committee (2006) Tackling the Complexity in the Benefit System: 36th report)

Some complexity in the benefits system results from seeking to meet the needs of people in a wide range of circumstances, in line with the Department’s policy objectives. This equilibrium has not yet been reached ->recommendations of a number of further actions to reverse the drift towards greater complexity.

Reducing complexity

1.  The Department intends to explore the scope for further benefit simplification, but not as a top-level objective. 2.  Actions being taken to tackle complexity point the way forward, but they are piecemeal and do not amount to a strategy. 3.  A simplification team is a step in the right direction and could act as a counterweight to growing complexity if it has sufficient influence. Managing complexity

4.  The Department cannot manage the complexity of the system without having skilled staff.

5.  Some customers do not get enough help to deal with the benefits system, especially where they need to know about more than one benefit.

6.  Insufficient work has been done to improve the standard of the Department’s written communication with customers.

Assessing complexity

7.  The Department is committed to reporting annually on progress in tackling complexity, but there are no ways of measuring it objectively.

8.  Currently, the scrutiny of new legislation does little to prevent increasing complexity, or to assess the wider consequences of new pieces of legislation on the system as a whole.

MILLAR, J.,  2004, Understanding Social Security, University of Bristol: Policy Press

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