tag:theconversation.com,2011:/uk/topics/job-seekers-allowance-26176/articlesJob seekers allowance – The Conversation2018-04-19T08:32:19Ztag:theconversation.com,2011:article/951682018-04-19T08:32:19Z2018-04-19T08:32:19ZMilitary veterans should not be subject to benefits sanctions – new study<figure><img src="https://images.theconversation.com/files/215363/original/file-20180418-163975-1a38pdt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/british-army-camouflage-uniform-union-jack-106909352?src=REJdhmjF8sP7OFknIiSoWw-1-4">Shutterstock/SGM</a></span></figcaption></figure><p>The UK government published <a href="https://www.gov.uk/government/publications/armed-forces-covenant-2015-to-2020/armed-forces-covenant">The Armed Forces Covenant</a> in 2011. It was a “statement of <a href="http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7693#fullreport">the moral obligation</a>” which exists between the nation and the country’s military “in return for the sacrifices they make”. The covenant is “<a href="https://www.armedforcescovenant.gov.uk/">a promise from the nation</a>” that those who serve or have served are treated fairly when accessing public or commercial services. </p>
<p>Research has explored veterans’ interactions with the <a href="https://www.kcl.ac.uk/kcmhr/publications/assetfiles/iraqafghan/Buckman2012-earlyserviceleavers.pdf">health</a>, <a href="https://www.york.ac.uk/media/chp/documents/2008/HomelessExServiceinLondon.pdf">housing</a> and <a href="http://www.fim-trust.org/wp-content/uploads/2017/04/Project-Nova-Report.pdf">criminal justice system</a>. But their experiences of the UK social security system have gone unexplored – until now. </p>
<p>Our <a href="http://www.fim-trust.org/wp-content/uploads/2018/04/20180410-FiMT-Sanctions-Support-Service-Leavers-Interim-Report.pdf">research</a> – funded by the <a href="http://www.fim-trust.org/">Forces in Mind Trust</a> – was based on interviews with 68 former service personnel and 19 key stakeholders (charities, voluntary and community organisations and policy officials). The people we questioned are currently claiming Employment and Support Allowance (ESA), Jobseeker’s Allowance (JSA) or <a href="https://theconversation.com/what-its-like-to-transition-on-to-universal-credit-85190">Universal Credit</a> (UC). The study represents the first project to focus specifically on how veterans experience the benefits system and raises questions about whether commitments to the covenant are being honoured. </p>
<h2>Why is this an important issue?</h2>
<p>The Department for Work and Pensions (DWP) has made a series of adjustments to Jobcentre Plus (JCP) services as part its commitment to the covenant. These include locating an <a href="https://www.gov.uk/government/publications/jobcentre-plus-services-for-the-armed-forces-and-their-families/armed-forces-enhanced-access-to-jobcentre-plus-services-and-armed-forces-champions">Armed Forces Champion (AFC)</a> in every district. The AFC’s role is to facilitate “joint working” between the Jobcentre and the Armed Forces community.</p>
<p>While such initiatives are welcome, our research suggests a disparity between the commitments “on paper” and the reality on the ground for those actually using the benefits system. In particular, it highlights the difficulties veterans face navigating the system, the appropriateness of the assessment process and the wider “support” that is currently provided. </p>
<h2>Navigating the system</h2>
<p>Most veterans we interviewed had found work immediately or very shortly after leaving service. But many had hit a period of “crisis” and were consequently having to claim benefits. The value placed on self-sufficiency, strength of character and resilience while in the Armed Forces meant that veterans often saw claiming benefits as a reduction in status from a position of respect. One told us:</p>
<blockquote>
<p>I survived for two years without a penny … I didn’t claim anything … I was too proud to go and do anything like that … It is massively degrading when you do something as proud as serving in the army. </p>
</blockquote>
<p>The process of applying for benefits was sometimes particularly challenging, too. Another participant told us:</p>
<blockquote>
<p>It’s like they put the needle in the haystack of needles and said ‘off you go, here’s your metal detector’, which is just picking up the stack of needles … It’s like it’s all hidden. Like we’ve got this secret pot of money that you may or may not be entitled to and we’re not going to tell you. </p>
</blockquote>
<p>Some struggled to cope with the demands of the “digital by default” approach inherent in Universal Credit and the wider delivery of social security. One veteran in his 50s said he was sanctioned because he did not have the IT skills to use the system.</p>
<blockquote>
<p>… everything was online … I’m 54 years old, I wasn’t sure what to do, and things weren’t made very clear … I am shocked and absolutely so let down and so deflated.</p>
</blockquote>
<h2>Benefit assessments</h2>
<p>The majority of our participants described having some form of health impairment, which most attributed to their time in service. These health conditions often affected their ability to look for, undertake or sustain employment. As such, many had at some point undergone an assessment as part of their benefit claim.</p>
<p>Interviewees reported overwhelmingly negative experiences of such assessments. In particular, it was felt that mental health impairments were poorly understood and/or regularly disregarded by assessors. One man, for example, relayed this comment from his assessor: “To be honest, all you veterans that say you’ve got PTSD and everything, it’s just a crock of shit.”</p>
<p>Concerns were also raised that service medical information was not routinely being included within the assessment process. This omission was often only rectified when a third party, such as a GP or Armed Forces charity, advocated on their behalf. </p>
<h2>The need for support</h2>
<p>Most of our respondents had disclosed their ex-Forces status to Jobcentre Plus. But responses to disclosure seem to have varied significantly, with some Jobcentres appearing to have dedicated staff who worked with veterans (those with a large garrison located nearby) while others did not. </p>
<p>It was evident that the majority of people were receiving support from organisations outside the DWP such as charities and housing providers. Overall, the quality of the support being provided by Jobcentre staff appeared to be highly variable and, while there was evidence of good practice, in some cases the approach of staff was considered wholly inappropriate. One veteran claimed an advisor said “I think you should be over it by now” when he told him about his PTSD from an incident in 1988.</p>
<p>The UK social security system is in a period of flux. With the roll out of Universal Credit, alongside the new <a href="https://www.gov.uk/work-health-programme">Work and Health Programme</a>, the time is right to ask questions of the DWP’s covenant commitments and scrutinise how these are actually working on the ground. We urge policymakers to look at our findings and recommendations and give them due consideration going forward.</p><img src="https://counter.theconversation.com/content/95168/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lisa Scullion receives funding for a project called ‘Sanctions, Support and Service Leavers: Welfare Conditionality and Transitions from Military to Civilian Life’. This is funded by the Forces in Mind Trust (FiMT), a £35 million funding scheme
run by the FiMT using an endowment awarded by the Big Lottery Fund.
</span></em></p><p class="fine-print"><em><span>Celia Hynes is currently in receipt of funding from the Forces in Mind Trust to undertake work into the experiences of military veterans within the mainstream welfare benefits system in the UK. she is also the co founder of the College for military veterans whcih is based at the University of Central Lancashire in Preston, working there two days per week with serving and veteran community and she undertakes voluntary work in addition to this , attending breakfast clubs across the region </span></em></p><p class="fine-print"><em><span>Katy Jones receives funding from the Forces in Mind Trust (FiMT) to undertake research into the experiences of military veterans with the mainstream welfare benefits system in the UK.</span></em></p><p class="fine-print"><em><span>Peter Dwyer currently receives funding from the Forces in Mind Trust (FiMT) to undertake research into the experiences of military veterans with the mainstream welfare benefits system in the UK. He also leads and receives support from the ESRC for his wider work on the Welfare Conditionality: Sanctions, Support and Behaviour Change project. </span></em></p><p class="fine-print"><em><span>Philip Martin is currently in receipt of funding from the Forces in Mind Trust (FiMT) to undertake research into the experiences of military veterans with the mainstream welfare benefits system in the UK.</span></em></p>A study has revealed how former Armed Forces personnel can get ignored and mistreated by an unsympathetic social security system.Lisa Scullion, Reader in Social Policy, University of SalfordDr Celia Hynes, Senior Lecturer, Admissions lead UoS and senior engagement officer within CMVES, University of SalfordKaty Jones, Research Fellow in the Sustainable Housing & Urban Studies Unit at the University of Salford, University of SalfordPeter Dwyer, Professor of Social Policy, University of YorkPhilip Martin, Research Assistant, University of SalfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/605892016-06-23T13:14:09Z2016-06-23T13:14:09ZThe way we work is changing, but the welfare state hasn’t kept pace with the times<figure><img src="https://images.theconversation.com/files/127894/original/image-20160623-30263-1jptzbq.jpg?ixlib=rb-1.1.0&rect=0%2C880%2C5500%2C3787&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">tai11/shutterstock.com</span></span></figcaption></figure><p>Mechanisation. <a href="https://theconversation.com/machines-on-the-march-threaten-almost-half-of-modern-jobs-18485">Robots</a>. The <a href="https://theconversation.com/you-could-lose-your-job-to-a-computer-so-why-isnt-the-digital-economy-an-election-issue-39015">digital economy</a>. The <a href="https://www.theguardian.com/commentisfree/2015/jul/26/will-we-get-by-gig-economy">gig economy</a>. The <a href="https://theconversation.com/hard-evidence-how-has-the-sharing-economy-changed-job-security-46049">sharing economy</a>. The world of work is changing but our creaky welfare system is still based on a 20th-century model of work, designed when soldiers were returning from fighting World War II. </p>
<p>Then, memories of the great depression of the 1920s were still fresh – and all political parties agreed that, after four hard years of pulling together in the national interest, a return to the <a href="http://www.nationalarchives.gov.uk/education/resources/thirties-britain/">Hungry Thirties</a> wasn’t an option. Returning heroes deserved proper jobs – and proper jobs were conceived as permanent and full-time, with regular hours that paid enough to allow the worker (presumed to be a man) to support a stay-at-home wife who would look after the family. </p>
<p>The National Insurance system was designed to provide assistance in the case of temporary calamities – an accident, an illness, or an employer going bust. A welfare claimant was seen simply as somebody who had fallen (temporarily) on hard times – benefits were a right. </p>
<p>As the years have passed it has become clear that the ideal template of the proper job, worker and family that underpins this model didn’t always fit the reality. Some jobs were low-paid and casual, some women refused to stay at home or couldn’t afford to, families broke up or never formed in the first place. Economic restructuring that began in the 1970s led to the disappearance of whole industries, creating ghost towns where once there had been mines, mills or shipyards. Suddenly life on the dole looked worryingly long-term.</p>
<p>Fast forward 70 years and we find a labour market that would be completely unrecognisable to a time traveller from the 1940s. When and how men and women work has been transformed. Even those who still have regular 40-hours-a-week contracts may be expected to carry their work around with them, checking emails on their phone and taking calls wherever they happen to be. Others may be on zero-hours or temporary contracts, employed through agencies or online platforms, summoned unpredictably to work at a moment’s notice <a href="http://www.feps-europe.eu/assets/a82bcd12-fb97-43a6-9346-24242695a183/crowd-working-surveypdf.pdf">via an app on a smartphone</a>, or doing interminable <a href="https://theconversation.com/the-human-rights-sector-must-stop-exploiting-unpaid-interns-34994">unpaid internships</a> before they can hope to receive a salary.</p>
<h2>Moving with the times</h2>
<p>For workers hovering precariously on the edge of survival trying to patch together a livelihood from multiple jobs, never sure when the next piece of work or income will show up, a benefits system in which the only categories are “employed” or “seeking work” is of little help. At the same time, daytime television programmes such as Saints and Scroungers, Benefits Britain: Life on the Dole, and Benefits Street drive home the message that there is no middle ground: you are either a hardworking taxpayer, or a lazy scrounger. In times of austerity, when governments aim to save money wherever they can, this is a convenient message. But the reality is not so simple. </p>
<p>Many workers are not taxpayers – they actually receive money from the state to top up wages that are too low to live on. The proportion of spending on benefits for unemployed people is <a href="http://www.mirror.co.uk/news/ampp3d/disabled-people-threatened-another-cut-4534714">relatively tiny</a> – for every pound paid out in Jobseekers Allowance in 2013, five were paid out in working-age tax credits to top up workers’ earnings. Tax credits are not really so much a subsidy to workers as to their stingy employers who get away with paying below-subsistence wages in the knowledge that the taxpayer will stump up the rest.</p>
<p>The current benefit system seems to have reinvented the 19th-century categories of “deserving” and “undeserving” poor, using the carcass of the 20th-century welfare state as an administrative framework. But neither 19th-century values nor 20th-century structures are fit for purpose in the fluid, just-in-time conditions of 21st-century labour markets and an unpredictable, digital, globalised economy.</p>
<p>We should go back to the drawing board and develop a system that provides basic security and dignity for all while still allowing for work to be organised flexibly. One possible solution is to give everybody a basic income – a guaranteed minimum income for everyone, available as a right. This would raise the standard of living and reduce poverty among the most vulnerable, but would also allow workers to move flexibly in and out of paid work, education and care work without being subjected to the expensive, demeaning and dysfunctional inquisitorial procedures of the current benefits system that sees only the largely exclusionary categories of “work” and “claiming benefits”. </p>
<p>Such a system would certainly be <a href="http://www.compassonline.org.uk/publications/universal-basic-income-an-idea-whose-time-has-come/">technically feasible</a> as studies have suggested, and do away with much inefficient, stigmatising and expensive bureaucracy. But it is not a panacea. To be truly equitable it would <a href="http://www.globalresearch.ca/an-unconditional-citizens-income-a-basic-guaranteed-minimum-income/5423130">require safeguards</a> in relation to public services, minimum wages and immigrants’ rights, which would not be easy.</p><img src="https://counter.theconversation.com/content/60589/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ursula Huws currently directs research projects which receive funding from The COST Association, the Foundation for European Progressive Studies and UNI-Europa. She is a trustee of the Citizen's Income Trust. </span></em></p>The welfare state was not designed for the modern world of temporary and casual work or multiple jobs. Is universal income the answer?Ursula Huws, Professor of Labour and Globalisation, University of HertfordshireLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/588682016-05-05T04:58:38Z2016-05-05T04:58:38ZExtra steps required to ensure jobs plan delivers for young people<figure><img src="https://images.theconversation.com/files/121326/original/image-20160505-19745-v8iba1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The government's new plan to help young people gain employment won't work for those who are severely disadvantaged.</span> <span class="attribution"><span class="source">Maureen Barlin/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>The government’s Youth-Jobs PaTH program to increase jobs, announced in the budget, is a step in the right direction but its success will depend on a number of factors. </p>
<p>The program will see young jobseekers receive six weeks of pre-employment training followed by a subsidised internship for four to 12 weeks. Employers can then choose to retain interns for a longer period, again supported by a wage subsidy.</p>
<p>While any move away from the <a href="https://theconversation.com/work-for-the-dole-doesnt-work-but-here-is-what-does-22492">discredited Work for the Dole program</a> might be seen as a good thing, the PaTH program has already attracted controversy. Employer groups have expressed support for the program but <a href="http://www.abc.net.au/worldtoday/content/2016/s4455836.htm">the ACTU has argued</a> that it will deter job creation and allow employers to exploit young workers by paying below-award wages.</p>
<h2>Will PaTH work for all job seekers?</h2>
<p>A program such as PaTH is likely to work best for young job seekers with a medium level of disadvantage to getting work – who need some polishing of their job seeking skills and an opportunity to demonstrate to an employer that they can perform well in the workplace.</p>
<p>For job seekers who aren’t at a disadvantage in finding work, PaTH may be much more than is needed for them to obtain a job. The danger is that if these job seekers are allowed to participate in the program, they will be chosen by employers for internships before other job seekers with higher levels of disadvantage. Employers will then receive a subsidy for a worker they would have been willing to hire at the award wage; and internships won’t be going to job seekers who would benefit most. </p>
<p>For this reason, the restriction of the PaTH internship scheme to job seekers who have been in employment services for at least six months is sensible – as would be any further measures to ensure the program cannot be accessed by job seekers who might easily find work.</p>
<p>At the other end of the spectrum, the type of assistance in PaTH will not be enough to make disadvantaged job seekers, such as those who are homeless or have language and literacy problems, job ready. Genuine assistance for this group requires funding service providers to work with them for a longer period and support them during the internship. </p>
<p>Because PaTH won’t enable more disadvantaged job seekers to become job ready, it follows that employers won’t be willing to put them into internships. Instead they will languish and still be forced to undertake Work for the Dole once their unemployment spell reaches 12 months.</p>
<h2>Where will the internships come from?</h2>
<p>Subsidy programs have a history of low take-up rates. Even with the offer of a subsidy, experience shows employers (quite reasonably) are only willing to take on job seekers who are job ready, so it has often proved difficult to meet targets for placements. </p>
<p>An example of this is the Job Compact from the mid-1990s. Initially it was planned to give 70% of long-term unemployed work experience via wage subsidies, but eventually only 30% were able to be placed. More recently, the <a href="http://www.vic.gov.au/backtowork.html">Victorian Government’s Back to Work</a> program had to be restructured following low take-up. So it will be important to find effective ways for creating internships.</p>
<p><a href="https://journal.anzsog.edu.au/publications/25/EvidenceBase%202014Issue4Version1.pdf">The evidence</a> is that this is best done via local partnerships between service providers who can provide training in job readiness, and employers who will provide the job placements. In a local partnership, service providers will be able to target the training they provide at the available placements and employers will be able to develop trust in the quality of job seekers to whom they give internships. A close relationship will also mean that the service provider can continue to support the job seeker and employer during the internship.</p>
<h2>Getting the internships right</h2>
<p>The incentives to participate in PaTH for job seekers and employers will depend on the structure of payments and on the labour market benefits they receive (for job seekers this benefit is work experience, and for employers is the possibility of finding a worker who they would like to retain).</p>
<p>So far there has <a href="http://www.businessinsider.com.au/people-are-outraged-by-the-federal-budgets-internship-program-which-pays-4-an-hour-on-top-of-their-existing-payments-2016-5">been considerable focus on</a> whether the income support supplement to job seekers of A$100 a week during the internship is fair and likely to motivate them to participate. Another aspect is the $1,000 payment to employers. </p>
<p>A lump-sum payment may incentivise employers to offer the shortest possible length of internship. A better alternative would have been to seek to motivate employers to offer longer internships by making the payment vary with the length of internship. All this suggests some more thought may need to go into the payment structure to ensure the incentives are right.</p>
<p>Another critical aspect of the internship is the type of job placement. Any work experience in the private or government sector work will bring some valuable development of skills. And even where it doesn’t lead to a longer-term job offer, there is the benefit of being able to obtain a reference. At the same time, it is easy to envisage the quality of internships, and hence their benefit to job seekers, varying widely. For that reason, some standards for what is expected from an internship should be part of the program.</p>
<h2>How many extra jobs?</h2>
<p>Wage subsidy programs will bring a small amount of extra job creation while they are in place. In some cases, the offer of a subsidy may be sufficient to convince an employer of the need to create a new job. However, <a href="http://www.keepeek.com/Digital-Asset-Management/oecd/employment/oecd-employment-outlook-2015/activation-policies-for-more-inclusive-labour-markets_empl_outlook-2015-7-en#page35">the evidence on these programs</a> is that in most cases employers will substitute a worker receiving a wage subsidy for another worker who they would otherwise have hired. </p>
<p>Once the subsidy scheme is over, any effect on job creation disappears. So the best way for a government to create extra sustainable jobs is by doing all it can to promote economic growth.</p><img src="https://counter.theconversation.com/content/58868/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeff Borland receives funding from the Australian Research Council.</span></em></p>The success of the government’s new youth employment plan will depend on how its used by services, employers and young people alike.Jeff Borland, Professor of Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/570132016-04-01T11:31:19Z2016-04-01T11:31:19ZWhy the living wage won’t compensate for tax credit cuts<figure><img src="https://images.theconversation.com/files/116794/original/image-20160330-28443-1fcc92n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will government cuts to tax credits hit Britain's poorest the hardest?
</span> <span class="attribution"><span class="source">Becky Stares/shutterstock</span></span></figcaption></figure><p>Wage poverty is endemic in Britain because wages are <a href="http://www.lancaster.ac.uk/news/articles/2016/wage-supplements--price-for-a-job-or-means-of-earning-a-living/">thought</a> of as a price for a job, rather than as a means of earning a living. </p>
<p>The introduction of the so called “<a href="https://www.livingwage.gov.uk/?gclid=CInk8e3T6MsCFQ0SGwodSWUMtg">national living wage</a>” – what really should just be viewed as an increase in the national minimum wage for the over 25s – will raise wages for the lowest-paid workers by 50p an hour. This should be good news for those receiving the increase, but it seems some businesses are using the national living wage as <a href="https://www.change.org/p/don-t-use-living-wage-as-excuse-to-cut-pay-benefits">an excuse to cut overall pay</a> and rewards for staff. </p>
<p>Pair this with concerns that businesses are <a href="http://www.theguardian.com/business/2015/sep/08/living-wage-fears-sending-shockwaves-through-uk-labour-market">scaling back recruitment</a> to make allowances for wage increases and it’s clear the higher minimum wage isn’t all it’s cracked up to be.</p>
<p>It isn’t only businesses that are playing hard ball. Alongside the introduction of this higher wage the government is moving forward with its cuts to wage supplements through the introduction of <a href="https://www.gov.uk/universal-credit/overview">universal credit</a> – a new benefit which is set to replace job seekers’ allowance and other means-tested benefits.</p>
<p>It is recognised that the cuts to wage supplements brought about by the introduction of universal credit will not be made up by the increases planned for the minimum wage. The Resolution Foundation, for instance, <a href="http://www.resolutionfoundation.org/media/press-releases/low-income-working-families-on-universal-credit-set-to-lose-1300/">calculates</a> that when all of the tax, benefit and minimum wage changes announced in 2015 are taken into account the average loss for the poorest half of households will be £650 a year by 2020.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/116812/original/image-20160330-15137-1i8341v.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Poor show for the low-paid.</span>
<span class="attribution"><span class="source">1000 words/Shutterstock</span></span>
</figcaption>
</figure>
<p>Wage supplements such as <a href="http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/">tax credits</a> help to address the problem of low wages, by adjusting the incomes of low-paid households to the number of people living in them. In this sense, wage supplements allow people to “earn” an income that is more related to their living costs than wages alone.</p>
<p>The reduction of these supplements alongside an increase in minimum wage, will do little to solve Britain’s longstanding problem with wage poverty.</p>
<p>As benefits for unemployed people are being eroded in value, working poor families face a bleak future. And while the shift to a higher minimum wage should increase the incentive to work, the mechanism that attempted to link wages to need is being put under pressure. </p>
<h2>A history of wage supplements</h2>
<p>Wage supplements have a <a href="http://www.palgrave.com/gb/book/9781137293961">chequered history</a> in Britain. At various points they have been interpreted as being both deeply problematic and highly beneficial for working people – and for the economy and society more generally. </p>
<p>To understand the problems we face today with wage supplements, we need to go back in time in the 1800s when this difficult relationship with benefits was first unfolding. Between 1834 and 1971, the main thrust of policy was that the supplementation of wages by the state – at least on a means-tested basis – would destroy the incentive for people to work and would encourage employers to pay low wages. </p>
<p>The <a href="http://www.nationalarchives.gov.uk/education/resources/1834-poor-law/">1834 Poor Law Commission</a> report’s argument, that wage supplements made working people “<a href="https://books.google.co.uk/books?id=BPw9AAAAcAAJ&pg=PA69&lpg=PA69&dq=idle,+lazy,+fraudulent+and+worthless&source=bl&ots=pKMKnu4zA-&sig=8uliiyIeZ5KS564SLLCI0Lw47Gg&hl=en&sa=X&ved=0ahUKEwjireuf6ujLAhWBPhQKHSJBDVEQ6AEIHTAA#v=onepage&q=idle%2C%20lazy%2C%20fraudulent%20and%20worthless&f=false">idle, lazy, fraudulent and worthless</a>”, cast a long shadow over policy. </p>
<p>But from the 1970s the position was reversed – it was argued that wage supplements had the potential to encourage people to do low-paid work and to reduce pressure on employers to increase wages. During the <a href="http://www.telegraph.co.uk/finance/recession/4323064/UK-recession-in-1980-What-was-it-like.html">mass unemployment</a> of the late 80s wage supplements came into their own as a way to encourage people into <a href="http://blog.britac.ac.uk/understanding-tax-credits-in-debates-about-wage-supplements-from-the-past/">low paid work</a> in the hope of reducing unemployment levels.</p>
<p><a href="https://en.wikipedia.org/wiki/Central_Policy_Review_Staff">The Central Policy Review Staff</a> (the Conservative think tank of the time) argued this could be done through the further development of wage supplements – which was introduced in 1988 as family credit.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/116814/original/image-20160330-28445-11f5l7o.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Replacing tax credits with the living wage will leave many people worse off.</span>
<span class="attribution"><span class="source">Yulia Grigoryeva/Shutterstock</span></span>
</figcaption>
</figure>
<p>Whether wage supplements are considered to be negative or positive, what has often been missing from arguments about them is reference to the way in which they might address in-work poverty.</p>
<p>It is not that such issues have been completely absent from debates about supplementing wages – quite the opposite in fact. The first benefit ever aimed specifically at people in low-paid work – family income supplement – which was introduced 1971, was the consequence of policy debates that had been revitalised by the “rediscovery of poverty” in the mid-1960s. Later, for New Labour governments, tax credits were partly a means of addressing child poverty.</p>
<p>However, in both these instances, concerns about poverty were either usurped by wider concerns with incentivising people to take low-paid work – in the case of family income supplement – or sat uneasily alongside them in the case of tax credits. </p>
<p>And of course attempting to incentivise unemployed people to take low-paid work is a very different exercise to addressing in-work poverty.</p>
<h2>Waging war</h2>
<p>It is because of this history surrounding wages supplements that the conservative government has found itself in difficulties in recent times. The government’s focus has been on shifting the incentive to work by taking away tax credits and increasing the national minimum wage, alongside lowering the real and relative level of benefits for workless people. </p>
<p>In this approach, the government’s belief is that the need for wage supplements is reduced. The problem with this belief is that even if it was not their original intention, wage supplements are important in relieving the poverty of poorly paid workers, as many people argued when resisting the cuts to tax credits. </p>
<p>The current proposal to reduce universal credit payments in favour of a higher minimum wage will not help to address the <a href="http://www.palgrave.com/gb/book/9781137293961">longstanding poverty</a> of many people in paid employment. In fact it will only make things worse for those already living on the breadline.</p><img src="https://counter.theconversation.com/content/57013/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Grover received funding from the British Academy for research into wage supplements in the inter-war period and the 1980s. </span></em></p>Plans to stop universal credit payments in favour of a ‘national living wage’ will not address the long-standing poverty of many people in paid employment.Chris Grover, Senior Lecturer in Social Policy, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.