Nothing has changed? Five priorities for Amber Rudd and a new government
25 Jul 2019
Tony Wilson, Institute Director
After six Secretaries of State in three-and-a-half years, it’s good news that Amber Rudd will be remain in charge at DWP. It’s welcome too because in eight months in post, Rudd has achieved more than any of her recent predecessors – with welcome changes on benefits assessment, tweaks to Universal Credit, progress on the work and health agenda, and a genuine openness to working with others on a range of future reforms. Given the sheer turmoil in government over the last year, her work so far and her commitment to go further have been welcome.
So as the ‘new’ government meets for the first time today, it’s tempting to say that nothing much will have changed in DWP. Officials will be able to put away their briefing pack for a new ‘SoS’ and pick up where they left off. But with a new Prime Minister, an autumn Spending Review, a range of welfare and employment reforms in train and of course the threat of a crash-out Brexit, this is going to be a hugely busy few months. So here’s my take on the five things that should be top of her in-tray.
- Increase social security spending. The Prime Minister’s maiden speech yesterday included a shopping list of new commitments – with concrete measures costing at least £6 billion (on police and education) and vaguer ones of unknown cost on health, social care, transport, digital and R&D. No mention though was made of social security. Since 2010, reforms by the Coalition and then Conservatives have reduced welfare spending by a scarcely-believable £35 billion a year (based on OBR welfare trends reports). Research for the Equalities and Human Rights Commission makes clear that these cuts have driven increased debt, homelessness and food bank use, particularly affecting lone parents, larger families and disabled people. The next spending review needs to make two changes in particular. First, it should end the freeze in the annual up-rating of benefits, so that these can again track the rise in the cost of living – a move that Amber Rudd has said is “essential” and which will cost around £1.5 billion a year. Secondly, it should increase the support to low-income households in the private rented sector – where a coalition of housing organisations are clear that the cuts of £1 billion a year to the Local Housing Allowance are driving the large increases in homelessness over recent years.
- Fix Universal Credit. I set out in January five priorities for UC reform – to pay it quicker, make it more flexible, ensure it is adequate, improve its local delivery, and support more and better work. Rudd has already taken a number of steps in the right direction, but there is still some way to go. In particular it is becoming increasingly clear that the monthly assessment, five week wait and advance payment system needs a fundamental overhaul – with DWP’s recent annual report stating that £1 in every £12 of UC is overpaid, the highest rate of any benefit since the worst days of tax credits rollout in 2003. Recent ‘Alternative Claimant Count’ statistics also suggest that employment support in UC is not working as it should – with a potentially significant number of claimants who are required to look for work as a condition of their claim not in fact doing so.
- Deliver on work, health and support for disabled people. Amber Rudd’s focus on disability and health in her first six months has been particularly welcome, and both she and her officials have shown a real openness to dialogue, collaboration and new ideas. The new consultation on measures to reduce job loss has a lot of positive proposals, as does the Prevention Green Paper (on support for those with musculoskeletal conditions and older people in particular). In our view these proposals can go further still – to address the clear market failure in workplace support at SMEs and to improve the co-ordination and delivery of support between primary care, employers and occupational health (both covered in Steve Bevan’s recent blog).
- Help tackle low pay. Britain has a low pay problem – with five million workers low paid, one in six of those low paid a decade ago ‘escaping’ low pay, and more than half of all people in poverty in working households. By coincidence, I set out yesterday in an essay collection for the Changing Work Centre some ideas on how we could start to address this: through better dialogue with employers, better evidence and the public sector leading by example. This is far from DWP’s problem alone –indeed in my view, part of the issue has been that governments have for too long seen this as being far more about putting conditions and support in place for low-paid workers than about changing employer behaviour. But DWP can play a key role in convening Departments, testing new ideas and building the evidence base (with £8 million in ring-fenced funding from HM Treasury).
- Deal with Brexit. Much as I don’t want to be a doomster or gloomster, I am increasingly worried about how our employment services and Universal Credit would cope with a ‘no deal’ exit. The Bank of England has forecast that a ‘disorderly’ exit would see unemployment increase by around 1.3 million, while a ‘disruptive’ exit would see an increase of around 700 thousand. This would be comparable to the last recession, where unemployment rose by 900 thousand between 2007 and 2010. We can choose not to believe these figures, but we should at least be prepared for them. The NAO has literally written the book on how Jobcentre Plus responded last time, and I was one of the DWP officials working on this back then. The upshot was that the response was massive, co-ordinated and successful – drawing on £1.6 billion of funding to ensure that as unemployment increased, so could investment in staying attached to the labour market and then finding new work (while ensuring that benefits were paid on time). By contrast, DWP has been allocated £15 million for Brexit preparations this year. I know that work is advanced in DWP in building contingency for Brexit, but with the odds of a ‘no deal’ growing these preparations will need to be stepped up.
Clearly, taken together these five things would be a huge agenda for the strongest government – and with 98 days until our next Brexit deadline, in all likelihood there’ll be only one priority in the next few months. But looking beyond that – if this government continues – then Amber Rudd has a great opportunity to build on what she has started in the last eight months. Too often, being Secretary of State for Work and Pensions has been treated as a waiting room for something better, so to have a senior government Minister choose to stay is as refreshing as it is welcome. We’re looking forward to continuing to work with her and her team.
Any views expressed are those of the author and not necessarily those of the Institute as a whole.