Budget 2017: Time to (re)invest in Universal Credit

Being the Chancellor of the Exchequer is probably like winning the lottery, just without the enjoyable bits.

Sadly, I’ve never won the lottery but when I do (after I’ve shaken off the hangover) I imagine that old friends and acquaintances will surface to ask if they can have a few hundred quid.

This must be a daily occurrence for the Chancellor, only with bigger sums. “Can I have £7billion for transport infrastructure?” “I need £4billion for the NHS.” “Can you lend me £50billion for housebuilding?”. And so on.

Fielding those requests is no easy task. How nice it would be to say yes, yes, and yes. But the Chancellor’s job, more often than not, is to say no. Much like a parent in a toy shop being asked “dad, can I have this, can I have this…” albeit with fewer subsequent tantrums (you’d hope).

And so, in that spirit, I’ll throw my hat into the ring to encourage the Chancellor to increase funding for Universal Credit (UC). In doing so, Philip Hammond would put right a mistake made by his predecessor.

In 2010, the introduction of Universal Credit was a radical and much needed reform to a floundering welfare system. Iain Duncan Smith once described the welfare system as being a combination of a safety net and a trampoline – because it should catch people when they fall on hard times but (in his words), “it should also propel them back upwards”. At the end of the Labour government in 2010, the welfare system was doing the first part of that but failing miserably on the second.

Prior to 2010, the UK’s spending on welfare had increased year-on-year for nearly a decade but the system was failing those it was trying to help. By the time Gordon Brown left Downing Street in 2010, 1.4 million people in the UK had spent 9 out of the last 10 years on benefits; almost one in five households had no one in work; and the number of households where no one had ever worked had nearly doubled. In short, the expanding welfare system had done little to move people into work.

Enter Universal Credit. Introduced by the coalition government, UC has been described as “the most radical reform to the British welfare system since Beveridge”. The main aims of UC were to simplify the welfare system (by merging several different benefits into a single payment) and to ensure that work always paid better than remaining on welfare (i.e. to remove the financial incentive of remaining on benefits for long periods).

The element of UC that helped people transition from welfare to work is ‘work allowances’ which is the amount a person or family can work before their UC payment is affected. Their UC payment will then taper downwards at a steady rate as they earn more from work. However, in his 2015 Budget, in an effort to find savings George Osborne announced a significant reduction to work allowances. The effect this had on UC was significant: it severely diminished UC’s overriding objective, to make work pay. In its assessment of the 2015 Budget, the Resolution Foundation concluded that “the incentive to enter work has been significantly reduced” and the changes will “make a difficult situation worse” for many low paid families.

It is here that Philip Hammond should intervene, a view supported by those who know and understand Universal Credit better than anyone.

Last week, the three main architects of Universal Credit each urged the government to take action on various aspects of UC including on the issues of work allowances. In separate interventions, the people who were chiefly responsible for introducing the policy each called on the government to use the Budget to change course.

Firstly, Dr Stephen Brien, the intellectual architect of UC who (literally) wrote the policy used an interview with the BBC to urge the government to amend its current policy on the 7 day waiting time as well as to introduce greater work allowances for claimants.

Secondly, the Centre for Social Justice, the think-tank chaired by IDS that published the original UC proposal in 2009, released a report to the Guardian that called on the government to cancel a planned raise to the income tax threshold (a Conservative manifesto commitment) and instead to re-invest £3.4bn in the work allowances that were taken out of the system in 2015.

Thirdly, Baroness Philippa Stroud (who served as special advisor to Iain Duncan Smith and who ran the CSJ before moving into government in 2010), used a speech in the House of Lords to urge the government to “abolish” the waiting period before a person is eligible to claim Universal Credit and to re-introduce the work allowances.

The waiting period, said Stroud, is “not a design feature of Universal Credit” meaning that it can easily be changed. Stroud added “I do not think it should just be reduced; I think it should be abolished.” In the same speech, she also echoed the call made by both Stephen Brien and the CSJ to re-invest in the work allowances that were removed in the 2015 Budget.

And so, what should be done? The government has ignored (rightly) the calls to pause or even reverse the roll-out of Universal Credit. At its heart, UC is a tool to fight poverty and contrary to popular belief it has been broadly successful: on average claimants of Universal Credit spend more time looking for work, are more likely to find work, and earn more than those claiming Jobseeker’s Allowance.

But UC was always intended to be introduced iteratively, or as Philippa Stroud describes it, with a “test and learn” approach. In other words, it will take time to get it right and it should be regularly reviewed and adapted if needed.

The Chancellor would be wise to remember this in his Budget. By strengthening Universal Credit, the government has an opportunity to direct much-needed cash to the poorest and most vulnerable in society. At the time of year when everyone is asking the Chancellor for money, this is one group he should say yes to.

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Perceptions of love (and parenting)

An experiment for parents: go and tell your child that you love them. Then ask them why do they think you love them? Don’t prompt an answer. Don’t make any suggestions. Just ask them why — and then wait for the response.

I did this recently with my 5 year old daughter and was surprised and shocked by her response.

Backing up a little bit…I have three children and I tell them that I love them all the time. I praise them when they do well; I encourage them; we laugh together; we play tricks on each other; we hug and kiss; we read stories together; we eat together; we watch movies together and so on. Simply put, they know they are loved.

I was prompted to have this conversation with my daughter after speaking to a good friend of mine called Tim who talked to me about the unintentional expectations that parents place on their children. He explained that many children grow up believing sub-consciously that they are loved only in response to their achievements. Put another way, they believe they are loved because of what they do not who they are. Think about it: as a parent, when do you most often show love to your child and when do you give them praise? The answer is probably when they have done something notable. Something praiseworthy.

Three years ago, Harvard University undertook a survey of 10,000 students who were asked what they believed their parents cared about most for their life. The students were given three options to pick from:

  1. your parents care most that you achieve highly;
  2. your parents care most that you are happy;
  3. your parents care most that you are kind to others.

The results make for depressing reading: more than half (54%) of students picked ‘achieve highly’ as the thing they thought was most important to their parents. 27% said that their parents cared most about their happiness. Only 19% said the thing their parents cared about most was them being kind.

The findings are sad and troubling and they confirm that modern society tends to prioritise what David Brooks calls resume virtues as opposed to eulogy virtues. But what’s equally troubling is that parents don’t even realise what they are doing; they are conveying these values completely unintentionally (as my friend Tim had said). The findings of the Harvard survey explained that parents think they prioritise kindness but clearly this is not what their children are hearing. The survey concluded that there is a “troubling gap between what adults say and what students perceive about the importance of caring, kindness, and respect”.

Back to my conversation with my daughter. When I asked her why she thought I loved her, her first guess was “because I’m beautiful?” No, I said, have another try. “Because I’m clever?” Nope, try again. “Because I’m funny?” I stopped her after her third guess, more to end my own misery than hers.

Thankfully, my earlier conversation with Tim had pre-warned me that these answers were likely and so I was pre-armed with a response.

I told my daughter that those things about her were true – that she is beautiful and clever and funny. But, they are not the reason I love her. The reason I love you, I explained, is because you’re my daughter and I’m your daddy.

She looked confused but I carried on.

This is a fact that can never change; I will always be your daddy and you will always be my daughter and that means that I will always love you no matter how clever you are, how funny you are, or how beautiful you are. I just love you because you are you.

I kissed her good night and that was the end of our conversation. However, I’ve started deliberately replaying this conversation with my children from time to time so that as they grow up they are consciously aware that they are loved simply for who they are not what they do.

I share all of this for two reasons. Firstly, because this whole concept took me by surprise and, as a result, it has been playing on my mind for a while. I wanted to get it off my chest! Secondly, I am writing in the hope that parents who read it will go and tell their children that they love them, for no reason other than because they do.

I guess sometimes we all need a little prompt to tell the ones closest to us how we feel. And if that happens, if just one parent does that because of this post, then every single one of these 769 words were completely and utterly worth it!

Film: In Memory

Earlier today I stumbled upon the trailer for this short movie. At first it looks like a classic love story: romantic, atmospheric, beautifully shot, soppy script, etc. But the final 5 seconds of the trailer deliver a little twist…

Looks like it could strike a similar chord to other films about dementia such as The Notebook or Away From Her. What I liked about the trailer was its focus on the love story of the young couple rather than the older couple – making it a story about life and love rather than about dementia.

Anyway, I liked it so wanted to share.

The release date for the full (13 minute film) is February 11th. IMDb has more information as well as a behind the scenes ‘making of’ video: http://www.imdb.com/title/tt5136522/?ref_=fn_al_tt_1

And the website for the media company behind the movie has further details here: http://bedrock-health.com/healthcare-feature-films/

 

♫ Christmas Number Ones ♫

The X-Factor has just finished which means that the race for Christmas number one is on. There is s till a certain cachet attached to having a Christmas number one single.

In no particular order and for no particular reason, a few thoughts about Christmas number one singles…

 

1) Simon Cowell has ruined it for everyone. 
The past 10 years have been dominated by x-factor winners who have enjoyed their 15 minutes of fame and then disappeared as quickly as they arrived. Matt Cardle anyone? Shane Ward? Leon Jackson? (to name just three).

 

2) Very few of the songs are any good. 
You have to go back at least 13 years to find a semi-decent song (Sound of the Underground, 2002), and that’s a stretch. The early 90s produced quite a few decent Christmas number ones including a re-release of Bohemian Rhapsody (’91), Whitney Houston’s I Will Always Love You (’92), and East 17’s Stay Another Day in 1994. Personally, I would argue that 2 Become 1 (1996) was the last “good” Christmas number one but I’m sure plenty of people would disagree with me about that!.

 

3) Few are about Christmas.
From the last 35 years only five Christmas number one songs are actually about Christmas (and three of those are the same song(!) – Band Aid’s Do They Know It’s Christmas).

 

4) The ones that didn’t make it are better than those that did.
Check out the list of Christmas number two singles. They’re a much better collection of songs than the number ones. Starting with Uptown Funk in 2014 the list also includes Take That’s Patience (2006), and Mariah Carey’s All I Want For Christmas is You (1994), and the timeless Fairytale of New York (1987).

 

5) Few do it twice. 
Only a select group of artists have had more than one Christmas number one. This illustrious list includes Cliff Richard (obvs), Queen, and Band Aid. Only The Beatles and the Spice Girls have done it three times in a row (1963/4/5 & 1996/7/8).

 

6) Revealed on Christmas Day.
Back in the day, the official weekly chart would be revealed on Sunday. The Sunday before Christmas would be the official Christmas chart. Now the chart has moved to Friday which means this year, we get the Christmas chart on Christmas day itself. The 2015 winner will be announced by Greg James on Radio 1.

 

7) The rise of the protest vote. 
One amusing side effect of the X-Factor’s dominance on the Christmas chart is that each year, someone, somewhere picks a random song and decides that this will be the ‘alternative’ choice. Quite who does this is not clear to me. Once the song is chosen, it is followed by a groundswell of support on Facebook, some decent coverage in the traditional media, and then occasionally, just occasionally, victory (see Rage Against the Machine, 2009).

 

Click the images below to view the list of Christmas number ones from the past 60 years.

 

Speech to Launch 2015 Prosperity Index

On Monday night, I gave a short speech marking the launch of the 2015 global Prosperity Index. In truth I was merely the warm-up act for Iain Duncan Smith. The video is below and I’ve provided a transcript of my remarks underneath.

The video starts with Sian Hansen, the Legatum Institute’s Executive Director. I’m at 1min50. Ian Duncan Smith begins at 8min15.

My remarks:

Welcome to the Legatum Institute’s Winter Reception, to mark the launch of the 2015 Global Prosperity Index.

We’re delighted that your all here. Chances are, if you a reasonably familiar with the Legatum Institute then you may well know of our Prosperity Index. For the benefit of those who are new – and as a refresher for those who are not – I’m going to spend a few minutes explaining what this thing is, and why it’s important. And then I’ll hand over to Iain Duncan Smith who will say a few words.

What is the Prosperity Index?

One way of looking at the Prosperity Index is that it is a data-rich, complex, and comprehensive way of ranking the nations of the world.

I could tell you that it includes 142 countries, covering 99% of global GDP and 97% of the world’s population.

I could tell you that for each of those 142 countries, the Index includes 89 individual indicators spread across 8 categories.

(The maths geniuses among us may have worked out that this adds up to more than 12,000 datapoints in any given year).

I could tell you that we use a combination of objective data and subjective data in order to capture a comprehensive measure of global prosperity.

I could tell you that this year Norway comes top; the UK 15th; and the U.S. 11th.

And all of that is true. But it’s not the whole story. In fact it’s not even the main story.

Because the Prosperity Index – fundamentally – is about people. It’s about how individuals in these countries experience their lives. It tells a human story. The charts and the graphs that point upwards tell us that, overall, conditions for people in those countries are improving.

And so yes, the Prosperity Index does tell us something about the world as a whole, but it’s about the individuals in those countries.

Why Produce a Prosperity Index?

Put simply, the Prosperity Index is an answer to a problem. The problem is this: the way we have traditionally measured the ‘success’ of nations is too narrow. Traditionally we use measures national wealth to determine success. Of course wealth is important but it’s not the whole picture. GDP is an incomplete measure of societal progress.

But don’t just take my word for it…

Simon Kuznets – the economist who created GDP…

The welfare of a nation can scarcely be inferred from a measurement of national income.

Nicholas Sarkozy, former French President…

It is time for our statistics system to put more emphasis on measuring the well-being of the population than on economic production.

Robert F Kennedy – speaking in 1968 – bemoaned the use of economic measures to assess national progress.

…the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.

Kennedy concluded by saying,

it measures everything in short, except that which makes life worthwhile.

And of course the American Founding Fathers included the “pursuit of happiness” as one of the fundamental tenets of the Declaration of Independence.

A little closer to home…

David Cameron…

I do think it’s high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country’s progress.

And the list of quotes like this goes on and on.

To summarise: GDP can only tell us so much. It can tell us the average wealth of a country but it can’t tell us how that wealth was created.

It can’t tell us whether the citizens of that country are free.

It can’t tell us whether the government of that country is corrupt.

It can’t tell us whether children in that country have to walk 10 miles to go to school, or whether the education they receive when they get there is any good.

And it can’t tell us anything about the strength of social capital in that country.

Guess what folks? The Prosperity Index can!

The Prosperity Index gives us a broad perspective of our progress. And that’s important because the information we have affects the decisions we make. If we want governments – or indeed anyone – to make the right decisions (decisions that increase prosperity), they need to have the right data.

As the economist Joeseph Stiglitz put it (far more eloquently than me): what you measure affects what you do. If you have the wrong metrics, you strive for the wrong things.

We believe the Prosperity Index provides the right metrics in order that we might strive for the right things.

And that, in a nutshell, is what the Prosperity Index is – and why we do it. It is the definitive measure of global progress.

Please do take a copy away with you. The results this year are genuinely fascinating, often counter-intuitive, and of nothing else the report itself is laced with beautiful info graphics!

Before I introduce Iain, I’d like to make a special mention to the team here at Legatum who are responsible for the Index. Each one has worked heroically in recent months to produce the Index and once I’ve mentioned them all, perhaps you would all join me in thanking them in the traditional way. They are: Stephen, Harriet, Alexandra, Augustine, Fei, and Abi.

Iain Duncan Smith is the Secretary of State for Work and Pensions. As well as founding the Centre for Social Justice, he has been the leader of the Conservative Party and the Member of Parliament for Chingford & Woodford Green since 1992.

One of the governments big success stories of the past 5 years is the way it has turned around the British economy and in particular seen so many people get back into work. Much of the credit for that lays with Iain, and in particular the vision and leadership he has brought to the DWP. Although I’m sure he’ll be the first to admit there is still much work to be done, the story so far is quite extraordinary.

Secretary of State, it’s great to have you with us. The results of this year’s Prosperity Index validate many of the policies you and your department have been pursuing over the past 6 years. We’re delighted to have you here to help us launch it tonight. Ladies and Gentlemen, Iain Duncan Smith.

Moving on

A little bit of news from me…

On 1st December, after nearly 7 years with the Legatum Institute, I will be leaving to join the Centre for Social Justice (CSJ) as Chief Operating Officer.

LI-CSJThe decision to leave Legatum has been a very tough one to make. When I joined in April 2009, we were about 10 people rattling around a very large office. Since then, the organisation has grown in both size and influence – it’s been a privilege to have played a part in that.

The CSJ is an organisation I’ve long admired. In recent years it has consistently been one of the most influential think-tanks in Britain and through its high-profile campaigning and rigorous research it has helped to put social justice firmly on the political agenda. I’m thrilled to be joining an organisation doing such important and worthwhile work.

Finally, I do want to say a huge thank you to everyone at Legatum who has made the last 7 years so enjoyable. I’ve made some wonderful friends who I will miss dearly. I won’t name you but you know who you are!