CLE0002

Written evidence submitted by Deven Ghelani, Policy in Practice

The key ways in which I would simplify the Tax and Benefit system are:

• Increase the adequacy of support through Universal Credit. Austerity driven reforms mean social security is 7.5% less generous than a decade ago. Shortfalls in support for housing and day to day bills are driving increasing fragmentation of support, for example: Discretionary Housing Payments, Household Support Fund, Cost of Living payments; and social tariffs in water, energy and telecoms. Policy in Practice estimates the costs to administer this support to be around £12bn, and the cognitive cost of people having to think about the complexities greater still. 
• Recognise non-earnings related cliff edges. The panel gave evidence on the cliff edges created by the application of sanctions, how the work capability assessment offers protection from sanctions, and makes returning to work a potential cliff edge if it means claimants risk losing this protection, and the importance of the work allowance in reducing the 'cliff-edge' of moving into work by helping to cover the associated costs (travel, clothing, hygiene) etc. The saving limit of £16,000 means increasing saving by one or two pounds can lead to loss of £1,000 a month in Universal Credit, decimating the incentive to save. Following the evidence session, I checked with clients in the welfare to work sector, and heard how damp uniforms, and poor hygiene can affect the success of a return to work. The Work Allowance for claimants without children was removed, and should be restored to support the journey back into work. 
• Passported benefits need a simple solution. The cliff edge caused by the loss of free school meals is significant, as school meals worth £500 per year need to be paid for after tax, national insurance, and Universal Credit withdrawal, meaning a £1,500 increase in gross income is needed (per child) to stay on par. The panel suggested a) rolling the value of free school meals into Universal Credit; b) making free school meals available to all on Universal Credit; and c) retaining the current temporary mechanism of retaining entitlement until the end of the current phase of schooling as sensible, simple solutions. Similarly, prescriptions could be extended to all those on Universal Credit, to reduce the cliff edge. 
• On the Office of Tax simplification: Simplicity in policy design needs to be prioritised and protected. Measures such as the High Income Child Benefit Charge, the loss of childcare at £100k and most of the issues raised in the bullets were created after the OTS and Universal Credit had been established, indicating that these have not had the intended impact. Politicians need the courage to increase the headline rate of income tax, or shift taxation away from work to other activities, rather than create ever more complex ways to take more from a dwindling base. As the OTS and Universal Credit have offered little protection, I would argue that it is far more important that committees like yours hold your own parties to account, and place a premium on keeping policy simple. 

May 2023