The Week

The Week, 28 January 2022

Left with a Sue Gray report-sized hole in your reading list? Worry not. Below is Reform’s rundown of another busy week in policy.

In time for ‘Plan B’ restrictions easing, the Department for Work and Pensions has announced its ‘Way to Work’ campaign, which aims to get job-ready people back into work faster. UC claimants will now have one month, rather than three, to find a job in their preferred sector — before facing sanctions if they are not making reasonable efforts to find a job, or are turning down jobs, in any sector. The Government’s objective is for this to get 500,000 people into work. Ambitious!

The change has been met by a whole lot of criticism, but the Government is right to point out that the eye-watering 1.2 million vacancies recorded last November is having a detrimental impact on the recovery, as well as the fact that, for most people, being in work is good for their health and wellbeing. It’s also fair to ask whether taxpayers should be funding people to stay on benefits while there are jobs available in different sectors.

However... even ignoring the fact that there are fewer than 250,000 people on UC who have been claiming for less than three months, there are big questions for the DWP. By rushing jobseekers into any job, the Department risks increasing underemployment, or people ending up in work that is unsustainable — both of which are poor outcomes. Just as important, as regular readers of The Week will be aware, it fails to address the “missing million” who have left the labour force and are now classified as economically inactive, including a worrying number of young people. The real win would be supporting people currently outside of the “intensive work search group” (to whom this new policy applies), largely those with a health condition or disability, to move into sustainable work.

In good news, following a lively Twitter debate last week on the best way to measure inflation, we are delighted to see the ONS announce it will now gather data which tracks people’s experience of inflation. Using prices collected “directly from supermarket checkouts”, they will go from analysing 180,000 data points per month to “hundreds of millions”, with the aim of capturing people’s “own personal inflation rate”.

For example, when the price of sourdough increases by 5 percent one possibility is that a shopper will spend 5 percent more on bread. Another is that they substitute the sourdough for a cheaper (yet still inflated) budget loaf. But for someone who ordinarily buys the cheapest option, this substitution may not be possible, and hence their experience of inflation is different. Whilst a more precise understanding of inflation is brilliant, though, what will make the difference is using data like this to inform the support given to struggling households.

Interestingly, in a blog post this week by Tera Allas, she notes the surprising proportion of people in the UK with below average incomes, who self-report “doing alright” or “living comfortably” — including a majority of those with very low monthly incomes of below £1000. One way to read this, as Allas argues, is that UK households are financially resilient. Another is that, aside from measures such as consumer confidence and buying climate, we are often quite bad at knowing how people experience the economy.

Here are our recommended reads from the past week...

Our first read this week is a thought provoking blog post by Sam Freedman on the mental health of young people. He points to a worrying surge in referrals to Child and Adolescent Mental Health Services, worsened by Covid, but on an upwards trajectory long before. He asks whether this has been caused by de-stigmatisation, but argues that the increasing rates of hospitalisation for self-harm suggest it cannot be the only factor. Instead, he comes to the conclusion that social media is the likely culprit owing to a) a correlation between social media uptake and worsening mental health in rich countries everywhere, and b) the concentration of self-harm in specific groups, such as teenage girls, who report social media making them more anxious and body conscious in focus groups.

Second up, we’ve been reading this working paper, by academics Thiemo Fetzer and Christopher Rauh, on whether COVID care has crowded out care for non-COVID patients in the NHS. Back in February last year, we published our NHS Resilience report, showing COVID was indeed impacted routine health services, and it’s great to see more number crunching in this vital area. Their headline is that for every 30 COVID deaths, there has been at least one avoidable (’excess’) non-COVID death in English hospitals. Whilst it is important to recognise the ongoing effect COVID is having on health services, this further stresses the need for a proper plan to get on top of the backlog, with private-sector surge capacity no doubt playing a part.

Thirdly, a worrying read for DLUCH ahead of the Levelling Up white paper due next month, is this blog post which notes the effect occupational pensions have had in propping up spending in ‘left behind’ areas. The author points out that, in some localities, occupational pensions comprise more than 30 percent of household income. Despite the divergence that has occurred in regional productivity, defined benefit pensions, based on historically higher salaries, have left pensioners well provided-for in retirement. Simply put, “in pension-land it is still the 1970s”. However, when a new cohort of retirees come through, with less generous pensions and higher housing costs, we can expect a further hit to those parts of the Midlands and North of England where pensions still make a significant contribution.

Finally, congratulations to Reform Advisory Board Member, Rt Hon Caroline Flint, who was this week appointed as Chair of the Committee on Fuel Poverty. In 2019, the year for which we have the latest data, over 3 million people were in fuel poverty in England. Given the current energy price crisis, many more people are now likely to be struggling. We have no doubt Caroline will hold the Government’s feet to the fire on addressing this urgent issue.

Have a lovely weekend,