WELFARE STATE
Poverty
Abolishing the wage stop
Ruth Lister
The wage stop is a rule operated by the Supplementary Benefits Commission to ensure that the net income of an unemployed person is no greater when receiving supplementary benefit than it would be if he were following his normal full-time occupation. Thus, if a man is required, to register for work and his potential earning capacity is considered to be less than his normal supplementary benefit entitlement, his supplementary benefit will be reduced accordingly.
At the last count, in November 1971, 21,000 families in receipt of supplementary benefit were being wage stopped. These families will have included over 60,000 children. Particularly vulnerable are those with large families and those paying a high rent. Since then, because wage stopped families are eligible for a Family Income Supplement payment, a number will have been lifted out of the wage stop as a result of the increase in the Family Income Supplement rates in April. There are, though, still at least 10,000 families being wage stopped, and the numbers will increase once again when the supplementary benefits rates are increased, and also, probably, as rent levels rise.
The wage stop is a statutory regulation which derives from the Ministry of Social Security Act, 1966. However, as in most aspects of the supplementary benefits system, there is a considerable degree of discretion involved in its actual administration. In 1967, in response to mounting criticism of the wage stop rule, the Supplementary Benefits Commission published a report, 'The Administration of the Wage Stop.' This made a number of recommendations designed "to ensure that claimants who are subject to the wage stop are dealt with as sympathetically and equitably as possible." Experience of a number of wage stop cases over the last few years led the Child Poverty Action Group to question whether in fact the reforms introduced following the reportt were achieving their desired objectives. We therefore decided to carry out a study of wage stopped families who had come to Child Poverty Action Group Citizens' Rights Office for help, The suplementary benefits level is conventionally taken as the "poverty line." The wage stop reduces claimants' incomes to below the supplementary benefits level. This, in effect, means that as a result of official 'Salley many families are being forted to live below the poverty line. It was clear from the study that life on the wage stop is a life of deprivation and hardship. In the constant struggle to make ends meet, parents were often going short on food and clothing for themselves in order to try to provide for their children.
Despite obvious evidence of hardship, the Commission's officers had been considerably less than generous in the exercise of their discretionary powers to grant extra payments to meet 'exceptional' needs such as clothing and furniture. One man, for instance, who asked for help with clothing and bedding on the advice of a welfare officer, was refused pointblank on the grounds that he was getting enough money to buy them himself; he was at the time getting £13 benefit on which he had to keep a wife and three children. In addition, many officers appear to have ignored the Commission's instructions to inform wage stopped families of other welfare benefits for which they are eligible and to help them apply for them.
In estimating a man's probable future earnings, three types of evidence are now used: past wage slips; guides to past earnings such as P60s, and the National Joint Council Local Authority (Manual Worker) wage rates. The last category is used for those classified as labourers and others such as the long-term unemployed, for whom it is difficult to reach an accurate estimation of their probable future earnings. In addition, the Commission's report states that "The estimation of future earnings must (my italics) take account not only of the basic wages payable to men in their usual occupations but also of the possibility of overtime, bonus payments, etc." A report in the Sunday Times last year, however, revealed that written into the secret Code, there are, in direct conflict with this recommendation, precise instructions to officers that, when applying the National Joint Council rae, they must never add for overtime.
Considerable stress is laid in the report on the care that needs to be taken in deciding on a man's normal occupation and his probable future earnings in that occupation. In few of the cases looked at in our study, did the wage stop appear to reflect any serious effort on the part of the Commission to come to a reasoned decision on the man's potential earning
ty
ca A um qualified men mennwerbeerbeionfg swkailgleedl ci t , labourers because no real at'efillo n' been made to find out eitherrl past earnings or their normal 0.' " had been. fitic #c'l The report also proposed a rel #A, wage stopped cases where therepIt'n i element of disability, and auggeo.fd t the requirement to register ford which the imposition of the depends) should be closely exam cases of men for whom a ce01,1 disability, age and length of makes it unlikely that they wil',;.6 In this respect too, officers to have been very conscielin carrying out the Commission's P In seven of the eighteen cases cy there were grounds for arghiagho requirement to register should lifted, and there have been a Ile? instances reported to Child Pc)vAe'c'1; Group of disabled wage stoPP:,,ie: being overlooked until inclu';'' made by some outside body ai'i5s Department of Health and Sod'3 office. Appeals had been lodged Wi,t„11„ , of the Child Povertyy Act'",;p ° Citizens' Rights Office in thirtof eighteen cases in the study alld only two were unsuccessful. they not got in touch with Ctil ci, Action Group few of the sect iaj would probably have appeal,e„t f simple reason, if no other, 0'0,14 them had not even known thecript7t1% wage stopped. This, in fact is 5' °I 41 of a more general shoricoll'ilogati supplementary benefits systeill," a. nts do not have easy ,;1041t Information about their eritit7 , i are usually kept in ignorance P'.cl, benefit has been calculated, °ire 4 Aiti that they do not know if theY their correct benefit or not. In Child Poverty Action uff°1.401 report on the administration °VA, stop, I make a number of reform of the wage stop's But, since one of the main pol-pte 1 out by the study is the exists between an administrat71:1 conceived on paper and its ac,%": .ic in practice in a system which l'A'o let, emphasis on the judgement 911'005 rit cf individual junior officialS;14 it4 remain sceptical, as to the reforms are likely to have. III.:‘,1 0 grj and of the hardships causedw14.11, stop, I believe that what is recit.1,',0 'tiai not the reform, but the aboilk` 44 wage stop. al
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ar hi °D3 Ruth Lister is Legal officer to the Child P0178 Group.
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