Isle of Man Guide

A few weeks ago the Minister for Social Care Hon Chris Robertshaw MHK set out the size of the challenge facing the Island in relation to social policy and called for a National Debate on the issues. His attached statement outlines the issues that we the people must now discuss and agree.

The Minister commented:

“We now have a simple choice: in order to address the substantial gap between Government’s income and expenditure we can either raise taxes significantly – which I firmly believe will damage jobs and the economy – or we can accept reforms to our social policy to ensure we support the most vulnerable while balancing Government’s budget. I am very confident that – if we have clear principles and apply them fairly – then the public will accept the need for change. I look forward now to a thorough public discussion on the principles of social policy reform.”

The statement sets out two fundamental principles as the basis for reform:

1. Government must seek to target scarce public resources to those in greatest need. This means more needs-testing and means-testing.

2. Government must seek to help people to be more self-sufficient and ensure they fulfil their social responsibilities. This means where possible providing more short-term help and fewer long-term benefits. It also means more effective assessment of needs and appropriate penalties where people seek to extract benefits and services to which they are not entitled.

Consultation documents will be published over the next few weeks in order to give everyone the opportunity to comment on social policy, which is at the heart of Government and affects everyone in our community.

Following the consultation this summer, Tynwald will be provided with an opportunity to debate social policy reform. This will assist Government in formulating the right overall social policy framework for the Island that has the broad support of Tynwald and the public. This framework will be crucial to Government in drafting the 3-year Budget for Tynwald to approve in February 2013. Detailed public discussions and consultations on specific reforms will take place during 2013 and possibly beyond. In this way Government can ensure there is full public engagement throughout while enabling progress to be made in meeting the current financial challenge.

Statement from Hon Chris Robertshaw MHK, Minister for Social Care

“Government in conjunction with Tynwald must and will lead – that is what we were elected to do. However, the issues are so significant that they require full public engagement at the earliest possible stage in a way that goes way beyond the normal consultation process.

Over the last 30 years we have passed through an extraordinary period of benign and solid economic growth during which we – perhaps inevitably – became quite comfortable and not a little complacent. That period is now over and if we are to ensure the next 30 years are to be a success story for the Isle of Man then we are going to have to start thinking in new and imaginative ways. That is also what today, and indeed this summer’s debate is all about. I may well be the Minister in post right now but please remember this it is your future we are talking about here.

To achieve success we have to engineer significant change whilst at the same time continuing to grow our economy and thus maintain confidence. All this against the backdrop of considerable international economic uncertainty.

When considering the size of our budgetary challenge this will be no mean feat.

If we allow ourselves to think differently I have no doubt we can succeed.

We need to think in a different way if we are to overcome the exponential rise in the cost of benefits whilst still continuing to protect the truly vulnerable. We need to think in a different way if we are to help people fully realize their own potential whatever their circumstances.

As we share much, but not all, of our existing benefits system with that of the UK let me start with a comment from a recent white paper produced by that jurisdiction on the subject - and I here quote a few key extracts from it:

“Successive governments have ignored the need for fundamental welfare reform, not because they did not think that reform was needed but because they thought it too difficult to achieve.”

“Instead of grasping the nettle, they watched as economic growth bypassed the worst off and welfare dependency took root.”

“The welfare bill has become unsustainably expensive.”

“A life on benefits is a poor substitute for a working life but too much of our current system is geared towards maintaining people on benefits rather than helping them flourish in work.”

That is one side of the coin – I now wish to draw your attention to the other side.

Just as there are parallels with the UK then so there are differences in so far as to remain competitive – to continue to encourage growth in our economy - we must remain a low tax jurisdiction. It makes little or no sense that despite this taxation environment we still operate a universal benefits system. In fact it is perhaps deeply surprising that we still do.

The challenge we face is to bring both sides together to provide the engine for a rebalancing programme that would be seen to be fair by all sections of our community.

One way of achieving this will be to use what I will call ‘The Two Way Escalator’ – it will be the engine at the centre of our policies and will drive the rebalancing programme.

It recognises two simple principles:

1. That our benefits system is in many respects universal and therefore badly targeted.

2. That our benefits system often traps the recipient in a culture of dependency.

Properly developed, the Two Way Escalator will deal with both these issues:

1. In the downward direction it will reduce the burden of cost through means testing.

2. In the upward direction it will ensure we embark on a programme of re-enablement right across a range of areas whilst always ensuring we continue to fully protect the truly vulnerable.

Turning first to means testing. As I have already intimated, I believe the choice is a simple one. We either retain our existing universal benefits system which is not fit for purpose and fund it by significant increases in taxation – thus profoundly undermining our economy – or we introduce means testing, thus ensuring benefits are properly targeted whilst still retaining a key advantage for continued economic growth.

This is a simple principle to describe and easy to understand but requires a very considerable amount of work indeed in a number of Government Departments if it is to be achieved. It is being led by my Department and Treasury and we have a number of work streams already in progress and these will run concurrently behind the scenes whilst the public debate is developing.

It is a new way of thinking – that is why we must have a public debate.

As you can see The Two Way Escalator divides the population into four broad groups of households but there is nothing religious about this – it could well ultimately be described in more or less groups with a variety of refinements and depending on the subject matter.

Within the contexts of means testing each group would be considered in a different way. Overall the potential for savings is very considerable indeed by ensuring scarce public resources are carefully targeted to those in greatest need.

Turning now to the re-enablement programme, this is more difficult to describe in a few words as it will be diverse and multi faceted but let me highlight two first principles to help give it some shape.

First consider the principal role of my department.

Imagine it as a room with one door in and two doors out.

All those needing or seeking assistance enter one door. The role of my department will be to assess need – to identify those who are truly vulnerable and care for them accordingly – whilst encouraging the rest to achieve the highest level of self sufficiency possible particular to each individual’s abilities and circumstances. This principle applies in all four of our main areas of responsibility and policies are being developed and will be developed accordingly. These areas of course being housing, adult and elderly care, child issues, and of course the benefits system itself – the latter including unemployment matters.

Second the concept of re-enablement is not about money, but about the provision of opportunity, services and incentives to encourage a movement away from a culture of rights and entitlements towards one of an increased sense of personal responsibility and self worth. By way of example in the area of child issues – Frank Field MP brilliantly articulates this argument in his recent work ‘The Foundation Years – preventing poor children becoming poor adults’.

Re-enablement takes many different forms – too many to discuss here. Be it housing, provision for the elderly, adult disabilities, child issues or getting back to work. I will come back to all these progressively in detail over the summer.

The principle built into the escalator is that policy will always be designed to do everything possible to encourage the movement from a lower level to a higher one until maximum potential is achieved – whatever that may be for any given individual. For example the potential for movement on the part of one person might be very considerable over time, whilst for the next, although perhaps limited, would be significant for that individual.

I think it is important to say here that the two way escalator will not only avoid the waste of taxpayers’ funds and assist enormously in moving away from a dependency culture but, where appropriate, will allow for the cross fertilisation of funds in order to boost specific re-enablement programmes – thus moving us away from silo thinking. In other words a far greater degree of targeting funds against the backdrop of policy priorities as they are developed. Polices grown out of clear principles with wide support.

A few weeks ago I tried to point out the size of the budgetary challenge we face within social care and our benefits system and today I have tried to show something of the outline thinking as to how we intend to meet the challenge.

I have consciously decided to consult in two stages to avoid trying to convey too many measures at once. These will both start in the next few weeks.

• Firstly I will be launching a consultation document on the case for greater means and needs testing. This will then run for the whole of the summer and I will encourage involvement through articles, interviews and hopefully some radio and internet programmes and pieces.

• Secondly I will be publishing a further consultation document on the case for greater enablement and personal responsibility. Again this consultation will run over the whole summer and once again I will encourage involvement and responses through articles, interviews and radio and internet programmes and pieces.

The launch of each consultation will be accompanied by a further press conference. You may think this is too protracted but there is much to say and to try to say it all at once would be to engage in overload, confusion and therefore possible failure.

In parallel with this, the work I have already mentioned will continue with a view to working up specific proposals to be presented for consideration by the Council of Ministers Social Policy and Children’s Committee which I chair.

By October the consultation comments will have been consolidated which, brought together with the work done by the Ministerial Social Policy Committee, should place us in a position to submit proposals for consideration by the full Council of Ministers in November in preparation for a major social policy debate in December in Tynwald.

Much will depend on being able to get public engagement.

Today’s message is about getting across two core principles:

1. Asking the public to accept we have to choose between higher taxation or means testing. (the lower side of the escalator)

2. That government recognises much more needs to be done to improve our benefits system in order to ensure everyone achieves their full potential in life through re-enablement and fulfil their responsibilities to society in return for the support they receive. (the upper side of the escalator)

Ladies and gentlemen, much will depend on how we as a community respond to this challenge.”

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