Experts who have studied the system for years get the interactions wrong yet we expect the ordinary claimant - who may have low levels of literacy and numeracy - to find their way through the labyrinth. That is one of the reasons why there has been increasing enthusiasm in recent years from both right and left for simplification. Many on the left like the idea of the citizens income. Many on the right want to cut benefits by combining them - as Iain Duncan Smith was famously trying to do with his Welfare to Work initiative before the cuts went beyond what even he could stomach.
In theory simplifying sounds very attractive. Why not get rid of all that pesky complexity?
I think many of these efforts are doomed to failure because of one simple truth. People are complex things and their circumstances do vary. Over simplify and you are quite likely to end up with some very nasty unintended consequences.
For example, if you pay a flat rate citizens' income to everyone then you will be making welfare payments to the children of some of the richest people in the country. You will also be paying people equally regardless of what disability they have, what the cost of their housing is, how many children they have, whether they are a single parent, and whether or not they are too sick to work. If you start to complicate the system by introducing supplements to citizens income to take account of these things then you are back to a means tested system. So either you introduce very generous arrangements for the healthy and wealthy using money that could have gone to the needy or you pretend to have a simple citizens income but vary it according to need. The moment you start trying to deal with real people's varying needs you go straight back into some form of means testing. Which I happen to think is a lot more realistic as a way of getting money to the right people than a flat payment.
There is, however, another way of approaching reform of tax and welfare. You could combine income tax with all welfare payments. Why not openly admit that it makes sense to assess people's needs but do it once? One government agency could assess every aspect of the needs of individuals and determine what tax or benefits they should receive accordingly. Get people to fill out one tax and benefit assessment and then ensure that the needs of the individual are met and decide how much they can contribute to society. By doing it this way you can avoid hidden problems for families like suddenly losing a significant benefit when family income rises. It becomes much easier to ensure that there is always a reasonable incentive for working.
There are huge advantages to such an arrangement. The individual would no longer have to be subject to constantly filling out forms and being assessed by different government agencies trying to find out whether they were in need of different forms of support. Instead the one tax and benefit agency could request all relevant information and put together information about your housing needs, your disability, your childcare, your school uniform costs and so on. The saving in terms of government bureaucracy would be enormous and if those savings were used sensibly you could replace unconnected staff in different agencies that are currently hurriedly looking at the same information about the same person with a single client manager who would have sufficient time to look properly into the circumstances of each individual. The official could develop a proper knowledge of the situation in which their client lives. All individuals, whether rich or poor, would need to develop a relationship with the tax and benefits office and the same would be true in reverse.
From the citizens point of view you would have one government department to ring and talk to whenever your circumstances changed. Easy to understand. Easy to deal with. From the government's point of view there would be one official looking into the circumstances of each individual and developing a relationship with them. Easy to administer and much easier to detect tax avoidance or benefit fraud because someone would have the whole picture and the time and the knowledge to examine anything that looked suspicious.
Devising the rules for such a system would of course be a serious challenge but in essence involves codifying current rules and making them clearer and simpler. It also has to be admitted that whenever you simplify the system there is always someone who wins out and someone else who loses and those who lose could be placed in difficulty. The way to overcome this is to phase in a new system by applying it to new claimants. This would also enable the new system to be tested and refined with relatively small numbers of people at first so that any errors could be ironed out.
We have just been given a huge lesson by Iain Duncan Smith and George Osborne in the difficulties of trying to combine and simplify 6 benefits at the same time as cutting them. They were wrong to think this would be simple, wrong to rush to implement it without listening sufficiently to criticisms, wrong to try to use this reform to cut down on payments to the poorest people in our society and wrong to blame the poor for needing help. This does not mean that they were wrong in thinking that the current system has become so complex and unwieldy that it is no longer helping people as effectively as it could and that it is costing a fortune to administer and needs change.
If we really want to target money to where it is needed and to simplify arrangements why not consider phasing in a single tax and benefit system administered by one Department?