Observation (CEACR) - adopted 2016, published 106th ILC session (2017)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - United Kingdom of Great Britain and Northern Ireland (Ratification: 1954)

Parts III, IV, V, VII and X of the Convention. Benefits to be taken into account. The Committee recalls that the system of social protection in the United Kingdom comprises contribution-based and income-based social security benefits, as well as various tax credits and a range of means-tested social assistance benefits, which offer additional protection against poverty. Contribution-based benefits are payable at a flat rate to anyone who has paid the requisite amount of National Insurance Contributions (NICs). Income-based benefits replace or supplement contribution-based benefits and are available to all who meet the eligibility criteria as to their income. In case of sickness, income security is ensured through a mix of measures comprising employer liability provisions, contributory social insurance benefits and non-contributory income-tested benefits, which together seem to offer the level of social protection comparable to that guaranteed by the Convention. According to the Government, the obligation to provide sickness benefit cover is met through a combination of Statutory Sick Pay (SSP) payable to employed workers by their employers, and contribution-based Employment and Support Allowance (ESA), which is available to employed and self-employed earners who are not covered for SSP purposes or whose entitlement to SSP has come to an end after the maximum duration of 28 weeks. SSP can be considered the main benefit covering the majority of persons protected during the whole period of payment of sickness benefit, as prescribed by Article 18(1) of the Convention/Code. ESA plays a supplementary role protecting only those who are not covered by SSP. Taken together, the Government believes these benefits ensure the required level of income security for the duration outlined by Part III of the Convention/Code. As regards the role of the income-tested benefits in the case of sickness, they are currently being replaced by Universal Credit (UC), which “is a general anti-poverty benefit available to those at risk of falling into poverty. It is payable to people out of work as well as those in work and on a low income. The UK classifies this as a ‘social assistance’ rather than a ‘social security’ benefit … As Universal Credit is a form of social assistance it does not fall within the scope of the Code.” Therefore, the Government considers that the United Kingdom’s obligation under the accepted Parts of the Convention/Code should continue to be met for the foreseeable future on the force of the NIC-based social security benefits alone.

The Committee takes due note of these important statements. It notes in particular that the United Kingdom wishes to apply Part III of the Code/Convention on the force of the combination of SSP and ESA (Contributory) at the exclusion of income-tested benefits such as income-related ESA and UC. Moreover, the Government insists that non-contributory income-related benefits shall not be taken into account for the purpose of all accepted Parts of the Code/Convention. The Committee observes that a Contracting Party is free to declare on the force of which benefits provided by the national social security system it accepts the obligations of the Code/Convention under each Part covered by its ratification. While respecting the above choice of the Government, the Committee would only partially agree with its statement that social assistance benefits fall outside of the scope of the Code/Convention. Indeed, the Code/Convention does not apply to the discretionary social assistance provided by the local authorities as they deem necessary; it fully applies to non-contributory means-tested social assistance benefits provided to all residents as of right. It is for measuring the adequacy of the rate of such benefits that Article 67 was included in the Code and Convention No. 102. The preparatory document on Convention No. 102 clearly states that Article 67 “applies to cases of social assistance under which the benefit may be reduced by part of the income or means of the beneficiary during the contingency. Safeguards are obviously required if social assistance is to be admitted for the purpose of compliance … A Member wishing to comply on the basis of social assistance would therefore have to prove that its maximum benefit, which will be payable to a family without sufficient means, is actually a subsistence benefit and large enough to permit the family to live under tolerable conditions” (Report V(B), International Labour Conference, 35th Session, Geneva, 1952, p. 110).

Part III (Sickness benefit), Article 16 (Calculation of the level of benefit). The Committee notes that the calculation of the replacement level of the SSP and ESA (Contributory) for the standard beneficiary (man with wife and two children) includes Child Tax Credit (CTC) of £117.50 in respect of two children. CTC is a means-tested form of support for low-income families with children who are in or out of work and living in the United Kingdom. Means-tested benefits, according to the Government, are not a form of social security and fall outside the scope of the Code/Convention. Following this logic, CTC, as a means-tested benefit, shall not be included in the calculation of the replacement level of SSP or ESA. Recalculated without CTC, the replacement rate of SSP Week 1–28 stands at 30.25 per cent of the reference wage of an ordinary labourer, of ESA (Contributory) Week 1–13 at 26.50 per cent and for Week 14 onwards at 33.62 per cent. The Committee observes that these rates fall much below the minimum rate of 45 per cent guaranteed by the Convention/Code and concludes that social security benefits in case of sickness, as they are understood and conceived by the Government, do not permit the United Kingdom to fulfil its obligations under Part III of the Convention/Code as regards the level of benefit.

Part IV (Unemployment benefit), Article 22 (Calculation of the level of benefit). The Committee notes that the calculation of the replacement level of the contribution-based Jobseeker’s Allowance (JSA) for the standard beneficiary (man with wife and two children) includes CTC of £117.50 in respect of two children and refers the Government to its comments under Article 16 above. Recalculated without CTC, the replacement rate of JSA Joint Claim stands at 36.75 per cent of the reference wage of an ordinary labourer, which is much below the minimum rate of 45 per cent guaranteed by the Convention. The Committee concludes that the United Kingdom does not fulfil its obligations under Part IV of the Convention as regards the level of unemployment benefit.

Part X (Survivors’ benefit), Article 62 (Calculation of the level of benefit). The Committee notes that, according to the data given in the report on Convention No. 102, the weekly rate of widow’s benefit together with Child Benefit but excluding CTC will provide a replacement rate of 36.18 per cent, which is below the minimum level of 40 per cent guaranteed by the Convention. Referring to its comments under Article 16 above, the Committee concludes that the United Kingdom does not fulfil its obligations under Part X of the Convention as regards the guaranteed level of the survivors’ benefit.

Level of contribution-based and income-related benefits below poverty line. During the last decade, the Committee of Ministers of the Council of Europe has been repeatedly pointing out that, unlike the income-based ESA and JSA, the contribution-based ESA and JSA fell short of the minimum level prescribed by the Code/Convention and do not attain even the lowest EUROSTAT at-risk-of-poverty threshold of 40 per cent of median equivalized income in the United Kingdom and in the European Union as a whole. In its latest reply, the Government states that: (a) “the rates of contributory ESA and JSA are the same as the income-based rates of ESA and JSA respectively”; (b) “the Government believes that it maintains a strong welfare safety net that is adequate and balances the requirements of a sustainable welfare system with the need to ensure that work pays”; and (c) “the Committee should note that the main rates of Jobseeker’s Allowance and Employment and Support Allowance provide a basic standard of living to those who are not in work at a level that does not disincentivise moving into work or back into work when the opportunity arises or their health permits”. With respect to these statements, one should first of all note that the Government is not contesting the fact that the level of the said benefits is insufficient in terms of the international standard established by the Code and Convention No. 102 and the at-risk-of-poverty threshold established by EUROSTAT. Instead, it considers this insufficient level “adequate” in terms of internal standard of welfare, and consequently expresses no intention to comply with the United Kingdom’s obligation to maintain social security benefits at least at the minimum level guaranteed by these international instruments. In appraising the Government’s position from a legal point of view, the Committee is bound to recall some basic rules of conduct of the Contracting Parties with respect to their international obligations freely assumed under the Code and ILO Conventions. Thus, the Vienna Convention on the Law of Treaties 1969 stipulates, in particular, that “every treaty in force is binding upon the parties to it and must be performed by them in good faith” (Article 26: Pacta sunt servanda), and that “a party may not invoke the provisions of its internal law as justification for its failure to perform a treaty” (Article 27: Internal law and observance of treaties). With regard to the internal provisions to incentivize sick or unemployed workers moving into work as soon as possible invoked by the Government to justify its failure to guarantee the minimum benefits prescribed by the Code and Convention No. 102, the Committee considers that the policy of keeping the basic standard of living of those who are on benefits and not in work below the absolute poverty line results in using social security as a means of economic compulsion to labour. While such policies were indeed common in Europe in the nineteenth century, in the twenty-first century the international community believes that “basic income security should allow life in dignity” and “secure protection aimed at preventing or alleviating poverty”, as it was recently stated in the Social Protection Floors Recommendation, 2012 (No. 202). The policy of keeping the rates of SSP, ESA, JSA and the widow’s benefit, contribution-based as well as income-based benefits, below the poverty line stands in direct contradiction to such objectives of the Code as “harmonising social charges in member countries” and “facilitating their social progress”, stated in its Preamble. In such situations where national welfare systems are designed in violation of the requirements of the Code, the Committee of Ministers reminds the Contracting Parties, as it has done in the Resolution CM/ResCSS(2016)21 on the application of the Code by the United Kingdom, that common European social security standards may be effective only so much as they are being respected and fulfilled by all and every member State. As, notwithstanding these reminders, the Government apparently remains deaf to the common European and international objectives of social protection, the Committee of Ministers should point out that, in accordance with Articles 66, 67 and 70(3) of the Code, the Government shall accept general responsibility for the due provision of the said benefits at the level which shall be sufficient to maintain the family of the beneficiary in health and decency, and shall not be less than the level calculated in accordance with the requirements of Article 66. To fulfil these provisions in good faith, the Code/Convention requires the Government to take all the necessary measures, including actuarial studies and calculations of the changes in benefits, insurance contributions, or the taxes allocated to covering the contingencies in question. Regretfully, there are no such measures mentioned in the report, which merely indicates that the proportion of expenditure on contributory benefits as a share of gross domestic product (GDP) has remained broadly stable over recent years, from 4.8 per cent in 2008–09 to 5.2 per cent in 2016–17, and forecast to be 4.9 per cent by 2020–21. Taking into account that, with these resources, the levels of abovementioned benefits were considered by Resolution CM/ResCSS(2016)21 to be manifestly inadequate in the meaning of Article 66 of the European Code of Social Security as well as in the meaning of Article 12(1) of the European Social Charter, the Committee asks the Government to undertake an actuarial study on the cost, in terms of a share of GDP, of bringing the level of contributory benefits to the minimum level guaranteed by the Code and to assess the capacity of the national economy to maintain them above the poverty line. As regards generation of additional resources which may be required for this purpose, the Committee draws attention to the 2010 estimation of the National Institute for Economic and Social Research, mentioned in the Government’s report, that extending average working lives by one effective year, which is the purpose of raising the State Pension age from 65 to 66 years by 2020, could increase GDP by around 1 per cent.

In this context, the Committee has also considered the demand of the Government to take into account that contribution-based benefits represent one part of the overall welfare system that includes a mixture of income-related and social assistance benefits, such as housing benefit and tax credits, and that the Government is taking additional steps to incentivize and support people into work. This includes measures such as the introduction of the national living wage, which increases the minimum level of pay per hour for those aged 25 or over; the increases to the personal allowance in income tax which has ensured that workers keep more of what they earn; and the reforms to childcare including doubling the hours of free childcare available for working parents of 3–4 year-olds from 15 to 30 hours and the introduction of tax-free childcare. The Committee, much as it would have liked to take into account social assistance benefits and other measures mentioned above in assessing the overall level of protection ensured by the national social security system, regrets to point out that, following the position firmly expressed by the Government, these measures “fall outside the scope of the Code as they are not a form of social security”. Nevertheless, the Committee is ready to enlarge the scope of social protections to be taken into account for the purposes of the Code and Convention No. 102, if the Government would reconsider its position.