Fixing the broken benefit system

4 February 2016

Whatever the differing views on the future of out-of-work incapacity-related benefits in the UK, there is a broad consensus the existing system is broken. The introduction of a new out-of-work benefit for claimants with a health condition – Employment and Support Allowance (ESA), was intended to help recipients of its predecessor, Incapacity Benefit, exit benefits and enter work. Presenting the reform in 2006, the then Secretary of State for Work and Pensions John Hutton predicted it would result in a million fewer claimants within a decade. Yet the number claiming sickness benefits has barely changed: 2.6 million were claiming when ESA was introduced; today it is 2.5 million.

There are a number of reasons why this has happened. For one, the dual purpose of the main gateway to access ESA – the Work Capability Assessment (WCA) – conflates assessing eligibility and a claimant’s capacity for work. Rather than the positive and open discussion of how to best support the claimant as intended, it has instead become a negative (and stressful) test as to whether a claimant is ‘too sick to work’. This is compounded by the fact that the benefit level for people with more significant health conditions is substantially higher than for unemployment benefits – and will widen under the new Universal Credit system. While this will have no effect on claimants with the most severe conditions, for others this may also unintentionally encourage them to focus on how sick they are.

Nearly three quarters of ESA claimants who have gone through the WCA are deemed incapable of being able to engage in any work related activity at all, with no requirement to engage with services to help them return to work. Yet 52 per cent of this group surveyed state they want to work. The evidence shows work is good for people’s health and wellbeing, including for many with mental and physical disabilities. For too many, the WCA is a gateway to a lifetime trapped on benefits. This is bad for the claimant’s well-being, the sustainability of the welfare system and society as a whole.

Reform’s new report, Working welfare: a radically new approach to sickness and disability benefits, lays out radical steps to address these problems. It proposes a single rate out-of-work benefit set at a level similar to the current unemployment benefit rate. This will ensure that there is no incentive to move onto one benefit over another. However, this measure is not about cutting spending. Savings should be reinvested in the non-work related Personal Independent Payment (which contributes to the living costs of people with the most severe long-term health conditions) and employment support to help claimants return to work.

A single rate would also enable the development of a much more personalised single gateway for accessing Universal Credit. Assessing a claimant’s benefit eligibility independently of their support needs will allow a more effective diagnostic of the complex multiple issues they may have to overcome in their journey back to work, rather than the out-of-work benefit they receive. If necessary, an independent assessment of health related barriers to work could then be used to design a rehabilitation plan, for which claimants with mild to moderate conditions could be expected to comply in return for their benefit.

Universal Credit is a bold attempt to simplify the complex benefit system. But to substantially change outcomes for out-of-work incapacity benefit claimants, the Government must go further. Incremental reforms have been tried before and failed. Only a new approach can deliver the major improvement in the employment outcomes of people with health conditions needed.

Ed Holmes,Senior Researcher, Reform

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