Published by Professor Roy Sainsbury on 5 February 2016
- Our Work
- The Reformer Blog
22 February 2016
Tomorrow the Welfare Reform and Work Bill ‘ping pongs’ back to the House of Commons. The Government will seek to overturn the Lord’s rejection of the change in the payment rate for some people on Employment and Support Allowance (ESA). Worth £640 million a year in savings by 2020-21, the change means that people in the Work Related Activity Group (WRAG) – those deemed able to carry out activities to help them move back to work – will receive the same level of benefit as jobseekers. The Government argues that removing the financial incentive to be in the WRAG will encourage more claimants to move back to work.
Campaigners against the change argue there is no evidence to support that claim. A review by three peers, supported by a group of disability charities, surveyed current claimants and found that half felt the cut would mean it would take longer for them to get into work. Setting aside the fact that the change will only apply to new claimants from April 2017 (and therefore not those surveyed), there are several flaws in this argument. Firstly, claimants are not moving into work under the current system – just 1 per cent of WRAG claimants leave the benefit each month. Secondly, using subjective survey data is not a good guide to the possible behavioural effect of the rate reduction, but, thirdly, robust international studies are. Reform’s recent report Working welfare: a radically new approach to sickness and disability benefits cites evidence from the US, Sweden, France and Norway which show that the higher the benefit rate the longer a claimant is likely to remain on it.
The other key argument critics use is the need for a higher payment rate to meet the additional costs faced by people with disabilities. This confuses the purpose of ESA, which is an income-replacement benefit, with the extra costs benefits Disability Living Allowance (DLA) and Personal Independence Payment (PIP). DLA and PIP are designed precisely to help with the significant and higher costs faced by some people with disabilities – such as needing specialist support, equipment or transport – and is worth up to £140 a week. It is also available to eligible claimants regardless of their employment status and therefore maintains work incentives.
Helping more people with disabilities and health conditions into work will clearly take more than the rate reduction contained in the Bill. The Government must invest more in back-to-work services. Health and social care services must ensure people can access the support they need (such as mental health services), when they need it (such as carers helping someone first thing in the morning so they can go to work). Employers need to recognise the talent available amongst disabled people and be willing to make the adaptations necessary for them to join their workforce. But the fact that other reforms are needed does not mean that the rate change is not. MPs should support the Government tomorrow, and then press for even more action in those other areas.
Charlotte Pickles, Senior Research Director, Reform