Reforming employment support for people with health conditions

21 October 2015

The Government’s flagship programme to assist benefit claimants back into work – the Work Programme – has not been without impressive results. The latest data release continues to show sustained improvements – with 731,000 people having started a job and 460,000 sustaining one through the scheme. While more clearly remains to be done, the main blackspot remains the results for claimants of Employment and Support Allowance (ESA). Only 8.6 per cent of claimants transitioning from Incapacity Benefit are achieving a job outcome within 24 months of referral compared to 26.9 per cent of JSA claimants over 25. This is not only a problem for the public finances but the individuals concerned. There is clear evidence that ESA customers expected to eventually be capable of work want to do so – with some 62 per cent surveyed saying they want to work. Employment not only provides a source of income, but can improve social inclusion, build self-esteem and help to develop skills and expertise.

Unfortunately, for too many people the system still does not help them find work. The Work and Pensions Select Committee’s report – out today – addresses one of two major upcoming opportunities to overcome this. The first is the replacement of the Work Programme – and the specialist disability Work Choice scheme – in 2017 and the chance it provides to help people with more complex barriers return to work. As we at Reform have identified, a new employment support system must diagnose and treat individuals according to their personal barriers to work rather than the inadequate proxy of which primary benefit they claim. This should include diagnosed health conditions, socioeconomic circumstances, education and employment history. Simpler, more transparent incentives, better integration with related public services, earlier referrals and an alternative payment-by-results model for the hardest-to-help claimants would also be an improvement.

The second opportunity is the phasing out of income-related ESA and its incorporation into Universal Credit. This will not only provide a smooth ‘taper’ of benefit withdrawal for additional hours of work, but also the chance to clarify the distinction between income replacement and disability benefits. The Chancellor’s 2015 Budget reduced the benefit level of new ESA claimants placed in the Work-Related Activity Group (WRAG) to that of Jobseekers Allowance from April 2017. This was intended to remove the incentive to be placed in the WRAG group due to the higher rate. However, this leaves the ESA Support Group rate higher than both the JSA and ESA WRAG rate. This will further be exacerbated by the fact that the Chancellor’s four year freeze on working age benefits specifically excluded the ESA Support Group (alongside PIP and DLA).

Meeting the Government’s goal of halving the employment gap between disabled and non-disabled workers – moving around one million more disabled people into work – will be no easy task. To help address this, Reform will be publishing three papers in the coming months: an overview of the ‘state of play’ in out-of-work incapacity benefits, a second looking at the structural design of the benefits, while the final paper will examine the employment support available. Ensuring people with the most entrenched barriers to employment receive the help they need is a formidable challenge. The policy decisions made in the next couple of years will be crucial in determining if it is met.

Ed Holmes, Senior Researcher, Reform

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