Working Welfare and how to address the disability employment gap

5 February 2016

The latest report from Reform, Working Welfare, tackles sickness and disability benefits and is a bold and wide-ranging contribution to what is already a fierce and controversial debate about welfare reform. Only last week during the Second Reading of the Welfare Reform and Work Bill in the House of Lords the government suffered a defeat (albeit one that might prove to be only temporary) on its proposals to cut payments to recipients of Employment and Support Allowance (ESA). Working Welfare enters the fray with some bold recommendations for ESA on three fronts, arguing firstly for a common rate of benefit for ESA and Jobseeker’s Allowance (JSA), secondly for a replacement of the much criticised and disliked Work Capability Assessment as the test of eligibility (or ‘gateway’) to the benefit and finally, for a more personalised approach to conditionality and sanctions.

Part of the motivation in the Welfare Reform and Work Bill and Working Welfare is to address the shockingly persistent employment gap between disabled people and non-disabled people (currently over 30 percentage points according to the Office for National Statistics). Viewing the benefit system as a part of the problem is not wrong of course and reforming the benefit system should certainly be part of the solution. Indeed, it is arguable that Universal Credit (at least as it was originally designed) is a response that now needs time to demonstrate its impact. Its potential impact has unfortunately almost certainly been undermined by successive changes imposed on the Department for Work and Pensions. As Baroness Thomas said in the House of Lords last week: “It is also not well enough understood that Universal Credit has taken a huge hit from the Treasury since its inception several years ago. We ought to hear more about that.” Hear hear to that, but a topic for another time perhaps.

The proposals in Working Welfare are rightly set out separately from each other. Making changes to the structure and the rate of ESA does not necessarily dictate how the gateway is designed or what regime of conditionality and sanctions should be attached to the benefit. Readers of Working Welfare will therefore almost certainly have mixed reactions to the wide range of proposals rather than accepting or rejecting them all. The report raises complex and challenging issues particularly about the structure of ESA and Universal Credit that also prompt fundamental questions about our benefit system, including this: why do we have a separate out of work benefit for people with long term health and disabling conditions? Do we need one?

The argument that ESA acts as a disincentive to work might or might not be a strong one (the House of Lords debate highlights what little evidence there is on either side) but it sidesteps the question of whether unemployed people who are sick or disabled need a higher level of benefit than other claimants to compensate for the additional financial demands on their households of long term unemployment? If the answer is yes then there could be a strong argument for retaining the differential between ESA and JSA and addressing any disincentive effects in different ways.

Working Welfare is timely and will not only contribute to current debates about welfare reform but is also valuable in helping us think about some of the bigger questions about benefits, poverty and work.

Professor Roy Sainsbury, University of York

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