Welfare Reform Bill

Carrots
Sticks
… and quite complicated ones at that

Late last week the Government announced its Welfare Reform Bill following the Green paper consultation started earlier in the year. The primary aim is to overhaul Incapacity Benefits - placing the emphasis on helping people back to work. The Government calculates that reforms should save £7bn per year.

Work and Pensions Secretary John Hutton has commented: "It is not about saving money for the taxpayer, it is about giving literally millions of people in our society the first opportunity to get back into the labour market where most of them want to be."

The move has not universally accepted with some charities dismissing the reforms as flawed and punitive. Age Concern have been amongst the most severe of its critics.

Andy Dean

NEWS FOCUS in this edition

The package

The government's Welfare Reform Bill aims to take 1 million of the 2.68 million claimants off Incapacity Benefit (IB) by replacing it with a new two-tier 'Employment Allowance' to encourage people back to work. Higher rates will be paid to those who genuinely cannot work, lower rates to those refusing to be reassessed for a job.

About a million more people now claim IB than two decades ago. Almost half of those who are today eligible for it are aged over 50, and a depressingly small proportion of these people ever return to employment.

The big growth in claims of late has been among women and those diagnosed with some type of mental illness, including stress and depression. This benefit costs the Government a staggering £12.5 billion every year.

The government also intends to change housing benefit payments to private landlords so that claimants get a flat allowance rather than the full rent charged by the landlord. This may dampen down the buy-to-let market, where landlords rely on renting out property to benefit claimants and the low paid.

The bill would also pave the way for the government to cut benefit to convicted fraudsters and implement a promise to permit councils to evict anti-social families from council estates and housing association property – something many Local Authorities have pushed for many years.

Other parts of the legislation would enable the government to proceed with plans to encourage big charities, social enterprise trusts and private companies to bid for services provided by the state.

Mr Hutton said the main aim of the bill was not to save money but to get the jobless back to work. He told the BBC Today programme:

" The rather grim statistic is that if you have been on incapacity benefit for more than two years, you are more likely to die or retire than ever get back to work. That's simply not good enough.

" What we want to do is to measure people's capacity to work more intelligently rather than simply measure their incapacity to work. We've got to see people as potential jobseekers and help them get back into the labour market."

Medical tests will measure what people can do, rather than simply assessing whether someone is sick enough to qualify for the benefit.

People with severe disabilities will get a higher rate and not be required to look for work. Those judged "capable" of work will be required to take part in "work-focused" interviews and activities.

More than £300m extra will be put into the "Pathways To Work" scheme, which would be extended across the country following successful trials, including one in Somerset.. The pilots have already helped to get 25,000 people back into work and this programme will be available to all new IB claimants by April 2008.

Minister for Welfare Reform, Jim Murphy has stated:

"Pathways has been a great success in getting people back to work, the facts speak for themselves with 25,000 people in work who would otherwise be on benefits.

"We estimate that the average cost per job through Pathways is £800, with each person who leaves benefits generating over £8,000 in savings to be reinvested in public services.

"Pathways is also representative of the sort of welfare system I want to see - one that is flexible, individual and supportive and above all delivering for the people who need it."

Pathways already covers some of the most deprived parts of the country and from 30 October 2006 it will be extended to all new IB claimants in Greater Mersey, Staffordshire and the eastern valleys of the South Wales Valleys districts. Pathways will then be rolled out across Britain by April 2008.

The plans received a hostile response from some charities and think-tanks. Some opponents of the bill fear there will be undue pressure put on disabled people to come off benefits.

Gordon Lishman, director general of Age Concern, said: "This is a deeply flawed package. It will do nothing for millions of people already out of work and risks doing little for the hundreds of thousands who will apply for the new benefit after their 50th birthday. We agree with supporting people to get back to work, but the evidence shows that existing pilots are not working for people over 50. Unless the support on offer actually works, it is wrong to require people to participate or to pay them lower benefits in the expectation they will find jobs."

The head of social policy at the Institute for Public Policy Research, Jim Bennett, said the new system would be "unnecessarily complex" and confusing for claimants.

"This new welfare reform bill is welcome, but it is a concern that the opportunity to introduce a much simpler system for supporting people with a disability or a long-term illness is in danger of being missed," he said.

Unions warned yesterday that the rush to get people back to work could harm some claimants. Mark Serotkwa, general secretary of the Public and Commercial Services Union, said: "The danger is ... people will be quickly churned through and placed in jobs which may not necessarily be sustainable in the long term."

SLIM Comments

Welfare reform has been a recurring theme for New Labour throughout their time in office. Yet in truth - the best that can be said is that the number receiving support from the taxpayer has stabilised. Serious welfare reform should lead to a long-lasting reversal in these figures but the jury is definitely out.

When you view the statistics, the 'massaging' of the employment figures that took place in the 1980’s – placing positive outcomes on moving people from unemployment benefit to IB or equivalents, has come back to haunt us. It left millions with little or no help and it is intriguing that only now is there evidence of a downward movement in the numbers on IB.

Of course, as part of the European Employment Strategy we are bound as a country, to taking some rather more 'active' employment measures and the existence of large numbers on such a 'passive' measure as IB means a degree of embarrassment for those wanting to hold up the UK economy as a model of what can be achieved – though the employment numbers themselves remain impressive.

The approach set out by John Hutton, the Work and Pensions Secretary, in the House of Commons yesterday at least has a prospect of making more than incremental progress. In terms of both politics and policy it is far more subtle and, thus, probably more realistic than many of the noisy efforts that have come before it. Mr Hutton has decided that the best way to tackle the abuses that plainly exist without demonising those who are genuinely incapable of work is by starting again with a new employment and support allowance. A clean slate would offer him a fresh opportunity.

The Secretary of State has also been shrewd in co-operating with the disabilities lobbies, rather than allowing himself to be portrayed as a harsh axeman functioning at the behest of the Treasury. He suggests a more generous financial settlement for those whose situation is so difficult that they will never be able to work and a more professional package of carrots and sticks for those who could find some form of employment if they sought it. The carrots are the advance in income and self-esteem that work would bring. The sticks are clearly necessary for those in need of extra motivation.
In truth, the numbers on IB will not collapse overnight. It will remain de facto unemployment benefit for too many individuals. There is, nevertheless, a chance that the unacceptable 2.68 million tally will be reduced, and that is a goal worth pursuing.

Published with thanks to the Guardian, Times and Telegraph news services.

Additional Links:

The Welfare Reform Bill

Principles of Welfare Reform site

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