Wednesday, 6 April 2016

The ESA WRAG cut: Rhetoric and reality. Or how making people poorer won't reduce the disability employment gap.

So the government has responded to the Petition calling on it to reverse the £29.05pw cut to the income of people in the Employment and Support Allowance Work Related Activity Group and refused to debate the issue again.

Their response to this Petition is littered with misleading statements - as were the Parliamentary debates on the change.  There is such a yawning gap between government rhetoric and the reality of people’s lives that it’s hard to believe it’s not worth continuing this fight.  

So, here’s an attempt to measure the government’s response to the Petition with some reminders of reality.

“This change only affects new claims made after that date and there will be no cash losers among those who are already in receipt of ESA”

Reality: This statement assumes that it’s OK to disadvantage a future group of claimants because current claimants aren’t affected. It’s not. 

(There also seems to be an assumption that opposition to the cut comes only from, or on behalf of, individuals who are afraid of how they themselves will be affected - a rather jaundiced view of human nature.)

The reality is that the experience of those currently receiving £102.15 pw (the ESA WRAG rate) illustrates how difficult it will be for future claimants to manage on £73.10 pw.

£73.10 pw is the level at which Job Seekers Allowance is set.  However, those on JSA are, on average, only claiming it for 6 months.  This relatively short period means people often rely on savings, help from family and friends, and also that they are less likely to incur large costs of, for example, car or household appliances repairs/replacement, insurance, etc.   The higher rate of ESA (for both those in the Support Group and in the Work Related Activity Group) is in recognition that 60% of people in the ESA Work Related Activity Group are out of work for 2 years or more. This is hardly surprising as, to be eligible for ESA, a person has to be assessed as having ‘limited capability for work’ which means that ‘his capability for work is limited by his physical or mental condition’ and ‘the limitation is such that it is not reasonable to require him to work’.

The longer someone is out of work, the harder it is to manage financially, and this is why our social security system has, since 1971, paid a higher rate to those who are out of work for longer than the average unemployed person. (Note: this higher rate of payment is not anything to do with whether someone has additional costs because of disability - only about half of those in the ESA WRA group qualify for Disability Living Allowance/Personal Independence Payment which is the additional disability costs payment.  See my previous blogpost.)

As it is, people have difficulty trying to manage on the ESA rate of £102.15.  The Disability Benefits Consortium, for example, found that 57% of a sample of 500 people said it wasn’t enough to live on; 28% said they had been unable to afford to eat at times, while 38% had been unable to heat their home. 

“The current system…..acts to trap people on welfare.”

Reality: There is little evidence that reducing levels of out of work disability benefits ‘incentivises’ people into work in significant numbers.  Most findings from the research studies cited by the government and its supporters are limited by the fact that they do not control for other factors which may be more important in determining whether people remain on benefits or regain employment.  All the researchers recognise this and qualify their findings accordingly but this is rarely recognised by those arguing for a cut in long-term sickness benefits.

The Norwegian study cited by Reform in their report (which the government has heavily relied on to support the policy change) found that a 10% reduction in Temporary Disability Benefit resulted in a 3% increase in movement into employment. However, the authors also cautioned “Note that we have no ambition of identifying the effects of the reform [to out of work disability benefits] as such. That would be very difficult, since the implementation of the reform coincided with other developments that probably contributed to the rise in employment…”. 

A systematic review of the impact of changes in eligibility and in levels of out of work disability/sickness benefits found that most studies similarly did not control for factors - such as levels of unemployment - which might also have an impact on movement off benefits and into employment.  The only study that did (from Sweden) found that an increase in the benefit level paid resulted in an increase in the duration on sickness benefits by an average of 4.7 days.

Interestingly, the Norway study cited by Reform found that the decrease in benefits levels not only coincided with a small increased movement into employment but also coincided with a higher increase in movement onto Permanent Disability Benefit. This correlation was also found in a number of studies included in the systematic review mentioned above. It’s very likely that the reduction in the ESA WRAG benefit will be followed by an increase in those moving into the ESA Support Group.

As Ben Baumberg argued, when the ESA WRAG cut was first announced in 2015, an increase in the numbers being placed in the ESA Support Group is likely to happen for two reasons.  Firstly, the increased conditionality and sanctions applied to the Work Related Activity Group is already resulting in an increase in people placed in the Support Group under Regulation 35(2)(b) where there would be a substantial risk to their health or someone else’s health if they were found to be capable of work-related activities. Secondly, claimants will themselves be more motivated to get into the Support Group because of the economic penalty of doing work related activity. Furthermore, once in the Support Group, they will be less inclined to take the risk of trying to enter or regain employment. 

I’m willing to bet that sooner or later we will have Ministers complaining that people in the Support Group are ‘languishing’ on benefits, and that there aren’t enough ‘incentives’ to ‘motivate’ them to seek employment.

The danger of assuming that correlation equals causation is illustrated by the fact that while the value of out of work disability benefits in the UK has been falling as a proportion of the average wage since 1979, over the same period the disability employment gap increased. And of course no government Minister or think tank is claiming that this correlation means the value of disability benefits should be increased in order to reduce the disability employment gap.(1)

“In addition to providing financial security for individuals, work often has a profound effect on people’s life chances and it is right that this Government does everything it can to provide better support to get people into work.”

Reality: Instead of addressing the failure of current “support to get people into work”, the government has assumed that removing a third of a person’s income will result in them getting a job.

To reiterate, the legislation governing out of work disability benefits says that people only qualify for ESA if they are assessed as having “limited capability for work” which means that “his capability for work is limited by his physical or mental condition” and “the limitation is such that it is not reasonable to require him to work”.

Those who have been put in the Work Related Activity Group have been assessed, not as fit for work, but only able to do ‘work-related activity’,  The legislation defines such activity as that “which makes it more likely that the person will obtain or remain in work or be able to do so” and regulations give examples such as action plans, work focussed interviews and training.

In any case the Work Capability Assessment is not, in reality, an assessment of whether someone is able to work. As Demos, amongst many others have pointed out, it is an assessment of functional limitations rather than an assessment of whether there are any actual jobs a person can do. This also means that neither is it an assessment of whether someone can actually do work-related activity, or crucially, what kind of support they might need.

There are two types of employment support programmes, the Work Programme and Work Choice. The former is a generic employment support programme, a payment-by-results programme delivered by private providers.  The generic Work Programme is not succeeding in getting disabled people into work, as is now widely recognised. The most recent statistics from DWP indicate that only 12.5% of ESA new claimants get a job outcome within two years on the programme. The equivalent figure for ex-IB ESA participants is 4.7%. 

The Work Choice programme has a better success rate but - although the Work and Pensions Select Committee recommended expanding it - the government announced last year that they would replace both the Work and the Work Choice programme with a new combined Work and Health Programme.  “Subsequently, it became clear that funding for this new programme would only be one fifth of the level of funding previously provided for the Work Programme and Work Choice.” 

“We are committed to ensuring that people have the best support possible, and that is what these changes are about.”

Reality:  These changes are about reducing public expenditure.  From the government’s point of view they are necessary because previous attempts to reduce the amount spent on disability benefits has failed. 

The Work Capability Assessment and Employment and Support Allowance were introduced in 2008 with the intention of ‘getting people off long-term sickness benefits and into work’. The rhetoric used then and since echoed that of the early 1990s.  Then it was argued that many people on what was then called Invalidity Benefit were actually capable of working and that there had been a growing ‘dependency culture’. 

Invalidity Benefit was therefore replaced by Incapacity Benefit in 1995 and an ‘All Work Test’ introduced, with the aim of being more ‘objective’ than the previous system of assessment which relied on GPs. However, the new assessment did not in fact reduce the numbers claiming long-term sickness benefits, so the All Work Test was replaced with first, the Personal Capacity Test in 2000 and then the Work Capability Assessment in 2008 (when Incapacity Benefit was replaced by Employment and Support Allowance). 

None of these changes have led to the intended reduction in the numbers of people receiving long-term sickness benefits - primarily because, although the number of new claims has remained fairly static since the 1990s, none of the changes has resulted in significant reductions in people actually regaining employment. 

When the Labour government introduced the Work Capability Assessment in 2008, they claimed the new system would lead to a reduction of 1 million claiming long-term out of work sickness benefits (Incapacity Benefit, replaced by Employment and Support Allowance).  The Coalition government also adopted this claim and supported the new system.  However, faced with a failure to reduce the numbers claiming ESA, the new Conservative government in 2015 started to criticise the system which they said they had ‘inherited’.  Before he resigned in March this year, Iain Duncan Smith signalled that the WCA would be replaced with an assessment which is more “personalised” and less “binary”, a system “which is focussed on what a claimant can do and the support they’ll need – and not just on what they can’t do”.  These familiar words and phrases - which have been used by governments every time they replaced one form of assessment and benefit with another in the last 30 years - will undoubtedly figure in the White Paper that the DWP intends to publish later on this year.

The tragedy is that - as most disabled people will tell you - both Labour and Conservative governments have focussed on individuals’ supposed lack of ‘motivation’ to get paid employment, rather than on the barriers of employer discrimination, unsuitable working conditions, job availability, and many other barriers which all too often accompany the experience of disability and/or ill health (see below). 

And incidentally, the replacement of Disability Living Allowance with Personal Independence Payment was similarly motivated by misinformed ideology which led the government to believe it could thereby reduce the budget by 20%.  We now know that only 5% of ‘savings’ have materialised. 

“The current system fails to provide the right support to help those with health conditions and disabilities towards and into work….”

Reality: It is certainly true that those disabled people who want to retain and regain paid employment are not receiving the ‘right support’.  But that is because the government is failing to address the factors which act as barriers to employment. And failing to provide the kind of support which does address barriers to employment.

There is considerable evidence from good practice examples, including those presented to the House of Lords Select Committee on the Equality Act 2010 and Disability, that when employers fulfil their duty under anti-discrimination legislation to make ‘reasonable adjustments’ to address barriers facing disabled people, this enables people to gain and retain employment.  However, the Committee also concluded that the government was not doing enough to encourage awareness of duties relating to reasonable adjustments.  Their report drew attention to the inappropriateness of relying on individual disabled people taking action to enforce their rights. Moreover, far from making it easier for disabled people to access their rights under the Equality Act, the government has made it harder by introducing employment tribunal fees.

The rights of employees are important in enabling disabled people to retain employment and this is illustrated by analysis of what happened across a range of countries during the last recession: where employment protections were greater the likelihood of becoming unemployed for those with ‘chronic illness’ was reduced. This confirms the longitudinal study published by the Department of Work and Pensions in 2003 which found that disabled people were less likely to lose their jobs if their workplaces were characterised by good employment protection. 

Recent changes in the UK economy have resulted in an increase in the kind of working conditions which would make it harder for disabled people to gain and retain employment.  This includes the increase in temporary agency work - a feature of the UK labour market in recent years - which has been accompanied by an increase in employers circumventing employment protection legislation and also in the type of working conditions which are both associated with poor health and which are harder for people in poor health to manage.

Unfortunately the current government considers employment rights to be unnecessary ‘red tape’, as illustrated by their inclusion of the Equality Act in their programme to reduce ‘burdens on businesses.  As the House of Lords Select Committee concluded, the government has “made changes under the Red Tape Challenge which increase the problems of disabled people….The Government, instead of concentrating on the burden on businesses, should be looking at the burden on disabled people”.  

A survey of people in the ESA Work Related Activity Group found that, while most felt that their state of health was a barrier to employment, the majority also wanted to work and identified ways in which work could be adjusted to make this possible, the most common being “flexible working, working from home, working less than 16 hours per week, increased confidence on the part of employers, and the opportunity to prove their abilities through work trials rather than interviews”. It is hard not to conclude that it is working conditions that need to change, not people who are claiming out of work benefits.

At the same time, the government has failed to significantly invest in the one programme which has a proven track record in supporting disabled people to work. Access to Work is a government funded programme, started in 1994, which pays for equipment, adaptations or support required by a disabled person in, or about to enter, employment or work experience, or who is doing ‘permitted work’ while on ESA.  It is a programme that in the past has been much praised by disabled people for helping them gain or retain employment and has also been described as the ‘best kept secret’, the assumption being that if it was more known about and better funded more disabled people would benefit from it.  It is also the type of government expenditure which makes economic sense as for every £1 spent on Access to Work the Exchequer recoups £1.48.

In the first two years of the 2010-15 Coalition government, there was a 17% reduction in the numbers of people helped by Access to Work (partly because of a rule change excluding larger employers, brought in by Labour).  Since 2012/13 the numbers of disabled people helped have increased but have still not reached the same level as in 2009/10. (2)

In 2015, the government decided to cap the amount of support that an individual could get from Access to Work - on the grounds that this would enable more people to be helped.   Research by a number of disability organisations in 2015 found that nearly all A2W users whose funding had been reviewed had experienced reductions in the help they got but the DWP has refused to release information which would confirm whether this is true or not. Deaf people have raised particular concerns about the impact on people who use BSL interpreters. 

The reality is…..
….that if the government really wants to tackle the ‘disability employment gap’ then it needs to stop trying to ‘fix’ disabled people’ and instead turn its attention to the factors which create poor health, insecure employment and poor working conditions.  Making people poorer will not magic up good health, good employers or good working conditions.  

  1. And if you really want to look at the problem with assuming statistically significant correlations tell us something about causality, have a look at this website which, amongst other things, points out that there is a statistically significant correlation between trimming the fat off your steak and being an atheist.(with thanks to Tim Harford’s Radio 4 programme More or Less for highlighting this).
  2. The November 2015 Spending Review announced “a real terms increase in Access to Work….to help a further 25,000 disabled people each year remain in work”.  However, when asked to confirm this, the Department for Work and Pensions refused to comment and I have not been able to find any indication of an increase in the Access to Work budget to make this a reality (if anyone else can find it I’d be grateful!).