LEEDS20th Oct 2012

Disability, Employment and Welfare Reform

DisabilityAim is to• Describe the recent performance of UK

welfare system• Discuss the model of welfare to work for

UK • Discuss disability and employment and

impact of ESA and WCA • Discuss future directions

Performance of the Welfare System • Pre-recession period saw the slowest rise in

welfare spending since WWII as falling roles funded increased generosity

• UK has low welfare reliance among working age compared to other countries – lower than US apart from maternity benefits!

• Steady decline in welfare reliance in UK – pre-recession and very small rise during recession (compared to previous ones)

• However, ageing population creates a large fiscal challenge and more employment helps

Welfare Spending – Out of Control?

5 5

Proportion of Working Age Population Reliant on Welfare Benefits OECD 2004

Welfare reliance• Over the business cycle welfare reliance

decreased

Source: Gregg Review 2009 - updated

Disability Welfare Roles • Disability welfare roles for those out of work

rose sharply fell from 1979 to 1995• Rise reflected-

– Increased survival of seriously ill/closure of large institutions/ growing awareness of mental health

– Hidden unemployment – claimant/gmt – Hardening of employer attitudes to

employing those with impairments affecting work

Disability Welfare Roles • Disability related welfare has a cyclical inflow

with persistence relative to unemployment • exit rates not noticeably cyclical• 1/3 of new claims still live after 2 years, 1/5 by

5 years• Long durations mean it takes 15+ years for full

effects to be visible• Disability welfare roles fell slowly during the

recovery – due to continued hangover from early 1990s and before

Recession and the Cycle of new claims - currently stable at 270,000

Rising numbers of Long-duration claims

Incapacity to ESA • Two Clear Strategies1.Reduce eligibility

- WCA testing to reduce inflow- re-testing of existing stock- limit contributory ESA for WRAG group

ESA has been running for 3 years for new claims – overlap with recession – inflows up and claim survival has fallen by 10% at 6 moths

Net effect very small so far – but will remove 0.5m – through re-testing and time limits

Welfare reliance• Over the business cycle welfare reliance

decreased

Source: Gregg Review 2009 - updated

WCA • WCA test is being implemented in an iterative

process – change the rules - out cry - change the rules…… - inappropriate for vulnerable groups

• No tracking of claimants leaving disability benefits means we don’t know what is happening to those losing access – potential for worsening health conditions, acute deprivation etc

• WCA test creating huge resentment among claimants and risks undermining WRAG process – appeals resulting in low flows into WP, likelihood of less positive engagement with providers

Incapacity to ESA 2. New engagement model designed to deliver

services, support to disabled people on benefits to move them into work on their terms – with generous financial incentives for providers. Participants who agree to next steps would be required to follow them through

• Expected to take 2 years but for some it could be up to 5.

• Disqualified, especially the contributory group will not be supported into work

Work

No Conditionality Group

Work Related Activity Group

Full Support

Work Ready Group

Self-help 0-3

months

Directed Jobsearch 3-6 months

Fast track

Destination based on

Client Group

WFIs

Action Plans

Work Related Activity

Time to Jobsearch is variable

Work Programme

Supported Jobsearch 6 – 9

months

15

Alternative Thinking Focus on employmentRetention with existing employer- Treat like Maternity leave – Right to return (1 to 2

years), right to request part-time work and other flexibilities/workplace support (also managed reirement)

- Incentivise/require employers to deliver rehabilitation in sick leave period (say after 3 months)

- Financial penalties for redundancy when on sick leave – rewards for returning staff

Alternative Thinking Return to Work- Increase financial rewards under Work

Programme and design in incentives against parking

- Appeal to CSR to build long-term relationships between WtW providers and employers

- Multi-agency work around those with multiple needs – ACE pilots disappointing