The Welfare Reform Bill was published on 4 July 2006. Amongst its foremost provisions are the basic rules concerning the employment and support allowance, which is expected to replace incapacity benefit and income support for incapacity from 2008. Drawing on the Bill and its predecessor, the Green Paper, Simon Osborne describes the main provisions and identifies some of the issues arising.
Employment and support allowance
When the new scheme is introduced, new claimants will no longer claim income support (for incapacity) and incapacity benefit. Instead they will claim an employment and support allowance (ESA).1 Alongside this there will be a 'transformed' personal capability assessment for determining what is currently called incapacity for work, but under ESA will be called 'limited capability for work'. Also, the new test will determine which claimants can be expected to engage in 'work-related activity'. Those who are expected to will be subject to increased levels of conditionality applying to their entitlement to benefit.
ESA will (like JSA) have a non-means-tested allowance with a national insurance contribution test (contributory employment and support allowance), and a means-tested allowance with a means test (income-related employment and support allowance). The Explanatory Notes to the Bill say that the national insurance test will be substantially the same as in the current incapacity benefit, and the means test will be substantially the same as in the current income support.2
ESA will be comprised of:
- a basic allowance set at basic JSA level; plus
- for those qualifying for income-related employment and support allowance, income support housing costs and enhanced disability, severe disability and carer premiums (there appears to be no disability premium payable at this stage);
plus, after an assessment period of 13 weeks, either:
- a work-related activity component - an additional payment in both income-related and contributory employment and support allowance for complying with the conditionality requirements. The exact amount is left to regulations but will be (according to the Green Paper) above the current long-term incapacity benefit rate3; or
- a support component - an additional payment in both income-related and contributory employment and support allowance for those most severely ill or disabled, which promises to pay people more than they get now4 - again, however, specific amounts are left to regulations.
At the start of the claim, people will apply and supply a medical certificate, as they would now. Until the DWP undertakes an assessment, including a revised PCA, people will be paid a basic allowance. This is to be aligned with JSA rates.
The Explanatory Notes to the Bill say that in the assessment phase the basic allowance is expected to be age-related 'on the same lines as contribution-based JSA now', but will be set at a universal rate once the assessment phase is complete. This means that young disabled people may be on very low levels of benefit for at least the first three months of their claim.
Work-related activity component
If a claimant passes the PCA, s/he will go onto the main phase of the allowance. Claimants will go onto the work-related activity component, unless eligible for the (higher) support component (see below). Continued eligibility for the work-related activity component will be dependent on participating in 'work-related conditionality'.
After the three-month assessment period, if the claimant passes the PCA and is judged to be in the support group, i.e. those with the most severe functional limitations, s/he will get the support component on top of the basic allowance. Any severe disability premium or enhanced disability premium would be paid on top. Disability living allowance is not affected by the reforms and would continue to be paid on top of other income as usual.5
The people who will fall into the support group will not be the same as the current exempt group (i.e., those currently exempt from the PCA). The Government wishes to align this group more closely with the impact a person's condition has on her/his ability to undertake suitable work rather than on the nature of her/his disability or illness.
The PCA is to have a name change to something more 'enabling'. A review of the PCA, including the suitability of the descriptors, is already underway. Consultation groups, including some disability organisations, began meeting in Spring 2006. Particular emphasis is given to the reform of mental health descriptors reflecting concern that 40 per cent of claimants are on incapacity benefits because of mental health conditions.6
The work-focused health assessment is intended to apply to everyone during the assessment period. The intention is that it will be carried out at the same time as capability for work and for work-related activity is assessed. It will look at health interventions supporting a return to work as well as identifying the tasks people are capable of despite their disability and may be conducted by health professionals such as occupational therapists. A report would be sent to the claimant's personal adviser and inform the work-focused interview. The report will be made available to the claimant as well but the Explanatory Notes do not say it will be made available to the benefit decision maker.7
- There will be no adult dependants' additions.
- There will be no age additions.
- Disability premium will be incorporated into the work-related activity component and the support component of employment and support allowance - but apparently not in the basic allowance. The enhanced disability premium and severe disability and carer premium will continue to be paid to those getting income-related employment and support allowance - using the same rules as for income support.8 It remains to be seen how links to passported benefits currently accessed through disability premium would be maintained. It appears that the disability premium will remain in income support for those claiming on other grounds - e.g., as lone parents or carers.
The new benefits structure and conditionality requirements are - according to the Green Paper - to apply only to new claimants. The Bill is vague about the nature of transitional protection for existing claimants.
However, there are powers in the Bill that would permit migration of existing claims to employment and support allowance claims.9 Also, the Pathways to Work pilots have in some areas been extended to include existing claimants, increasing the number of mandatory work-focused interviews, and may in time be extended further.
ESA and conditionality
As set out in the Bill, conditionality will mean participating in:10
- work-related health assessments;
- work-focused interviews, (including producing action plans);
- work-related activity. This element of conditionality may not apply straight away. The Explanatory Notes to the Bill say that, 'as resources allow, conditionality relating to participation in work-related activity could be introduced.'11
The Green Paper said that the ESA benefit structure and compulsion will, 'only apply to new claimants.' But the proposal is also to 'work more proactively' with claimants with 'potentially more manageable conditions
. . . balancing their responsibilities to prepare for a return to work with the need to treat them fairly.'12 Given the continuing extension of the Pathways to Work compulsion to existing claimants, the expectation must be that in the longer term ESA compulsion will also apply to all existing claimants.
The Bill provides that work-related conditionality applies to claimants who are entitled to employment and support allowance but are not members of the support group. The conditionality must end if the claimant becomes a member of the support group.13
Exactly which claimants will be exempt - i.e., in the support group, is not specified either in the Green Paper or the Bill. Presumably, this will become clearer in regulations. The Green Paper said that the group will differ from the exempt groups for the PCA, and that the new exempt group will replace the current PCA exempt group. However, it is clear that the new exemptions will be based not on having a specific condition, but rather (according to the Green Paper) on 'the severity of the impact of that illness on their ability to function.' As an example, it is cited that blind people are currently 'consigned to the exempt group, although most blind people are capable of, and indeed wish to, undertake appropriate work . . . our proposals will correct this anomaly'.14 There is no indication that there will be rights of appeal attached to decisions in this area.
The compulsory requirement to take part in work-related health assessments is new. According to the Bill, the nature of the requirement and the 'good cause' provisions allowing for failure to take part without a sanction will be very similar to those that apply currently to work-focused interviews.15 The decisions and appeals rules will need to be adjusted to provide for appeal rights.
The Bill does not propose much change regarding work-focused interviews themselves. They seem likely to work in much the same way as they do in Pathways to Work, but with increased private/voluntary sector involvement. The Green Paper said that, 'we will also use private and voluntary sector expertise to provide personal advice and support for individuals to help them back to work.'16
Regarding work-related activity, the Bill defines it as 'activity which makes it more likely that the person will obtain or remain in work or be able to do so.' Regulations may prescribe the time at which the activity is to be undertaken and the amount of activity which is required.17 The Green Paper set out examples of what might be considered as suitable for inclusion in action plans. The examples (all repeated in the Explanatory Notes to the Bill, except 'improving employability') cited are:18
- 'work tasters', e.g. work trials, voluntary work, permitted work , preparation for self-employment;
- managing health in work, e.g. condition management programmes, Progress to Work programme, NHS Expert Patients programmes;
- improving employability, e.g. basic skills programme, over-50s 'confidence in working' programme, Jobcentre Plus or external training programmes;
- jobsearch assistance, e.g. New Deal for Disabled People Job Brokers, additional support from Jobcentre Plus - e.g. Disability Employment Advisers, independent job searches;
- stabilising life, e.g. cognitive behavioural therapy, assessing childcare options, managing financial situation or stabilising housing situation.
Sanctions and appeals
There is little detail in the Bill, and the detail will presumably be in regulations. The principle is that (apart from for people exempt from conditionality) after limited capacity for work is established, ESA will only be increased to a level above basic JSA level if claimants comply fully (i.e., in work-focused interviews, action plans and work-related activity).
Once on the increased level of benefit, failure to comply will result in a reduction of benefit. There is no detail in the Bill beyond reference to the benefit being reduced, but the Green Paper referred to reductions 'in a series of slices' back to basic JSA level.19 That is a potentially drastic level of sanction.
The sanction may be applied if the claimant fails to comply with conditionality requirements without having 'good cause'. What constitutes 'good cause' will, according to the Explanatory Notes to the Bill, be defined in regulations and will be similar to that currently applied in the Pathways to Work pilots.20 The Bill itself leaves the detail of the good cause provisions to regulations. However, it does provide that good cause must be shown 'within a prescribed period.'21 This seems to indicate that the current period of five working days from the scheduled date of the interview will be retained. That may result in difficulties for claimants who wish to appeal on good cause grounds but have not attempted to show good cause within that five-day period.
On appeals themselves, there is no detail available yet. There was a broad commitment in the Green Paper that people will be able to appeal as now. The inference is that appeal rights against non-compliance decisions and a 'good cause' provision will remain as in the Pathways to Work pilots.
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- 1. Welfare Reform Bill, clause 1
- 2. Explanatory Notes, para 5
- 3. A new deal for welfare: Empowering people to work, Cm 6730, (The Stationery Office), p. 42
- 4. A new deal for welfare, p. 42
- 5. A new deal for welfare, p. 44
- 6. A new deal for welfare, p. 40
- 7. Explanatory Notes, para 73; Explanatory Notes, clause 74
- 8. Explanatory Notes, para 57
- 9. A new deal for welfare, p. 47; Welfare Reform Bill, Schedule 4
- 10. Welfare Reform Bill, clauses 10-13
- 11. Explanatory Notes, para 13
- 12. A new deal for welfare, p. 47
- 13. Welfare Reform Bill, clauses 10-12
- 14. A new deal for welfare, pp. 6, 38-39
- 15. Welfare Reform Bill, clause 10
- 16. A new deal for welfare, p. 42
- 17. Welfare Reform Bill, clause 12
- 18. A new deal for welfare, p. 43
- 19. A new deal for welfare, p. 44
- 20. Explanatory Notes, para 11
- 21. See for example, Welfare Reform Bill, clause 11(2)(g)(ii) on work-focused interviews.