The future of Welfare Reform And Employability programmes

Chris White CJ Mental Health Constancy S.U.S.E AGM September 2011 www.cjmentalhealthconsultancy.co.uk

The changing face of Welfare

A number of important outcomes for the Scottish population have improved since the late 1990s but, on most key dimensions, inequalities have remained unchanged or become more pronounced.

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Inequalities in Scotland

the gap between the top and bottom of the distribution in key outcomes such as income, employment, health, learning and safety is significantly wider in Scotland than in other European countries A number of important outcomes for the Scottish population have improved since the late 1990s but, on most key dimensions, inequalities have remained unchanged or become more pronounced.

the employment rate for working age adults without disability is 82 per cent, while it is only 47 per cent for disabled working age adults

The Christie Commission: June 2011 the future of public delivery services in Scotland www.cjmentalhealthconsultancy.co.uk

A short history of reform

1997 1999 2002 2003 2006 2008 New Deal launched. National Minimum Wage introduced. Creation of Jobcentre Plus Introduction of Tax Credits Pathways to Work introducing mandatory requirements “A new deal for welfare: Empowering people to work” Employment and Support Allowance New Work Capability Assessment “Black Friday” October 10th UK Banking system collapses 2010 6 May General Election - No party has overall control www.cjmentalhealthconsultancy.co.uk

Welfare under the coalition

Bad Con?

George Osbourne "Those making a 'lifestyle choice' to just sit on out-of-work benefits would be affected." Good Con?

Iain Duncan Smith "The purpose of my life here is to improve the quality of life of the worst of in society”.

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Employment Support Allowance National Roll-out

4 year plan to migrate IB claimants over to ESA.

Oct 2010 IB migration due to start in Aberdeen and Burnley Jan 2011 Feb 2011 Mar 2014 Linked rules abolished all new claims will be for ESA IB migration started across the UK All claimants will have moved to ESA www.cjmentalhealthconsultancy.co.uk

Unemployment in the UK

JSA claimant count in August rose by 20,300 to 1.58 million.

Youth unemployment rose sharply - by 78,000 to 973,000 www.cjmentalhealthconsultancy.co.uk

ESA on-flow (before migration)

Total Support Group 77,100 (7%) Work Related Activity 235,800 (20%) Fit for Work 407,300 (35%) Claim Closed Assessment phase 428,800 (36%) 26,700 (2%) ESA on-flows by month of claim start and result of initial assessment after the effect of appeals - Aug 2010 (1,175,700 claims) www.cjmentalhealthconsultancy.co.uk

ESA Appeals (before migration)

Fit for Work Appeals Heard 335,900 (7%) 122,500 Decision in favour of appellant 48,000 (39%) DWP Decision upheld 74,400 (61%) Before ESA migration over 1/3 of people appealed the fit for work decision with 39% of those appeals successful www.cjmentalhealthconsultancy.co.uk

Employment Support Allowance National Roll-out Incapacity Benefit Statistics

Total Claims UK 2,176,530 Scotland 239,550 No with a MH problem 943,390 (43%) 110,110 (46%)

DWP statistics Feb 2010

Early DWP estimates suggest that, following any appeals, around 234,000 (10.75%) people are likely to be found fit for work.

www.dwp.gov.uk/docs/incapacity-benefit-reassessment-faqs.pdf

Earlier this week Iain Duncan Smith said 23 per cent of people would be judged “fit to work”. 58 per cent would receive ESA but would be required to do work related Activities. 19 per cent would be unable to carry out any form of work. www.cjmentalhealthconsultancy.co.uk

Reviewing the WCA

Professor Harrington 1st Review Recommendations

• Simplified WCA descriptors • empowering and investing in Jobcentre Plus Decision Makers • Jobcentre Plus taking control of the process and supporting individuals through it • Atos employing “champions” at each Medical Examination Centre.

Professor Harrington 2nd Review evidence call Sept 2011 Expected Report - January 2012

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The immediate challenges for Employment Services

• Welfare Reform was devised during a period of falling unemployment and higher demands for labour • Implementation however is during a global recession with rising unemployment and falling demand for labour • Increasing competition in the labour market • Pressure both internally and externally to significantly reduce public spending • Resistance and resilience to welfare to work programmes caused by economic factors, previous negative work experience, and insecurities caused by the benefit system.

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Conservative Welfare Reform Plans

Universal Credit

• Replace all income-related out-of-work benefits and Tax Credits • with a one new Universal Credit • combine elements of the current income-related benefits and Tax Credits systems; • bring out-of-work and in-work support together in a single system; and • supplement household earnings through credit payments, reflecting circumstances (including children, housing and disability).

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Welfare Reform Bill 2011

The main elements of the Bill are: • introduction of Universal Credit to provide a single streamlined benefit new expectations on claimants • Introduction of the Personal Independence Payment • Housing Benefit reform to improve incentives to work • driving out abuse of the Social Fund system by giving greater power to local authorities • Reform of Employment and Support Allowance • changes to child support • devolution of the discretionary elements of the Social Fund www.cjmentalhealthconsultancy.co.uk

Universal Credit

• Replace all income-related out-of-work benefits and Tax Credits with a one new Universal Credit • combine elements of the current income-related benefits and Tax Credits systems • bring out-of-work and in-work support together in a single system • supplement household earnings through credit payments, reflecting circumstances (including children, housing and disability).

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Greater incentive to look at work

Working on benefits affects individual benefits differently, and often acts as a disincentive to work.

Introduce one set of earnings disregards and for earnings above that level benefits will be withdrawn at a single withdrawal rate.

E.g. someone on Income Support can earn up to £20 without affecting benefit, but for every £ they earn above that they lose £1 in benefit.

Using a taper then they would still be able to earn £20, but they would keep 25% of any earnings above that figure www.cjmentalhealthconsultancy.co.uk

Conditionally

Individuals who are able to look for work or prepare for work should be required to do so as a condition for receiving benefit and those who fail to meet their responsibilities will face a sanction including: • reduced benefit •REMOVAL of BENEFIT www.cjmentalhealthconsultancy.co.uk

Housing Benefit

• Housing Benefit which costs £21billion a year. • George Osbourne described Housing benefit as “completely out of control” • limit of- £280 a week for a one-bedroom home to £400 a week for a four-bedroom property • reduction for under-occupancy The average cut for a household with one spare room will be £11 a week • Pay Housing Benefit direct to the claimant • Introduce more generous tapers to help people move into work www.cjmentalhealthconsultancy.co.uk

Breaking the Welfare Contract

One of the most controversial parts of the proposed welfare reforms is limiting Contributions based ESA •National Insurance is a government insurance scheme •Covers worklessness through sickness, disability and old age •Currently if you have paid enough NI cover is provided indefinitely •In future Contributions based ESA will be limited to 1 year www.cjmentalhealthconsultancy.co.uk

Personal Independence Payments

From 2013/14 Disability Living Allowance (DLA) will be replaced by Personal Independence Payments.

People will undergo an “objective medical assessment” to ensure payments are only made for as long as a claimant needs them.

daily living component standard rate enhanced rate

(appears to be no equivalent of DLA low rate care)

mobility component standard rate enhanced rate www.cjmentalhealthconsultancy.co.uk

Reducing Fraud and error

fraud and error problems account for 3% of welfare spending costing the taxpayer £5.2bn a year.

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Is welfare reform deliverable?

How realistic is a £5billion fraud and error cost saving projection? Can HMRC to meet its Universal Credit targets Is Universal Credit really a simplified system capable of the flexibility promised?

Can a coalition government progress the reforms through all the both the House of Lords and House of Commons?

www.cjmentalhealthconsultancy.co.uk

Is welfare reform deliverable?

How realistic is a £5billion fraud and error cost saving projection? Can HMRC to meet its Universal Credit targets Is Universal Credit really a simplified system capable of the flexibility promised?

Can a coalition government progress the reforms through all the both the House of Lords and House of Commons?

www.cjmentalhealthconsultancy.co.uk