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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