Wednesday, July 12, 2006

Welfare Reform - For the many, discussed by few.

Last week the government published a bill that will directly affect three million people in the UK, indirectly touch millions more. Its success or otherwise will have a major impact on the long term health of our economy. It received some newspaper and radio coverage, but virtually no analysis or comment. Amongst other things, the Welfare Reform Bill aims to restructure benefits for people unable to work because of ill health or incapacity.

At the moment there are two benefits for people unable to work: Incapacity Benefit is based on previous National Insurance contributions. This is worth c.£58 for the first 26 weeks rising in two stages to c.£75 per week for a single person. Income Support, is income based and worth about £57 a week for a single person. The two benefits interact in convoluted ways and the government is rightly combining the two to create one ‘Employment and Support Allowance’ (ESA). It’s also abolishing the crazy system that means that the longer you stay on Incapacity Benefit the more money you get.

However, the real problem with the system at the moment is that it draws a false distinction between fit and healthy job seekers who get assistance and support in finding work and those on IS or IB who get put on benefits and forgotten. In fact, most people who go onto IS or IB want to get back working as soon as possible. So the government is planning to implement its ‘Pathways to Work’ programme, already piloted, which gives support to people with their health and employment to get back into work. This will be compulsory for those people deemed to have a non-permanent disability and failure to cooperate will mean a cut in benefit down to Job Seekers Allowance level of around £57 per week. Those who are deemed permanently incapacity with no chance of work will be given a higher rate of benefit and not be forced to engage in support programmes.

The cost of the Pathways to Work programme is estimated at a tiny £147 million per year. My back-of-the-envelope estimate suggests that only 30 000 claimants per annum need to come off benefit for the scheme to break even. The pilot areas have almost reached that target by themselves over three years.

Compulsory attendance at interviews with the threat of benefit cuts can be both helpful and fair, as long as this ‘stick’ is wielded justly, as a last resort and as discipline not retribution. Ultimately claimants need to be aware that they are being supported by the wider public and need to take responsibility for their actions and progress. Knowing that their actions matter could be beneficial for some claimants. If no-one cares what you do and how you progress towards work you are more likely to experience apathy and low self esteem. The lost benefit could be reinstated after a period of six months if the person was ready to reengage with training.

The success of the scheme will depend on two main factors. The first is the level and type of support. Is the DWP going to be able to provide individually tailored support, built on a relationship with a personal adviser that deals with mental health and stress, through to industrial injuries and lost limbs as well as retraining? It’s a huge ask and there is little evidence to suggest that the benefits bureaucracy can change its ways. Therefore the government’s plans to contract out some of the support services to the voluntary sector, whose ethos on relationship and developing individuals skills and gifts would be well suited, is to be welcomed. If the DWP succeeds in this area it will be a monumental turnaround and worthy of the epitaph ‘A welfare system for the 21st Century’. It would mean that claimants would be able to believe that the system is there to enable and support them rather than demean and dismiss them and treat them as an unwelcome statistic.

The second success factor is far wider ranging. Can the government lead the remodeling of the economy to promote more highly skilled part time work, anti-ageist practices and government-business partnerships to retrain people? Many people on IB can’t go back to working full time immediately or sometimes ever and need to gradually build up their hours over a period of years. By not modifying business practice to encourage more part time working the private sector are missing out on good people entering their organisations. If the government is going to retrain people they will need the cooperation of businesses on a significant scale. Central government needs to equip local authorities and Job Centre Plus’ to engage in partnerships that can produce win-win solutions and offer a package of incentives to businesses to engage. These changes are partly out of the government’s hands and will rely on the vision and expertise of political and business leaders and local and national level. As the population ages this remodeling is crucial for the long term stability of our economy.

The Welfare Reform Bill may not be much talked about, but it has the potential to transform Incapacity Benefits for the good of millions of claimants, the tax payer and the economy as a whole. Whether the government and the DWP can successfully legislate for and implement the changes remain to be seen: if they do manage, we should be talking about their achievement for many years to come.

1 comment:

  1. Glad to hear you'll be voting Labour after all then ;-).