House of Commons Work and Pensions Committee Government support towards the additional living costs of working–age disabled people Seventh Report of Session 2010–12 Volume I Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/workpencom Ordered by the House of Commons to be printed 8 February 2012 HC 1493 Published on 19 February 2012 by authority of the House of Commons London: The Stationery Office Limited £20.00 The Work and Pensions Committee The Work and Pensions Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Work and Pensions and its associated public bodies. Current membership Dame Anne Begg MP (Labour, Aberdeen South) (Chair) Debbie Abrahams MP (Labour, Oldham East and Saddleworth) Harriett Baldwin MP (Conservative, West Worcestershire) Andrew Bingham MP (Conservative, High Peak) Karen Bradley MP (Conservative, Staffordshire Moorlands) Sheila Gilmore MP (Labour, Edinburgh East) Mr Oliver Heald MP (Conservative, North East Hertfordshire) Glenda Jackson MP (Labour, Hampstead and Kilburn) Brandon Lewis MP (Conservative, Great Yarmouth) Stephen Lloyd MP (Liberal Democrat, Eastbourne) Teresa Pearce MP (Labour, Erith and Thamesmead) The following Members were also members of the Committee during the Parliament: Ms Karen Buck MP (Labour, Westminster North), Alex Cunningham MP (Labour, Stockton North), Margaret Curran MP (Labour, Glasgow East), Richard Graham MP (Conservative, Gloucester), Kate Green MP (Labour, Stretford and Urmston), Sajid Javid MP (Conservative, Bromsgrove) and Shabana Mahmood MP (Labour, Birmingham, Ladywood) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/workpencom The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Committee staff The current staff of the Committee are Carol Oxborough (Clerk), Andrew Hudson (Second Clerk), James Abbott (Committee Media Adviser), James Clarke (Inquiry Manager), Emma Sawyer (Senior Committee Assistant), Hannah Beattie (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the Work and Pensions Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 2839; the Committee's email address is [email protected] 1 Contents Report Page Summary 3 1 Introduction 6 Background 6 The Government’s proposals 6 Our inquiry 7 Structure of this report 8 2 Policy objectives 9 DLA policy objectives 9 How DLA works 9 The role of face-to-face assessments in the current claim process 10 The Required Period Condition and length of DLA awards 11 PIP policy objectives 11 Addressing misunderstandings and complexity of DLA 11 Lack of a rigorous system of award reviews 13 Misperceptions of DLA as an out-of-work benefit 14 Addressing rising caseload and expenditure 15 3 Consultation, communications and media coverage 18 Media reporting on disability benefits 18 Proposed new UK Disability Strategy 20 DWP consultation and communications strategy 21 4 Assessment of the impacts of the introduction of PIP 23 DLA mobility component for residents of publicly funded care homes 23 Potential knock-on impacts on NHS and local authorities’ care budgets 24 Passported benefits 26 Cumulative impacts of DLA and IB reform 27 Structural change from three rates of DLA care to two of PIP daily living 28 Breakdown of forecasted DLA case by rate combination 30 Breakdown of eligible PIP caseload by Daily Living and Mobility component combination 31 Extending the Required Period Condition 31 5 The draft PIP eligibility criteria 34 The first draft 34 Trial assessments 35 Criticisms by disability organisations 35 Focussing on those with “greatest needs” 37 Approach to fluctuating conditions 37 Taking account of aids and appliances 38 The second draft 39 Plans for further development 41 2 6 Implementation of PIP 42 Similarities with the WCA 42 Claimant experience in the trial 45 Ending automatic entitlement 45 Do most individuals need a face-to-face assessment? 46 Potential impact on the Tribunals Service 47 Contracting 48 Implementation plans 49 Interaction with other assessments 51 The Motability Scheme 51 Children and young adults 52 List of Recommendations 54 Formal Minutes 61 Witnesses 63 List of printed written evidence 63 List of additional written evidence 64 List of Reports from the Committee during the current Parliament 65 3 Summary Disability Living Allowance (DLA) is unique in the benefit system in that it provides non- means tested support for anyone who incurs additional living costs as a result of their long- term disability or health condition. The Government’s plans to introduce a new benefit to replace DLA for working age claimants, the Personal Independence Payment (PIP), were based on HM Treasury’s assumption, which drew on evidence from the Work Capability Assessment (WCA) for Employment and Support Allowance (ESA), that a new eligibility assessment would produce a saving of around 20% on the projected expenditure on the DLA budget for working-age claimants in 2015–16. This implies that some current DLA recipients will lose financial support and that the bar for new claimants will be set higher. The necessity of identifying potential savings across Government in the current fiscal climate is acknowledged. However, HM Treasury’s assumption that a 20% reduction in expenditure on this benefit could be achieved by 2015–16 is uncertain. Projections made by analogy to the process for reassessing incapacity benefit claimants under the WCA may be inaccurate. Demographic changes are a significant factor in the increase in DLA expenditure, particularly the growth in the number of people over state pension age who retain DLA. This will not be affected by the introduction of PIP which is intended only to apply to working-age DLA claimants. There are a number of arguments for reforming DLA. It has become an increasingly complex benefit, evidenced by the large and growing amount of case law. The purpose of DLA is not always well understood by claimants and their advisers, the general public or the media. For example, it is frequently misunderstood to be an out-of-work benefit. Claiming DLA can be difficult and it is not always clear who will be eligible. There is not a consistent and clear system for reviewing DLA awards—evidence suggests that around 11% of DLA awards are overpaid due to unreported gradual changes in circumstances. However, it should also be borne in mind that a significant number of people who might be eligible for DLA do not currently claim it. The Chancellor of the Exchequer’s announcement of the intention to reform DLA made the Government’s communications task a difficult one. It is unfortunate that a background of budget cuts has created unnecessarily high levels of anxiety about this reform amongst DLA recipients. Since then, DWP has taken steps to involve disabled people in the process for devising and implementing PIP and this has proved to be effective to some extent. Much of the media coverage of DLA reform has been negative and has often conflated DLA with out-of-work benefits such as ESA. This helps to fuel negative perceptions of disabled people. While the Government cannot control the editorial line taken in the media, it should exercise extreme care in the way it engages with the media on disability benefits and take further steps to explain the reasons for the reform to the media and the public. In particular, a more responsible approach to explaining and providing context is required when the Government releases statistics about disability benefit claimants. The Government’s confirmation that it does not intend to adopt a “big bang” approach to implementation is welcome. It has announced its intention to limit new claims to a few thousand per month for the first few months and to confine implementation initially to 4 one geographical area. The period prior to national roll-out should be used to learn the early lessons which emerge from this small-scale implementation and to make changes quickly where necessary. As has been shown in the move from Incapacity Benefit to Employment and Support Allowance, reassessment of existing claimants is even more complex than assessing new claims. Reassessment of existing DLA claimants should only proceed once DWP is confident that the assessment process is accurate and working properly for new claims. More reassessment of claims is necessary than has been the case with DLA. However, too frequent reassessment risks wasting public money and causing stress and anxiety to disabled people. The personal interview should play an important part in assessing many PIP claims but evidence from medical professionals expert in a particular condition and with a detailed and longstanding knowledge of the claimant should be given due weight in the assessment process. Once the initial assessments for PIP have been completed in the first geographical area, the Government should look again at the value of face-to-face assessments for PIP claims where claimants’ conditions are severe and unlikely to change. These steps may help to avoid cases going to appeal, with the accompanying costs and delays. Until very recently the information released by the Government included no estimate of the number of people likely to be affected by the reform. It is still not possible to ascertain, from the latest information released in January, from which DLA rate combinations the projected PIP caseload reduction of 500,000 claimants by 2015–16 (compared to projections for DLA) will come and therefore which current DLA recipients are likely to have their benefit withdrawn altogether.