RESEARCH PAPER 09/08 Welfare Reform Bill: 23 JANUARY 2009 social security
provisions Bill 8 of 2008-09
The Welfare Reform Bill was presented on 14 January 2009 and the House of Commons Second Reading debate is scheduled for 27 January. It follows the July 2008 Green Paper, No one written off: reforming welfare to reward responsibility and the December 2008 White Paper, Raising expectations and increasing support. It includes provisions to establish a ‘work for your benefit’ scheme for the long-term unemployed, to allow piloting of the ‘personalised conditionality’ regime proposed by Professor Paul Gregg, and to enable the future abolition of Income Support. Other social security measures relate to new requirements for certain claimants, including drug misusers; benefit contribution conditions; the Social Fund; and benefit sanctions for non-attendance at Jobcentre Plus interviews, benefit fraud and violence against Jobcentre staff.
The Bill also provides for the ‘trailblazing’ of a new right for disabled people to control how public resources are used to meet their needs; new powers to enforce child maintenance; and for the joint registration of births, as proposed in the June 2008 White Paper, Joint birth registration: recording responsibility. These parts are covered separately in Library Research Paper 09/09
Steven Kennedy
SOCIAL POLICY SECTION
Bryn Morgan
ECONOMIC POLICY AND STATISTICS SECTION
HOUSE OF COMMONS LIBRARY
Recent Library Research Papers include:
08/86 Interlocking crises in the Horn of Africa 24.11.08 08/87 Small Business, Insolvency and Redundancy 25.11.08 08/88 Parliamentary Approval for Deploying the Armed Forces: An 27.11.08 Introduction to the Issues 08/89 Economic Indicators, December 2008 04.12.08 08/90 Turkey today 08.12.08 08/91 Political Parties and Elections Bill: Committee Stage Report 18.12.08 08/92 Unemployment by Constituency, November 2008 17.12.08 08/93 Business Rate Supplements Bill [Bill 2 of 2008-09] 22.12.08
2009
09/01 Economic Indicators, January 2009 09.01.09 09/02 Saving Gateway Accounts Bill [Bill 3 of 2008-09] 09.01.09 09/03 Social Indicators 14.01.09 09/04 Policing and Crime Bill [Bill 7 of 2008-09] 15.01.09 09/05 Unemployment by Constituency, December 2008 21.01.09 09/06 Coroners and Justice Bill: Crime and Data Protection 22.01.09 [Bill 9 of 2008-09] 09/07 Coroners and Justice Bill: Coroners and Death Certification 22.01.09 [Bill 9 of 2008-09]
Research Papers are available as PDF files:
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ISSN 1368-8456
Summary of main points
The Welfare Reform Bill was presented on 14 January 2009 and the Commons Second Reading debate is scheduled for 27 January.
Since 1997 the Government has instituted a series of reforms to the welfare system designed to reduce benefit dependency and encourage more people into work, including the establishment of Jobcentre Plus, the introduction of employment programmes such as the New Deal, tax credits, the National Minimum Wage, the Pathways to Work programme, the replacement of incapacity benefits with the Employment and Support Allowance, and changes to lone parents’ benefits from November 2008.
The social security measures in Part 1 of the Bill have been presented as steps towards realising the Government’s vision of a ‘personalised welfare state’, where people are given more support to help them overcome disadvantage and move towards work, matched by higher expectations that they will take up that support. The Bill follows the December 2008 Welfare Reform White Paper, Raising expectations and increasing support: reforming welfare for the future, which developed proposals set out in the July 2008 Green Paper, No one written off: reforming welfare to reward responsibility, and the report of the independent review by Professor Paul Gregg, Realising Potential: A Vision for Personalised Conditionality and Support, published on 2 December. The Government’s approach has also been influenced by the recommendations in David Freud’s March 2007 report for the Department for Work and Pensions, Reducing dependency, increasing opportunity: options for the future of welfare to work. One of the key themes in the Freud report was further contracting out of back-to-work provision.
Part 1 of the Bill includes, among other things, provisions to enable a mandatory ‘work for your benefit’ scheme to be piloted for the long-term unemployed; to allow piloting of a ‘personalised conditionality regime’ along the lines of that proposed by Professor Paul Gregg; to direct Employment and Support Allowance (ESA) claimants to undertake specific work-related activity; and to pave the way for the future abolition of Income Support and the movement of claimants onto either Jobseeker’s Allowance (JSA) or ESA. Other measures aimed at reinforcing obligations to move towards work include new powers to require problem drug users to follow a rehabilitation plan; benefit sanctions for JSA claimants who fail to attend Jobcentre Plus interviews; and the extension of Work-Focused Interviews (WFIs) to people over 60 but under state pension age.
Mandatory ‘work for your benefit’ schemes are to be piloted from 2010 for long-term JSA claimants, and for some other JSA claimants at an earlier stage of unemployment, if they are deemed likely to benefit from it. Participants would be required to undertake up to six months full-time work experience. The Government argues that the scheme would help long-term claimants develop work habits and employability, but critics have branded the proposals punitive ‘workfare’, pointing out that there is little evidence from other countries that such schemes are effective in reducing benefit caseloads and getting people back to work.
In his report, Realising Potential: A Vision for Personalised Conditionality and Support, Professor Paul Gregg set out a vision for a ‘personalised conditionality and support regime’,
under which all working age claimants of out of work benefits would be placed in one of three groups: a ‘Work Ready’ group, where claimants would be subject to similar jobsearch requirements to those currently on JSA; a ‘Progression to Work’ group, who would not be expected to return to work immediately but who would be required to draw up a personalised action plan and undertake activities to help them move towards work; and a ‘No Conditionality’ Group (comprising the current ESA ‘support group’ and certain other categories) who would not be subject to any conditionality requirements to receive their benefit. The Bill includes provisions to enable the ‘Progression to Work’ approach to be piloted for lone parents and partners with younger children. To date there has been little detailed comment about the ‘personalised conditionality’ model, but some organisations have argued that parents with younger children should not be compelled to undertake activities against their will, and that benefit sanctions are ineffective in encouraging engagement with services and would merely lead to further hardship. Others have questioned the capacity of Jobcentre Plus and partner organisations to deliver the kind of personalised services and support that are envisaged.
The Bill also provides for ESA or JSA claimants who are problem drug users to be directed to comply with a ‘rehabilitation plan’. There are also provisions to require claimants to undergo drug testing in certain circumstances. While closer links between Jobcentre Plus and drug treatment providers have been welcomed, some organisations have voiced serious concerns about the proposals, both in terms of how the arrangements will work in practice and in relation to the potential impact of benefit sanctions on individuals with multiple and/or complex problems.
A central theme running through the Bill and the preceding White and Green Papers is the need for an increasing focus within the welfare system on benefit claimants’ obligations to seek work or to prepare for work: the White Paper stated that the latest phase in the Government’s reform programme was based on the idea that ‘virtually everyone should be required to take up the support that we know helps people to overcome barriers to work’. This links in with the Government’s long-term aspiration to reach an employment rate of 80 per cent. The White Paper argued that the worsening economic situation strengthened the case for further welfare reform, but some commentators have questioned whether, in the light of rapidly worsening labour market conditions, it is sensible or appropriate to expand conditionality to new groups and to intensify the regime for existing jobseekers.
The Bill also includes provisions to enable benefit sanctions to be imposed following a single conviction, penalty or caution for benefit fraud, and for a new sanction for JSA claimants convicted or cautioned for violence against Jobcentre staff or staff working for contracted providers.
Part 1 also includes, in addition to provisions relating to conditionality, measures to tighten up the National Insurance contribution conditions for contribution-based JSA and contributory ESA; and provision to abolish Adult Dependency Increases (ADIs) for Carer’s Allowance and Maternity Allowance.
Further provisions in Part 1 of the Bill relate to the discretionary Social Fund. At the beginning of December 2008 the Department for Work and Pensions published a consultation document, The Social Fund: A new approach, which sought views on, among other things, allowing credit unions or similar third sector organisations to take over provision for credit to Social Fund users in their areas, under contract. The Bill paves the way for
contractors to provide ‘external provider social loans’, following the Government’s decision to proceed with this proposal. To date, there have been few detailed responses to the proposals, but those organisations that have responded have raised a number of concerns and there has been strong criticism of the Department for the very short period given for consultation. A further measure in the Bill to extend the circumstances in which advance payments of benefit may be made, to reduce pressure on the Crisis Loan system, does however appear to have wide support.
The Bill also makes provision for pilots to be run to test whether take-up of Pension Credit can be increased by allowing payment without a claim being made and with modified rules for determining entitlement.
Virtually all of the provisions in Part 1 of the Bill apply to Great Britain only. Social security is a transferred matter under the Northern Ireland Act 1998, although there is a long-standing policy of parity in this area.
The exception is clause 19 and Schedule 4, which cover sanctions for benefit fraud and apply to the whole of the United Kingdom.
Other Parts of the Bill provide for the ‘trailblazing’ of a new right for disabled people to control how public resources are used to meet their needs; new powers to enforce child maintenance; and for the joint registration of births, as proposed in the June 2008 White Paper, Joint birth registration: recording responsibility. These Parts are covered in a separate Library Research Paper
CONTENTS
I Background 11
II Part 1 of the Bill 15
A. ‘Work for your benefit’ 15
1. Existing JSA rules 15 2. Work programmes 16 3. Experience from other countries 17 4. The Green Paper 21 5. The White Paper 24 6. Clause 1 27 B. Personalised conditionality 29
1. Background 29 2. Professor Paul Gregg’s report 29 3. The White Paper 32 4. Clause 2 36 C. Simplifying working age benefits 38
1. The Green Paper 38 2. The White Paper 41 3. Clause 3 and clauses 5-7: abolition of Income Support 42 4. Clause 4: conditionality for partners 44 D. Work-related activity for ESA claimants 47
1. The Green and White Paper proposals 47 2. Clause 8 49 E. Claimants dependent on drugs 50
1. The Green Paper 50 2. The White Paper 53 3. Clause 9 and Schedule 3 56 F. Contribution conditions for JSA and ESA 59
1. Background 59 2. The Green and White Paper proposals 61 3. Clauses 10 and 11 62
G. Adult Dependency Increases with Maternity Allowance and Carer’s Allowance 63
1. Background 63 2. Clause 12 65 H. The Social Fund 65
1. Background 65 2. The current proposals 69 3. Clauses 13-18 74 I. Benefit sanctions 76
1. Background 76 2. Clause 19: ‘one strike’ sanctions for benefit fraud 78 3. Clause 20: sanctions for violence against DWP staff 81 4. Clause 24: sanctions for ‘failure to attend’ 85 J. Pension Credit take up 87
1. Background 87 2. Numbers 88 3. Targets for take up 89 4. Strategy to increase take up 91 5. Clause 21 94 K. Duration of pilot schemes 95
1. Clause 22 95 L. Contracting out employment services 96
1. Freud Report 96 2. DWP Commissioning Strategy 98 3. Flexible New Deal 99 4. Contracting-out in other countries 100 5. Clauses 2(2) and 23 102 M. Work-Focused Interviews for the over 60s 103
1. Background 103 2. Clause 26 105 Appendix 1: New Deal programmes 106
Appendix 2: Working age benefit recipients 113
RESEARCH PAPER 09/08
I Background
The Welfare Reform Bill was presented on 14 January 2009 and the Commons Second Reading debate is scheduled for 27 January. The Bill follows the December 2008 Welfare Reform White Paper, Raising expectations and increasing support: reforming welfare for the future, which developed proposals set out in the July 2008 Green Paper, No one written off: reforming welfare to reward responsibility, and the report of the independent review by Professor Paul Gregg, Realising Potential: A Vision for Personalised Conditionality and Support, published on 2 December. The Government’s approach has also been influenced by the recommendations in David Freud’s March 2007 report for the Department for Work and Pensions (DWP), Reducing dependency, increasing opportunity: options for the future of welfare to work.
The DWP website sets out the context and main themes of the Government’s welfare reform programme as follows:
Welfare Reform The Government is committed to building a strong, healthy and prosperous society, where everyone has the opportunity to make the most of their skills and potential.
The Government wants as many people as possible to share in the rewards of work, because paid work is the best route to independence, health and well-being for most people.
We have already made significant progress with the introduction of a series of reforms to remove the barriers holding people back, to help them into work and to give them responsibility and the support they need. Our policies have helped reduce child poverty and deliver high levels of employment.
But more needs to be done to remove the barriers people face or help overcome them. This is particularly important when economic times are more difficult.
The White Paper Raising expectations and increasing support: reforming welfare for the future sets out how we plan to take our proposals forward as part of our vision for a personalised welfare state, where more support is matched by higher expectations for all.
The story so far The Government’s reforms have contributed to a significant improvement in the underlying performance of the UK labour market. Employment remains at a high level and the number of people claiming a key out-of-work benefit is around one million lower than in 1997. We have:
• created Jobcentre Plus, a world leading welfare to work organisation • introduced innovative employment programmes such as the New Deals • improved incentives to work by providing greater support through the tax credit system and the introduction of the minimum wage • rolled-out Pathways to Work nationally for people on incapacity benefits.
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Welfare Reform Green Paper During Summer 2008, the Government consulted on the next steps in the journey of welfare reform. The Green Paper No one written off: reforming welfare to reward responsibility set out proposals to:
• provide a more personalised service to help jobseekers to access the support and skills they need to help themselves • deliver a simpler system of two working age benefits which means we can focus on equipping those who can work with the skills they need to find jobs while also providing the right support at the right time to those who need it most • provide greater support for disabled people and empower them as they are given greater control of the support they get from government • strengthen parental responsibility • ensure that many more parents will be able to access the skills and training they need to find employment and improve their children’s life chances • strengthen local partnerships, creating more opportunities for back-to- work providers to deliver greater local flexibility and help to jobseekers so that they can access jobs within the local labour market.
The Green Paper consultation closed on 22 October 2008.
[…]
The need to step up personalised support for individuals to help them back to work, and increase their responsibility to take up this help is particularly important when economic times are more difficult.
And the work goes on. In October 2008, we replaced incapacity benefits for new claimants with the Employment and Support Allowance which focuses on what people can do, rather than what they can’t. Jobcentre Plus has also started running work skills trials, and a stronger framework of rights and responsibilities for lone parents beginning in November 2008.
Fair Rules for Strong Communities was published on the Number 10 website on 2 December 2008.
On 2 December 2008 Professor Paul Gregg delivered his independent report on conditionality and support Realising potential: A vision for personalised conditionality and support
Welfare Reform White Paper The White Paper Raising expectations and increasing support: reforming welfare for the future was published on 10 December 2008.
This White Paper builds on the Green Paper proposals and sets out in detail the plan for the future as part of our vision for a personalised welfare state, where more support is matched by higher expectations for all.1
1 http://www.dwp.gov.uk/welfarereform/
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The economic context has however changed dramatically in recent months.
The DWP’s Five Year Strategy, published in February 2005, announced the Government’s long-term aspiration for an employment rate of 80%:2
We are on the verge of achieving our initial aspiration of having at least 75 per cent of the working-age population in work. The next stage will be even more stretching with a long-term aspiration of moving towards an employment rate equivalent to 80 per cent of the working age population … This is a modern vision of full employment.
This aspiration was reaffirmed in the January 2006 green paper on welfare reform, A new deal for welfare: Empowering people to work.3
The proportion of the working age population in employment, the employment rate, has been relatively high for the last decade, consistently between 74% and 75%. These levels have been reached previously: in the early 1970s and as recently as 1990. However, chart 1 shows the difficulty in raising the rate above 75%. If the worrying decline in the rate already seen during 2008 continues, then the 80% aspiration will move out of sight for some time.
Chart 1: Working age employment rate: UK: 1992-2008
76.0 75.0 74.0 73.0 72.0 71.0 70.0 69.0 68.0 67.0 Per cent of working age population age working of cent Per 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
UK performance can also be looked at in an international context. Chart 2 compares employment and unemployment rates in the G7. The employment rate in the UK is almost 6 percentage points above both the OECD and EU15 averages. In 2007, only Iceland had a rate above 80%.4 Compared with other G7 countries, the UK had the second highest employment rate in 2007 and one of the lowest unemployment rates:5
2 DWP, Five Year Strategy – Opportunity and security throughout life, February 2005, Chapter 2, p22 3 DWP, A new deal for welfare: Empowering people to work, January 2006, Cm 6730 4 In 2007 Australia, Canada, Denmark, Iceland, the Netherlands, New Zealand, Norway, Sweden and Switzerland were the countries ranked above the UK 5 Standardised G7 comparisons are available in the statistical annex of OECD Employment Outlook 2005, available at: http://www.oecd.org/dataoecd/36/30/35024561.pdf.
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Chart 2: G7 employment and unemployment rates:
80 10 70 8 60 50 6 40 4 30 population 20 2 10 0 0 e Standardisedunemployment rate (%) an c Employment asa % of theage working UK US e p any n Italy K da ny c m ra U a US pan n Ja F n Italy Canada er a Ja rma G C Fra Ge Unemployment rate (unemployed as a % of all in labour Employment rate (working age) force) Source: OECD, Employment Outlook, 2008 While the UK has a relatively high overall employment rate, there are significant variations between groups. In particular rates are low (but increasing) for lone parents, people with disabilities and those with low levels of qualifications. In order to reach the 80% aspiration, the employment rates within these groups will need to be raised.6
Chart 3: Employment rates, Great Britain, 2007
90%
80% 70%
60% 50%
40%
30%
20%
10% % of all working age people all in working group % of 0% Disabled Low est Ethnic 50-59/64 Lone Males Females All qualified minorities parents
Source: ONS, Labour Force Survey, Q2 2007
These statistics present a relatively positive view of the UK labour market. However, this Bill is published in a changed economic environment.7 Unemployment is increasing. In December 2008, there were 1,153,300 unemployed claimants in the UK. This was 368,000 higher than in December 2008 and the highest figure since March 2000. On the
6 The lowest qualified are the 15 per cent of the working-age population with the lowest qualifications. Source: DWP, Opportunity for All, Indicator 19 7 “Ambitious employment goals for tough times”, The Guardian, 15 Jan 2009
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wider ILO definition of unemployment, there were 1.97 million people aged 16 and over unemployed in the three months September to November 2008. This represented 6.3% of the economically active population and was an increase of 310,000 from the same quarter of 2007. On a seasonally adjusted basis, the estimated number of vacancies in the economy has fallen by 26% between March and December 2008.8
There are projections that unemployment will increase dramatically in 2009. The average of independent forecasts provided to the Treasury in December 2008 was that claimant unemployment would reach 1.6 million in the fourth quarter of 2009.9 The ITEM Club forecast that a million jobs will be lost in the next two years, with ILO unemployment rising to 3.4 million by 2011.10
II Part 1 of the Bill
A. ‘Work for your benefit’
Clause 1 of the Bill provides for the piloting of a ‘work for your benefit’ scheme aimed at the long-term unemployed who have received intensive support from Jobcentre Plus and specialist ‘back-to-work’ providers. This section looks at the existing schemes and the evidence from abroad on the effectiveness of ‘workfare’ programmes. It then looks at the Government’s proposals as set out in the Green and White Papers, and reactions to them.
1. Existing JSA rules
To be entitled to Jobseeker’s Allowance, a person must, among other things:11
• be available for work for at least 40 hours a week. Certain groups of people including carers and those with a physical or mental condition are able to restrict their availability to less than 40 hours depending upon their personal circumstances, so long as they retain reasonable prospects of employment; • be actively seeking work. The claimant must be able to demonstrate this by undertaking a certain number of ‘steps’ each week, such as preparing a CV, applying for jobs, or registering with an employment agency. • enter into a Jobseeker’s Agreement with Jobcentre Plus. The Agreement sets out the claimant’s agreed availability, including any restrictions on their availability for work; the steps the claimant intends to take to look for work; and the range of help to be provided by Jobcentre Plus to help the claimant find work.
8 ONS, Labour Market Statistics First Release Historical Supplement 9 Forecasts for the UK Economy, HM Treasury, December 2008 10 Item Club, Winter Economic Forecast, January 2009 11 For the JSA rules which now apply to lone parents with a youngest child aged 12 or over, see the Social Security (Lone Parents and Miscellaneous Amendments) Regulations 2008; see also the Report by the Social Security Advisory Committee under Section 174(1) of the Social Security Administration Act 1992 and the statement by the Secretary of State for Work and Pensions in accordance with Section 174(2) of that Act, Cm 7480, October 2008
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• not be in ‘remunerative work’. This is work done for payment, or in expectation of payment, for 16 hours or more a week.
Payment of benefit can be suspended (‘sanctioned’) for a period of time in various situations, including where the claimant:
• Left their job voluntarily without good cause; • Lost their job through misconduct; • Was dismissed or discharged from the Armed Forces; • Refused, failed to apply for or accept a job, without good cause; • Neglected to avail themselves of an employment opportunity; • Refused to carry out a ‘jobseeker's direction’; • Refused, failed to apply for or failed to attend a compulsory training scheme or employment programme, without good cause; or • Lost their place on a compulsory training scheme or employment programme because of misconduct.
The length of the suspension depends upon the situation, but in some situations it can be for up to 26 weeks.
During the first six months of a JSA claim, ‘Fortnightly Jobsearch Reviews’ are the key part of the regime. As the length of time on benefit increases, conditionality escalates and a ‘Personal Adviser’ is allocated who can provide more intensive support and refer the claimant to appropriate provision, which may include a ‘New Deal’ scheme. They can also direct claimants to undertake specific activities to improve their employment prospects, through a ‘jobseeker’s direction’.
Appendix 1 gives further details of the New Deal schemes and the requirements for participation.
2. Work programmes
There have been previous employment schemes and pilots in the UK which have some elements of a ‘work for your benefit’ scheme. In the 1970s and 1980s programmes that incorporated elements of working on projects of community value in return for benefit, a wage or an addition to benefit included Community Industry, Community Enterprise Programme, Community Programme, Voluntary Projects Programme, elements of Employment Action and Project Work. However, most of these were voluntary schemes. 12
The project with most similarity to a compulsory “work for your benefit” scheme was the Project Work pilot which ran in 32 areas between April 1996 and April 1998. Elements of the programme were compulsory for adults aged 18 to 50 years who had been unemployed for more than two years. The specific elements Project Work varied according to the pilot area but generally involved a 13 week period on a range of (the
12 Further details on all of these programmes are given in Part II of Library Research Paper 05/62 Employment and Training Programmes for the Unemployed: Volume II: Other Programmes and Pilots
16 RESEARCH PAPER 09/08 then) Employment Service’s programmes followed by a period of compulsory work experience with private training organisations, and voluntary and charitable bodies. Refusal to attend led to loss of benefit. Participants received an allowance equivalent to benefit plus £10 per week. Another element was a job subsidy to employers who took on long-term unemployed people. Employers were paid a subsidy of £60 for six months, falling to £30 for the following six months. During its existence, commentators often described Project Work as a ‘workfare’ programme.13
The 1997 Conservative Party manifesto included a proposal to extend Project Work nationwide:
As Project Work succeeds and demonstrates that its costs can be met by the savings from getting people into work, we will extend the programme to cover the long-term unemployed nationwide
We will also develop an innovative "Britain Works" scheme which uses the experience and ingenuity of private and voluntary sectors to get people off welfare into work.14
On entering office, the Labour Government increased the subsidy in the Project Work pilots to £75 per week for those aged over 25 and unemployed for more than two years. This paved the way for the subsidy element in the New Deal for 25+. However, the other parts of the programme were replaced by the New Deals.
Currently, there are compulsory elements to the New Deal for Young People and New Deal 25+ which include work options. At the “options” stage of NDYP, there is a subsidised employment option, the Environmental Task Force option or an option of working in the voluntary sector. There is also a full-time education and training option. On ND25+, participants in the Intensive Activity Period are required to undertake a package of activities that could include work experience and placements or subsidised employment.
3. Experience from other countries
There are a number of schemes in other countries that require participants to engage in unpaid work experience as a condition of receiving social security benefits, including the US, Australia, Denmark and the Netherlands.
In the US, there have been a variety of workfare programmes introduced as part of states’ welfare programmes:
In the US, most states operate workfare schemes as part of their obligations under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), introduced in 1996. This established Temporary Assistance for Needy Families (TANF) as the core welfare programme for families with
13 For example see: "Shephard plans to take Workfare nationwide", Financial Times, 24 February 1997; "Tories push work for dole", The Guardian, 24 February 1997; TUC Report, "Workfare: what is the Government up to?", October 1996 14 You can only be sure with the Conservatives, Conservative Party, 1997, section 2
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dependent children under the age of 18. Under TANF, all states are subject to a work participation requirement to engage at least 70 per cent of its welfare population in work-related activities for at least 30 hours a week. As TANF programmes are designed and implemented at state level, there is considerable variation in the scope and nature of workfare programmes across the US.15
The Australian “Work for the Dole” (WfD) model has also been frequently studied. It was introduced in 1997, initially for young people (18-24) who had been unemployed for six months or longer.16 It involves mandatory participation in community projects run by councils, community organisations or charities in return for a $20.80 per fortnight addition to unemployment payments. Initially participants were expected to work for 32 hours per fortnight. In 2006, this requirement was extended to 50 hours for those who had been unemployed for 12 months or more.17
The Labor government, elected in November 2007, have proposed some changes to WfD, including extending the period before mandatory WfD activity to 12 months and making changes to the funding regime.18
Evaluation A research report by Centre for Regional and Economic Social Research (CRESR), (funded by the DWP) summarised evidence on workfare schemes in the US, Canada and Australia.19 The authors noted that there were few systematic evaluations of workfare programmes that isolated the effects from those of other welfare-to-work activities. They summarised evidence from the programmes as follows:
Effectiveness in reducing welfare caseloads – Dramatic reductions in welfare caseloads in the US and Canada cannot be attributed to workfare alone. Other elements of welfare reform such as intensive job search requirements and time limits on claiming have contributed to falling caseloads whilst economic growth has also enabled recipients to find work. – Workfare has a deterrent effect which stops people claiming or encourages them to leave welfare before the workfare phase. This makes it harder to measure the tangible outcomes of welfare. – The proportion of welfare recipients engaged in workfare is low in all three countries studied, even in the US which has the most extensive and well- established workfare programme.
15 A comparative review of workfare programmes in the United States, Canada and Australia, DWP Research Report 533, December 2008, p7 16 Later extended to all jobseekers under 50 17 It should be noted that the Australian government did not attempt to justify WfD on the basis of improved job outcomes. Instead, it was seen as one way that unemployment benefit recipients can fulfil their “Mutual Obligation” – the concept that welfare assistance provided to the unemployed of working age should involve some return responsibilities for the recipient. 18 The Future of Employment Services in Australia, Department of Education, Employment and Workplace Relations, August 2008 19 A comparative review of workfare programmes in the United States, Canada and Australia, Crisp and Fletcher, DWP Research Report 533, December 2008
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Effectiveness in improving employment outcomes – There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers. – Subsidised (‘transitional’) job schemes that pay a wage can be more effective in raising employment levels than ‘work for benefit’ programmes. – Workfare is least effective in getting people into jobs in weak labour markets where unemployment is high. – Levels of non-participation in mandatory activities are high in some workfare programmes.
Effectiveness for clients with multiple barriers – Workfare is least effective for individuals with multiple barriers to work. – Welfare recipients with multiple barriers often find it difficult to meet obligations to take part in unpaid work. This can lead to sanctions and, in the most extreme cases, the complete withdrawal of benefits that leaves some individuals with no work and no income. – Some states in the US have scaled down large-scale, universal workfare programmes in preference for ‘softer’ and more flexible models that offer greater support to those with the most barriers to work. This includes a greater reliance on subsidised jobs that pay wages rather than benefits to participants.
In the US, the study looked at evidence on schemes in New York and Wisconsin, which are regarded as large-scale workfare schemes with tough sanctions regimes, but also Washington State and Vermont which operate subsidised job schemes. The report found that the outcomes for subsidised job programmes were more favourable than for conventional workfare programmes. In New York, the Work Experience Programme (WEP) requires participants to work for three days per week, with two days for job search activity. According to one study, records showed that only 5% of WEP participants had found jobs. The use of WEP as the sole form of work-related activity fell dramatically between 1996 and 2001.20
The Wisconsin Works (W-2) programme has been studied mainly due to significant falls in welfare caseloads in the 1990s. Placements in “Community Service Jobs” are one of four activities that can be mandated under the W-2 programme. However, the study again found weak evidence of sustained jobs and of those leavers who found jobs, around half had incomes below the poverty line. High absence rates were also reported.
These changes to the design and use of workfare in New York and Wisconsin prompted Crisp and Fletcher to write that there was a “discernible shift away from more punitive, universal ‘work for benefits’ models towards schemes where recipients are paid a basic wage.”
In Washington State, a 1999 survey found that subsidised “Community Jobs” generated better outcomes than unpaid work experience. The workfare component of the welfare to work scheme has been discontinued.
20 ibid. p9
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The evidence from Australia on improved job outcomes is mixed. One early study found that employment outcomes among participants had increased by 7% compared with a control group of non-participants. However, Crisp and Fletcher also point to other research that found WfD ineffective in helping participants find sustainable employment. WfD was also criticised for limiting time for job search activities and for favouring unskilled work which did not develop participants’ skills.
In December 2003, a study was completed by the University of South Australia and the University of Melbourne: Work for the Dole – A pathway to self-esteem and employment commitment, or the road to frustration?21 The study concluded that the programme failed the most disadvantaged jobseekers. In particular, volunteer participants did not experience improved employment skills, employment commitment, or self esteem.
A more positive review of the Australian experience is put forward in a 2003 book from the Centre for Applied Economic Research at the University of New South Wales. This found that on the whole, the programme did help find participants jobs.22 It estimated that between 60-70% of those who successfully found jobs would have found employment even without the programme, although it may have assisted them in finding long-term jobs of higher quality. In addition, helping the remaining 30-40% find jobs represented a notable success. The authors argued that the programme should be strengthened and made several recommendations, including:
• introducing a pilot programme to allow participants, upon completion of the programme, to volunteer in the for-profit sector to improve work experience; • improving the availability of training credits to WfD participants; • giving participants more choice of projects to participate in; • improve funding of the programme to improve training opportunities and simplify financial arrangements for community organizations; and • increase the small payment to cover costs associated with WfD participation (e.g., transport).
The Freud report commented on WfD and also on a programme in Nova Scotia, Canada:23
Opinion on whether Work for the Dole is effective differs. There are three common criticisms: that it reduces worksearch and so makes it less likely that someone will get a job; that it does not increase an individual’s employability; and that it stigmatizes the long-term unemployed. The Australian Government has countered that it enables people who have been out of the workforce for a long time to develop work habits, a sense of purpose and a sense of achievement within the community.
21 Work for the Dole: A pathway to self-esteem and employment commitment, or the road to frustration?, Carson et al., Youth Studies Australia vol.22 no.4, 2003, pp19-26. 22 Work for the Dole: Opportunity or Obligation, Nevlile and Nevile, Centre for Applied Economic Research, 2003. A more recent article by the authors summarising their views is available on the internet: Realising the potential of work for the dole, Journal of Economic and Social Policy (Australia), Vol 11, No. 1, pp73- 88 23 Reducing dependency, increasing opportunity: options for the future of welfare to work: An independent report to the Department for Work and Pensions, DWP, 2007, p82
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In Nova Scotia a similar programme, called the Community Employment Innovation Project (CEIP) has taken place. This programme took volunteers from long-term benefit recipients and offered a wide range of community based “jobs”. Volunteers were required to work on a full-time basis which included basic job- readiness training and job-search support. In exchange for this commitment participants were paid a wage. The research from this suggests that there has been a significant positive impact on employment outcomes for people who participated, as well as an increase in the speed at which customers off-flowed from the programme and into work.
Although Freud argues for strengthening “rights and responsibilities”, he did not specifically recommend a “work for your benefit” scheme.
4. The Green Paper
The July 2008 Green Paper, No one written off: reforming welfare to reward responsibility24 presented proposals for piloting a ‘work for your benefit’ scheme as an extension of the ‘graduated conditionality’ principle underpinning both the Jobseeker’s Allowance regime and the Flexible New Deal: that expectations of what jobseekers should do should increase with the length of their unemployment. It proposed that, where a claimant reached the end of the Flexible New Deal (i.e. after two years on JSA), their case would be reviewed by Jobcentre Plus to-
• Identify those whose progress during Stage 4 [i.e. the Flexible New Deal] suggests they would be more suited to other programmes or whose circumstances indicate a claim for another benefit entirely; • Identify those who have made good progress with their Flexible New Deal provider but have not managed to make the move into sustained work – such jobseekers could remain with the provider on a voluntary basis for a limited period to build on that progress; and • Identify those who should move onto mandatory full time work experience.25
The pilot would also ‘explore giving advisers the power to require full-time activity of claimants at any stage of their claim if they believe it would be of benefit’.26 This would focus on those ‘repeatedly claiming JSA’.
The Green Paper stated:
2.18 We believe there is real value in long-term unemployed people working full- time to develop their work habits and employability. So we will contract with public, private and voluntary providers to test out a number of models of mandatory, full-time activity for those who have not found work at the end of the Flexible New Deal process. We also want to be clear that community work is not about introducing compulsory volunteering or forcing people to volunteer. Instead we want to send out a clear message that people capable of work but who have
24 Cm 7363 25 Impact assessment – No one written off: reforming welfare to reward responsibility, p20 26 Cm 7363, para 2.20
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not found a job by this stage will be required to work full-time or undertake full- time, work-related activity in return for their benefits.
Claimants would be expected to complete a ‘substantial amount of work experience in the community every day’ to remain entitled to JSA.27
It proposed that pilots would begin in a number of Jobcentre Plus districts from 2010. Comparison groups would also test an ‘enhanced conditionality regime involving changes to signing frequency and other aspects of the current Jobseeker’s Allowance requirements’.28
The Green Paper acknowledged that creating opportunities for community work would not be ‘cost free’ and asked for views on how full-time work experience in the community sector might be ‘provided and incentivised’ to produce the best employment outcomes. a. Responses to the Green Paper
The Government acknowledged that the ‘work for your benefit’ proposals ‘provoked differing responses’:
Some respondents were opposed to the principle of anyone working for their benefit while others thought it was reasonable that people who had been claiming Jobseeker’s Allowance for a protracted period were expected to take up the opportunity to get back into the habit of work.29
The Social Security Advisory Committee (SSAC) said that it had ‘very severe reservations’ about the proposals which, it noted, would impact on claimants at the same stage that the Department was now proposing to remove support for mortgage interest from new claimants of JSA.30 The recent international comparative study of ‘workfare’ programmes undertaken for the Department31 [referred to in the previous section] questioned the effectiveness of such programmes in reducing benefit caseloads, improving employment outcomes and helping claimants with ‘multiple barriers’ to work. The Committee had seen ‘no evidence to suggest that any contemporary ‘workfare’ models’ were likely to be effective in Great Britain. It was also concerned about the nature of the activity envisaged; it should not replace existing jobs and should provide ‘added value’ for the participant by addressing education and skills needs as well as barriers to working. There was also the issue of how a claimant could combine ‘work for benefit’ with jobsearch activities.
27 Impact assessment – No one written off: reforming welfare to reward responsibility, July 2008, para 68 28 Ibid. para 67 29 Cm 7506, December 2008, p146 30 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee, para 3.1 31 Richard Crisp and Del Roy Fletcher, A comparative review of workfare programmes in the United States, Canada and Australia, DWP Research Report No 533, August 2008
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The SSAC response stated:
The challenge is to provide positive, meaningful, useful and voluntary work experience, without incurring disproportionate costs in setting up ‘make work’ schemes. It will be hard to avoid creating a perception of work as punishment for failure and thus creating an additional stigma for those who are long term unemployed or have had a series of short term jobs.32
As regards the suggestion, underpinning the proposal to allow Jobcentre Plus advisers to require full-time activity at any stage, that some people deliberately leave benefit and reclaim JSA at a later stage to avoid increasing conditionality, SSAC said it could find no empirical evidence to suggest this was occurring. The Committee also noted that a policy which targeted claimants moving in and out of JSA ‘did not sit comfortably’ with other initiatives designed to encourage the long-term unemployed to explore short-term job opportunities, and noted that the changing economic climate was likely to increase the number of temporary or insecure jobs.
The Child Poverty Action Group argued that the ‘work for your benefit’ proposals amounted to ‘workfare’, and also pointed to the recent DWP-commissioned international comparative research (see above) which, it said, suggested that-
• There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job • search and by failing to provide the skills and experience valued by employers • Workfare is least effective in getting people into jobs in weak labour markets where unemployment is high • Workfare is least effective for individuals with multiple barriers to work • Welfare recipients with multiple barriers often find it difficult to meet obligations • Some states in the US have scaled down large-scale, universal workfare programmes in preference for ‘softer’ and more flexible models that offer greater support to those with the most barriers to work.33
CPAG believed the workfare option would be ‘unlikely to achieve more than stigmatising a small group’ and said it failed to deal with the complex reasons why systems of engagement failed to work for some people. Its submission states:
CPAG is in support of helping those out of work to volunteer in order to help them develop the skills and participate in local communities, and there is a clearly a case for personal advisers to be able to provide access to work experience and work taster programmes.
However we do not support forced full time work experience, the dual risk of this is it is both stigmatising and meaningless for claimants to go through – devaluing and de-motivating them whilst not adding to their employability.
32 Ibid. para 3.2 33 CPAG, No one written off: Response to the July 2008 welfare reform Green Paper, October 2008
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There is also an important point of principle that work should be decently paid. The single rate of jobseeker’s allowance is £60.50, which works out at £1.73 per hour on a 35 hour week, £4 less than the national minimum wage.
Voluntary sector is good at supporting and advocating for claimants. This proposal of involving the community sector in compulsory activity changes how claimants may view voluntary sector providers from one where an organisation is ‘on your side’ to one where it is part of the machine. Going far down this road of implicating the voluntary sector in conditionality (including through supplying information on which sanctioning decisions are taken) will undermine independence and trust, it removes the very reason Government is so interested in the voluntary sector in the first place.34
Citizens Advice also voiced ‘serious concerns’ about the work for your benefit proposals, arguing that there was ‘very little evidence’ from other countries that such schemes were effective.35 The DWP-commissioned research cited in the Green Paper36, it argued, did not support the use of workfare programmes. The Citizens Advice response went on:
2.23 It is seriously worrying that the DWP are prepared to consider work for benefit schemes without addressing the key problems found in international comparison research.
2.24 Full-time activities, such as community work or job trials, are positive steps in building confidence for return to work, and the emphasis should be on encouraging people into these supportive placements. The threat of a sanction should be unnecessary in a discussion with a claimant and personal advisers should work on building positives relationships so that they can jointly discuss necessary steps for return to work. It is also unclear how these proposals would work coherently alongside the community allowance scheme which the DWP are considering piloting to enable claimants to be paid to be paid by community organisations without the money affected their benefit.37
5. The White Paper
In the December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future38, the Government confirmed that it would pilot a ‘work for your benefit’ scheme from 2010 providing up to six months full-time work experience:
We proposed testing whether job seekers who have not entered sustained work after 12 months of the Flexible New Deal should take part in this programme. We know that many customers will reach this stage because they have significant barriers to work, such as gaps in their skills. We envisage that Work for Your
34 Ibid., pp31-32 35 Citizens Advice response to the Welfare Reform Green Paper, October 2008 36 Richard Crisp and Del Roy Fletcher, A comparative review of workfare programmes in the United States, Canada and Australia, DWP Research Report No 533, August 2008 37 Citizens Advice response to the Welfare Reform Green Paper, October 2008, pp11-12 38 Cm 7506
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Benefit will provide support to address these barriers alongside full-time work- related activity.
6.8 Others who are still on Jobseeker’s Allowance at the end of Flexible New Deal may be ‘playing the system’, preferring living on benefit to employment, or simultaneously claiming and working. This is unacceptable. We believe the prospect of attending mandatory full-time activity for a substantial period of time would act as an effective deterrent.
It noted that some responses to the Green Paper had suggested that the scheme could be seen as a punishment, adding:
This is certainly not our intention. In line with the Gregg Review recommendations, we intend that the full-time activity undertaken by participants in the pilot areas will provide substantial back-to-work support.39
The pilots would give Jobcentre Plus advisers a discretionary power to require participation of a proportion of claimants still out of work at the end of the Flexible New Deal:
6.10 As the changes would be intended to provide extra support to help people back into work, we will pilot Work for Your Benefit to test whether it has this impact. We will test the programme in a number of Jobcentre Plus districts, requiring participation from a proportion of those who are still out of work at the end of the Flexible New Deal period, and as a discretionary power for advisers for claimants they believe would benefit. In pilot areas, job seekers who do not return to the ‘supported job search’ stage of the Jobseeker’s Allowance regime will be required to participate in either:
• a full-time Work for Your Benefit programme involving full-time work experience for up to six months; or
• an alternative programme delivered by Jobcentre Plus involving increased support and interaction to help long-term unemployed people find work.
6.11 In pilot areas, we will also test allowing Jobcentre Plus advisers to refer customers to Work for Your Benefit-type provision earlier in their Jobseeker’s Allowance claim. To ensure greater personalisation and tailoring of employment support we want advisers to have access to the programme for job seekers who could benefit from this type of activity earlier in their claim, including those who refuse to engage with the other support on offer. The pilots will start in 2010, in line with the first people completing 12 months on Flexible New Deal. The pilot areas have yet to be determined, but we will engage with local partners in developing the specification for the provision when locations have been finalised.
6.12 In running these pilots, Jobcentre Plus will identify people who are not suitable for one of the three options. These will include people who need more intensive support, such as Progress2Work or Linkup and those who should not
39 Ibid. para 6.8
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be on Jobseeker’s Allowance. Job seekers who have made good progress with their Flexible New Deal provider, but have not managed to make the move into sustained work, will also be outside the pilot programme. They would be able to remain with the Flexible New Deal provider on a voluntary basis for up to six months to build on progress.
The Figure below, from the White Paper40, shows how the Government envisages ‘work for your benefit’ will fit within the ‘escalating conditionality’ regime for jobseekers:
Since most claimants leave JSA after a relatively short period, the Department estimates that only a small percentage (less than five per cent41) will still be unemployed at the end of the Flexible New Deal stage.
The Welfare Reform Bill 2009 Impact Assessment published by DWP alongside the Bill states:
To ensure that Work for Your Benefit gives customers the best opportunity to find sustained work in the open labour market the programme will include substantial employment support. The level of employment support will depend on individuals’ personal circumstances. It will also allow providers the flexibility to vary the balance between full-time activity and employment support during the first four weeks of the programme. This is intended to allow time to address jobseekers’ barriers to employment and maintain a focus on job search activity in order to help jobseekers progress into sustained employment.42
The Impact Assessment also says:
In developing this policy, the government will learn from evidence from previous policies similar to community work based programmes, particularly those in the 1970s and 1980s, in order to develop a policy that improves jobseekers long-term
40 Figure 61, p111 41 This could however increase given the worsening labour market situation 42 Para 33
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job prospects and helps them achieve sustained employment. The government will also learn from the mixed results of the “workfare” programme, ensuring that our proposals contain a significant element of employment support and are flexible enough so cater to an individual’s needs, particularly for those with complex and multiple barriers.43
The earlier Green Paper Impact Assessment44 acknowledged that ‘disadvantaged groups’ were ‘disproportionately more likely to be affected by piloting work for your benefit’ because they were less likely to have found sustained employment during the first two years of a JSA claim.45 The evidence suggests that ‘work for your benefit’ will disproportionately affect JSA claimants from minority ethnic groups, and those with disabilities. However, the Department points out that the programme will also offer ‘flexible and personalised’ support which, it argues, should be able to accommodate individuals’ needs.46
6. Clause 1
Clause 1 of the Bill inserts two new sections – 17A (‘Schemes for assisting persons to obtain employment: “work for your benefit”’) and 17B (supplemental) – into the Jobseekers Act 1995. The Explanatory Notes state that the intention is to pilot the ‘work for your benefit’ scheme in limited areas using powers in section 29 of the 1995 Act (‘Pilot schemes’); subsequent implementation would depend on the outcome of the pilots and affordability.47
New section 17A(1) provides that regulations (to be subject to the negative procedure) may impose a requirement on JSA claimants to participate in schemes designed ‘to assist them to obtain employment’. Section 17A(2) provides that regulations may, in particular, ‘require participants to undertake work, or work-related activity, with a view to improving their prospects of obtaining employment’.
Section 17A(4) precludes regulations made under subsection (1) from applying to JSA claimants who are not required to satisfy the usual jobseeking conditions (i.e. availability for and actively seeking work, and having a jobseeker’s agreement). The Explanatory Notes state that it is envisaged that this group will include lone parents with younger children who are moved to JSA following the abolition of Income Support.48
Section 17A(5) gives examples of provisions that may be included in the regulations. Subsection (5)(d) provides that failure to comply with the regulations will not result in a sanction if a claimant can show that they had ‘good cause’ for doing so.
43 Ibid. para 36 44 Impact Assessment of ‘No one written off – reforming the welfare state to reward responsibility’, July 2008 45 Ibid. para 100 46 Welfare Reform Bill 2009 Impact Assessment, para 51 47 Bill8-EN, para 53 48 Ibid. para 58
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The Explanatory Notes state:
The Government intends that good cause for not participating in a ‘work for your benefit’ scheme will be consistent with the good cause provisions currently contained in regulations relating to jobseeker’s allowance. An example of good cause would be dealing with a domestic emergency.49
Subsection (6) provides for the non-payment of benefit for between one and 26 weeks in response to a failure to comply with the regulations. Subsections (8) and (9) make provision however for payments to continue even though the regulations would prevent it. The Explanatory Notes state that the intention is to enable claimants subject to a sanction to receive ‘hardship payments’.50
Hardship payments – which are part of the current Jobseeker’s Allowance system – are reduced-rate payments of JSA which may be made in certain circumstances. Claimants need to show that they, or their family, would suffer hardship unless they receive a payment. Unless the claimant is in a ‘vulnerable group’ (e.g. they are looking after children, have a disability, or are caring for someone who is long-term sick or disabled), no payment may be made until the third week. The Explanatory Notes do not indicate however whether the hardship provisions for those required to ‘work for their benefit’ will match the existing JSA hardship rules.
New section 17B is supplemental to section 17A. It provides for contracting with organisations providing ‘work for your benefit’ schemes and the provision of funding and other support. Section 17B(1)(d) and (e) make provision for payments (‘by way of grants, loans or otherwise’) to persons participating in the scheme, and payments for ‘incidental expenses’, respectively. The Explanatory Notes state that the latter could include, for example, travel costs for people on schemes.51
Clause 1(5) provides that a decision to impose a benefit sanction for non-compliance with the regulations may be appealed.
The Explanatory Notes include a section which considers whether the provisions in clause 1 raise any human rights issues.52 On the question of whether ‘work for your benefit’ might potentially breach Article 4(2) of the European Convention on Human Rights (prohibition of forced or compulsory labour), the Government believes that the provisions are ‘not unjust or oppressive’ and form part of a ‘long-established policy whereby claimants who are required to be available and actively seeking work must take reasonable steps to improve their chances of obtaining and remaining in work’.53
The Explanatory Notes also state that there is concern that work or work-related activity could breach Article 3 ECHR (inhuman or degrading treatment). Benefit sanctions for refusal to take part in work or work-related activity could also be said to breach Article 3,
49 Para 60 50 Para 63 51 Para 65 52 Paras 402-406 53 Para 402
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or Article 8 (right to family life). However, the Notes also point out that the ‘good cause’ provisions provide an important safeguard in both cases. Furthermore, the powers to make hardship payments ‘may be exercised so that claimants and their dependants are not placed in situations of extreme privation in breach of [Article 3 or Article 8]’.54
B. Personalised conditionality
1. Background
Until recently, lone parents with a child under 16 who were not in full-time work could claim Income Support. However, from November 2008 most lone parents with a youngest child aged 12 or over are no longer eligible for Income Support and must instead claim Jobseekers’ Allowance (JSA), which means that they are required to be ‘available for and actively seeking work’. This is the first step in a series of planned changes to the rules which will mean that by October 2010 most lone parents with a child aged seven or over will be subject to the JSA regime.55
The July 2008 Green Paper, No-one written off: reforming welfare to reward responsibility, contained further proposals to prepare lone parents for a return to work when their youngest child reaches seven, including mandatory ‘skills health checks’ (where an adviser believes it necessary) for lone parents when their youngest child reaches five, and piloting a requirement for lone parents whose youngest child is five or six to attend relevant skills training if skills gaps that are likely to be a barrier to work are identified.56
The DWP’s summary of responses to the Green Paper states that, while the principle of offering lone parents skills health checks and training opportunities received general approval from those who responded, there were ‘some notes of caution’ about introducing a mandatory element.57
The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future58, confirmed that the Government intends to ‘roll out’ skills health checks for lone parents with younger children, but also said that the pilots would be expanded to incorporate wider return to work activity. Further, the pilots would test out the model of ‘personalised conditionality’ proposed by Professor Paul Gregg of Bristol University, in his recent report for the Department for Work and Pensions.59
2. Professor Paul Gregg’s report
The independent review by Professor Paul Gregg was announced by the Secretary of State for Work and Pensions on 30 July, following the publication of the Green Paper. The review, which would run alongside the Green Paper consultation, would look at
54 Paras 403-404 55 For further information see the DWP website 56 Cm 7363, pp54-57 57 Cm 7506, December 2008, p153 58 Cm 7506 59 Ibid.
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‘…what we should expect people to do and the role sanctions can and should play in motivating individuals to engage in the back-to-work support provided’.60 The terms of reference were:
• To set out a vision for a more personalised conditionality regime – and what this might look like in practice. This should be based on the objective that expectations and potential sanctions are challenging, appropriate and effective – given individual’s needs and circumstances. • To consider the evidence about the impact and effectiveness of conditionality in the UK and from different international regimes – drawing out potential lessons for future reform. • To consider the implications of the latest evidence from the fields of behavioural economics and social psychology for conditionality policy. • To consider what reforms would be needed to the welfare system to deliver a more personalised conditionality regime. These are likely to involve changes both to policy and delivery, but should not be based on proposals with significant additional resource implications. • To consider the potential trade-offs and tensions in delivering a more personalised conditionality regime – for instance balancing clear expectations and fair treatment with greater flexibility and discretion.61
Paul Gregg’s report, Realising Potential: A Vision for Personalised Conditionality and Support, was published on 2 December 2008.62 It concluded that, while evidence from the UK and abroad supported the finding that conditionality helps increase employment, to make the sanctions regime more effective it should be:
• Made more responsive by devolving decision-making for some key decisions around attending interviews, supported by the introduction of tighter rules around good cause for those not attending and a new ‘notification’ principle;
• Made clearer through the introduction of an early warning system, better communication and, over the longer-term, a move towards a system of fixed fines; and
• Better able to deal with repeat offenders through the introduction over the longer-term of a clearer set of processes, with a stronger approach based around mandatory activity for those found to be playing the system.63
Gregg also went further, setting out a ‘vision’ for a ‘single personalised conditionality regime’ whereby virtually everyone claiming benefits and not in work should:
• Be required to engage in activity that will help them to move towards, and then into employment;
60 DWP press notice, Making work work for everyone, 30 July 2008 61 Ibid. 62 See also DWP press notice, Purnell - fair rules for welfare reforms, 2 December 2008 63 Realising Potential: A Vision for Personalised Conditionality and Support, Executive Summary
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• Have an adviser with whom they will be able to plan and agree a route back to work;
• Be obliged to act on the steps that they agree will help them;
• Have a clear understanding of the expectations placed upon them (and why) and what the consequences are for failing to meet these; and
• Be able to access a wider range of personalised support on the basis of need not what benefit they are on.64
Gregg envisaged a ‘personalised conditionality and support regime’ comprising three broad groups:
A ‘Work-Ready’ group for people who are immediately job-ready. The personalised regime will be akin to the current Jobseeker’s Allowance regime. It should be largely rules-based and self-directed with standard jobsearch requirements. As part of further personalisation there should also be steps to:
• Speed up access to the more personalised parts of the JSA regime for harder to help groups; and • Improve support for people on JSA with a health condition or disability.
A ‘Progression to Work’ group aimed at those where an immediate return to work is not appropriate but is a genuine possibility with time, encouragement and support, and where the conditionality will:
• Reflect the claimant’s co-ownership of the return to work process; • Be tailored to their capability and built around their circumstances; • Be based on activity that supports the claimant‘s own route back to work; and • Link up with effective support.
A ‘No Conditionality’ group that involves no conditionality requirements whatsoever. This would consist of the current Employment and Support Allowance (ESA) support group, lone parents and partners with a youngest child under the age of one, and certain carers.65
Gregg also recommended that the Government should consider whether the support currently on offer to claimants was sufficient to underpin his vision, given the wider categories of individuals that would be included in a personalised conditionality regime, including:
• Exploring how multi-client contracts can be used to deliver provision based on need rather than what benefit people are on, with an appropriate pricing structure to decrease incentives for parking66;
64 Ibid. 65 Ibid. 66 ‘Parking’ refers to the situation that could occur if contractors focus their efforts on those who are easiest to help, while offering little or no help to those furthest from the labour market.
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• Considering how to deliver work experience programmes, particularly for those further from the labour market. These need to build in help with jobsearch and wider support rather than be delivered as a pure Workfare type scheme;
• Ensuring that existing childcare commitments are delivered on the ground;
• Building support to ensure that people not only move into work, but also stay and progress once in work. In particular to continue to test and evaluate the ideas tried in the Employment Retention and Advancement (ERA) pilots67 and to roll out the approach nationally once the right cost effective mix has been found;
• Considering the appropriate package for young people, to ensure that the majority in this age group gain the necessary skills and qualifications both before work and in work.68
3. The White Paper
The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future69, welcomed the recommendations in Professor Gregg’s report and said that the Government supported the ‘vision’ of personalised conditionality based on the three groups:
We agree with each of the key components of this vision, and this White Paper sets out a number of ways in which we are planning to take forward Professor Gregg’s recommendations. We intend to move quickly to begin reshaping some of our previously announced pilots. This will enable us to test core elements of the Gregg Review as soon as possible. It will involve testing out the ‘Progression to Work’ requirements for lone parents and partners with younger children and people claiming the Employment and Support Allowance, described later in this chapter. We also plan to pilot sanctions escalation. We start to set out more details about how we plan to do this in later chapters.70
Further details of the Government’s plans for lone parents and partners with younger children are in the following extract from Chapter 6 of the White Paper:
6.62 The Green Paper, No one written off: reforming welfare to reward responsibility, contained proposals to support more lone parents with younger children into employment, so that preparation for work becomes a natural progression, rather than a sudden step-up. Some respondents supported the idea of skills training and skills health checks in advance of the transition to full job seeking, while others felt it should be up to the individual to decide whether and what training they needed. A common theme in responses was the need for
67 For further information on the Employment Retention and Advancement pilots see Library Research Paper 05/62, Employment and Training Programmes for the Unemployed: Volume II 68 Ibid. 69 Cm 7506 70 Para 4.10
32 RESEARCH PAPER 09/08 flexibility in training, with the flexibility to fit provision around lone parents’ childcare responsibilities.
6.63 We understand the need for flexibility and we have no intention to force people to undertake training that is not appropriate to their needs. This is why we will be introducing a skills health check for lone parents. We also intend to modify the Green Paper proposals to take account of the new personalised conditionality vision for lone parents with younger children proposed by the Gregg Review. We agree with the Gregg Review that further extensions of the Jobseeker’s Allowance regime to lone parents with younger children (i.e. below the age of 7) would not be appropriate and that the introduction of a new conditionality regime in line with the proposed ‘Progression to Work’ group could potentially help many more lone parents back to work. We therefore want to expand the current regime for lone parents and our Green Paper proposals to start to build up the supportive regime suggested by Professor Gregg (see Chapter 4).
6.64 While Professor Gregg suggests that lone parents with a youngest child aged between one and six should be in the ‘Progression to Work’ group, we believe that we should start to explore what these arrangements might look like for parents when the youngest child reaches three. Under these arrangements, lone parents with a youngest child aged between one and two would be required to attend Work Focused Interviews, as is currently the case. They would have no further requirements placed upon them, but they could volunteer for support under the New Deal for Lone Parents.
6.65 We therefore intend to expand the pilot measures for lone parents with younger children which we proposed in the Green Paper, No-one written off: reforming welfare to reward responsibility, to incorporate wider return to work activity as well as activity to address skills gaps. We want to discuss with people the detail of how this would work. We particularly need to consider issues around childcare provision to assist people preparing to move into part-time work. For those parents who do need childcare, services are increasingly available, but we need to make sure that safeguards are in place for those with special needs, such as parents with disabled children.
6.66 Similarly, we will reflect on our proposal to pilot a financial incentive for lone parents with younger children undertaking voluntary skills-related activity and how this fits with pilot arrangements which will take us towards the Gregg vision of a personalised conditionality regime, providing enhanced support for those preparing for work.
6.67 Consistent with the Gregg Review, for lone parents with younger children, we need to make sure that addressing skills needs becomes fully integrated into the preparation for work path for this group. Attending a mandatory skills health check and subsequent training to help them identify and develop the skills they need or undertaking other work-related activity, could form a vital part of the long term action plan for lone parents. These measures will add to the effectiveness of the comprehensive package of back-to-work and in-work support already available to all lone parents. Training opportunities will include English for Speakers of Other Languages (ESOL) training for those with language needs.
6.68 To underpin the Gregg vision, we will be introducing legislation that will enable advisers to require lone parents with a youngest child aged three or over to undertake work-related activity, a skills health check and training where a lack
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of skills is identified as a barrier to employment. We also intend that these arrangements would apply to partners of claimants with young children.71
In a previous chapter, the White Paper states:
However, we agree with the Review that direction under the new ‘Progression to Work’ path would never be used to force clients to apply for specific jobs, attend job interviews, take any particular form of employment, or place a pre-school child into inappropriate childcare against the will of the parent.72
The pilots are expected to start from late 2010. The White Paper stated that the Government would ‘take powers to legislate for this approach’ and that it would discuss the proposals for piloting with ‘stakeholders’.73
To date, there have been few detailed responses to Professor Gregg’s report and the subsequent proposals in the White Paper. Some respondents to the Green Paper expressed concern about the general focus on increased conditionality and the obligation to work in the Government’s proposals. The Social Security Advisory Committee commented:
We welcome the Green Paper’s focus on the tackling of long-term unemployment. However, we would take issue with the solutions proposed. The focus on sanctions is, we believe, unhelpful and does not take proper account of the full findings of the Department’s own research or our own work. We are disappointed that more evidence has not been presented to prove that sanctions and compulsion are effective in generating long term sustainable employment.74
It went on:
2.2 Whilst we recognise the Government’s position that it wishes to enshrine the obligation to enter paid work at the heart of its approach to welfare, we see practical difficulties in the way it proposes to achieve this. We remain unconvinced that there is sufficient evidence either from the UK or international experience that increased conditionality will be either an efficient use of Jobcentre Plus resources (with its knock-on effects on expenditure on decision making and appeals etc) or effective in changing the behaviour of jobseekers or increasing employment rates.
2.3 It is unfortunate that the results of the Gregg Review will not be available before the consultation on the Green Paper concludes. A thorough examination of the evidence for the proposition that increased conditionality and the use of sanctions in the benefit system is an efficient and effective use of public resources in support of the Government’s policy for pushing up the employment rate would have enhanced the current consultation. We note the Green Paper’s expectation that increased benefit conditionality and the threat of sanctions will
71 Ibid. 72 Ibid. para 4.23 73 Ibid. p14 74 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee, para 2.1
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result in the effective achievement of the policy objective of increasing the employment rate. We remain unconvinced that the evidence to support this view is either consistent or robust, or that evidence of improved compliance under threat of sanctions necessarily leads to improved engagement and activation.75
Following the publication of the White Paper, the Chief Executive of the Child Poverty Action Group, Kate Green, said:
It worries us that the paper calls the personal support programme a ‘regime’. We do not want an authoritarian welfare state as claimants don’t need compulsion to take up high quality health, training and employment services that wealthier people take for granted. Work requirements must not conflict with health and care needs for sick or disabled claimants, or childcare priorities for parents.
The commitment that lone parents and disabled claimants will not be forced to apply for specific jobs, attend job interview, take any particular form of employment or place a pre-school child into inappropriate childcare against the will of the parent is an important protection. It must be clearly written into the legislation alongside the Secretary of State’s undertaking that there will not be financial sanctions for parents.76
Fiona Weir, Chief Executive of One Parent Families/Gingerbread, said:
By all means encourage single parents to start thinking about preparing for returning to work when they can juggle a job with bringing up children single- handedly but benefit cuts and extra Jobcentre hurdles will not equip them with the skills and confidence to go forward.
We want to see an approach which collaborates with single parents and builds on their own aspirations to achieve their best as parents and as would-be employees. Giving further sanctioning powers to jobcentre officials will not create the partnership approach that single parents need from advisers.77
Responding to the White Paper, Citizens Advice argued that while a less rule-based, more personalised approach to supporting lone parents and disabled people could help them into work, it would only be effective if accompanied by effective safeguards. The Citizens Advice Head of Welfare Policy, Lizzie Iron, said:
After the scaremongering and tough talking of the last few days, the government now needs to demonstrate it can genuinely deliver the high-quality personalised support it has promised to help lone parents and disabled people move off benefits into work.
This will require major investment in ensuring Jobcentre Plus is equipped to provide this support at a time when accelerating job losses are placing increasing demands on already overstretched staff and services. As things stand it is
75 Ibid. 76 CPAG press notice, Welfare reforms seriously flawed, 10 December 2008 77 One Parent Families/Gingerbread press notice, Single parents need partnership approach, not threats of sanctions, 10 December 2008
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doubtful that Jobcentre Plus staff will have the necessary skills, training, time and support they need to do the job.
Effective safeguards are vital to prevent unintended hardship resulting from benefit cuts being misapplied. CAB evidence and the government’s own research both show very clearly that in most cases threatening benefit cuts is neither necessary nor effective in moving people off benefits into work, and that they tend to hurt the most vulnerable. Bureaux regularly report cases of benefit cut sanctions being misapplied, causing unjustified hardship to vulnerable people.
All the evidence shows that most lone parents and people with disabilities want to work and will do so if they can. What they really need to help them do this - especially in the current economic climate where unemployment is rising fast and competition for jobs may be fierce - is support in overcoming the barriers facing them. Fundamental improvements are needed in the delivery of benefits and tax credits, in access to affordable, high quality childcare, and in ensuring basic rights at work are enforceable and employers offer the flexible working arrangements parents and people with disabilities need.78
4. Clause 2
Clause 2 inserts new sections 2D to 2G in the Social Security Administration Act 1992. Section 2D allows the Secretary of State to make regulations (to be subject to the negative procedure) to require a person in receipt of Income Support, or a partner of a person receiving Income Support, income-based Jobseeker’s Allowance (JSA), or income-related Employment and Support Allowance (ESA), to undertake work-related activity to continue to receive the full rate of benefit.
The Government’s intention is to pilot the ‘progression to work’ model for lone parents and partners of claimants with a youngest child aged between three and six. The clause and new sections do not however explicitly mention these groups.
The regulations may make provision for, among other things:
• The circumstances in which a person is to be subject to any requirement to undertake work-related activity • The time and amount of work-related activity a person is expected to undertake • The circumstances in which a person is or is not to be regarded as undertaking such activity • Sanctions for failure to undertake work-related activity, without good cause • What is and what is not to be taken into account when determining whether a person had ‘good cause’
‘Work-related activity’ is defined as ‘activity which makes it more likely that the person will obtain or remain in work or be able to do so’ (section 2D(8)).
78 Citizens Advice press notice, Citizens Advice response to welfare reform White Paper, 10 December 2008
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Section 2E requires the Secretary of State, in circumstances to be prescribed in regulations (to be subject to the negative procedure), to provide persons (or partners of persons) in receipt of Income Support, income-based JSA or income-related ESA who are required to attend Work-Focused Interviews (WFIs) with an ‘action plan’. Regulations may provide the form, content, review and updating of action plans. Action plans will contain details of the work-related activities people will be required to undertake under section 2D. There will be provision for action plans to be reconsidered at the person’s request (subsection (5)).
Section 2F allows the Secretary of State, in circumstances set out in regulations (to subject to the negative procedure), to issue a ‘direction’ to a person required to undertake work-related activity under section 2D. A direction must be ‘reasonable, having regard to the person’s circumstances’ (subsection 2(a)).
Section 2G allows contracted-out suppliers to carry out certain functions. Details will be in regulations (again subject to the negative procedure). The functions which they may carry out include:
• Conducting Work-Focused Interviews • Providing action plans • Issuing directions
However, they will not be able to make decisions about whether a person has failed to comply with a requirement to undertake work-related activity, whether a person had ‘good cause’ for failure to comply, or whether a benefit sanction should be applied. Such decisions remain the responsibility of the Secretary of State.
The delegated powers in new section 2G mirror those under clause 23 of the Bill (see below).
The Explanatory Notes suggest that Article 8 of the European Convention of Human Rights could be engaged if sanctions cause hardship such that there was an impact on private or family life. However, the Government considers that any interference that is established is justified in the economic interests of the country and the need to make the best use of public funds.79 The Government also believes powers to provide ‘hardship payments’ may be exercised so as to ensure claimants and their dependants do not experience ‘extreme privation’.80
79 Para 407 80 Ibid.
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C. Simplifying working age benefits
1. The Green Paper
In recent years there has been renewed interest in rationalising the number of benefits for people of working age.81 The Institute for Public Policy Research82 and David Freud83, among others, have put forward proposals for moving towards a system based on a single working age benefit. In the July 2008 Green Paper, the Government stated:
We believe that the idea of reducing the number of benefits has great merit – a radical, modernising reform to remove some of the complexity inherent in the current system.
6.7 In designing a simpler system, we must still recognise that people’s needs are many and varied. Any welfare system must have the flexibility to cope with these diverse needs. But that does not prevent us transforming the way in which people engage with the system. A simplified system of income-replacement benefits would free staff from juggling the administration of different benefits and give them more time to help our customers understand their entitlement and the support we can offer.
6.8 Such a system would be based more on individual need and less on the type of benefit received. For those capable of work in the longer-term but with significant barriers or responsibilities, activity would start gently and increase as they are able to manage more activity. We want to explore whether, over the long-term, this can be achieved in a single benefit drawing on the best features of JSA, IS and the new ESA.84
Elsewhere in the Green Paper, the Government set out proposals for moving all lone parents, whatever the age of their child, to Jobseeker’s Allowance (although those with a youngest child under seven would not be required to look for work or take a job).85 The Green Paper went on:
We think there is a strong case for going further and abolishing IS altogether as it is a largely passive benefit that expects very little from its recipients and does nothing to prepare them for a life after benefits. In fact, its very name implies financial dependence and inactivity. We therefore propose to take powers to abolish IS, and to use these powers as soon as resources allow.
6.10 With the proposals to move lone parents to a modified JSA and disabled people and people with long-term health conditions claiming IS to ESA, IS would be a benefit mainly for carers plus an assortment of much smaller groups. We want to consult widely on how the best interest of these groups and in particular carers, can be best served within the benefits system.
81 Appendix 2 gives statistics on the number of people in receipt of working age benefits 82 Roy Sainsbury and Kate Stanley, One For All: Active welfare and the single working-age benefit, IPPR, July 2007 83 David Freud, Reducing dependency, increasing opportunity: options for the future of welfare to work An independent report to the Department for Work and Pensions, March 2007 84 Cm 7363 85 Ibid. para 2.66
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6.11 We fully recognise that people currently on IS cannot be expected to be immediately available for work or be actively seeking a job. If IS was abolished, either ESA or JSA could be used to provide them with the same amount of financial support as now without any additional conditionality. However, there may be a case for keeping ESA as a benefit that specialises in supporting disabled people and people with long-term health conditions, with JSA as the benefit for other groups.86
As regards carers, the Green Paper proposed moving those on Income Support to a modified form of JSA which would not require them to meet the usual jobseeking conditions or undertake work-related activity, but which would enable them, on a voluntary basis, to access back to work support through Jobcentre Plus.87
In its response to the Green Paper, the Social Security Advisory Committee commented:
9.2 The Green Paper is not clear whether the way forward is a reduction in the number of benefits, the simplifying of the complexity of the benefit regulations, or the introduction a truly single working age benefit. The ideas suggested in paragraphs 6.7 and 6.8 are not in our view coherent. If, as proposed, the system would be better based upon individual need rather than type of benefit, then it is irrelevant how many benefits there may be if meeting diverse needs is the objective. The issue is rather the interaction between benefits, and the interaction between benefits and paid employment. A single benefit which genuinely met the heterogeneous needs of the working age population would have to be complex. If, however, the objective is to place the vast majority of working age benefit recipients onto JSA and a small minority onto the ESA support group, then many groups of people would be on a benefit – JSA - which by its nature would not meet their needs because, as we comment above in relation to carers, many recipients will not be seeking paid employment as they are already working full time providing care. Meanwhile the minority – those in the ESA Support Group - would be placed in a position, the opposite of that which is central to the Green Paper: in effect, they would be ‘written off’.
9.3 To overcome the problems of moving those of working age who are currently on IS onto JSA the Green Paper suggests a modified JSA regime. It suggests that for some there would be no additional conditionality. This implies that this single benefit would have at least three different JSA regimes – for those currently on JSA; for lone parents and for others currently on IS. We fail to see how such a proposal simplifies the system either for citizens or for staff. It would, however, send a message to all those of working age that they should be in paid employment.88
Disability Alliance noted that while the proposal to ‘simplify’ the welfare benefits system around two key out-of-work benefits might appear attractive, there was a very serious risk of increasing the complexity of the system:
86 Ibid. p108 87 Ibid. paras 6.12-6.16 88 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee
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6.3 We feel this risk arises from a combination of current and proposed policy proposals: • employment and support allowance being introduced from 27.10.08, which will present DWP logistical challenges in delivery, as well as migration; • lone parents moving onto jobseeker’s allowance, with variable requirements as to work seeking activity; • jobseeker’s allowance claimants to be required to undertake increasingly intensive work-related activity through the duration of their claim; • the position of carers, as well as other residual income support claimants, who it is proposed will move to jobseeker’s allowance, with yet more variable conditionality in terms of work-related activity.89
Disability Alliance also questioned the capacity of Jobcentre Plus, given budgetary constraints, to administer a single benefit (JSA) with multiple levels of conditionality depending on the individual circumstances of the claimant. In addition, it felt that the proposals would ‘serve to undermine the basic solidity and straightforward approach’ of JSA, ‘a relatively well-administered benefit with easily understood conditions’.90
The Child Poverty Action Group argued:
Any measures to simplify must take account of the reasons behind some of the current system’s complexity. Part of the complexity exists precisely because it seeks to meet varying needs. Without ensuring sensitivity to different needs and capabilities, moves to simplify risk not only being unjust but creating large groups of losers. The proposals in the Green Paper do not detail how the system would still be able to meet varying needs; shoehorning everyone onto one benefit in the longer term will either fail to meet diverse needs or will simply lead to condensed complexity (for example we believe this is happening with more lone parents going onto JSA). We believe strongly that claimants should not be expected to bear the cost of reducing complexity; social justice should not become the handmaiden of administrative convenience.91
Citizens Advice was ‘enormously concerned’ about the proposals to abolish Income Support and move lone parents and carers to a modified form of JSA. It questioned the rationale for doing so, given that JSA was, by definition, intended for people who are immediately available for work or actively seeking a job:
When the proposals were first highlighted, we imagined that the intention would be to move these groups to a modified form of ESA, which is, in the words of the Green Paper, intended to be a temporary benefit, helping people address the many and varied barriers which mean they cannot engage with the labour market immediately, but might look forward to a time when they could – when their children reached an appropriate age, or if their caring responsibilities come to an
89 Disability Alliance Response to the Government’s consultation paper, No one written off: reforming welfare to reward responsibility 90 Ibid. paras 6.4-6.5 91 Child Poverty Action Group response to the welfare reform Green Paper, p26
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end. We believe that the proposal to move lone parents and carers from income support to JSA will undermine the basic principle of JSA.92
2. The White Paper
In the December 2008 White Paper the Government said it remained attracted to the idea of a single working-age benefit and would continue to explore whether, over the long term, this was the right approach.93 As a step towards a simplification however, it proposed to abolish Income Support and establish a system of working-age benefits based around Jobseeker’s Allowance and Employment and Support Allowance:
The next natural step towards a simplified system should be the closure of Income Support which would take us to a dual-benefits system based around Jobseeker’s Allowance and the Employment and Support Allowance. Those who currently claim Income Support and who do not move onto the Employment and Support Allowance will move to Jobseeker’s Allowance.
2.13 Jobseeker’s Allowance requires the most activity of all the working-age benefits and is focused on helping people who are work-ready return to employment. We recognise that not everyone claiming Income Support is in a position to look for employment, certainly not straightaway. So for these people we will modify Jobseeker’s Allowance to mirror the levels of activity within Income Support. The change in benefit will, therefore, not result in an increased level of required activity.
2.14 Those, however, who felt they were in a position to explore a return to work would be able to choose to make use of the increased support available. We will also carry forward the rules on education and training, meaning those people who currently claim Income Support and are studying or in training can continue to do so once they are moved to the modified Jobseeker’s Allowance.
2.15 Professor Gregg recommended that when we take powers to abolish Income Support and move claimants onto Jobseeker’s Allowance the Department should give themselves the legislative framework to deliver the new ‘Progression to Work’ path (see Chapter 4). We can see the advantage in doing so and will be proposing that legislation is drafted accordingly.
In the light of responses to the Green Paper, and Professor Paul Gregg’s report, it would not move carers from Income Support, at least not until it had a clearer long-term term plan for carers’ benefits as a whole:
2.16 In the Green Paper we asked for views on whether moving some carers onto Jobseeker’s Allowance, with no change in the conditionality placed upon them, would be suitable. Many carers and their representative organisations were very clear that Jobseeker’s Allowance was not an appropriate benefit for carers. Respondents explained that carers would not be available for work because of their caring responsibilities – which, although unpaid, were at least as much as those experienced by people in full-time work.
92 No one written off: reforming welfare to reward responsibility Citizens Advice response to the Welfare Reform Green Paper, para 6.7 93 Cm 7506, para 2.8
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2.17 In his review of conditionality, Professor Gregg also said that people entitled to carers’ benefits should not be expected to engage in back to work activity, unless they volunteered to do so. We accept that recommendation. We also remain committed to ensuring that the specific needs of carers are recognised within the benefits system. As a result, we have amended our proposal and will not move carers from Income Support until we have a clear and detailed plan setting out how we will reform the benefits system over the longer term. We will, of course, discuss these plans with stakeholders as our work on streamlining the benefits system progresses.94
3. Clause 3 and clauses 5-7: abolition of Income Support
Clause 3 inserts new sections 1A and 1B in the Jobseekers Act 1995 which provide for categories of person to be entitled to Jobseeker’s Allowance without having to satisfy the ‘job seeking conditions’ (i.e. availability for and actively seeking work, and having a jobseeker’s agreement). The provisions will allow JSA to be extended to groups who currently qualify for Income Support.
Regulations (to be subject to the negative procedure) will allow the Secretary of State to prescribe the categories of person to be entitled to JSA on this basis. The Welfare Reform Bill 2009 Delegated Powers Memorandum states that the Secretary of State intends to use this power in a similar way to the existing power under the Social Security Contributions and Benefits Act 1992 to prescribe who may be entitled to Income Support.95 The power will enable groups currently entitled to Income Support to receive JSA instead.
The Department expects to transfer groups from Income Support to JSA ‘over a period of time as and when resources permit rather than all at once’.96
Clause 3 also introduces Schedule 1, which makes various further amendments to the Jobseekers Act 1995. The Delegated Powers Memorandum states:
Subsection (4) introduces Schedule 1 containing amendments to the Act which would provide a framework under which some people not required to meet the job seeking conditions may nevertheless be required to meet some other conditions that will help prepare them for work in the future. Other measures in the Bill will mean that elements of this framework will already be in place for some people on Income Support before Schedule 1 takes effect. Therefore the amendments to the Jobseekers Act in Schedule 1 do not imply any change in principle although they will facilitate the further extension of the new conditionality framework, especially to partners.97
Schedule 1 contains detailed provisions relating to conditionality. It covers, among other things:
94 Ibid. 95 Para 63 96 Welfare Reform Bill 2009 Delegated Powers Memorandum , para 67 97 Para 66
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• Requirements to attend Work-Focused Interviews • Powers to direct claimants to undertake activities related to finding employment, becoming more employable or remaining employed98 • Action plans and requirements to undertake work-related activity • The circumstances in which a sanction may be applied
Much of the detail will be set out in regulations, which are to be subject to the negative procedure.
The Delegated Powers Memorandum states:
Delegated powers in relation to: work-focused interviews; action plans, work related activity and employment officer directions to undertake work-related activity, will be new to Jobseeker’s Allowance and are intended to be used in relation to groups who are not required to meet jobseeking conditions (i.e. some former Income Support claimants and their partners) but who are expected to prepare for work in the future. In all cases there will be a power to prescribe in regulations groups who do not have to meet any of these conditions. It is intended that those groups would include lone parents with children under 1, carers who are regularly and substantially caring for someone who is severely disabled and some groups with very specific or temporary reasons for not being able to comply with job seeking conditions. The creation of a clear no- conditionality group will ensure that only those people who can reasonably be expected to prepare for work will be subject to additional requirements.99
The Welfare Reform Bill 2009 Impact Assessment states that the modified Jobseeker’s Allowance will ‘cater for a wide variety of different support needs’ and will provide ‘a graduated range of conditionality according to individual circumstances’.100
Clause 7, Schedule 2 and Part 1 of Schedule 7 provide for the eventual abolition of Income Support. The Delegated Powers Memorandum explains:
Subsection (2) of Clause 7 will allow the Secretary of State to abolish Income Support by Order once he is satisfied that it is no longer necessary to prescribe groups of people to receive Income Support because they are catered for elsewhere in the benefit system. In order to ensure that the process of transferring groups out of Income Support goes smoothly subsection (4) of the Clause makes provisions for an order under subsection (2) to contain transitional provisions or savings.
Income Support, as a benefit of last resort, is referred to in many other Acts. Subsection (3) provides for consequential amendments and repeals to be made under Schedule 2 and Part 1 of Schedule 7 in accordance with any provisions contained in an Order made under subsection (2).
98 Paragraph 265 of the Explanatory Notes states that this could include ‘improving skills’ 99 Para 87 100 Para 217, p39
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By the time an Order under subsection (2) is made Income Support will no longer be needed and it would be appropriate for an instruments [sic] under this clause to be subject to the negative procedure.101
Clause 7(9) confirms that the regulations will be subject to the negative procedure, but the table in Annex 1 of the Delegated Powers Memorandum states that the affirmative procedure applies.
Clauses 5 and 6 make further changes linked to the abolition of Income Support, including provision for the transition of people who move from Income Support to ESA or JSA.
4. Clause 4: conditionality for partners
Prior to 2001, partners of benefit recipients had no conditions attached to their entitlement to benefit. Since 2001, younger childless couples on income-based- Jobseeker’s Allowance have been required to make a ‘joint claim’, and both are required to meet the labour market requirements of the benefit. The requirement has been gradually extended until it now applies to all couples on income-based JSA without dependent children.
Since April 2004, partners of those claiming Income Support and Incapacity Benefit (with or without children), and income-based JSA claimants with children, have been required to attend a single Work Focused Interview (WFI) six months into their partner’s claim. This also now applies to partners of Employment and Support Allowance (ESA) claimants. Since April 2008, partners of income-based JSA claimants with children have been required to take part in repeat WFIs every 6 months.
The purpose of the WFI is to discuss the possibility of working and to encourage partners to join the voluntary New Deal for Partners. Taking part in an interview is a condition of the couple continuing to receive the full amount of benefit, but any action beyond participation in the interview is optional.
The July 2008 Green Paper proposed a ‘more active regime’ for partners.102 It proposed extending the joint claims requirement in JSA to couples with a youngest child aged seven or over. In addition, the proposals would affect couples claiming Income Support and ESA. The proposals would mean that, where one partner was capable of working (and not a carer), means-tested support would be available via JSA only.
Organisations responding to the Green Paper consultation expressed concerns about the proposals. The Social Security Advisory Committee commented:
We welcome support and encouragement for partners to enter paid employment however have reservations about the appropriateness of JSA conditionality being imposed upon partners. We have commented upon this in the past. If this conditionality is to be introduced then steps will need to be taken to assure both
101 Paras 78-80 102 Cm 7363, pp92-94
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that it is imposed in a culturally sensitive manner and also that such a new regime does not result in tension between partners, resulting in the breakdown of relationships and the risk of the exposure of more children to poverty.103
Disability Alliance thought that the proposals were ‘…very confused and have the potential to create unnecessary complexity into an already complex system of benefits and tax credits’.104 It also argued that it failed to recognise fully the caring roles of partners and undermined their contribution to society. Furthermore, it could complicate and delay the process of assessing people for entitlement to ESA.
The Child Poverty Action Group noted that while the proposals ensured that, for benefit purposes, partners would be treated in the same way as lone parents (who, from 2010, will be required to claim JSA when their youngest child reaches seven), their position remained that ‘parents whether (lone or partnered) should have choice about entering work and that such a choice needs a far greater level of support than currently available’.105 CPAG also argued that it was unclear exactly how the rules would operate in practice, including how a claim would be triggered where one partner was getting ESA, how payments would be made, and how awards were to be calculated.
The December 2008 White Paper announced that the Government would go ahead with the changes for partners:
6.84 This White Paper confirms our intention to introduce new measures to provide help that is more appropriate to the individual needs of both members of a couple who do not have children or have older children to assist them return to the labour market. As outlined earlier, following the Gregg Review, we also agree that partners with young children generally fit within the progression to work group and will legislate to enable us to take forward the Gregg vision on the same footing as the proposed arrangements for lone parents.
6.85 Couples with older children in which both partners are capable of work will be required to make a joint-claim for Jobseeker’s Allowance. Under these arrangements both members of the couple will need to be available for and actively seeking work as a condition of receiving Jobseeker’s Allowance. This extends arrangements which currently apply only to couples without children claiming Jobseeker’s Allowance to include couples who have dependent children where the youngest child is aged seven years or older.
6.86 Where one member of the couple is capable of working but the other is not because, for example, they have restricted capability because of illness or disability then they, too, will be able to access income-related assistance via Jobseekers Allowance only. However, in these cases the partner who is capable of work will make the claim on behalf of the couple and will have to fulfil Jobseeker’s Allowance conditionality. The partner who has the health condition will still be able to establish that they have limited capability for work and, if
103 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee 104 Disability Alliance Response to the Government’s consultation paper, No one written off: reforming welfare to reward responsibility, para 4.2 105 Child Poverty Action Group response to the welfare reform Green Paper, p20
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eligible, will be able to claim contributory Employment and Support Allowance in their own right. They will also be able to access additional support through the work-related activity premium if they are prepared to comply with the work-related conditions of the Employment and Support Allowance.
6.87 The changes will have two main effects. First, they will extend Jobseeker’s Allowance joint-claims to cover those couples with a youngest child aged seven or over who is a member of the same household and for whom they are responsible. Second, they will ensure that income-related support payable in respect of couples where at least one member is capable of work, is available via Jobseeker’s Allowance only.106
The following table107 summarises the effect of the measures for couples on JSA, Income Support and ESA, where exemptions do not apply.
Claimant of: Partner Children? Current Proposed capable of conditionality conditionality work? for partner for partner Jobseeker’s Yes Yes – WFI every 6 JSA joint-claim, Allowance youngest months and full JSA aged 7 or access to New conditionality over Deal for for both Partners members of the couple Income Yes No WFI at 6 month Partner Support/Employment point only and becomes main and Support access to New claimant in a Allowance Deal for new JSA claim Partners and full JSA conditionality applies. ESA main claimant can still claim ESA Income Yes Yes – WFI at 6 month Partner Support/Employment youngest point only and becomes main and Support aged 7 or access to New claimant in a Allowance over Deal for new JSA claim Partners and full JSA conditionality applies. ESA main claimant can still claim ESA
106 Cm 7506, December 2008 107 Based on Table 6.1 in the White Paper
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Further information and analysis is given in the Welfare Reform Bill 2009 Impact Assessment.108
Clause 4 amends the Social Security Contributions and Benefits Act 1992 and the Welfare Reform Act 2007 to remove entitlement to Income Support and income-related Employment and Support Allowance for couples where one member is capable of work. This will mean that the only route to means-tested support for such couples will be through income-based Jobseeker’s Allowance and the member of the couple who is ‘work ready’ will have to satisfy the JSA job seeking requirements.
Regulations (to be subject to the negative procedure) will prescribe exemptions. The Impact Assessment states:
…these changes will affect only those couples where at least one partner is ‘work ready’. The Government will not expect those who cannot fulfil the labour-market conditions in JSA to move to that benefit. Therefore, it will put in place exemptions and mitigations to protect couples (in scope of the policy change) in certain circumstances: those who are carers [who are in receipt or eligible for Carer’s Allowance], where one member is in the ESA Support Group or are of the eligible age for Pension Credit will not be considered ‘work ready’. It is the intention that couples with children under the age of 7 years will be exempted from these arrangements.109
The change will affect partners for new benefit claims in 2012/13. Existing claimants will move over to the new arrangements on phased basis:110
• Year 1: all partners with children (and partners with children over 16) • Year 2: partners with children over 12 • Year 3: partners with children over 10 • Year 4: partners with children over 7
D. Work-related activity for ESA claimants
1. The Green and White Paper proposals
While the Welfare Reform Act 2007 already contains powers to require claimants to undertake work-related activity, for the time being claimants of Employment and Support Allowance are required only to participate in Work-Focused Interviews (WFIs). The Government’s intention has always been to extend conditionality to include actual participation in work-related activity, as resources permit.111
108 Paras 118-207 109 Welfare Reform Bill 2009 Impact Assessment, para 128 110 Ibid., para 131 111 For further background see Library Research Paper 06/39, The Welfare Reform Bill 2005-06
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The July 2008 Green Paper sought views on whether there was a case for further increasing the requirements for ESA claimants to undertake work-related activity.112 A number of organisations suggested it was premature to be suggesting further changes to the rules, given that ESA had not yet been introduced. Disability Alliance, for example, argued:
Until we can be sure that the more active approach undertaken with ESA is working effectively for disabled people, there is no evidence to suggest that increasing the ESA conditionality requirements on work-seeking will be effective, proportionate or necessary, and indeed could be counter-productive.113
The White Paper confirmed that legislation would be introduced to give Jobcentre plus advisers greater powers to require claimants to undertake specific activities. From late 2010, the Government proposes to test Professor Paul Gregg’s ‘progression to work’ approach for ESA claimants in eight ‘pathfinder’ areas. An action plan will be agreed by the claimant with the personal adviser, setting out appropriate activities to help the claimant move towards work. Failure to take part in any activity to address barriers to work, without good cause, may lead to a sanction.114 The Government felt that claimants themselves were best placed to decide what was appropriate for them, but added:
…a minority may need more guidance. The activities they choose may prove to be ineffective over a sustained period of time. An even smaller number may refuse to co-operate with support from which they could benefit. They may deliberately choose ineffective activities, or not take part at all.115
The White Paper stated:
5.31 The Gregg Review recommended that conditionality should be based around encouragement, co-operation and co-ownership. Nonetheless, it also recognised that on occasions the conditionality would need to be stepped up where people consistently fail to engage effectively with the personalised support regime. In line with this proposal, we are introducing legislation which will allow personal advisers, where a claimant is not complying with the requirements, where they have particular needs such as skill needs or they are problem drug users, or they are not addressing their main barriers to work, to decide the appropriate activity. In these cases, claimants will be required to take part in the specific activity their adviser has chosen.116
It went on:
5.35 While drugs and skills barriers are ones which we want to address urgently, we agree with Professor Gregg that we should also give personal advisers the capacity to mandate customers to a specific activity in other cases as well. We believe that it is not right for some claimants who are unwilling to engage, or who
112 Cm 7363, paras 3.31-3.35 113 Disability Alliance Response to the Government’s consultation paper, No one written off: reforming welfare to reward responsibility, recommendation 12, p22 114 Cm 7506, paras 5.26-5.29 115 Ibid. para 5.30 116 Ibid. para 5.31
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deliberately try to avoid addressing their main barriers to work, to be able to continue doing so. In these circumstances, the adviser will also be able to require the claimant to do something specific, to ensure their barriers to work are addressed.
5.36 We will ensure that a clear and comprehensive set of safeguards are built into the support we offer, making sure claimants are not required to undertake inappropriate activities. In particular, this power would never be used to force claimants to apply for or take up specific jobs, or to undergo medical treatments that would clearly fall foul of human rights legislation or violate medical ethics, professional codes of practice or clinical governance. We would also be clear about when sanctions would apply, so that people do not misunderstand them, or are sanctioned unfairly. The success of Pathways to Work is based on a supportive and co-operative relationship between the claimant and adviser. This is something which we want to preserve while ensuring that people are progressing towards work.
5.37 There were some responses to the consultation which questioned whether sanctions and work-related activity requirements were effective. We have recently published research that shows that conditionality can have a measurable impact on the likelihood of returning to work [Department for Work and Pensions (2008) More Support, higher expectations: the role of conditionality in improving employment outcomes. TSO], but we are aware that this is new territory. This is why we intend to run pathfinders to test the effects of requiring more of customers, while providing a much more engaged service.117
2. Clause 8
Clause 8 amends section 15 of the Welfare Reform Act 2007 to specify a work-related activity that an ESA claimant in the work-related activity group must undertake to remain entitled to benefit. Details are to be set out in regulations, which will be subject to the negative procedure.
Section 15 of the 2007 Act currently provides that the Secretary of State may direct that a specific activity in the case of an individual does not count as ‘work-related activity’ under requirements imposed by the Act. The purpose is to stop individuals seeking to satisfy the requirement to undertake work-related activity by undertaking an activity that might be considered inappropriate.118 The amendment allows the Secretary of State to direct that a specific activity is the only activity which can, in that person’s case, be regarded as ‘work-related activity’. The intention is to enable the Secretary of State to require claimants to undertake a specific activity in certain circumstances.119
Any direction must be reasonable, having regard to the person’s circumstances, and must be recorded in their action plan. Failure to undertake the activity, without good cause, within the allowed time would be sanctionable.
The Welfare Reform Bill 2009 Impact Assessment states:
117 Ibid. 118 Explanatory Notes, para 92 119 Ibid. para 93
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287. The Welfare Reform Act 2007 provided powers to require ESA claimants to undertake general work-related activity, and it has always been our intention to commence these powers to add this requirement to the range of engagement tools within ESA. From late 2010, in pathfinder areas, the Government will ask customers to demonstrate that they are undertaking work-related activity appropriate to their situation, so that they can move towards a return to work.
288. This clause proposes powers that will provide that certain claimants, they will be required to undertake a work-related activity as specified by their personal adviser from the main phase of their claim (e.g. after the assessment phase).
289. The Government intends this requirement will apply to customers who have an urgent and serious barrier to work which has been diagnosed as such by an external expert (for example, a problem drug user) to customers who refuse to engage in any work-related activity; or customers whose choice of activity is clearly ineffective in addressing their barriers. This requirement will only be applied if the personal adviser has evidence that such a requirement is necessary, and as such, the timing of mandation will vary according the individual's circumstances.
290. The range of activities that might be specified can be any reasonable activity that helps the claimant address their main barriers to employment. This might include: work tasters, improving employability, jobsearch assistance, and stabilising life and in some circumstances, managing health in work. The Government would not mandate a claimant to apply for or take up work or undergo medical treatments that would clearly fall foul of human rights legislation or violate medical ethics, professional codes of practice or clinical governance
291. Although the Welfare Reform Bill will only take powers to relating to specific work-related activity the Government has considered the impacts of the package of measures to increase expectations as a whole as work-focussed interviews will form the framework for monitoring work-related activity and as such are an intrinsic part of this measure.120
E. Claimants dependent on drugs
1. The Green Paper
The Government’s Drugs Strategy, Drugs: protecting families and communities, was published on 27 February 2008.121 The Strategy included, among other things, proposals to help problem drug users re-establish their lives, including closer links between Jobcentre Plus and specialist treatment providers. It went on:
However, we do not think it is right for the taxpayer to help sustain drug habits when individuals could be getting treatment to overcome barriers to employment. So, we will explore the case for introducing a new regime for drug misusers which provides more tailored and personalised support than is currently provided by the existing Incapacity Benefit or Jobseeker Allowance regimes. In return for benefit
120 Original emphasis 121 Available at the Home Office website
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payments, claimants will have a responsibility to move successfully through treatment and into employment. Further proposals will be announced regarding these measures.122
Proposals for a ‘new regime for problem drug users’ were set out in Chapter 2 of the Green Paper, No one written off: reforming welfare to reward responsibility123. These included:
• Legislation to enable information sharing between Jobcentre Plus and the police, probation services and prisons; and
• Requiring all applicants for benefit to declare whether they were addicted to heroin or crack cocaine.
The Green Paper went on:
2.41 Once problem drug use has been identified, those who are not in drug treatment already will be required to see a drug treatment provider. However, we also propose that problem drug users on benefit should be required, where appropriate, to see a specialist employment adviser and to draw up, with their help, a rehabilitation plan. This plan would set out the steps that they will take to stabilise their drug dependency, move towards recovery, tackle the problems they face and get into work.
2.42 This approach will build on our Progress2work programme, which provides specialist support for recovering drug users. Problem drug users are more likely to have health problems, particularly mental health problems, more likely to have basic skills needs, more likely to be vulnerably housed, socially excluded and in debt. So as with Progress2work, the specialist support will need to address these barriers.
2.43 In return for this access to drug treatment and specialist employment support, there will be an obligation on individuals to take it up. Failure to do so without good cause would result in a referral back to Jobcentre Plus and a potential benefit sanction. This approach will take account of the range of barriers that many drug-dependent claimants face (often including chronic health conditions).
2.44 We also invite views on making changes to the benefit system in order to introduce a ‘Treatment Allowance’ that would replace normal benefit payments while problem drug users stabilise in treatment. This could be time-limited, for example to only apply whilst an individual stabilises their condition. After this they would be paid benefit in line with JSA and ESA.124
In its response to the Green Paper, the Social Security Advisory Committee said that it found the proposals in relation to people addicted to crack cocaine and opiates to be
122 p31 123 Cm 7363, paras 2.28-2.49 124 Ibid.
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‘unconvincing, simplistic, and to present a number of issues that demand much more thought before they are taken further’.125 It went on:
The abuse of illegal drugs – just as with alcohol abuse – can be a major barrier to entering, and staying in, employment. However, we find little to commend the Government’s proposed approach. It is our understanding that all the evidence points to drug rehabilitation programmes being most effective when the client actively wishes to engage in treatment. Taken together, coercion and the removing of income have the potential to make a bad situation worse.126
The Green Paper had failed, SSAC said, to consider the knock-on effects on child poverty or child welfare; nor had it presented any evidence to suggest how the removal of benefit would assist those with drug problems. The SSAC added:
2.9 We think it highly unlikely that people dependent upon illegal drugs (even supposing that they define themselves as ‘drug dependent’) would declare their dependency to Jobcentre staff. Many of those with drug dependency are likely to be experiencing other serious mental health conditions, either a result of, or a trigger to, their drug addiction. Meanwhile, the proposals appear to envisage members of the Department’s staff making judgements, while respecting the claimant’s rights, about the nature and extent of a suspected drug dependency. The suggested exchange of information with police authorities and the courts on positive testing (aside from the resource implications of setting up a system that would be effective) appears to be a clumsy and disproportionate approach to identifying a relatively small group of people.
2.10 Those claimants who already acknowledge their drug addiction and are seeking treatment for drug addiction will be assessed under the WCA as having a medical condition. Those who do not think they have a problem (yet are drug dependant) will not declare that they are addicted, but may view themselves as ‘recreational users’. Unless consideration is being given to compulsory drug testing for benefit eligibility purposes (and we can see major obstacles and objections to such a step), we cannot see how this will work.127
The SSAC supported instead a voluntary approach to treatment.
Organisations concerned with drug misuse also expressed concerns. DrugScope, for example, while welcoming closer links between Jobcentres and drug treatment providers, the proposal for a ‘treatment allowance’ allowing problem drug users to address their problems before requiring them to seek work, and proposals for more personalised support to help them into education, training and work, did not support proposals to identify all problem drug users entering the benefit system, increased information sharing between the welfare and criminal justice systems, and a regime underpinned by the threat of sanctions. Responding to the Green Paper’s publication, its Chief Executive, Martin Barnes, commented:
125 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee, para 2.7 126 Ibid. 127 Ibid.
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Any requirement by Jobcentre Plus to take up treatment or specialist employment support must recognise the complex nature of drug dependency. It is vital that Jobcentre staff do not assume a ‘one size fits all’ model of drug treatment and that drug services take the lead in drawing up an appropriate individual care plan.
We welcome the proposal to consider a ‘treatment allowance’ while people are in treatment if this enables a more flexible approach to usual benefit conditions, such as the actively seeking work requirement for those claiming jobseekers allowance.
Genuine support and encouragement to help drug users into employment is welcome, but compulsion and threats of benefit sanctions could do more harm than good, risking further marginalisation. The stigma faced by people in drug treatment and the concerns of prospective employers need to be addressed, as do associated problems such as homelessness, debt and poor physical and mental health. The reality is that many drug users, including those already in treatment, are unable to access the full range of services and support they need or are entitled to.
We have concerns about a requirement to declare whether someone is using heroin or crack cocaine, particularly if this is accompanied by the threat of benefit sanctions or ‘overpayment’ proceedings. People will be understandably anxious about giving such information to staff outside a treatment or primary care setting. Given public concerns about data protection, the proposal that prisons, probation services and the police share information with Jobcentre staff is also troubling.128
2. The White Paper
The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future129, addressed some of the issues organisations responding to the Green Paper had highlighted:
Declaration of drug use 6.33 Many stakeholders criticised the proposal to make declaration of problem drug use a condition of benefit entitlement. There were suggestions that this was asking people to incriminate themselves and concerns that the proposals would push drug users further from the benefits system. In particular, there was anxiety that women, in particular, would not declare drug use due to fear that their children would be taken into care. There was further concern about proposals to use drug testing.
6.34 The Government understands these concerns and we will not make all new benefit claimants make a declaration of drug use at the start of their claim. We recognise that drug addiction is a long-term, chronic, relapsing condition that generally takes years to overcome. While the ultimate goal must be abstinence, we understand that many problem drug users need additional help such as substitute medication to become drug-free. The approach that we adopt will support that.
128 DrugScope press release, DrugScope responds to publication of Welfare Reform Green Paper, 21 July 2008. See also the full Response from DrugScope to the Green Paper, October 2008 129 Cm 7506
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Sanctions 6.35 Stakeholders feared that sanctions which led to loss of benefit might drive drug users into crime and prostitution and that this would have a negative impact on families. Contributors thought that such sanctions would single out drug users for unfair treatment.
6.36 We believe, however, that it is wrong for individuals, their families and society to allow people to use drugs long-term without challenge while they are on benefit. It is impossible to sustain a drug problem on benefit income alone so many of those with entrenched, serious misuse problems are very likely to be involved in crime. We understand these concerns, however failure to engage in the programme without good cause will lead to a sanction.
Identification 6.37 To support problem drug users back into employment we need to be able to identify them. This is likely to happen for those claiming the Employment and Support Allowance during the Work-Focused Health-Related Assessment, but we also need to identify people claiming Jobseeker’s Allowance. Where advisers suspect that this may be the case, those claiming this benefit may therefore be asked whether current or recent use of heroin and crack cocaine is preventing them from working.
6.38 We will support this by exploring the use of existing and new powers to enable data to be obtained from the criminal justice agencies. This information will include, for example, details of people who have left prison, and those who are subject to a Drug Rehabilitation Requirement imposed by the courts as part of a community sentence. The information given by claimants and provided by the criminal justice system will be safeguarded and will only be used for benefit purposes and the operation of the new programme.130
The White Paper announced that a new ‘drug and employment support programme’ would be developed to provide ‘integrated and personalised support’ for problem drug users claiming Jobseeker’s Allowance or Employment and Support Allowance. This would cover:
• support to stabilise the claimant’s drug problem;
• support to help build self-esteem and confidence;
• steps to address barriers to work such as housing and debt; and
• support to gain the skills needed to get ready for work.131
The White Paper outlined the main features of the proposed regime:
6.40 Claimants who are identified as problem drug users will be referred for an initial assessment with a healthcare professional who will decide whether the
130 Ibid. 131 Ibid. para 6.39
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individual has a heroin or crack cocaine problem, and will determine whether they should be referred to the new programme. We are exploring whether drug testing has a role to play in respect of claimants who fail to engage.
6.41 Individuals will be required to engage with a personalised programme of support until they are ready to move onto the mainstream Flexible New Deal or Pathways to Work programmes. Regular feedback will be provided to Jobcentre Plus on their progress.
6.42 During the period they are on the programme, claimants will receive a Treatment Allowance. This will be paid within the existing structures of Jobseeker’s Allowance and the Employment and Support Allowance, but the conditions of entitlement will be varied and replaced with a more tailored and appropriate set of conditions for supporting recovering drug users. For example, this will mean that those on Jobseeker’s Allowance will not be required to sign on or be required to show that they are actively seeking work for this period. They will, however, be expected to engage with and undertake the actions in their rehabilitation plan.
6.43 It is important, though, that individuals engage properly. In return for receiving the Treatment Allowance, they will be required to agree a rehabilitation plan, and to make real efforts to make progress against it. If they fail to do so, without good cause, they will be subject to sanctions. These will be based on those already present in Jobseeker’s Allowance and the Employment and Support Allowance.132
The regime would be piloted and fully evaluated before any national rollout.133 The Government said it was ‘continuing to explore’ with the Scottish Government and Welsh Assembly Government if the measures could be extended to Scotland and Wales in a way which was consistent with their respective drug abuse strategies.134
The Welfare Reform Bill 2009 Impact Assessment further states:
The benefit system applies across Great Britain. However, health services are devolved in Scotland and Wales, while criminal justice is also devolved in Scotland. Many of these proposals would therefore only apply in England. The Government will explore the most appropriate way to extend those measures that relate to the benefit system and specialist employment support within Scotland and Wales, in consultation with the Scottish Executive and the Welsh Assembly Government.135
Responding to the White Paper, the Chief Executive of DrugScope, Martin Barnes, said that DrugScope welcomed the Government’s commitment to improve access to employment, education and training for problem drug users, and applauded the
132 Ibid. 133 Ibid. para 6.45 134 Ibid. para 6.46 135 Para 331
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Government’s aim of removing barriers to social inclusion for people affected by drug use.136 He went on however:
While we welcome the decision not to require someone to declare heroin or crack cocaine use at the start of a benefit claim, the White Paper leaves open the possibility that a declaration of drug use may be required at a later stage. We oppose the introduction of drug testing by Jobcentres and hope this proposal does not go ahead.
We are extremely concerned that a positive and supportive approach could be seriously undermined by the threat to withdraw benefits for problem drug users who do not engage with or remain in drug treatment.
We supported the introduction of a treatment allowance if it provided genuine additional support for people in treatment - however, linked with the threat of benefit sanctions it looks more like a Trojan horse for compulsion.
There is no evidence that using benefit sanctions to compel problem drug users into treatment will be effective. Withdrawing benefits could perversely drive some people further away from the support they need, potentially impacting upon their families and wider communities in the process.137
3. Clause 9 and Schedule 3
Clause 9 and Schedule 3 make provision for claimants of Employment and Support Allowance (ESA) or Jobseeker’s Allowance (JSA) who are dependent on, or have a propensity to misuse, drugs. Where this is a factor affecting their prospects of obtaining or remaining in work, they may be required to engage in certain activities. The Schedule also contains powers to extend the provisions to those who misuse alcohol.
Schedule 3 contains extensive regulation-making powers. Regulations are to be subject to the affirmative procedure.
The provisions in Schedule 3 are also subject to a form of ‘sunset clause’. This requires the Secretary of State to prepare a report to Parliament on the operation of the drugs provisions, and the scheme can only continue beyond 30 months if both Houses pass a resolution approving an order affirming the continuation of the legislation.
The provisions only relate to those JSA claimants who are required to meet the job seeking conditions (i.e. availability and actively seeking work, and having a jobseeker’s agreement), and ESA claimants in the work-related activity group. JSA claimants who do not have to satisfy the job seeking conditions (see clause 3), and ESA claimants in the ‘support group’, are not subject to the new requirements.
136 DrugScope press release, DrugScope responds to publication of Welfare Reform White Paper, 10 December 2008 137 Ibid.
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Schedule 3 inserts a new schedule A1 in the Jobseeker’s Act 1995 and a new schedule 1A (for ESA) in the Welfare Reform Act 2007. The two schedules closely mirror each other; the references below are to paragraphs in the new schedule A1 in the 1995 Act.
JSA claimants required to meet the job seeking conditions may be required to attend a meeting and answer questions about their use of drugs, whether it affects their chances of finding work, and any treatment they are receiving (paragraph 1(1)-(3)).
A claimant may be required to undertake a ‘substance-related assessment’, carried out by an approved person, if there are reasonable grounds for suspecting they have a drug problem that is affecting their prospects of finding work (paragraph 2). An approved person would be someone with the necessary qualifications or expertise, for example a doctor or registered nurse.138
A claimant who fails to take part in a substance-related assessment, without good cause, can be required to undertake one or more drugs tests to ascertain whether there is or has been any drug in the person’s body, to help determine whether they are dependent on, or have a propensity to misuse, drugs (paragraph 3). A person is regarded as having taken part in a test if they provided a ‘permissible sample’ in accordance with instructions given by an approved person. A ‘permissible sample’ means a urine sample, or, ‘such sample (other than an intimate sample) as may be prescribed in relation to that drug’ (paragraph 3(7)). ‘Intimate sample’ means:139
(a) a sample of blood, semen or any other tissue fluid or pubic hair;
(b) a dental impression;
(c) a swab taken from any part of a person’s genitals (including pubic hair) or from a person’s body orifice other than the mouth.
Paragraph 4 provides that information provided by a claimant in relation to drugs cannot be used in criminal proceedings against them, unless they, or someone acting on their behalf, choose to refer to it. This does not apply to offences involving misrepresentation under section 112 of the Social Security Administration Act 1992, or to offences under section 5 of the Perjury Act 1911 and its Scottish equivalent.
Paragraph 5 allows the Secretary of State to make regulations authorising information to be obtained from the police, the probation service or other ‘prescribed body’, to check the accuracy of information provided by claimants. Regulations may also provide for the Secretary of State to share this information with others.
Paragraph 6 contains regulation-making powers to require compliance with a rehabilitation plan only if, as a result of a substance-related assessment, the Secretary of State is satisfied that:
• The person is dependent on, or has a propensity to misuse, any drug;
138 Explanatory Notes, para 302 139 Paragraph 3(8)
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• Their condition requires and may be susceptible to treatment; and • It is a factor affecting their prospects of obtaining or remaining in work.
The person must, during the period when the rehabilitation plan is in place, submit to the treatment specified in the plan, and take part in interviews, assessments and other steps as may be specified. Treatment must be by, or under the direction of, a person having the necessary qualifications or experience.
Paragraph 6(6) provides powers to make regulations which:
• Suspend the job seeking conditions and any existing jobseeker’s agreement, while a rehabilitation plan is in place; • Provide that a person is not required to submit to certain types of treatment without their consent; • Provide for the agreement, form, signature, review, variation and revocation of rehabilitation plans; and • Require claimants to provide information about their compliance with the plan.
Sub-paragraph (7) provides for JSA to be referred to as a ‘treatment allowance’ where a claimant is required to comply with as rehabilitation plan.
Paragraph 7 covers sanctions. Regulations will prescribe the sanctions to apply to claimants who, without good cause, fail to comply with the requirements to attend an interview and answer questions, take part in substance-related assessment, take part in a drug test, or comply with a rehabilitation plan. The regulations will set out what constitutes ‘good cause’. In line with current sanctions rules, sanctions may last for up to 26 weeks.140 There is to be provision for hardship payments (sub-paragraph (4)).
For claimants of Employment and Support Allowance, the sanction is not complete withdrawal of benefit, but a reduction in benefit, by an amount and for a period of time to be prescribed in regulations (paragraph 7 of new Schedule 1A of the Welfare Reform Act 2007).
Paragraph 8 defines ‘drug’ as a controlled drug as defined by section 2 of the Misuse of Drugs Act 1971, and also provides a power to set out in regulations which drugs the provisions in the new Schedule will apply to.
As noted above, there are also provisions to allow the Secretary of State to make regulations extending the regime to those who misuse alcohol (paragraph 9).
140 Explanatory Notes, para 308
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F. Contribution conditions for JSA and ESA
1. Background
For the purposes of determining entitlement to contribution-based Jobseeker’s Allowance, the Department for Work and Pensions looks at a claimant's National Insurance contribution record for the two complete tax years immediately before the benefit year in which the claim is made. ‘Benefit years’ run from the first Sunday in January to the end of the first Saturday in the following January.141 Both the following contribution conditions need to be met in order for a claimant to qualify for contribution-based JSA:
• in at least one of the relevant contribution years (i.e. the two complete tax years before the benefit year in which the claim was made) the claimant must actually have paid Class 1 contributions142 with an earnings factor of at least 25 times the lower earnings limit for that year.
• in each of the two relevant contribution years the claimant must have paid or been credited with an earnings factor of at least 50 times the lower earnings limit for that year.143
An ‘earnings factor’ is simply the amount of earnings on which a claimant has made Class 1 contributions. Credited contributions can count towards the second contribution requirement but not the first.
For contributory Employment and Support Allowance, the contribution conditions are:
• In one of the last three relevant contribution years, the claimant must have paid Class 1 or Class 2 contributions on earnings equivalent to 25 times the lower earnings limit.
• In each of the last two relevant contribution years, the claimant had Class 1 or Class 2 contributions or credits equivalent to 50 times the lower earnings limit.144
For contributory ESA however, the first contribution condition can be relaxed for certain groups including:
• People who have been entitled to Carer’s Allowance • Low-paid disabled workers who were entitled to the disability or severe disability element of Working Tax Credit • Previous ESA claimants • People who were in prison but whose conviction was subsequently quashed
141 Section 21(6) Social Security Contribution and Benefits Act 1992 142 Self-employed (Class 2 and Class 4) contributions do not count towards contribution-based JSA. For further information, see Library Standard Note SN/SP/547, Jobseeker’s Allowance for the self-employed 143 Section 2 Jobseekers Act 1995 144 Schedule 1 Part 1 Welfare Reform Act 2007
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There are also special ‘youth rules’ which allow people who have had a limited capability for work since early in life to qualify for contributory ESA without having to satisfy the National Insurance contribution conditions.145
The ESA rules essentially carry forward the rules for Incapacity Benefit, which ESA replaced for new claims from 27 October 2008.
The contribution conditions for unemployment benefits and for benefits for people unable to work because of sickness or disability have not always been as set out above.
JSA replaced Unemployment Benefit in October 1996. The same contribution conditions existed under Unemployment Benefit from 1988. They had been tightened up significantly by the Social Security Act 1988. Before that, the first contribution could be satisfied in any tax year, and the second one had to be fulfilled only in the last complete tax year, not the last two.
Michael Portillo, then a junior Minister at the Department for Health and Social Security, explained during Committee Stage of the Social Security Bill 1987/88 that the changes had to be made because "present conditions [had] become too easy to satisfy ":
The present conditions have become too easy to satisfy. One of the crucial factors in that change is that the lower earnings limit, which has been increased in line with prices, has been reducing as a proportion of earnings. For example, the contributions required to meet the first condition could be made by someone on average male earnings on the basis of only five weeks' work. A man could fulfil the second condition on the basis of contributions paid on only nine weeks' work. Even after the changes proposed in the Bill a man on average earnings could fulfil the second condition on the basis of nine weeks' work in each of two years. The requirement is still fairly modest.146
The present Government tightened up the contribution conditions for Incapacity Benefit (IB) in 2001. Prior to April 2001, the first contribution condition for all IB claimants was that they must have paid contributions equivalent to 25 times the lower earnings limit in any one tax year. The October 1998 Green Paper, A new contract for welfare: support for disabled people, had proposed that for IB purposes only contributions paid in the last two tax years should count:
Incapacity Benefit and contribution-based Jobseeker’s Allowance are both benefits for people of working age who have paid National Insurance contributions and who then become unable to work because of incapacity or unemployment respectively. Entitlement to these benefits should fairly reflect people’s work and contribution records. We believe it is right that the conditions of entitlement for contributory benefits for people of working age should be broadly similar and that those who qualify for these benefits should do so on the basis of recent work and contributions.
145 For further details see DWP ESA Technical factsheet T11 – Young People 146 SC Deb (E) 3 December 1987 c 396
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We therefore propose to change the Incapacity Benefit contribution conditions to require the claimant to have actually paid a minimum amount of contributions in one of the last two tax years. This will bring Incapacity Benefit more into line with contribution-based Jobseeker’s Allowance. At present, people who have been unemployed and getting National Insurance contribution credits can qualify for Incapacity Benefit, as long as they have paid contributions at some point in their working life - however long ago this was.147
The subsequent Welfare Reform and Pensions Bill 1998-99 proposed a reduction to two years. The extension to three years was a Government concession made in response to defeats in the House of Lords.148
2. The Green and White Paper proposals
The July 2008 Green Paper, No one written off: reforming welfare to reward responsibility149, proposed further changes to the contribution conditions for JSA and ESA:
6.23 At the moment, people can qualify for contributory IB and JSA by working for as little as four weeks. We propose to strengthen the link between claiming contributory benefits and periods of recent work by:
• reducing the number of contribution years in which a claimant can qualify for ESA from three years to two. This will ensure that qualification for ESA is based on recent work. This measure simplifies the benefits system by bringing this aspect of the ESA rules into line with those for JSA;
• modernising the qualifying contributions period for benefit so that people can qualify only after a reasonable period of work. In future, our reforms will ensure that people have to work for around six months before they can qualify for contributory ESA and JSA.
6.24 We will retain existing protections that allow disadvantaged groups such as carers and young disabled people to qualify for ESA. Other qualifying conditions for contributory ESA, for example those that apply to self-employed people, will remain unchanged. People who no longer qualify for contributory ESA under the new arrangements will be able to apply, instead, for income-related ESA.
In its response to the Green Paper, the Social Security Advisory Committee said that it was concerned that the proposal to reform contribution conditions ‘may signal an aspiration to further erode the principle of national insurance’.150
The Child Poverty Action Group commented:
147 Cm 4130, paras 27-28 148 For further details see Library Standard Note SN/SP/286, Major amendments to the Welfare Reform and Pensions Bill 149 Cm 7363 150 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee, para 9.4
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The proposals on reforming the contribution conditions will reduce the number of claimants who qualify for contributory ESA and JSA. Those who find they no longer qualify will either have reduced income or be reliant on the means-tested element of either benefit. The proposals will therefore increase complexity and have a negative effect on child poverty.151
Respondents to the Green Paper also expressed concern about the impact of changes on individual incomes.152
The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future153, confirmed that the Government intended to proceed with the changes:
From 2010, new Employment and Support Allowance and Jobseeker’s Allowance claimants will only qualify for contributory Employment and Support Allowance or Jobseeker’s Allowance if they have paid contributions for a minimum of 26 weeks. Payment of these contributions will need to have taken place in the last two tax years. We will retain the existing protections and exemptions for self- employed people and vulnerable groups.154
The Government estimates that the changes to contribution conditions would lead to approximately 20,000 fewer claiming ESA and 5,000 fewer claiming JSA by 2013-14.155
3. Clauses 10 and 11
Clause 10 amends the Jobseekers Act 1995 so that the first contribution condition for JSA is met by the claimant having paid, or being treated as having paid, at least 26 weeks of Class 1 contributions on relevant earnings at the base year’s lower earnings limit (£90 a week in 2008-09) in one of the last two tax years before the claim. Regulations (to be subject to the negative procedure) will set out how ‘relevant earnings’ are to be calculated.
Subsection (5) includes a further regulation-making power to enable the first contribution condition to be relaxed for certain groups.
Clause 11 amends the Welfare Reform Act 2007 to ensure that the first contribution condition for Employment and Support Allowance is met by the claimant having paid, or being treated as having paid, at least 26 weeks of Class 1 or Class 2 contributions on relevant earnings at the base year’s lower earnings limit (£90 a week in 2008-09). Contributions must have been paid in respect of one of the last two complete tax years prior to the claim, rather than three as at present. This brings the ESA contribution conditions in line with those for JSA.
151 CPAG, No one written off: Response to the July 2008 welfare reform Green Paper, October 2008, p28 152 Welfare Reform Bill 2009 Impact Assessment, para 375 153 Cm 7506 154 Para 2.32 155 Ibid. p65
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Again, the rules regarding calculation of ‘relevant earnings’ will be set out in regulations.
The clause also amends existing regulation-making powers in the 2007 Act to allow for further categories of claimant to satisfy the first contribution condition for ESA by alternative criteria. At present, special rules apply to, among others, carers and young disabled people. The Government has said that it will retain these existing provisions for disadvantaged groups. The Explanatory Notes state that partners of overseas service personnel might also be covered by special rules.156
G. Adult Dependency Increases with Maternity Allowance and Carer’s Allowance
1. Background
Maternity Allowance is an income maintenance benefit paid to women who have been employed or self-employed but who do not qualify for Statutory Maternity Pay.
Carer’s Allowance is an income maintenance benefit payable to certain people who provide at least 35 hours of care a week to severely disabled person.
Adult Dependency Increases (ADIs) are additions that may be payable with certain contributory and non-contributory benefits if another adult is financially ‘dependent’ on the recipient. They are a long standing feature of the benefits system, dating back to the introduction of the National Insurance scheme in 1948. ADIs are currently payable along with:
• Retirement Pension • Incapacity Benefit • Severe Disablement Allowance • Maternity Allowance • Carer’s Allowance
The original justification for ADIs reflected certain assumptions about family life; it was assumed that families were likely to comprise a single male breadwinner with a non- working housewife or housekeeper unable to acquire entitlement to benefits in her own right.157 This view has increasingly been recognised as outdated, and ADIs restricted to a narrower range of benefits. Contribution-based JSA, for example, which was introduced in 1996, does not include ADIs; neither were they carried over from Incapacity Benefit to Employment and Support Allowance. The Pensions Act 2007 also provides for the phasing out of ADIs payable with the Retirement Pension between 2010 and 2020.158
156 Para 100 157 See Wikeley, Ogus and Barendt’s The Law of Social Security, 5th edition, 2002, p248 158 For further information see Library Research Paper 07/05, The Pensions Bill 2006-07
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The abolition of ADIs in Carer’s Allowance was announced in the 2006 Pre-Budget Report as one of a number of measures to simplify the benefits system and reduce the scope for error.159
The Welfare Reform Bill 2009 Impact Assessment justifies the abolition of ADIs with Maternity Allowance and Carer’s Allowance on the following grounds:
• ADIs are based on outdated assumptions about dependency and have little relevance to today’s society
• The change is aligned with the planned phased abolition of ADIs in the Retirement Pension, and will bring greater uniformity across benefits
• As a step towards a simpler benefits system which is easier to understand and operate, and helps reduce error
• To remove disincentives to seek work or increase earnings160
Under the provisions in the Bill ADIs would not be payable for new claims for Maternity Allowance or Carer’s Allowance on or after 6 April 2010. Existing ADIs would continue, but any ADIs still in payment with Carer’s Allowance awards at 6 April 2020 would cease.161
Only around 200 ADIs are awarded with Maternity Allowance claims each year. Total expenditure on ADIs with Maternity Allowance in 2008-09 is forecast at around £300,000.162
Currently, around 17,400 awards of Carer’s Allowance (about 4 per cent of all awards) include an ADI. Around 2,400 new claims each year include an ADI.163
While some households will lose out as a result of the abolition of ADIs, the Department emphasises that additional support for lower income households will still be available via means-tested benefits. In the case of Carer’s Allowance, the Department notes that around half of new claimants awarded ADIs also receive Income Support or Pension Credits and would therefore see no change in their total weekly benefit.164 The Government argues that the negative impact of abolishing ADIs for Carer’s Allowance can be mitigated by ensuring adequate information is available in the run up to the change and promoting greater awareness of Income Support and Pension Credit.165
159 Cm 6984, December 2006, para 4.62 160 pp72-79 161 Welfare Reform Bill 2009 Impact Assessment, para 449 162 Ibid. para 423 163 Ibid. para 455 164 Ibid. para 455 165 Ibid. para 461
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The Government estimates that the net annual saving from abolishing ADIs for Carer’s Allowance, taking into account compensating increases in means-tested benefits, would be £3 million in 2010-11, rising to £17 million in 2014-15.166
2. Clause 12
Clause 12 repeals sections 82 and 90 of the Social Security Contributions and Benefits Act 1992, which make provision for Adult Dependency Increases (ADIs) to be paid with Maternity Allowance and Carer’s Allowance respectively. ADIs are abolished for all new claims for these benefits from 6 April 2010. This is also when ADIs will cease to be available for people making new claims for state pensions.
Existing ADIs for claimants getting Carer’s Allowance will be phased out between 2010 and 2020; again this is in line with the provisions for state pensions. Corresponding arrangements are not necessary for Maternity Allowance since it is a short-term benefit.
H. The Social Fund
On 1 December 2008 the Government published a consultation document, The Social Fund: A new approach, which sought views on, among other things, introducing legislation to allow credit unions and similar organisations to take over the provision of Social Fund loans to persons in their areas, under contract from the Department for Work and Pensions. The Bill makes provision to implement the proposal for ‘external provider social loans’. Other provisions in the Bill would make it easier to make advance payments of benefit to reduce the circumstances where people need to apply for Crisis Loans; this was also proposed in the consultation document.
This section gives general background to the Social Fund and looks at the current proposals and initial reactions to them.
1. Background
The Social Fund was fully introduced from April 1988 by the Social Security Act 1986. Part of it covers payments including the Sure Start Maternity Grant, Funeral Payments, Winter Fuel Payments and Cold Weather Payments, which are paid according to provisions set down in regulations. The other part is the discretionary Social Fund, which is cash limited and provides grants and loans.
The discretionary Social Fund provides:
• Community Care Grants • Budgeting Loans; and • Crisis Loans
166 Ibid. p80
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Community Care Grants (CCGs) are non-repayable grants which are available only to people in receipt of Income Support, income-based Jobseeker’s Allowance or Pension Credit. They are intended to provide help in certain circumstances, including:
• Where a person needs help to establish themselves in the community after leaving institutional or residential care, or to remain in the community rather than go into care; • Where a person or family is under “exceptional pressure”, for example following family breakdown, or and emergency or disaster; and • Certain travel expenses, for example to visit a sick person or attend a relative’s funeral.
Budgeting Loans (BLs) are intended to provide help with occasional or “lumpy” items of expenditure such as furniture and household equipment, clothing and footwear, rent in advance, removal expenses, travelling expenses and expenses associated with seeking or re-entering work. Loans are interest free and are only available to people who have been receiving Income Support, income-based JSA or Pension Credit for at least 26 weeks.
Crisis Loans (CLs) are available to people faced with an unforeseen emergency or disaster which leaves them without funds and can be awarded regardless of whether the family is in receipt of any benefit. A CL is only made if the applicant can show that they or their family would otherwise face “serious damage or serious risk to their health or safety”. Loans can only be made if the applicant has insufficient resources to meet immediate short-term needs.
Applications for Community Care Grants, Budgeting Loans and Crisis Loans are decided by DWP decision makers who must exercise their discretion within the constraints of the legislation and legally-binding Directions issued by the Secretary of State. They must also take account of Guidance issued by the Secretary of State, although this is not legally binding. In addition, local guidance (also not legally binding) is issued to decision makers.
For Community Care Grants and Crisis Loans, the decision maker exercises individual discretion when deciding applications. In Budgeting Loan cases however, the decision making has since 1999 been based on legally-binding, factual criteria rather then discretion.
Social Fund decision makers must work within the constraints of their local budget. Every year Jobcentre Plus districts are given one budget to pay for Budgeting Loans and Crisis Loans, and another budget for Community Care Grants.167
A further feature which distinguishes the discretionary Social Fund from mainstream social security is that there is no right of appeal to an independent tribunal for dissatisfied
167 A single national loans budget is however to be introduced from 1 April 2009, to ensure continued geographical constituency of outcome for Budgeting Loan applicants.
66 RESEARCH PAPER 09/08 applicants. There is however an internal review system and a right to request a further review by a Social Fund inspector (SFI) appointed by the Social Fund Commissioner.
The following table168 gives summary statistics for the discretionary Social Fund for 2006/07 (CCG = Community Care Grants; BL = Budgeting Loans; CL = Crisis Loans).
CCG BL CL Applications received (000) 543 1,552 2,105 Initial decisions (000) 535 1,556 2,088 Awards (000) 247 1,168 1,431 Awards as % of initial 46.1 75.1 68.5 decisions Initial refusals (000) 288 352 596 Gross expenditure (£m) 138.9 511.0 121.2 Recoveries (£m) N/A 463.6 66.5 Net expenditure (£m) 138.9 47.4 54.7 Average award (£) 458 433 82
The discretionary Social Fund has been the subject of criticism ever since its inception. In March 2001 the Social Security Select Committee published a highly critical report on the Social Fund.169 In October 2002 the National Association of Citizens Advice Bureaux (NACAB) published a report based on its clients’ experiences of the Social Fund, Unfair and underfunded: CAB evidence on what’s wrong with the Social Fund. Some of the problems identified and criticisms made in these and other reports are as follows:
• The insufficiency of the overall Social Fund budget • The ‘postcode and calendar lottery’ faced by applicants, due to the cash-limited nature of the Social fund • Because the fund is cash-limited, applicants for Community Care Grants who have legitimate and pressing needs can still be refused if they deemed to have ‘insufficient priority’ • Many people – particularly those of working age – are unaware of Community Care Grants and do not understand how the different elements of the Social Fund operate; • The categories of need covered by the Social Fund do not provide for all potential situations. As a result, people may find that the only way to secure a grant or loan is to apply for items which are given priority (such as new cookers or beds) but which they do not in fact need • The 26 week qualification period for Budgeting Loans excludes many people with legitimate needs
168 Source: Annual Report by the Secretary of State for Work and Pensions on the Social Fund 2007/2008, Cm 7483, October 2008, Table 1 169 The Social Fund, HC 232 2000-01
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• The restriction of Budgeting Loans and Community Care Grants to those on income-related benefits means that people with incomes just above this level who have may have pressing needs are excluded • A refusal of help from the Social Fund can exacerbate people’s problems, or force them to turn to unsuitable and/or expensive sources of credit • A significant proportion of Crisis Loans (43 per cent of applications in 2007-08170) are for ‘alignment’, that is to tide people over who are waiting for benefits to be paid • Restrictive rules regarding repayment • Repayments deducted from income-related benefits can leave applicants in severe hardship • There is unmet need not only because of budget constraints but also because of ‘informal refusals’ where would-be applicants are allegedly discouraged. Lack of information and poor expectations can also discourage applicants • Inadequate information and advice for claimants from DWP staff • Difficulties in making applications for Crisis Loans • Unacceptably long processing times for applications for some payments • Poor standards of decision making
On 16 November 2006 the Treasury Committee published a report, Financial inclusion: credit, savings, advice and insurance.171 The Committee noted that financial exclusion '...blights the lives of many millions of people, increases the costs they bear for basic services, makes them vulnerable to illegal or high-costing lending, and reinforces social exclusion'.172 Government action was therefore needed to improve access to affordable credit, promote affordable 'savings for all', and ensure access to good financial advice. The Committee acknowledged the role of the Social Fund in helping families on low incomes access funds for one-off items of expenditure, and improvements announced by the Government, but noted that organisations and pressure groups thought that further reform was necessary. It concluded:
The Social Fund plays a vital role in helping those on low incomes to access affordable loans to meet one-off items of expenditure. However, we note the comments of the relevant Minister in evidence to us that the "Social Fund does not punch its weight in terms of the financial resources the Government puts behind it". The funding for the Social Fund should more clearly match the needs of those on low incomes. We have received evidence to suggest that the Social Fund is failing in its mission to assist those most in need of credit. It is essential that the Social Fund becomes more fully integrated with other provision of affordable credit for people on low incomes. Given that many people rejected by the Social Fund turn to unlicensed lenders, we recommend that the Government instigate arrangements to refer unsuccessful applicants to local credit unions and CDFIs where appropriate or other providers of affordable credit. We note calls for eligibility for the Social Fund to be expanded and believe that the Government should keep the funding of Social Fund lending activities under review, in particular if the intention to transfer some recipients of income support and
170 HC Deb 17 July 2008 c637-638w 171 HC 848 2005-06 172 ibid. p3
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jobseeker's allowance to the tax credit system goes ahead. The DWP needs to instigate an open debate on reform of the Social Fund to ensure that the Social Fund can make a better contribution to improving access to affordable credit and become a more positive source of assistance for people on low incomes. We recommend that the DWP conduct a review to explore how the Social Fund's contact with the financially excluded could be made more productive in order to make a longer term difference to the capabilities and inclusion of users.173
A further critical report on the Social Fund was published by the Work and Pensions Committee on 23 May 2007.174 The Committee noted the Treasury Committee’s call for an ‘open debate’ on reform of the Social Fund and added:
It is our impression that Social Fund policy is currently in limbo, pending wider Government work on financial inclusion. Given the severe operational and resource issues which we have described in this report, we recommend that the DWP must now address the performance of the Fund as a matter of urgency, and launch a formal consultation exercise on how it can be improved.175
2. The current proposals
In Financial Inclusion: an action plan for 2008-11, the Treasury announced that the Government was considering involving private and voluntary sector organisations in the delivery of a reformed Social Fund scheme.176 It announced that it had commissioned a ‘financial and practical feasibility study’ into whether the private and third sectors could be brought into partnership with the Government to deliver a reformed Budgeting Loan scheme. The study, by KPMG, would look at, among other things:
…whether it would be feasible to develop a public private partnership model whereby sufficient external capital would be invested to increase capacity for lending to financially excluded people beyond that currently provided by the Social Fund Budgeting Loan Scheme
The KPMG report, Social Fund Reform Feasibility Study, was submitted on 1 October 2008 and is available at the DWP website.177 The study found however little enthusiasm among ‘market participants’, who indicated that in the current economic climate they would not wish to invest in a scheme lending to the ‘deep sub-prime’ sector:
The recent economic environment has shown that the appetite for the funding of unsecured retail lending in the UK market has abated significantly since the start of the credit crunch in July 2007. This effect has been felt most severely by the sub-prime lenders in the market and has resulted in a number of lenders either withdrawing from, or pricing themselves out of the market.
In our interviews of market participants, all said that in the current economic environment, they would not wish to fund a model lending to a deep sub-prime
173 Ibid. para 81 174 The Social Fund, HC 464 2006-07 175 ibid. para 104; original emphasis 176 Financial inclusion: an action plan for 2008-11, 6 December 2008 177 Social Fund reform feasibility study
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sector. Moreover, if the liquidity crisis currently being experienced were to ease, they would still expect any funding to be done on purely commercial rates with the highest risk of losses being absorbed by a subordinated funder – which they saw as a possible role for Government. Since our field work was completed in early summer 2008 the risk appetite of banks to take exposure to non prime assets has shrunk further making the prospect of bank funding on commercially acceptable terms more remote.
Given the lack of track record on lending in this way to this sector of the sub- prime market, a pilot demonstration programme would be essential to achieve the level of reassurance the commercial lenders would need on the ability to earn a commercial return comparable to those available in the market today – though this would not, of course, guarantee involvement.
To be able to obtain any detailed, reliable information on payment patterns and credit risk expected under this model, the pilot scheme would have to replicate the full scale model. To do this, funding would be needed to build the infrastructure and supply the capital to lend. Based on our discussions with the market participants, it would be difficult to attract funding from the private sector for this pilot. We understand that primary legislation changes may also be needed to run a pilot scheme.178
On 1 December 2008 the Department for Work and Pensions published a consultation paper, The Social Fund: A new approach.179 In his foreword to the paper, the Secretary of State said that the Government had been looking at reform of the Social Fund within the context of wider concerns about financial exclusion and ‘loan sharks who prey on the most vulnerable’. The Social Fund protected many against very high interest charges they might otherwise have to pay, but did not address the underlying problems of managing on a low budget and that access to the Fund was limited when someone takes a job. His foreword continued:
So we are proposing three main areas where we believe the social fund should be improved:
• We should contract with other organisations to offer credit to our customers. Instead of relying on loans from us, people would be dealing with a local organisation which, as well as providing credit, can also offer them advice and other financial services that will continue to be available after they have left benefit and returned to work.
• People needing immediate help before they qualify for their first normal payment of benefit should be offered an advance of that benefit, rather like a new employee receiving an advance of salary before the end of their first month in work. This would replace the current practice of requiring these customers to apply for crisis loans on the grounds that their health or safety was at risk
178 Ibid. p1 179 The Social Fund: A new approach
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• Instead of allowing customers to receive budgeting loans after they have been on benefit for six months, or crisis loans in an emergency, we are suggesting a single credit facility which people can turn to as soon as they claim benefit. A single loans system could also cater for some of the needs now met by community care grants. We want to look at how community care grants might be focused more clearly on our vulnerable customers.180
The consultation paper stated:
2.3 The social fund provides credit free of interest charges; credit unions typically charge interest at rates varying from 12.68% to 26.8% APR; while home credit companies can charge interest as high as 246.5% APR. We would like to expand access to affordable loans. As explained in section one, there are several initiatives in hand to do this. However, we would also like to build on the social fund as a further step in this direction.
2.4 In its present form the social fund is limited in scope as a basis on which to expand help for the financially excluded. It has several drawbacks:
• It only offers credit to those out of work. • It is too passive, offering loans in times of trouble but no advice on how to manage money • It does not offer an account or the means to save money
We want to link social fund customers to a wider, more active set of financial services. We propose doing so by working in partnership with those organisations, such as credit unions, that already work to provide these services to people on low incomes.181
It argued that while the KPMG study had concluded there was ‘no suitable national partner in the current economic climate’, that need not stop DWP working with the third sector ‘to offer financial services to our customers in those areas where particular credit unions have achieved sufficient size and security to deal with a large number of clients’:
3.3 We are therefore seeking views on the merits of taking legislative powers to allow some credit unions, and similar organisations from the third sector, to take over the provision of credit to social fund customers in their areas. As well as offering affordable loans, our new partners could also offer a range of other services, such as savings accounts and financial advice, under contract to DWP. To fund the cost of these extra services, we are proposing that the credit offered under these arrangements could attract an interest charge of 1 - 2% per month - the same criterion which applies to Credit Unions.
3.4 The benefits of the proposed reform would be:
180 Ibid. pp2-3 181 Ibid. p6
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• access to a wider range of financial services for those on the lowest incomes which would not end when they found work and improved their circumstances;
• Financial and budgeting advice provided by people who have a wealth of experience in offering this type of support;
• a further stimulus to the growth of the third sector through working with a new group of customers in partnership with government.
3.5 There are risks associated with lending money to those who are hard pressed to manage on a small budget. To reduce these risks substantially, we would offer our external partners the facility of recovering any money lent under the proposed reform by deductions from their clients’ benefit payments. Over 90 % of social fund loans are recovered in this way. Moreover, unlike the Eligible Loans Deduction Scheme, credit unions would be able to use this facility as soon as the loan had been made, rather than waiting until the borrower defaulted on repayments. In using the proposed powers, we would take especial care to ensure our most vulnerable customers do not lose out. The aim of this reform is to use existing resources to provide a better deal for financially excluded people. There is no question of reducing the amount of credit available."
3.6 We are anxious to make speedy progress, including making legislative changes at the earliest opportunity, to improve the help we provide for our customers. We know that many families are struggling and understand how important it is for them to have improved access to credit and financial advice. This is why we are seeking your views over a shorter period than we would normally allow. We will continue to discuss the detail of how these powers might be used in the coming months.182
The proposal to allow third sector organisations to charge interest on loans attracted particular controversy, with media reports in December suggesting that the Government had been ‘forced into a U-turn’.183
The DWP consultation paper asked for responses by 23 December. To date, few organisations have published responses to the consultation; those that have however have been critical of the way the consultation was conducted, its timing, and the short period given for responses.184 While there appears to be general support for the proposals to offer advance payments of benefit instead of Crisis Loans, and to abolish the 26 week qualifying period for Budgeting Loans, there is unease about some of the other suggestions. Citizens Advice comments:
While we understand the imperative to make at least enabling provision for social fund reform in the forthcoming welfare reform bill, we are extremely disappointed in the consultation process. The three week consultation period is not only at
182 Ibid. pp7-8 183 See for Example BBC News, ‘No plans’ for state loan charges, 21 December 2008; ‘Government U-turn on plans to charge interest on loans for poorer families’, The Guardian, 21 December 2008 184 See for example Disability Alliance, R62: Response to the Social Fund: A new approach, 19 December 2008; Citizens Advice response to The Social Fund: A new approach, 6 January 2009; Carers UK response to The Social Fund: A new approach, December 2008
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odds with Government guidelines on consultations, but is completely out of proportion with the significance of the changes being suggested. These proposals represent a fundamental and radical shift in the principles behind the Social Fund, and we find the paper hurried and unclear, and lacking in appropriate thought and analysis. There is a wealth of evidence and literature on possible improvements to the fund, but there is no sign that any of it has been taken into account in the review.
Our greatest concern is that these proposals ignore the fundamental principle which forms the rationale for the Social Fund. State benefits are intended to cover the basic costs of daily living, and it has been accepted that further money should be made available for those living on benefits, to cover capital payments, arising either from the need to buy single ‘lumpy’ items, or to cover other emergency needs. The proposals in the review would change this principle from providing a fund to meet urgent need, to a provision of credit based on market principles and ability to pay.
The proposal to amalgamate crisis loans and budgeting loans into a single type of interest-bearing loan, together with the suggestion that grants will be more tightly focused – i.e. eligibility is likely to be reduced – represents a progression away from the original intention of the fund which we find wholly inappropriate.
A key problem with current social fund loans is the lack of flexibility and choice claimants have in negotiating repayments. This makes interest-free government loans much less attractive than other loans, which attract significant amounts of interest but over which borrowers have more control. The Government should look seriously at how it could increase choice and flexibility in loan repayments, including offering a choice of higher weekly repayment rates with no interest charged, or lower weekly repayments attracting a small amount of interest.
We are not opposed to the principle of delivering an equivalent to the Social Fund through third party providers, but we strongly recommend that the details of any such scheme must be designed to protect those on the lowest incomes from unmanageable debt. We do not support the proposal to allow interest to be charged at a maximum rate of 26.8% APR. If some loans are to attract interest, these rates must be set at levels which are affordable for the target borrowers, and it is vital that some provision be retained for the very poorest customers, in the form of grants and/or interest-free loans – even if this function stays with the DWP.
We have further concerns about the very sketchy details of access and delivery as outlined in this review…185
Other concerns voiced by Citizens Advice, Carers UK and the Disability Alliance in relation the proposal to contract with third sector organisations include:
• The danger that it could lead to an inconsistent and patchy service across the country (a ‘postcode lottery’).
185 Ibid.
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• The possible conflict of interest when a single body is awarding loans, providing financial advice and providing other financial services
• Issues regarding decisions and appeals
• How contractors would be monitored
3. Clauses 13-18
Clause 13 inserts three new sections into the Social Security Contributions and Benefits Act 1992. New section 140ZA allows the Secretary of State, with the agreement of the Treasury, to make ‘arrangements’ with external providers to make loans to people receiving prescribed benefits or having prescribed needs. Arrangements may relate to particular areas, or across the whole of Great Britain. Payments are to be referred to as ‘external provider social loans’.
‘Arrangements’ may cover, among other things:
• Powers for the Secretary of State to make payments to lenders, both for making loans and for other expenses of the lender • Categories of person to whom a loan may not be made • Criteria to be used by the lender when deciding whether to make a loan • Circumstances in which a loan may or may not be made • The manner and terms of repayment • Account keeping by the lender • Information required by the Secretary of State • Provision of guidance about budgeting for prospective borrowers • The circumstances in which arrangements may be terminated • Payments by lenders to the Secretary of State when arrangements cease186
Subsections (7) and (8) provide for certain payments to be made to and from the Social Fund.
New section 140ZB allows the right to repayment of loans to be transferred between the Secretary of State and an external provider, and vice versa.
New section 140ZC requires the Secretary of State to publish a report annually on the operation of arrangements under section 140ZA.
Clause 13(2) inserts new section 78A in the Social Security Administration Act 1992. The new section contains a regulation-making power to enable the Secretary of State to collect repayments due to an external provider, by deductions from benefits or by other methods, and to pay these over to the lender. The regulations are subject to the negative procedure.
186 Section 140ZA(4)-(6)
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The commentary on clause 13 in the Welfare Reform Bill 2009 Delegated Powers Memorandum indicates that the Government intends to ‘develop the detail of the loans scheme’ after assessing the results from the recent consultation and following ‘further discussion with interested groups and potential lenders’.187
Clause 14 amends the Social Security Contributions and Benefits Act 1992 to enable access to Crisis Loans of Budgeting Loans to be restricted in areas where ‘external provider social loans’ are available.
Clause 15 covers the exchange of information between the Secretary of State and external providers, and for the use and disclosure of such information, including provision for a criminal offence for unauthorised disclosure.
Clauses 16 and 17 make changes to the existing provisions governing Social Fund Community Care Grants. These changes were not detailed in the recent consultation paper.
The Explanatory Notes explain the purpose of the clause:
Under the existing law, successful applicants for community care grant may be provided with cash to obtain the goods or services that the award covers. At the discretion of the appropriate officer, a payment may be made to a third party to provide the goods or services. These amendments to the Social Security Contributions and Benefits Act 1992, taken with those in clause 17, enable the Secretary of State to require that, where the goods or services are covered by arrangements the Secretary of State has made with a supplier, the award made must relate to specified goods or services and the payment would be made to the supplier. It is expected that these arrangements will involve the supply of white goods and furniture at a discounted rate.188
Clause 17 relates to reviews of decisions where good and services have been awarded under the provisions in clause 16. Subsections (1) and (2) provide for the right to apply for a review is restricted in respect of an award of goods or services. Regulations (to be subject to the negative procedure) will provide for exceptions in certain cases.189
Clause 17 also contains provisions relating to the exchange of information between the Secretary of State and suppliers of goods and services. The provisions here are similar to those in clause 15.
Clause 18 implements the proposal in the Social Fund consultation paper to reduce pressure on the Crisis Loan system by extending existing provisions for making and recovering payments of benefits on account.
Clause 18(2) replaces existing provisions in the Social Security Administration Act 1992 with new regulation-making powers to allow a payment of benefit on account where a
187 Para 151 188 Para 112 189 Welfare Reform Bill 2009 Delegated Powers Memorandum, para 160
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person would be in need if no payment on account were made, or where an award has been made but it is impracticable for the full amount of benefit to be paid immediately. The Explanatory Notes state:
The new subsection broadens the range of situations in which a payment on account may be made before an award has been made. It enables these payments to be made on a need basis rather than in situations where it is impracticable to make a claim, determine a claim or pay benefit. It provides the Secretary of State with improved flexibility to address short-term hardship. 190
The changes will allow payments on account to be made to individuals in need where a full payment of benefit would not be due in any event because of changes to the legislation relating to benefit paydays and periods of payment, notwithstanding any delay in making the claim or determining it.191
Regulations (to be subject to the negative procedure) will make provision for how payments on account are to be set against subsequent payments of benefit. They may also prescribe circumstances where payments on account will not be recoverable.
I. Benefit sanctions
1. Background
The provisions in the Bill extend ‘conditionality’ in the benefits system in a number of areas. The increasing emphasis on the use of benefit sanctions – i.e. temporary reductions or withdrawal of benefit – to influence claimants’ behaviour has been a major source of controversy in recent years. Concerns have been voiced about whether sanctions are in fact effective in influencing behaviour, particularly for those with multiple and complex problems. Others have argued that sanctions run the risk of worsening the position of the most vulnerable and reinforcing disadvantage.
The Social Security Advisory Committee’s Annual Report for 2005-2006 contained an occasional paper, Sanctions in the benefit system: Evidence review of JSA, IS and IB sanctions. The paper included observations about the impact of sanctions and the effect of hardship payments:
The impact of sanctions A consistent message has emerged in terms of the impact of JSA sanctions on individuals. Several reports have discussed the material hardship and emotional problems associated with sanctions (see for example Saunders et al., 2001 and Vincent, 1998), although there is still a great deal more to be known about the differential effects on claimants.
190 Para 115 191 Welfare Reform Bill 2009 Delegated Powers Memorandum, para 172. Further information on forthcoming changes to benefit payment rules under the ‘Periodicity and Payday Project’ can be found at the Jobcentre Plus website
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A number of qualitative studies have shown that JSA sanctions have a significant financial impact (as would be expected). However, the severity of the impact depended on a number of issues, including whether the claimant received timely information about entitlement to hardship funds, lived with their parents, had a partner and children or were able to find work immediately following the sanction (Saunders et al., 2001). Hardship payments replace much of the lost benefit but not all claimants are eligible and possibly some of those who are eligible do not claim. The impact on younger claimants who live with their parents may be mitigated by financial support from them, but this simply spreads the impacts of the sanction onto the family unit. The Department has little information on the longer-term impacts of sanctions. For example, there is currently no information on people who may become homeless as a result of a sanction or whether a sanction leads to long-term health impacts such as anxiety and depression.
In the recent quantitative survey, 68 percent of those sanctioned stated they had experienced financial hardship as a result of a sanction. The responses to the financial hardship included taking out a loan, becoming overdrawn at the bank and falling into arrears with bills. The financial hardship may also have implications for emotional well-being and relationships with family, especially if the family are supporting the sanctioned individual. In addition, for some claimants it makes it more difficult for them to search for work as they do not have money to pay for transport to interviews etc. The financial and other hardships caused by sanctions will have a negative impact on wider Government targets around child poverty and social inclusion.
Hardship payments are available for some sanctioned claimants to mitigate some of the financial impacts of the sanction. They are primarily available for those clients classed as vulnerable, such as pregnant claimants, those who are single and looking after a 16-17 year old and those with a long-term medical allowance. DWP data show that in 2004, 27 percent of sanctioned claimants applied for hardship payments and 91 percent of those applicants received payment. Overall, 25 percent of those sanctioned received a payment as a result. However, we do not know how many sanctioned claimants are eligible to apply and so the 25 percent figure tells us little about whether those eligible are applying and receiving the payments. We also do not know about claimants’ awareness and understanding of hardship payments. It is important that the payments are fully explained to all sanctioned claimants so that they are aware of the support that may be available to them and can then make an informed decision about whether to apply.192
The SSAC has for many years expressed concerns about increasing conditionality and the use of sanctions in the benefits system. In its response to the Green Paper, it voiced concern about sanctions aimed at behaviours not directly linked to the conditions of entitlement to benefit:
Linking desired behaviours (beyond well-established and generally reasonably well-understood labour market behaviours) to benefit receipt has a poor track
192 pp66-67
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record. For example, benefit sanctions for non-compliance with Community Orders, were found to be ineffective.193
The current Bill proposes extending sanctions in three separate sets of circumstances:
• Following a single conviction, penalty or caution for benefit fraud
• For those on JSA convicted or cautioned for violence against benefits staff
• For those on JSA, for failure to attend a mandatory interview
Further details and information on the background to these proposals are given below.
2. Clause 19: ‘one strike’ sanctions for benefit fraud
The Social Security Fraud Act 2001194 made provision for benefits to be withdrawn or reduced where a person is convicted twice of benefit offences within three years. The provisions were introduced following the recommendation by Lord Grabiner in his March 2001 report on The Informal Economy that the Government consider the option of ‘punishing persistent fraudsters by removing, or heavily reducing, their right to benefit for a specified period’.195 Further background is given in Library Research Paper 01/32.196 The detailed provisions are in the Social Security (Loss of Benefit) Regulations 2001.197 The Welfare Reform and Pensions Act 2007 extended the ‘two strikes’ period from three years to five years.198
The July 2008 Green Paper, No one written off: reforming welfare to reward responsibility199, while noting that benefit fraud was now at its lowest level ever recorded level, sought views on what further measures should be put in place:
Benefit fraud is theft of honest taxpayers’ money. We are considering whether there are further sanctions that are appropriate for those people who have chosen to abuse a system that is there to support those in need. We intend to ensure that we have effective deterrents and punishments in place. Views are, therefore, invited on whether we should develop our sanctions regime further, with a view to increasing the deterrent effect by reducing or withdrawing entitlement to benefit after a first offence.200
In its response, the Child Poverty Action Group argued that there were risks in ‘over- emphasising the problem of fraud’:
193 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee, para 2.8 194 Sections 7-12 195 p iii 196 The Social Security Fraud Bill 2000/2001, 21 March 2001, pp 17-51 197 SI 2001/4022 198 For further background see Library Research Paper 06/39, The Welfare Reform Bill: Bill 208 of 2005-06 199 Cm 7363 200 Ibid. para 2.27
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Government has an important role in maintaining the integrity of the system and rightly conducted anti-fraud activity, but fraud is a demonstrably small problem and overestimating its extent disadvantages those who need to claim. The Green Paper (para 2.23) notes fraud has fallen, and suggests it accounts for 0.6% of benefit spend. The problem of fraud (and loss to the tax payer) is smaller than that of non-take up (for instance 9% of the money intended to be paid through income support never reaches the families who need it), yet the Green Paper has nothing to say about how those missing out on their entitlements can be helped to claim.
The Green Paper notes both the small level of fraudulent behaviour and that this has fallen, but continuing to issue high profile ‘tough’ messages stigmatises the claimant population by instilling a wrongful stereotype that fraud is common (both in the messaging around the Green Paper and in high profile public campaigns). Worse dubious methods like voice risk analysis may discourage genuine claimants from claiming for fear of being thought fraudulent (CPAG has seen no published evaluation by DWP on voice risk analysis – we do not know how it deals with nervous claimants, or claimants from different cultural groups).201
Citizens Advice thought that the existing criminal sanctions regime was sufficient.202 It added:
2.26 Citizens Advice believes that the department should be much more concerned about the increasing level of customer and official error, much arising from the sheer complexity of the benefit system, and also at times, the inefficiency of the DWP. We would also suggest that the £106 million identified as overpaid benefits is overshadowed by the £10 billion-worth of means-tested benefits that went unclaimed last year.
Similar points were made by Disability Alliance203:
The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future204, confirmed that it intended to proceed with plans for ‘one strike’ sanctions for benefit fraud:
Building on the current criminal sanctions regime 6.26 Since 1999, cautions and administrative penalties have been offered to customers for less serious cases of benefit fraud, with criminal prosecution pursued in more serious cases. We also have a policy of referring all suitable cases for financial investigations under relevant legislation [The Proceeds of Crime Act (POCA) 2002]. with a view to obtaining from Courts, the authority for restraint and/or confiscation of identified assets.
6.27 For repeat offenders, ‘Two Strikes’ is a fixed 13 week benefit disqualification period for anyone who is convicted of benefit fraud in two separate proceedings within a five-year period. The ‘Two Strikes’ provisions enforce the principles of
201 CPAG, No one written off: Response to the July 2008 welfare reform Green Paper, October 2008, p32 202 Citizens Advice response to the Welfare Reform Green Paper, October 2008 203 Disability Alliance Response to the Government’s consultation paper, No one written off: reforming welfare to reward responsibility, paras 2.16-2.21 204 Cm 7506
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rights and responsibilities by ensuring that those who repeatedly defraud the benefits system can lose their right to financial support. It has been successful in deterring fraud. We now consider that the same principle should be extended to everyone who commits fraud and deliberately ignores the rules. This White Paper confirms that we intend to introduce a new sanction to reduce or withdraw entitlement to benefit for four weeks after a first benefit fraud offence (a ‘One Strike’ approach). This will extend the penalty to cover those who commit a first offence which results not only in convictions, but also administrative penalties and formal cautions.
6.28 The proposals on benefit fraud penalties would mean that in all cases where there is sufficient evidence that benefit fraud had been committed to consider a prosecution there would be:
• Recovery of the overpayment. • A fraud sanction. • A four-week benefit penalty.
The Welfare Reform Bill 2009 Impact Assessment states:
The new policy is being introduced to strengthen the deterrents and punishments that currently exist in the DWP’s criminal sanction regime to deter more people from committing benefit fraud in the first place. The existing “two strike” policy only impacts on a small number of offenders who are convicted of benefit fraud on more than one occasion within a five year period, whereas about 50,000 people per year are convicted for the first time or receive an administrative penalty or formal caution.205
The Department states that possible benefit savings from ‘one strike’ sanctions would be in the region of £4-10 million a year.206 a. Clause 19
Section 7 of the Social Security Fraud Act 2001 made provision for benefits to be withdrawn or reduced if a person is convicted twice of benefit offences within three years. As noted above, the Welfare Reform and Pensions Act 2007 extended the ‘two strikes’ period from three years to five years.207
Clause 19 and Schedule 4 of the current Bill extend the loss of benefit provisions by introducing a similar sanction, for the same benefits, for a first conviction for benefit fraud, or following an agreement to pay a penalty or accept a caution.
Clause 19 inserts new sections 6A-6C in the Social Security Fraud Act 2001. New section 6A defines ‘disqualifying benefit’ (i.e. benefits against which an offence can be committed) and ‘sanctionable benefits’ for the purposes of both new section 6B and the existing section 7.
205 Para 486 206 Ibid. para 487 207 For further background see Library Research Paper 06/39, The Welfare Reform Bill: Bill 208 of 2005-06
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New section 6B provides that a new benefit sanction may apply where a person has:
• been convicted of one or more benefit offences in any proceedings;
• accepted an administrative penalty as an alternative to prosecution; or
• agreed to be given a caution
The disqualification period is four weeks (subsection 11).
Subsections (6)-(10) provide that the amounts by which Income Support, Jobseeker’s Allowance, Pension Credit, Employment and Support Allowance, Housing Benefit or Council Tax Benefit are to be reduced will be prescribed in regulations (to be subject to the affirmative procedure). The Explanatory Notes state that these amounts will be the same as those currently prescribed for the purposes of the ‘two strikes’ provisions in section 7.208 The current rules, including protection for ‘vulnerable groups’ and ‘persons in hardship’, are outlined in Library Research Paper 06/39.209
3. Clause 20: sanctions for violence against DWP staff
The Green Paper, No one written off: reforming welfare to reward responsibility210, stated:
We believe the use of actual violence or the threat of violence by a small, but very disruptive, number of claimants towards staff in Jobcentre Plus offices and organisations delivering services, is both unacceptable and undermines everyone’s efforts to seek and enter sustained employment. We will also explore imposing a similar sanction in these instances.211
The Social Security Advisory Committee response to the Green Paper commented:
2.12 We agree that actual violence or the threat of violence towards staff should never be accepted. This is an issue which affects many public and private sector workers, and we welcome a ‘zero tolerance’ approach to such behaviour. However, sanctioning benefits is not an approach that we would support. The criminal and civil law and due process should be used and provide more effective protection and remedy for vulnerable staff. We note that there is no parallel proposal from the Government to increase the tax rate upon those who threaten HMRC staff.212
208 Para 125 209 p99 210 Cm 7363 211 Para 2.13 212 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee
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Disability Alliance213 agreed completely that Jobcentre Staff must be protected from violent behaviour, whether actual or threatened. It went on:
However, we have two interlinked concerns about the proposals as they stand:
1. Automatic and escalating financial sanctions for non-attendance at appointments may raise the possibility of disputes occurring where, for example, the claimant has not received a notification letter or where the claimant may have misunderstood the requirement/responsibility as a direct result of literacy, languag e, and other communication difficulties.
2. The imposition of financial sanctions due to a threat of violence could easily arise if an adviser misunderstands the effects of a person’s mental health condition or learning difficulty.
2.7 Research has demonstrated that the least satisfied Jobcentre Plus customers include:
• JSA customers; • customers who have been claiming benefit for a long time; • males; • older customers.
2.8 Given the fact that the Green Paper proposals will demonstrably have significant impacts upon these groups of claimants, we feel it is important that the DWP ensure that Jobcentre Plus can offer a quality service to all customers, which will in turn help to reduce the possibility of aggressive behaviour from claimants. Further, we feel that it is important that statistical monitoring takes place, with regards to numbers of sanctions imposed as well as analysis of underlying issues such as mental health problems, drug dependency, homelessness and so on, as these are clearly the high risk groups as far as these proposals are framed.
Recommendation 2 - Disability Alliance feel that frontline Jobcentre Plus staff need appropriate training and guidance to properly recognise the symptoms and signs of mental distress, especially given the increased interactions that are likely to occur with the introduction of employment and support allowance.
Ensuring that Jobcentre Plus frontline staff are adequately supported, trained and resourced to deliver quality services should help avoid problems arising in the first instance. Further, there is a need to ensure that claims administration is efficient and timely, so that benefit payments are received as and when expected. This again helps to avoid disputes arising in the first instance. 214
213 Disability Alliance Response to the Government’s consultation paper, No one written off: reforming welfare to reward responsibility 214 Ibid., original emphasis
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The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future215, confirmed that the Government would seek new powers:
6.20 In 2007-08 there were over 16,000 reported assaults on Jobcentre Plus staff, the overwhelming majority of which were ‘verbal assaults’. Jobcentre Plus takes a robust approach to such behaviour and will act against it when it occurs, including calling the police and supporting criminal prosecutions. Job seekers can also be required to attend a different office to fulfil their work search commitments when directed to do so. Jobcentre Plus will continue to undertake these actions when appropriate.
6.21 In the Green Paper, No one written off: reforming welfare to reward responsibility, we said that we would explore imposing a benefit sanction in addition to the action Jobcentre Plus already takes. We will introduce a sanction which will tackle violent behaviour through a loss of benefit. This will give Jobseeker’s Allowance claimants the clear message that avoiding conditionality through violence towards Jobcentre Plus staff will not be tolerated.
6.22 Most of the individual respondents responsible for delivering Jobcentre Plus services recognised that sanctions are vital in ensuring that our ‘something-for- something’ approach to employment support is effective, and were in favour of strengthening the sanctions regime. There was broad support from many of them for the proposal to introduce benefit sanctions for violent behaviour. Other individual responses from members of the public were along similar lines. However, many organisations expressed concern that particularly vulnerable groups, such as disabled people or people with a mental health condition were at particular risk from sanctions and their administration.
6.23 We recognise these concerns, but we do not believe that they amount to a reason for weakening the structure of conditionality which necessarily underlies our aims for welfare reform. We will continue to ensure that each individual’s circumstances are carefully considered before imposing a sanction. We will maintain the safeguards which are already in place to prevent anyone – including vulnerable people – being unfairly sanctioned.
The Welfare Reform Bill 2009 Impact Assessment states:
In the context of about 60 million face to face contacts in Jobcentre Plus per year, there were 1,590 banning orders and a further 957 people who received a warning letter from a Departmental solicitor prior to a banning notice but were not banned (in 2007/08). Jobcentre Plus also obtained 91 injunctions preventing individuals from entering certain Jobcentre Plus premises. Jobseekers can also be required to attend a different office to fulfil their work search commitments when directed to do so. Jobcentre Plus will continue to undertake these actions when appropriate.216
Benefit sanctions would be applied in addition to any such action Jobcentre Plus already takes.
215 Cm 7506 216 Para 500
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a. Clause 20
Clause 20 inserts two new sections – 20C (‘sanctions for violent conduct in connection with a claim’) and 20D (supplementary) – into the Jobseekers Act 1995. New section 20C(1) provides for a benefit sanction of one week to be applied to JSA claimants who are successfully convicted of or, in England and Wales, cautioned, for an offence involving ‘violence or harassment’. For a person to be sanctioned, it is necessary that:
• the violent conduct was towards Jobcentre Plus staff or contracted out staff at DWP providers;
• the offence took place on the Jobcentre Plus premises or those of contracted out providers while the offender was there for the purpose of a JSA claim; and
• the offender is a person or a member of a joint claim couple who satisfies the conditions of receiving JSA.
Benefit will not be payable for one week; any other sanction under the Act subsequently imposed on the claimant may also be extended by five weeks on the first occasion that the other sanction applies.
Reduced rate hardship payments may be available (section 20C(7) and (8)).
New se c tion 20D sets out the offences in England and Wales in respect of which a sanction may apply. These are:
• common assault or battery;
• threats to kill, wounding with intent to do grievous bodily harm, inflicting bodily injury with or without a weapon, and assault occasioning bodily harm ( under sections 16,18,20 or 47 of the Offences Against the Person Act 1861);
• the offences of affray, fear or provocation of violence, intentional harassment, alarm or distress and harassment, alarm or distress (under sections 3, 4, 4A or 5 of the Public Order Act 1986);
• the offence of harassment and putting people in fear of violence - (under sections 2 or 4 of the Protection from Harassment Act 1997);
• racially or religiously aggravated assaults, public order offences or harassment (under sections 29, 31 or 32 of the Crime and Disorder Act 1998);
• the ancillary or preparatory offences related to the offences above, namely aiding, abetting, counselling or procuring the commission of the
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offence, encouraging or assisting the commission of the offence, or attempting or conspiring to commit the offence.217
Subsections (3) and (4) specify the corresponding offences in Scotland.
Subsection (7) provide for regulations to require specified persons, such as the police or prosecuting agencies218, to notify the Secretary of State of offences which would lead to a sanction.
Subsection (8) provides for regulations (to be subject to the affirmative procedure) adding or removing offences from the list.
Those who are sanctioned have a right of appeal against a decision regarding payment of their benefit (clause 20(4)).
4. Clause 24: sanctions for ‘failure to attend’
The Green Paper noted that a ‘significant minority’ of Jobseekers failed to attend appointments and interviews with Jobcentre Plus advisers or to ‘sign on’ on time.219 It proposed that someone failing to attend a fortnightly job interview or appointment without good cause should automatically lose a week’s benefit. The Government also wanted to look at ‘escalating’ sanctions so that a second failure to attend would result in a loss of two weeks’ benefit.220
In its response to the Green Paper, the Social Security Advisory Committee said:
Failure to attend (FTA) 2.5 According to paragraph 69 of the Equality Impact Assessment (EIA), 12,000 jobseekers each month fail to attend interviews or appointments with Jobcentre Plus without good cause. The EIA goes on to suggest that these claims are then closed, yet this action typically leads to a loss of two days’ benefit. The conclusion that we draw from this limited evidence is that the majority of those who FTA have their benefit reinstated despite being unable to prove ‘good cause’. This may be because staff have made practical and sensible decisions which protect the incomes of vulnerable citizens and avoid unnecessary appeals.
2.6 The Green Paper proposes changing the current position for those who FTA from a disqualification to an automatic sanction of one week’s benefit. Such a move will inevitably result in more time having to be spent by Jobcentre Plus staff and the appeals service. We are not convinced that it will promote a clearer message and improve compliance since the automatic sanction will apply after the FTA has occurred. We would be more convinced if we were provided with evidence that the 12,000 who FTA, repeat this behaviour.221
217 Explanatory Notes, para 144 218 Explanatory Notes, para 148 219 Cm 7363, para 2.13 220 Ibid. 221 No one written off: reforming welfare to reward responsibility – the response of the Social Security Advisory Committee
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Citizens Advice commented:
2.14 There has however, been little research into why claimants fail to attend. CAB advisers report seeing clients who fall into this ‘significant minority’ who have been sanctioned several times. They are often vulnerable clients with learning disabilities who have failed to understand what is required of them or who haven’t attended courses or applied for jobs because the options have been inappropriate to their disabilities or levels of literacy. Without proper probing of claimants’ failure to attend and without sufficient Disability Employment Advisers, there is a serious risk that vulnerable claimants will be unfairly and inappropriately sanctioned.222
Disability Alliance argued:
2.5 The Green Paper notes that the current sanctions regime is ‘successful’ for the majority of jobseekers and until more detailed information about the multifarious reasons for individual non-compliance is available, the proposal to build in increasingly punitive approaches appears premature and inappropriately harsh as well as adding to the administrative burden. Current sanctions already allow for the removal of benefit in cases of non-attendance at interviews or non- compliance with jobseeker’s directions for example, so it is difficult to understand the rationale for further sanctions. This is even more worrying in light of the greater numbers of people with lower level mental health problems and learning difficulties needing to claim JSA as the entitlement test for employment and support allowance increases in rigour.223
The December 2008 White Paper, Raising expectations and increasing support: reforming welfare for the future224, said that the Government would proceed with new legislation:
6.16 The Gregg Review noted that around a third of all referrals for a sanction are for failing to attend a mandatory interview or appointment, and 70 per cent of referrals result in a sanction being applied. As a result of people failing to attend appointments or work programmes, there are around 12,000 Jobseeker’s Allowance claim terminations per month. Many job seekers return shortly after their claim has been closed down to start a new Jobseeker’s Allowance claim. In this costly process of termination and reclaim, only one or two days of benefit are lost to the claimant, which is a poor deterrent at a high administrative cost.
6.17 Therefore, we intend to bring forward new legislation to close this gap in the way sanctions respond to serious non-compliance. It would no longer be possible for a job seeker to ignore a mandatory appointment. Those who do would be subject to a benefit sanction of no fewer than one full week of Jobseeker’s Allowance. We will also ensure that any subsequent failure to attend would result in a sanction amounting to the loss of two weeks’ benefit.
222 Citizens Advice response to the Welfare Reform Green Paper, October 2008 223 Disability Alliance Response to the Government’s consultation paper, No one written off: reforming welfare to reward responsibility 224 Cm 7506
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6.18 We believe that introducing a consistent and automatic sanction for failing to attend a mandatory interview or work programme will clarify the current process so that job seekers know what is expected of them and what will happen if they do not comply without very good reason. Our intention is to ensure that attending mandatory interviews, including signing on every fortnight, is recognised by everyone as a key part of accounting for active work search.
More detailed information on the Government’s proposals relating to sanctions for ‘failure to attend’ is given in the Welfare Reform Bill 2009 Impact Assessment225
a. Clause 24
Section 8 of the Jobseekers Act 1995 currently allows for regulations to pr ov ide that entitlement to JSA may cease for between one and five days if the claimant fails to attend a mandatory interview and fails to show, within a prescribed period (currently five working days), good cause for failure to attend. A mandatory interview would include, for example, a fortnightly job search review, also known as ‘signing on’.
Clause 24 amends section 8 to provide that, in these circumstances, entitlement to JSA will continue but benefit will not be pa yable for a fixed period of at least one week and not more than two weeks. Regulations will also provide that if a person fails to attend a mandatory interview for a second or subsequent time, their claim is kept open but a fixed two week sanction is applied.226 As now, if a person makes contact with Jobcentre Plus within five working days and shows ‘good cause’, a sanction will not be imposed. Regulations will also provide for a claim to be terminated if the claimant fails to make contact with Jobcentre Plus within the prescribed period of five working days.227
Decisions may be appealed. Regulations may make provision for hardship payments in certain circumstances.
Regulations under the amended section 8(2) are subject to the affirmative procedure.
J. Pension Credit take up228
1. Background
Pension Credit was introduced on 6 October 2003, replacing the Minimum Income Guarantee (Income Support for people aged 60 or over) as the main means tested support for pensioners.229 The Pension Credit has two elements, the Guarantee Credit and the Savings Credit. The total Pension Credit received is the combination of the two
225 pp96-105 226 Explanatory Notes, para 167 227 Explanatory Notes, para 171 228 This section by Djuna Thurley, Business and Transport Section 229 State Pension Credit Act 2002; These issues are covered in more detail in Library Standard Note SN/BT/1439 ‘Pension Credit’
87 RESEARCH PAPER 09/08 elements, except for those aged between 60 and 65, who are entitled only to the Guarantee Credit.230
The Guarantee Credit replaced the Minimum Income Guarantee as the means of providing a “safety net” level of income, below which no pensioner should fall. It brings income from all sources up to a minimum level: the “appropriate minimum guarantee.” The basic amounts for 2008/09 and 2009/10 are set out in the table below:231
Rates of Guarantee Credit (£pw)
2008/09 2009/10
Single 124.05 130.00 Couple 189.35 198.45
These amounts can be increased if the claimant or their partner has a severe disability, looks after a severely disabled person or has certain housing costs, like mortgage interest payments.232
The Savings Credit aims to reward people over 65 with modest levels of “qualifying income” (including state, occupational and personal pensions) above the Savings Credit “threshold”, up to a maximum. The figures for 2008/09 and 2009/10 are set out in the table below:
Rates of Savings Credit (£pw) 2008/09 2009/10 single 91.20 96.00 Income threshold couple 145.80 153.40 single 19.71 20.40 Maximum credit couple 26.13 27.03
2. Numbers
There are around 2.7 million recipients of Pension Credit in Great Britain. In addition, it is estimated that between 1.3 and 1.8 million are eligible for, but not claiming, Pension Credit.233 The estimated amount of unclaimed Pension Credit is between £1,960 million and £2,810 million.234
The most recent estimate of Pension Credit take-up by caseload is in the table below:
230 State Pension Credit Act 2002, Explanatory Notes, para 3 231 DWP Press Release, 11 December 2008 – £4 billion boost for pensioners (benefit rates) 232 Pension Service, ‘A detailed guide to Pension Credit for advisers and others’, (May 2008), p30-31; State Pension Credit Regulations 2002 (SI 2002/1792), regulation 6 and schedule 1 233 ‘Welfare Reform Bill 2008-09 – Impact Assessment’, para 507 234 DWP/National Statistics, First release: Income Related Benefits Estimates of Take-Up in 2006-07, 10 June 2008; National Statistics, ‘Income Related Benefits Estimates of Take-Up in 2006-07, DWP, 2008; Estimates of take-up are presented as ranges within which true take-up is expected to lie.
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Take-up by caseload (%) Estimated numbers not claiming (000s)
Pension Credit 59-67 1,260-1,820 Of which:
Guarantee Credit only 72-82 170-300 Guarantee Credit and Savings Credit 64-77 380-710 Savings Credit only 42-49 640-840 Source: DWP/National Statistics, 'First release: Income Related Benefits Estimates of Take-Up in 2006/07'
3. Targets for take up
In Spending Review (SR) 2002, the Government set a Public Service Agreement target to have at least three million households in receipt of Pension Credit by 2006. In its 2005 Autumn Performance Report, DWP reported that, due to a slow-down in take-up, there was some “slippage in progress towards this target.”235
In SR 2004, a further target was set to:
By 2008, be paying Pension Credit to at least 3.2 million pensioner households, while maintaining a focus on the most disadvantaged by ensuring that at least 2.2 million of these households are in receipt of the Guarantee Credit.236
In 2007, DWP said this target would not be achieved. Arguing that it “would not represent value for money repeatedly to press unwilling eligible people to take up their entitlement”, it introduced a revised target:
In 2007-08 The Pension Service plans to generate 235,000 successful Pension Credit applications with 166,000 of these being successful applications for the Guarantee Credit, with a view to broadly maintaining the existing caseload levels.237
The SR 2004 target was not met. In fact, by April 2008 there were 2.72 million recipients of Pension Credit, with 2.13 million receiving Guarantee Credit. The revised target (to generate 235,000 Pension Credit applications) was achieved.238
For 2008-09, the Pension Service aims to:
…deliver an annualised value of new successful Pension Credit applications of £767 million and to secure at least 250,000 successful new Pension Credit applications.239
The Public Accounts Committee said that while the target had not been met, it had focused the Department’s attention on raising take-up of Pension Credit. However, it did not cover other benefits, receipt of which was important for reducing poverty:
235 DWP, Autumn Performance Report 2005. Progress against Public Service Agreement targets, p50 236 DWP, Autumn Performance Report 2007: Progress against Public Service Agreement Targets, p47 237 Ibid, p48 238 DWP, Autumn Performance Report 2008. Progress against Public Service Agreement Targets, p39 239 Ibid.
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2. Pension Credit is now paid to around 2.7 million households, around a million more than its predecessor, the Minimum Income Guarantee. The Department was committed to a Public Service Agreement target to pay Pension Credit to 3 million households by the end of February 2006, rising to 3.2 million households by 2008. After an initial rapid rise, growth in the number of claimants has reached a plateau at around 2.7 million, although there are small monthly increases (Figure 1 below).The Department believes that it will eventually reach the 3.2 million target, and it has already me t its target of paying the Guarantee Credit—the element of Pension Credit aimed at pensioners with the lowest incomes—to 2.1 million households by 2006. In retrospect, the Department believes that the 2006 PSA target was unrealistic, although it was based on the best information available at the time it was set.
3. The PSA target focused the Department’s attention on raising take-up of Pension Credit. The target did not, however, cover other benefits, receipt of which is as important for reducing poverty. The Department is currently considering a more general target relating to pensioner poverty and benefits for pensioners in the context of the 2007 Comprehensive Spending Review. It published baseline indicators of the independence and well-being of older people, including material well-being, in October 2006.
4. The Pension Service believes there is a significant group of people who are entitled to Pension Credit but are not taking it up. The Pension Service’s Local Service staff see about one million such pensioners a year. Where they do not wish to pursue a claim, the Local Service records the reason. Around one quarter of non-claimants said they had sufficient to live on, while 6% said it was not worth applying (Figure 2 ).240
In the 2007 Comprehensive Spending Review, a PSA delivery agreement was set to “tackle poverty and promote greater independence and wellbeing in later life.” Five key indicators would be used to measure progress against this PSA target:
• The employment rate of those aged 50-69 and difference between this and the overall employment rate
• The percentage of pensioners in low income
• Healthy life expectancy at age 65
• The proportion of people over 65 who are satisfied with their home and their neighbourhood.
• The extent to which people over 65 receive the support they need to live independently at home.241
240 Public Accounts Committee, ‘Department for Work and Pensions: tackling pensioner poverty – encouraging take-up of entitlement’, 26th Report of Session 2006-07, HC 169, Summary and paras2-4 241 HM Treasury, Public Service Agreements; PSA Delivery Agreement 17. Tackle poverty and promote greater independence and well-being in later life , October 2007
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4. Strategy to increase take up
The Government’s strategy to increase take-up includes focusing efforts on the poorest pensioners, encouraging those who may be eligible to claim benefits (rather than relying on ad hoc marketing activity) and making the claim process easier:
Promoting take-up of benefits
3.19 The Pension Service administers benefits and promotes take-up of benefits among pensioners. It will work jointly with local authorities, administering Council Tax Benefits (CTB) and Housing Benefit (HB) and with health and social care providers, private and third sector partners to generate successful claims for benefit.
3.20 The Pension Service will build on its good track record of using data- matching, customer insight, streamlining processes and joint working to focus its efforts on the poorest pensioners and hard-to-reach groups. The Pension Service’s delivery strategy will continue to be extensively informed by feedback from regular customer surveys, and specific customer consultation exercises. To enhance current targeting of appropriate benefits and services to those pensioners most in need, The Pension Service is developing a multi-dimensional customer segmentation model, based upon a series of public and private sector data sources.
Streamlining processes
3.21 The Pension Service will automate current business trigger processes to ensure that their staff are automatically alerted to customers' likely entitlements to extra benefits or services when handling customer enquiries or changes of circumstances over the telephone. This will ensure that eligible non-recipients to a range of benefits (including Pension Credit, HB, CTB and Attendance Allowance/Disability Living Allowance) are encouraged and offered additional support to make applications as part of all normal business conversations with customers, thereby reducing the reliance on ad hoc marketing activity to generate high levels of take-up.
Integrated and simplified claiming
3.22 It will be easier for people claiming Pension Credit to claim CTB and HB; the claim form has been significantly shortened; access to information relating to five benefits will be available from one telephone call; and from September 2007 customer eligibility for CTB/HB is also being routinely checked when customers make contact with The Pension Service.242
In December 2007, the Government announced a package of changes, to come into force in October 2008, to simplify the state pension system. The package included measures to simplify the process for claiming Pension Credit. More controversially, the length of time for which Pension Credit can be backdated would be reduced to pay for the changes. The then Minister for Pensions Reform Mike O’Brien said:
242 Ibid
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I can announce a package of changes for introduction in October 2008 to simplify further the state pension system. The package is cost-neutral over the long term and will be paid for by reducing the backdating of pension credit from 12 months to three months, as from next October. Twelve-month backdating was introduced in 2003 to ease the introduction of pension credit. The new changes will make better use of these resources and, I understand, will be broadly welcomed by Help the Aged and Age Concern. The changes that we intend to introduce will make the system less confusing, less intrusive and more transparent. We want the customer to be able to get their state pension entitlements with the minimum fuss, bureaucracy and form filling.
In 2005, we made some improvements. Those applying for pension credit by telephone have been able to get council tax benefit and housing benefit together, using a shortened claim form completed by the Pension Service. The form is then sent out to the customer to sign and send to their local council. Many pensioners do not send the form on, however, and so lose out. We aim to improve on that by being more efficient and more joined up. We intend for council tax benefit and housing benefit claims to be made over the telephone in exactly the same way as those for state pension and pension credit. The claim will be taken by the Pension Service and automatically passed to the local council for assessment.
No more action will be needed by the pensioner. They can access up to four benefits in one telephone call: pension credit, state pension, housing benefit and council tax benefit. About 50,000 pensioners will gain from the measure by 2010. We also plan to align the rules on backdating of pension credit, housing benefit and council tax benefit with those on the working age benefits. That will reduce complexity and make the application process less intrusive.
These days, some pensioners spend longer periods abroad in warmer countries. They currently lose their pension credit after only four weeks. We intend to change the pension credit rules that relate to the length of time that pensioners can spend abroad before their benefit is affected. We will align pension credit with the rules on housing benefit and council tax benefit, so that benefit will continue for up to 13 weeks. That will mean that almost 90 per cent. of the pensioners who would currently have their pension credit stopped will in future retain their entitlement.
Those changes will be taken with two further measures in the Pensions Bill that, with your permission, Mr. Speaker, I hope to put before the House today. Those measures will simplify the rules relating to the additional state pension and remove the need for most pension credit customers aged 75 and over to tell us about changes in their retirement income. More than 1 million pensioners will benefit through not having to complete a review of their income and capital, because we believe that income and capital do not increase much for most people after 75. 243
The Social Security Advisory Committee broadly welcomed most of the changes but found the rationale for generating savings through restrictions to the backdating provisions unconvincing:
8. The Committee broadly welcomed the changes to the rules on temporary absence abroad, and the other measures which formed part of the overall “simplification” package such as the AIP run on and the improved claims process
243 HC Deb, 5 December 2007, c841-2
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for Pension Credit customers who claim HB/CTB. However, the Committee found that the Department’s rationale for generating savings to pay for such improvements through restrictions to the backdating provisions to be unconvincing, and selected these regulations for formal referral for 3 main reasons:
• The Committee’s long standing interest in the backdating provisions for income related benefits;
• An apparent lack of reliable evidence for the assertions made in relation to the rationale for making the changes and to support the costings; and
• The unprecedented number of representations from organisations and indiv id uals expressing their concern about the impact of the proposals on vulnerable groups and upon the Government’s policies to reduce poverty.244
In response, the Government said:
10. The Government believes that the proposals to reduce backdating, which follow improvements to the claims process for Pension Credit and HB/CTB (such as the ability to make a claim by telephone and to make a claim for all three benefits, Pension Credit, HB and CTB, in one simple phone call), supplemented by a continued campaign to encourage potential recipients to claim their entitlements at the time the need first arises (rather than waiting, in difficult circumstances, for up to a year before making a claim) is an important and coherent step toward a simpler more streamlined system. When the additional measures being introduced as part of the overall package are also taken into account, the Government believes that it has made significant improvements without the need to make detrimental changes to the rules for existing customers.245
In evidence to the Work and Pensions Committee in December 2008, Terry Moran (Chief Executive) and Nigel Richardson (Customer and Partnership Director) of the Pension, Disability and Carer Service (PDCS) explained the evolving strategy to improve take up among poorer pensioners. It had “become very clear that some of the traditional methods and techniques of mass media” had shown diminishing returns in terms of trying to influence some of those pensioners who were resistant to claiming Pension Credit. A different approach was needed:
…the communities where vulnerable people go has been proven to be a very effective way to get some of that resistance that people have in terms of take-up. Our approach is to work much more through our partners, our advocates, and our friends and families, having identified where we think those target groups are. The whole approach is saying, "Let's work through our partners, even some new partners that we have identified, and where people are comfortable in terms of what they do, in terms of their leisure activities." We are even looking at things like
244 The Social Security (Miscellaneous Amendments) (No.4) Regulations 2008 (S.I.2008 No.2424), Report by the Social Security Advisory Committee under Section 174(1) of the Social Security Administration Act 1992 and the statement by the Secretary of State for Work and Pensions in accordance with Section 174(2) of that Act, September 2008, Cm 7469 245 Ibid, p9
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MECCA Bingo, for example. From some of our analysis we have seen that generations of family will often go into those areas, and it means that we can get some influence on people, to start to generate more take-up of benefits.246
5. Clause 21
Clause 21 of the Bill would make provision to pilot ways in which Pension Credit could be calculated and paid in order to increase the numbers of eligible persons receiving benefit:
153. To achieve this, the clause allows regulations to be made which would permit the payment of state pension credit without a claim being made and with modified rules concerning how the entitlement is determined. 247
The pilots would help to test whether “more automatic processes” could be used to help improve take-up by the poorest pensioners:
505. More automatic processes, using information the Department for Work and Pensions already holds to engage with those who need to government’s support, are one possible way of improving take-up. However, there are many issues to consider if this is to be successful, and it is essential that the Department test these proposals through pilots.
506. The power proposed in this Bill would enable us to run different types of time limited pilots. The pilots would be designed to find out as much as the Department can about whether the information the Government holds could be used to help target and deliver support to the poorest pensioners; and to do so in a way that that is acceptable to those individuals affected….
508. The proposed pilots would give us a much better understanding of the scope for increasing take-up through more automatically delivering support for the poorest. The pilots themselves would, however, directly involve a relatively small number of individuals for a limited period of time. Typically a pilot impacting on around 2000 pensioners would enable us to obtain robust findings. 248 a. Comment
Age Concern welcomed the proposed pilots.249 In a September 2008 report on the impact of Pension Credit, it argued that a system of automatic payments was the only effective way of reaching many older people:
The complexity of the benefits system makes it difficult for older people to know whether they are eligible for payments and discourages many from claiming. From October 2008, small scale changes to the system will come into effect. However, these changes are unlikely to produce a significant increase in take-up and are being financed by reducing the amount of time for which payments can
246 Uncorrected transcript of oral evidence, taken before the Work and Pensions Committee. To be published as HC 104-i, 17 December 2008, Q8 247 Welfare Reform Bill 2008-09 – Explanatory Notes, para 152-3 248 Welfare Reform Bill 2008-09 – Impact Assessment, para 508-09 249 Source: Age Concern
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be backdated. Given the ingrained barriers to claiming, we believe that a system of automatic payments is the only way to achieve full take-up of Pension Credit and other benefits. This research shows strong support for this among older people, especially if concerns about data security can be allayed.
• Seven out of 10 pensioners think that automatic payments would significantly improve the process of paying benefits. • Just over a third of older people have concerns about data security but would support automatic payments if safeguards are put in place. • A quarter would not support automatic payments due to their concerns about data security.250
Help the Aged has also recommended that ‘the Government should look into how it can pay benefits more automatically so people do not have to go through the complicated process of filling in forms and verifying their identity or income any more than they have to.’251
K. Duration of pilot schemes
1. Clause 22
Section 29 of the Jobseeker’s Act 1995 and section 19 of the Welfare Reform Act 2007 allow for the piloting of regulations made under specified enactments relating to working- age benefits. Under the Jobseeker’s Act, piloting regulations can apply only for a maximum of 12 months. Under the Welfare Reform Act, the maximum is 24 months.
Clause 22 amends both the 1995 Act and the 2007 Act to provide for a common maximum time limit of 36 months for pilot schemes. It also amends the wording of section 29 of the 1995 Act to clarify t h at regulations are aimed at making it ‘more likely that persons will obtain or remain in work or be able to do so’. This is the existing wording in the Welfare Reform Act 2007.
The Welfare Reform Bill 2009 Impact Assessment states:
Building on over a decade of evidence the Department for Work and Pensions is increasingly moving towards piloting new and innovative commissioning approaches (as signalled in the Department’s Commissioning Strategy) and away from testing the effectiveness of two week courses or single personal adviser interviews. This proposal will simplify arrangements for large pilots that could involve customers receiving tailored support for up to 12 months, as with the multi client group pilot included in the white paper ‘Raising Expectations and Increasing Support: Reforming Welfare for the Future.’ This approach will also give specialist back to work providers with whom the Department for Work and Pensions enters contracts gre ate r certainty that the pilot will run to its completion, giving them the confidence to make significant upfront investments to help more jobseekers achieve sustained employment.252
250 Age Conce rn, ‘Flagship or flagging? The impact of Pension Credit five years on’, September 2008, p1-3 251 Help the Aged, 'Pensions, Benefits and Take up. Help the Aged Policy Statement 2008’ November 2008 252 Para 521
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L. Contracting out employment services
Clause 2(3) and 23 of the Bill would extend contracting out of specified employment service activities to private and voluntary sector organisations.
Contracting-out of employment services in the UK is not new. Elements of a number of existing schemes, including Employment Zones, Pathways to Work and the New Deal for Disabled People are provided by external providers. DWP estimates that the private and voluntary sector accounts for around a third of expenditure on employment services.253 The Welfare Reform Act 2007 introduced powers similar to those in clause 23 for claimants of ESA.254
1. Freud Report
One of the key recommendations in David Freud’s report on welfare reform was that most employment services for the longer-term unemployed and more disadvantaged should be contracted-out to private and voluntary sector providers:
Intensive intervention at the start of a claim, focused on assisted job search, is now established as the best way to help people to move back into sustainable employment. As a one stop shop, Jobcentre Plus should therefore remain at the core of the service provided and retain ownership of claimants as they pass through the system. However the longer that someone is out of work, the more likely it is that they will stay out of work – long-term worklessness is both a cause and consequence of labour market disadvantage.
The intensive, individualised support which is effective in putting the most disadvantaged people into work is expensive. However, evidence from Employment Zones and the New Deal for Disabled People suggests that an outcome-based approach can deliver significantly improved results for the hard to help. And while there is no conclusive evidence that the private sector outperforms the public sector on current programmes, there are clear potential gains from contesting services, bringing in innovation with a different skill set, and from the potential to engage with groups who are often beyond the reach of the welfare state.255
He makes recommendations for contracts that are long term, outcome-based and based on the 11 regions and countries in the UK. Also, he recommends that these contracts are let to prime contractors who would then be responsible for appointing subcontractors to provide services that cater for the variety of claimants in a region.
253 Raising expectations and increasing support: reforming welfare for the future, DWP, Cm 7506, December 2008, p11 254 Welfare Reform Act 2007, s.16. Pages 49-55 of Library Research Paper 06/39 The Welfare Reform Bill (Bill 208 of 2005-06) give background on contracting-out. 255 Reducing dependency, increasing opportunity: options for the future of welfare to work: An independent report to the Department for Work and Pensions, DWP, 2007, p6
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Freud identifies some of the key issues that a successful contracts system would address. Payment mechanisms would need to provide incentives to develop programmes that cater for all groups of claimants. Also, he recognises that the DWP would need to develop a “world-class” contracting capability.
The report was welcomed by the Government and the proposals were taken forward in the welfare reform green and white papers. December’s Raising Expectations included a number of approaches that would use contracted providers.256 These include:
• From March 2011, piloting a single personalised employment programme which combines Pathways to Work with the Flexible New Deal. It will also explore whether lone parents with children aged three to six could be included in the programme. It would test whether Freud’s “invest-to-save” model would be cost-effective in supporting long-term claimants back to work. • Testing whether an “invest-to-save” model would be cost effective. Invest-to-save would involve the DWP being allowed to fund payments under contracts using the expected benefit savings. These pilots would also begin from March 2011 in five regions. • Introducing a “right to bid” for suppliers where they thought they could improve services. Guidance for bidders has already been published257 and the White Paper states that these will be assessed in spring 2009.
The Conservative Party has also proposed the involvement of the private and voluntary sectors in the provisions of employment services in its 2008 policy paper, Work for Welfare: Real Reform to Help Make British Poverty History:258
4.3 Creation of a managed market for back to work employment services In almost all the countries studied, successful labour market reforms have involved private or third sector organisations operating back to work programmes. In the Netherlands, over 600 private organisations help jobseekers at a local or national level, while in Germany jobseekers can choose to register with a private provider if the government services have failed to help them find work after six weeks. Again, the United States and Australia have gone furthest in outsourcing many elements of the return to work process to third party welfare-to-work providers (WTWPs). These private and not-for-profit organisations have provided skills assessments, job search training, intensive and customised employment assistance and provision of work placements. Contract structures and payment arrangements vary but the best examples from Australia use performance based payments, ensure efficient competition between WTWPs for contracts, allow jobseeker choice, and provide dynamic and transparent data on job placement performance.
256 Raising expectations and increasing support: reforming welfare for the future, DWP, Cm 7506, December 2008, p48 257 Right to bid bidders guide, DWP, October 2008 258 Welfare Policy Paper – Work for Welfare, Conservative Party, January 2008
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2. DWP Commissioning Strategy
The DWP published its Commissioning Strategy in February 2008.259 This set out how the DWP would implement Freud’s vision on contracting out. It set out six principles on which contracting-out would be based:
• The commercial opportunities we shall offer will be arranged into larger, longer lasting (subject to performance achievements) contractual packages which we expect will be delivered by top-tier providers leading and managing diverse supply chains. • The contract structure will allow for packages based on city regions but will also ensure effective coverage of rural areas. • Contracts will increasingly link with the appropriate local delivery infrastructure that best delivers sustained jobs. • We will aim to do most of our business (around 80 per cent) with a stable core of reliable providers. This will leave space for new entrants to the market. • The core providers should be capable of delivering multiple contracts across the country to a high standard on a consistent basis. • We envisage a market where smaller providers will mainly act as sub- contractors (or ‘delivery providers’) and in which excellent sub-contractual relationships are the norm.
The Work and Pensions Select Committee launched an enquiry into the commissioning strategy and the employment programme market in June 2008.260 Three evidence sessions were held and memoranda received from a range of bodies.261
In their submission to the report, the TUC made four main points:
• The inferiority of the public sector is often assumed but has not been proved. The Department for Work and Pensions and Jobcentre Plus are effective organisations with a strong delivery record. • Bidding for DWP services may threaten voluntary organisations' independence and ability to innovate. • The TUC is concerned that claimants' interests may take a back seat to the pursuit of profit in a basically contracted-out system. 'Creaming' and 'parking' are particular risks. • There are particular concerns that contracting-out to religious organisations may lead to a greater risk of discrimination against claimants and staff.262
The Shaw Trust, a registered charity that delivers some Workstep, Pathways to Work and NDDP programmes, supported much of the strategy but argued that changes were
259 DWP Commissioning Strategy, DWP, February 2008 260 “Select Committee to inquire into DWP's commissioning strategy and the employment programme market“, Work and Pensions Select Committee press release, 25 June 2008 261 Memoranda are available on the Parliament website at: http://www.publications.parliament.uk/pa/cm200708/cmselect/cmworpen/memo/dwp/contents.htm 262 Work and Pensions Committee, DWP Commissioning Strategy and the Employment Programme Market, CS10 – memorandum submitted by the Trades Union Congress
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WorkDirections, a private sector provider of existing services said:
7. We welcome the DWP Commissioning Strategy as it makes some significant steps in ensuring the viability of the employment services market and the focus on sustainable outcomes. Key areas where the new Commissioning Strategy has made significant progress is in measuring and rewarding sustainable job outcomes (26 weeks with an intention to move towards 18 months) and increasing the length of contracts to five years (to allow for investment both in physical infrastructure a nd in subcontracting relationships).264
3. Flexible New Deal
Further information on the New Deal programmes is given in Appendix 1.
The Flexible New Deal (FND), which will be introduced from October 2009 will include contracted-out services for those who remain on the programme for more than 12 months. FND is the first programme to be commissioned under the DWP Commissioning Strategy. The invitation to tender for the first stage of FND contracts was published in March 2008.265
In September 2008, the Social Market Foundation published a report on FND. In it they argued that the move to FND should produce benefits but also gave suggestions for how the proposals could be improved:
Despite its advantages, the new system is not without the risk of unintended consequences: these are the subject of this report. While the high-level vision of FND has huge potential, its execution risks undermining that vision. The reliance on second best regulatory tools to drive good performance from contractors is unlikely to succeed.266
In particular, SMF argued that there should be higher service payments to prime contractors, combined with fines for failure to place a jobseeker in employment by the 12-month point. They argued that this would be cost-neutral, but would increase incentives for the contractors. They also argued that the payment structure, rather than regulatory tools, should be used to deal with the issue of “difficult-to-place” participants being overlooked and that bonus payments should be used to reward placement in sustainable jobs, which they define as jobs retained for more than 12 months.
The tendering process for FND was also commented on in memoranda to the Work and Pensions Committee report on commissioning. SERCO, a provider of employment services argued that the funding mechanism was flawed:
263 Work and Pensions Committee, DWP Commissioning Strategy and the Employment Programme Market, CS10 – memorandum submitted by the Shaw Trust 264 Work and Pensions Committee, DWP Commissioning Strategy and the Employment Programme Market, CS10 – memorandum submitted by Work Directions 265 Flexible New Deal – letter to providers, DWP, March 2008; Dep 2008/1038 266 Flexible New Deal: Making It Work, Social Market Foundation, September 2008
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However, the funding mechanism is flawed and will not drive provision to extend to 'harder to help' groups. The principles of the model were counter intuitive from the outset, with the unit price decreasing as providers offered more outcomes. Now with the definition, in the Invitation to Tender, of unrealistic baselines, there is serious concern over the stability and viability of these contracts. Providers may feel incentivised to 'cream' and 'park', and may in fact fall over entirely as a result of over-promising in order to safeguard their market share.267
It argued that:
The most effective funding model, with the highest impact on employment outcomes, is the Employment Zone model, with providers taking on responsibility for benefit payments for 26 weeks but only receiving 21 weeks of money. Anyone the Zone does not get into work, becomes a cost, or penalty, to the provider. This could be further enhanced by outcome payments linked to long-term sustainability, using some sort of 'target accelerator', as explored recently in a paper by the Social Market Foundation.
4. Contracting-out in other countries
Contracting-out of employment services is already in place in a number of other countries. The systems in the US, Australia and the Netherlands are the most frequently studied.
United States The Personal Responsibility and Work Opportunities Act was introduced in 1996. It devolved significant new powers to individual states for implementing ‘Temporary Assistance for Needy Families’ (TANF). This meant that states could contract out all services, including eligibility for TANF financial assistance.
Around 13% of expenditure has been contracted out. Although a few states (including Wisconsin) contracted out case management and eligibility systems, most retained this but contracted out the delivery of other employment service.268 The devolved nature of the US system means that there is a variety of models to study. A significant, and growing, proportion of contracts are held by faith-based organisations.
Australia In Australia, the system is split between the public, private and voluntary sectors. Both the entire job brokerage function and the task of re-integrating individuals into the job market are put out to tender to private and voluntary sector providers. This is known as the Job Network. Referrals to those services and the payment of benefits are carried out in the public sector by Centrelink.
Netherlands
267 Work and Pensions Committee, DWP Commissioning Strategy and the Employment Programme Market, CS10 – memorandum submitted by SERCO 268 Contracting out welfare to work in the USA: delivery lesson, Dan Finn, DWP Research Report 466, 2007, pp1-2
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The division between sectors in the Netherlands is different again as only reintegration programmes are tendered out. However, a key feature of the system in the Netherlands is that local municipalities and the social insurance agency (UWV) are the purchasers rather than the central government department, the Ministry of Social Affairs and Employment.
Descriptions of other systems are also given in an appendix to David Freud’s report.269 On the Australian system he says:
The Australian experience is less clear-cut than many of its proponents suggest. The private and voluntary sector market has successfully taken on the mainstream employment services and helps to secure good outcomes for the majority of the unemployed. The purchasing Department (the Department of Employment and Workplace Relations) has refined its contracting approach over a series of four contract rounds and the day-to-day relationship at working level between Centrelink and Job Network Members is now much more effective than was previously the case. Costs have been considerably reduced. However, the system has proved less successful at preventing long-term unemployment.
One element of the Australian system that he does recommend is the Job Seeker Classification Instrument. This is a screening process used early in the job search to determine the type of help to be offered. He argues that this means that those who are hardest to help would receive assistance earlier in their claim, and that those who would have found work anyway are not provided with more expensive services that they do not need.270
A number of other studies have looked at contracting out in other countries. A Policy Exchange analysis of systems in Australia, Germany, Wisconsin, Denmark and the Netherlands argues that involving the private and voluntary sector could save up to £1 billion:
The overall results are encouraging. The essays in this compilation show how the use of the private and voluntary sectors has brought improvements, for example: • In Wisconsin welfare rolls fell by 80% over three years. If similar changes in the UK achieved only a quarter of this change, the annual budget for Incapacity Benefit claimants would be cut by £1 billion, and the cost of benefits for lone parents with children over seven by around £300 million. • If the UK matched the 50% drop in job placement costs achieved in Australia, the cost of operating the welfare system would be cut by £250 million. • Germany’s unemployment count fell by 1 million in the two years after it started to reform its welfare state. • Both Denmark and The Netherlands have been more successful in getting lone parents and the disabled back to work than other EU countries.
However, difficulties arise from the design of the contracting out regimes. Some of the authors report cases of ‘creaming’ and ‘parking’, where service providers
269 Reducing dependency, increasing opportunity: options for the future of welfare to work: An independent report to the Department for Work and Pensions, DWP, 2007, Appendix 2 270 ibid., p59
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concentrated on jobseekers that were the easiest to deal with or delayed, and sometimes even ignored, the most challenging cases. In Australia, success fees were sometimes fraudulently paid to employers taking on jobseekers for a limited period.271
A recent Joseph Rowntree Foundation report concentrated on Australia and the Netherlands.272 Again, this found some positive evidence on cost savings; in Australia it found that the cost of finding someone a job had halved since the introduction of Job Network and that there had been a saving of around a third in the Netherlands. It also found that performance-based contracting increased the short-term job prospects of jobseekers. However, it argued that little is known about the increased transaction costs in the system, both on purchasers and providers (contract design, bid preparation and assessment; contact management, supervision) and users who have to negotiate and satisfy the requirements of a more complex system. Like the Policy Exchange report, it also highlighted the problem of the “parking” of harder to help clients caused by the incentive mechanisms within contracts.273 The report suggests that a solution would be service guarantees where participants are offered a choice between providers and a mechanism to address complaints.
Child Poverty Action Group have also recently published a report on contracting, looking at experience in Australia, Denmark, Germany and the Netherlands. It finds limited evidence to suggest efficiency gains or cost savings from contracting-out and little evidence that the large-scale involvement of voluntary and private sectors leads to innovation in service delivery. Finally it argues that contracting-out services is not likely to be an effective strategy for raising skills.274
5. Clauses 2(2) and 23
Clause 23 would amend the Jobseekers Act 1995 to allow contracting-out of a range of employment services. These provisions are broadly equivalent to those in the Welfare Reform Act 2007 for ESA. The delegated powers memorandum states that this will enable more efficient use of contractors who deal with both JSA and ESA claimants. This follows the White Paper proposals for pilots of single employment schemes.
The stated intention is to use the powers in the clause to make regulations that allow the Secretary of State to authorise public, private and voluntary sector contractors to undertake the specified functions which included work-focused interviews, action plans and work-related activity. The authorisation to take decisions relating to benefit
271 Paying for success: How to make contracting out work in employment services, ed. Peter Lilley MP and Oliver Marc Hartwich, Policy Exchange, 2008 272 Lessons from contracting out welfare to work programmes in Australia and the Netherlands, Joseph Rowntree Foundation, November 2008 273 The concept of “parking” in relation to contracted-out welfare-to-work schemes is that it will be more expensive to find work for claimants with disadvantages or who have been out of work for a long time. Contractors will, other things being equal, concentrate on easier to help claimants. Any contracts that are drawn up need to provide an incentive mechanism that mitigates against this. 274 Contracting out employment services: lessons from Australia, Denmark, Germany and the Netherlands, Child Poverty Action Group policy briefing, December 2008
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sanctions is specifically excluded from this power. The scope of these authorisations can be limited to particular activities or areas.
Clause 2(3) introduces similar provisions to those in clause 23 into the Social Security Administration Act 1992 relating to employment services for income support claimants.
M. Work-Focused Interviews for the over 60s
1. Background
Work-Focused Interviews (WFIs) were first proposed as part of the ‘single work-focused gateway’, piloted as part of ONE275, and rolled out nationally by Jobcentre Plus. WFIs are for working age claimants of certain benefits who are not required to meet the labour market conditions for Jobseeker’s Allowance. The intention of the Work-Focused Interview is to bring the claimant into a job-focused environment and encourage job- seeking activity or take-up of training and to let people know about the financial support available.
Paul Gregg’s report, Realising Potential: A Vision for Personalised Conditionality and Support276 contains a section which looks at the evidence on the effectiveness of the WFI regime.277
The July 2008 Green Paper, No one written off: reforming welfare to reward responsibility278, proposed extending the requirement to take part in Work-Focused Interviews to people aged 60 to 65:
A work-focused regime for people aged 60 to 65 2.50 Since 1997, the employment rate of people aged between 50 and State Pension age – currently 60 for women and 65 for men – has increased by over seven percentage points. This represents an extra 1.4 million people in employment. Currently around 1.3 million people have remained in or returned to work beyond State Pension age, over 500,000 more compared to 1997. Demographic change means that we will be seeing fewer young people coming into the job market in future. So more older people will be needed to fill future vacancies. We also as a society can’t afford to write off the skills and experience of older people.
2.51 Many of those aged 60 or over who do not have a job would like to work but are concerned that they will be considered too old and do not have the right skills. We are committed to increase their employment opportunities. We want to give these people the same level of support as we provide for younger people. So we have already made it unlawful to discriminate in training, recruitment and employment on grounds of age.
275 ONE was the name given to the single work-focused gateway following a ‘re-branding’ exercise in 1999 276 December 2008 277 pp36-38 278 Cm 7363
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2.52 People are no longer considered ‘over the hill’ at age 60. In the recent publication Framework for a Fairer Future – the Equality Bill, we set out our determination to outlaw age discrimination and promote equality for older people. This will build on the existing Age Regulations covering employment and outlaw age discrimination in the provision of goods and services.
2.53 As we bring State Pension Age for men and women together between 2010 and 2020, people aged 60 to 64 who are out of work will become eligible for working-age benefits. Under current rules they are not required to attend Work Focused Interviews. We intend to change the law to allow people aged 60 and over access to the additional back to work support offered by a Work Focused Interview.
2.54 To help ensure there are jobs for older people, our Age Positive initiative is also promoting the benefits to employers of recruiting, training and retaining older workers who, by 2020, will comprise 30 per cent of the workforce.
In its response to the Green Paper, Citizens Advice commented:
2.28 We welcome the offer of additional help to 60-65 year olds who want to go back into employment. Increasingly, work is being seen as a potential route out of poverty for those who are already retired. The number of people over the state pension age in the workforce reached 1 million in 2004, and is increasing. Many want to return to work and we welcome proposals to offer access to the additional back to work support offered by a work focused interview. We do not believe that it will be necessary to make this support mandatory.
2.29 CAB advisers report particular concerns about placing additional requirements on people who have worked all their lives only to become ill close to state pension age. Take, for example, men who have worked full time all their lives, before being diagnosed with heart disease in their late 50s or early 60s. They are clearly unwell and are often expected to live for only a few more years. All too often, these men fail their PCA, because they are able to walk, but slowly or in pain, and feel pressurised to return to work when they are really too unwell to do so. The bureaux advisers point out that these men are unlikely to live to get their pension, and yet feel extremely let down by the inflexibility of the system when they need it most.279
Age Concern commented:
We welcome the government’s commitment to increase employment opportunities for people aged 60 to 65 and to give them the same level of support as younger people. The proposals, however, are unclear about how the government will achieve this. We therefore recommend that a strategy for enabling people over 60 to remain or return to work is developed and implemented. We believe that this is particularly important given that the State Pension Age is set to increase and a greater proportion of people in their 60s will be expected to be in work. We also urge the government to demonstrate its commitment to outlawing age discrimination by abolishing the default retirement
279 Citizens Advice response to the Welfare Reform Green Paper, October 2008
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age, which is inimical to this commitment, and by revamping the Age Positive initiative to foster culture change in the workplace.280
2. Clause 26
Section 2A of the Social Security Administration Act 1992 provides for regulations requiring a person under 60 claiming any one of a number of specified benefits to take part in a Work-Focused Interview (WFI) as a condition of continuing to receive the full amount of benefit. Section 2AA of the Act, inserted by the Employment Act 2002, extended the requirement so that where a claimant has a partner, and both are under 60, they are both required to attend WFIs.
From April 2010 the process of equalising state pension age for men and women at 65 will begin. The state pension age for women will gradually increase over a ten year period to 65.
Clause 26 removes references to the age of 60 in section 2AA of the Social Security Administration Act 1992 and replaces them with references to a person who has not reached pensionable age. As the state pension age increases, therefore, the requirement to take part in a WFI will apply to more people in the 60-65 age group.
The Government has not produced a full Impact Assessment for clause 26 because it was ‘not deemed appropriate’ given the small numbers of individuals affected.281
280 Age Concern response to No one written off: reforming welfare to reward responsibility, October 2008, pp7-8 281 Welfare Reform Bill 2009 Impact Assessment, para 561
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Appendix 1: New Deal programmes
The New Deal programmes were gradually introduced after the 1997 General Election by the new Labour Government. They are a key element of the Government’s Welfare to Work strategy. The programmes include job search, training and other work-related activities. Each programme targets a different group of claimants and although the programmes share similar elements there are different balances of compulsory and voluntary activities.
In 2008, the Government reviewed ten years of the New Deal. In the introduction to this document, the Prime Minister said:282
The New Deal was both a statement of our values and a key part of our economic strategy. Introduced after two decades in which child poverty more than doubled; the number of people on Incapacity Benefit had risen by one and a half million; and more than 80,000 young people had been on unemployment benefit for more than a year. It said that we valued every person in our society and that our economy in turn needed them to be active if we were all to be successful.
There are currently six “New Deal” programmes, introduced in stages from 1998 and aimed at different groups of unemployed people.283
The first programme was The New Deal for Young People (NDYP), introduced in 1998 and initially funded by the windfall tax on privatised utilities’ profits. This is a mandatory employment programme for all young people aged 18-24 who have been claiming Jobseeker’s Allowance (JSA) for six months or more. After an intensive period of careers advice and help with job search techniques known as the Gateway period, NDYP participants enter one of four programme options: a subsidised job; a place on the Environment Task Force; a place with a voluntary sector employer; or full-time education or training. Participants who refuse to participate in any of these options may face benefit sanctions.
The New Deal for 25 plus (ND25+)284 was the next programme to be introduced, in July 1998. Again, it is a mandatory programme for all people aged 25 and over who have been claiming JSA for 18 months or more, except those living in an Employment Zone.285 The programme shares many aspects with the NDYP. The programme provides a wide variety of individually tailored support, including the services of a New Deal Personal Adviser (NDPA), in the form of training, advice, guidance, and work experience, including access to self employment. ND25+ is delivered in three stages: • a ‘Gateway’, lasting for up to 4 calendar months providing access to short-term provision;
282 Transforming Britain’s Labour Market: Ten Years of the New Deal, DWP, January 2008 283 More details on these schemes are provided in Library Research Paper RP05/61. Updates on the individual programmes are available to Members and their staff on the Parliamentary Intranet. 284 Also known as the New Deal for Long-Term Unemployed 285 Employment Zones are private sector led employment programmes which operate in 13 different areas of the UK as an alternative to ND25+ and NDYP. For more information see Volume II, Part I, Section D of Research Paper 05/62.
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• an ‘Intensive Activity Period (IAP)’ initially lasting for 13 weeks but which can be extended to 26 weeks (and in a small number of cases up to a year). It includes flexible packages of support which can combine work experience/placements, work focused training and help with motivation and soft skills; and • a period of ‘follow-through’ support.
Initially, the IAP was mandatory only for those aged 25-49, but from July 2007 this requirement was extended to those age d 50-59.286
The New Deal for Lone Parents (NDLP) followed in October 1998. It is a voluntary programme which provides lone parents on Income Support with help and advice on jobs, benefits, training and childcare, so they can make the transition from benefit receipt to employment. The programme is delivered through personal advisers at local Jobcentre Plus offices.
The New Deal for Partners (NDP) is a voluntary programme which offers advice and job search assistance to dependent partners of benefit claimants. The programme was introduced nationally in April 1999 and called New Deal for Partners of the Unemployed to April 2001. In April 2004 an enhanced version of the programme was introduced, offering the same package of support available to lone parents.
The New Deal for 50 Plus (ND50+) provides a combination of advice, help with job- search, and financial support to help the over-50s back into work. It is a voluntary programme. ND50+ started in October 1999 and was rolled out nationally on 3 April 2000. Those aged 50-59 who have been unemployed for 18 months or longer are eligible for mandatory activity under the ND25+.
The final New Deal programme to be introduced was The New Deal for Dis abled People (NDDP), in July 2001. It is a voluntary programme that provides a combination of advice, help with job search, and financial support in order to assist individuals in finding sustained employment. The NDDP is targeted specifically at people with disabilities and long-term health problems, particularly those receiving benefits on the grounds of incapacity for work. Individuals with learning difficulties or disabilities are also eligible for help via the NDDP.
The NDDP is delivered to customers through individual Job Broker organisations across Great Britain. Organisations securing Job Broker contracts include voluntary and not-for- profit agencies, private sector companies and public sector organisations. They usually have a track record of working with people with health conditions and disabilities, and some specialise in working with people with a particular type of health condition or disability, for example mental health conditions.
286 The Jobseeker’s Allowance (Extension of the Intensive Activity Period) Amendment Regulations 2007, SI 2007/1316
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Table 1 shows the total number of participants, leavers, and people finding jobs through the New Deal programmes since they began.
According to the DWP 3.22 million people had started a New Deal programme in Great Britain by the end of August 2008; 2.05 million had gained a job through New Deal programmes by the end of May 2008.287
Table 1
New Deal starters, leavers and jobs found: 1998-2008 (a) Great Britain Thousands
NDYP ND25+ NDLP NDDP ND50+ NDP (b) (c) Starters 1,334.9 786.8 901.1 306.2 100.0 18.0 Leavers 1,265.7 558.3 824.8 n/a n/a 5.6 Jobs (d) 833.7 341.5 581.1 189.4 187.8 7.2 Current participants 75.6 60.0 73.1 n/a n/a 4.2
Notes: (a) starters data are to August 2008; leavers, jobs and participants data are to May 2008 (b) The jobs figure for ND50+ includes 98,040 people who had received employment credit up to March 2003 (c) Leavers from the NDP are from April 2004 onwards; starters and jobs include some figures from before April 2004 (d) Jobs figures include sustained and unsustained jobs. A sustained job is where the jobholder does not return to New Deal for 13 weeks.
Sources: DWP tabulation tool [http://www.dwp.gov.uk/asd/asd1/tabtools/tabtool_nd.asp] DWP Quarterly Statistical Summary, Table 1.4 http://www.dwp.gov.uk/asd/statistical_summaries.asp
At the end of May 2008 there were 75,600 participants in NDYP, 60,000 in ND25+ and 73,100 in NDLP.288 More statistics on participation and outcomes are given in Library Standard Note SN/EP/4867 New Deal Statistics.
b. Evaluation
In their review of ten years of the New Deal, the Government highlight a number of successes:289
Every group and region of the country has benefited: - The number of people claiming Jobseeker’s Allowance is at its lowest for over 30 years. The number of long-term claimants unemployed has fallen
287 The figures for the sum of people starting and gaining a job for each individual New Deal programme will be higher than these as some people will start and gain a job through different New Deal programmes. 288 Statisti cs are not currently available for participants and leavers from the New Deal 50+ and the New Deal for Disabled People. 289 Transforming Britain’s Labour Market: Ten Years of the New Deal, DWP, January 2008, p4
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from more than half a million to 125,500; while for young people it has fallen from 85,000 to fewer than 7,000. - The lone parent employment rate has gone up by 12.5 percentage points since 1997, while the number of lone parents on Income Support has fallen by nearly a quarter of a million. NDLP has helped more than half a million lone parents into work. This in turn has contributed to a reduction of more than half a million in the numbers of children in poverty. - Thanks to the success of NDDP, which has helped more than 150,000 people into work, and of Pathways to Work, which has increased the numbers moving off benefit by 8 percentage points, the apparently inexorable rise in the number on incapacity benefits has been stopped and is being reversed - for the first time in a generation. The number of people making new claims for Incapacity Benefit (IB) has been reduced by more than a third while the total number on benefit is at its lowest for eight years. Meanwhile the employment rate for disabled people has risen significantly, by around 9 percentage points between Spring 1998 and Q2 2007.
The Social Market Foundation agreed that the New Deal had made a positive impact, although the number of economically inactive was still high, and there was a high proportion of repeat JSA claims:290
Independent evaluations have shown the approach adopted – combining mandatory contact with Jobcentre Plus (fortnightly interviews for JSA claimants and regular WFIs for other groups) with intensive labour market support (mandatory for JSA claimants, voluntary for other groups) – to be a success. […] On balance, as the independent evaluations cited above show, the New Deal has helped to reduce unemployment. The large impact on lone parent employment and, more recently, through Pathways to Work for people with health problems and disabilities is real. And there is a strong case to be made that periods of short-term unemployment are preferable to sustained long-term unemployment: the scarring effects of long-term unemployment, in terms of depreciating skills, lost motivation and reduced attractiveness to employers, are strong, particularly for young people.
However, there are criticisms. One argument used is that these changes have taken place in a period of relatively robust economic growth, and therefore that there would have been reduced unemployment anyway. Another argument is the cost of the programmes, in particular, the cost per sustained job. A Public Accounts Committee report from October 2002 on NDYP argued:291
The New Deal for Young People met its target of getting 250,000 under 25 year- olds off benefit and into work before the end of 2001-02. However, the cost per participant can be high (up to £6,000) and many of these young people would in any event have found a job in a growing economy. The programme has been effective in reducing long-term youth unemployment, and most young people who have participated in the programme have benefited in some way. In its first two
290 Delivering Full Employment: From the New Deal to Personal Accounts, Social Market Foundation, April 2007 291 The New Deal for Young People, Public Accounts Committee, 62nd Report 2001-02, 9 October 2002, HC 700 2001-02
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years, the programme also had a positive impact on levels of youth employment and on the economy overall. The Department now need to develop effective ways of measuring the longer-term impact of the programme on the employability of participants, including those who do not enter the job market.
A Policy Exchange paper from 2004 argued that the New Deal was not working, that most of the fall in youth unemployment would have happened without the New Deal, and that some of the New Deal training activities reduce participants’ chances of finding work:292
The New Deal isn’t working because it puts too much emphasis on often irrelevant government-run training programmes, and too little on the provision of actual work experience. Nevertheless, to abolish the programme without replacing it with something better would be to squander an opportunity to improve the lives and prospects of the young unemployed, and other jobseekers and benefit claimants.
There is a feasible alternative to the New Deal, based on the idea that all able- bodied people of working age should be required to earn their benefits through real work. Workfare, as it is sometimes called, is not about saving taxpayers’ money, although it certainly does that. It is not even about eliminating fraud and enforcing work requirements, although it does that too. It is about giving the unemployed something the current system has denied them for too long – the dignity, independence, self-respect and opportunity that comes with a real job.
Detailed evaluation reports evaluating New Deal programmes generally focus on individual programmes. There is a section towards the end of each chapter in Research Paper 05/61 which summarises the key findings of the most relevant evaluation reports for each programme.293 c. Flexible New Deal
Proposals for a “flexible new deal” were included within the July 2007 consultation paper In Work, Better Off and then developed in Ready For Work, in December 2007.294 This would replace NDYP and ND25+ and would involve four stages of assistance and activities aimed at moving the JSA claimant into work. The arguments for the Flexible New Deal were based on the belief that the needs of the long-term unemployed were varied and would be better met through specialist providers:295
After 12 months with Jobcentre Plus we expect that around 90 per cent of customers will have left Jobseeker’s Allowance. People remaining on Jobseeker’s Allowance after 12 months are likely to have serious and multiple challenges. They will be referred to a specialist contracted provider with whom the customer will agree a personalised action plan. The customer will have up to a year to work
292 Not Working: Why Workfare Should Replace the New Deal, Adam Bogdanor, Policy Exchange, 2004 293 Employment and Training Schemes for the Unemployed: Volume 1: Recent developments and New Deal programmes, RP 05/61, September 2005 294 In Work, Better Off, DWP, July 2007, Cm 7130. Annex A gives a description of a flexible new deal. 295 Ready to Work: Full employment in our generation, DWP, December 2007, Cm 7290. p15
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with the provider to find sustained employment or, as a minimum, to undertake a period of mandatory activity.
The initial stages of the Flexible New Deal would still be provided through Jobcentre Plus:
• An immediate interview with a personal adviser to look at any barriers to finding a job, including a “skills screen” for basic numeracy, literacy and language problems. Jobseekers would then be directed to help and support.
• Stage one would then be based on the current JSA scheme with some assistance and fortnightly meetings to “review and test the jobseekers job search”. This would last three months and include a mandatory back to work group session at week six.
• If the claim continued for three months, stage two would be a formal review of the Jobseeker’s Agreement and more frequent interviews. Jobseekers would be expected to extend their job search based on travel to work, wage and working hours rather than by preferred employment or occupation.
• After six months on JSA, customers would enter stage three, the Gateway stage. This would be similar to the current New Deal Gateways but a year earlier than under the ND25+. There would be early entry to the Gateway for the most disadvantaged jobseekers.
After 12 months of a JSA claim, jobseekers would be moved to the fourth stage. This would require the jobseeker to sign up with specialist return-to-work provision in the public, private or voluntary sectors. Ready to Work described how this would operate:296
We will work with providers on the detail of the contracts and to establish best practice. But we will expect them to engage with all their flexible New Deal customers and see their customers on a regular basis; we do not want to write-off anyone, or allow providers to not support our hardest to help customers. As a minimum there would be an initial in-depth assessment of the customer’s employment-related needs and circumstances and an action plan agreed with the customer, which includes personalised and stretching activity to get back to work.
As with the existing New Deals, participation with an external provider and compliance with the accompanying action plan will be mandatory. Failure to undertake any back to work activity arranged by the service provider would mean a referral to Jobcentre Plus to consider benefit sanctions.
Implementation Implementation plans were announced in a written statement on 14 March 2008.297 There would be two phases of implementation, in October 2009 and 2010. The Flexible
296 Ready to Work: Full employment in our generation, DWP, December 2007, Cm 7290, p57; Flexible New Deal evidence paper, DWP, December 2007; Ready to Work: Full employment in our generation, DWP, December 2007, Cm 7290, Annex A (a summary of responses to the initial proposals). 297 HC Deb 10 March 2008 c30-32WS
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New Deal would be the first programme commissioned under the new DWP Commissioning Strategy:298
The flexible New Deal is a key part of implementing the vision set out in David Freud’s report, “Reducing Dependency, Increasing Opportunity” published last year. It will be the first programme commissioned under the new DWP Commissioning Strategy that I announced on 28 February, and through which we will engage specialist back to work providers in the public, private and third sectors to offer more creative and innovative ways of helping jobseekers to overcome their specific problems with the clear aim of getting into sustainable employment.
Providers will be paid by results, focused on helping long-term unemployed people into jobs that last, and focusing on every individual and not just the well motivated.
Providers will match the type and length of activity to each participant’s needs resulting in an individually tailored support package. Our vision is that everyone who can work should do so. I have made it clear that all jobseekers joining this programme will be required to do at least four weeks of work or work-related activity if they fail to find work within 12 months of support from their provider, and we will be looking for bidders who can offer even more for those who will benefit.
The Social Security Advisory Committee has been asked by DWP to consult on draft Social Security (Flexible New Deal) Regulations. These are the regulations that would introduce the Flexible New Deal as an employment scheme.299 The consultation closed in November 2008 but no response has been published.
298 DWP, DWP Commissioning Strategy, February 2008, Cm 7330 299 “Consultation: The Social Security (Flexible New Deal) Regulations 2008”, Social Security Advisory Committee, 8 October 2008
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Appendix 2: Working age benefit recipients
The latest figures show just over 5 million individuals of working age on one or more benefit in Great Britain. Around half of these, 2.6 million, were in the “incapacity” group with jobseekers, 800,000, and lone parents, 700,000, the next largest groups. Together, these three groups account for over 8 in 10 in the working age benefit client group.
Working Age Client Group Caseload : by Statistical Group Great Britain 2000 to 2008 (Thousands) Total of which: Others on Incapacity Lone income Job Seeker Carer Disabled Bereaved Unknown benefits Parent related May benefit 2000 5,371 1,037 2,686 919 311 211 - - 207 2001 5,262 909 2,754 900 320 180 - - 199 2002 5,456 877 2,766 871 336 166 245 195 - 2003 5,460 886 2,774 856 348 156 266 174 - 2004 5,327 777 2,773 823 359 155 283 156 - 2005 5,289 801 2,742 789 364 151 301 142 - 2006 5,326 896 2,688 775 369 153 317 129 - 2007 5,207 807 2,643 766 375 167 335 114 - 2008 5,143 788 2,596 739 388 173 357 103 -
SOURCE: DWP Information Directorate: Work and Pensions Longitudinal Study. Notes: Caseload (Thousands) Figures for CA and DLA include those cases with entitlement but where payment is currently suspended (for example, because of an extended stay in hospital or an overlapping benefit). Statistical Group Statistical Group is a hierarchical variable. A person who fits into more than one category will only appear in the top-most one for which they are eligible. Job Seeker: claimant on Jobseekers Allowance; Incapacity Benefits: claimant on Incapacity Benefit or Severe Disablement Allowance; Lone Parent: claimant on Income Support with child under 16 and no partner; Carer: claimant entitled to Carer's Allowance; Other Income Related Benefit: claimant on Income Support or Pension Credit; Disabled: claimant on Attendance Allowance or Disability Living Allowance; Bereaved: claimant on Bereavement Benefit or Widow's Benefit; For example a claimant of Disability Living Allowance and Jobseekers Allowance would appear in "Job Seeker", not in "Disabled".
Working Age benefit recipients by statistical group (GB): May 2008 Bereaved 4% Disabled 4% Unknown 0% Others on income related benefit Job Seeker 3% 16% Carer 6%
Lone Parent 16%
Incapacity benefits 51%
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Half of the 5.1 million working age benefit clients are receiving Income Support on its own (16%) or in combination with other benefits (34%).
Working Age Client Group Caseload: Benefit combination Great Britain, May 2008 000s Percent Total 5,143 100% of which: Jobseekers Allowance only 769 15% Incapacity Benefit only 679 13% Income Support only 803 16% Disability Living Allowance only 351 7% Income Support and Incapacity Benefit 592 12% Incapacity Benefit and DLA 538 10% Income Support, Incapacity Benefit and DLA 518 10% Carers Allowance only 278 5% Income Support, DLA and SDA 154 3% Income Support and Carers Allowance 146 3% Widows Benefit only 52 1% DLA, Severe Disablement Allowance 41 1% SDA only 6 0% SDA and Income Support 10 0% Other Combination 204 4%
Source: DWP Tabulation Tool
DWP sample data suggest that around three-quarters of on Jobseekers Allowance are receiving income-based JSA on its own or in combination with contributory JSA. One- quarter receive contributory JSA only
Income Support In May 2008, before the new Employment Support Allowance was introduced, 57% of those on Income Support of working age were because of incapacity. 35% of those on Income Support were lone parents.
Income Support recipients of working age (under 60) Great Britain: 2000 to 2008 (Thousands) Others on Incapacity Lone income May Total Carer benefits Parent related benefit 2000 2,247 1,121 919 74 133 2001 2,272 1,189 900 75 108 2002 2,251 1,205 870 77 98 2003 2,255 1,228 855 80 92 2004 2,203 1,214 823 80 86 2005 2,150 1,203 789 81 78 2006 2,125 1,192 775 82 77 2007 2,128 1,193 766 84 85 2008 2,102 1,191 739 87 85
Source: DWP Tabulation Tool
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