Incapacity Claimants in the East Midlands July 2008 INCAPACITY CLAIMANTS IN THE EAST MIDLANDS Identifying their characteristics, aspirations and skills needs A report to the East Midlands Learning and Skills Council Christina Beatty, Steve Fothergill and Deborah Platts-Fowler Centre for Regional Economic and Social Research Sheffield Hallam University 2 3 Contents Summary 1. INTRODUCTION Background Purpose of the report Structure of the report 2. SOME BASIC STATISTICS Exactly who makes up the IB total? The stock of incapacity claimants Trends through time Age of claimants Duration of IB claims Nature of health problems 3. A CLOSER LOOK AT INCAPACITY CLAIMANTS Duration out-of-work Previous work experience Reasons for job loss Self-assessment of health Job aspirations Sources of income An assessment 4. THE QUALIFICATIONS OF IB CLAIMANTS Qualification levels Differences within the stock of IB claimants Qualifications and job aspirations Studying for qualifications 5. THE TARGET GROUP FOR BACK-TO-WORK INITIATIVES The scale of hidden unemployment Size of the target group Job aspirations of the target group Training needs 6. POLICY IMPLICATIONS Appendix This report has been commissioned by the East Midlands Learning and Skills Council but also draws heavily on the findings of a survey financed by the government’s Economic and Social Research Council (grant ref no RES 062230086) and by local partners 4 5 Summary The 177,000 incapacity benefit (IB) claimants in the East Midlands are the single largest group working age benefit claimants in the region, accounting for 6.5 per cent of all adults of working age or three times the number of claimant unemployed. The IB numbers have been broadly stable in recent years, with a slow shift from men to women so that among the under-60s the number of women on IB now almost matches the number of men. The government has set a national target of a 1m reduction in the number of IB claimants by 2016 –in which case large reductions will be necessary in the East Midlands. Across the East Midlands, and the country as a whole, IB claimants are far from evenly distributed. In some southern parts of the region the IB claimant rate is already very low and seems unlikely to fall much lower. In contrast, in some northern parts of the region, including the former coalfield but also the Lincolnshire coast, IB claimant rates are much higher, sometimes accounting for 10 per cent of all adults of working age. This pattern has it roots in long-standing differences in the strength of local labour markets. There has been modest convergence through time, but big differences between places persist –even as the ex-miners, for example, drop out of the IB figures into retirement. Many IB claims have been for a very long time –half for more than five years according to DWP figures –and the likelihood of claiming IB increases with age. Mental and behavioural problems are the most common medical reason for IB claims in the region, followed by musculoskeletal problems. Sheffield Hallam survey data from a range of localities around Britain, which offers a good guide to IB claimants in the East Midlands, highlights the extent to which IB claimants occupy a disadvantaged position in the labour market, even putting aside their ill health or disabilities. In particular, the survey data indicates that 60 per cent of IB claimants have no formal qualifications whatsoever. The government’s Labour Force Survey (LFS) points to a lower figure –40 per cent –but there are serious and systematic omissions from the LFS data. Either way, a large proportion of the IB claimant group will be disadvantaged in the eyes of potential employers by exceptionally poor qualifications. The survey data also points to a stock of IB claimants that is often extremely detached from the labour market, with barely a quarter saying they would like a job or might like a job further into the future. Fewer than one-in twenty are actively looking for work. On the other hand, although health problems and disabilities appear to be widespread only a quarter of IB claimant say that they ‘can’t do any work’. What appears to be happening is that in the East Midlands, and elsewhere, the IB claimant figures have become dominated by men and women who find it difficult to maintain a foothold in a competitive labour market –the less skilled, less healthy and (to some extent at least) the less motivated. Within the stock of IB claimants, the potential group for back-to-work initiatives is modest –perhaps just over 40,000 men and women at any one point in time in the East Midlands. These are the men and women who express an interest in working 6 again. They tend to be younger (typically 35-55) and have not had such long spells on benefit, though many still report considerable health problems. Many of this group have quite specific thoughts on the help they would need to re-enter employment and the types of job they would like. Quite a number of this group also have specific thoughts on the training and qualifications they require. The report concludes by highlighting nine policy implications: To hit the government target of a 1m reduction in IB numbers, a reduction of the order of 65,000 will be necessary in the East Midlands This reduction, and the concerted action to achieve it, will need to be concentrated in the parts of the region, particularly the northern half, where the IB claimant rate is highest Addressing the poor level of qualifications among IB claimants must be an integral part of the action to bring the numbers down In the absence of compulsion, back-to-work initiatives are best targeted at the minority of claimants who express an interest in returning to work These target individuals are most likely to be the younger, more recent claimants Health problems and disabilities remain a core obstacle to training and employment, and are ignored by training providers at their peril Opportunities for part-time working need serious emphasis, and are in line with the aspirations of quite a number of men and women Guidance needs to be available on the financial pros and cons of returning to work Training provision needs to respond to the specific aspirations of men and women 7 1. INTRODUCTION Background Incapacity claimants are the single largest group of non-employed working age benefit claimants, in the East Midlands and across Britain as a whole. In the East Midlands in May 2007 (the most recent date for which figures are currently available) 177,000 men and women of working age (16-59/64) were incapacity claimants. This compares to 60,000 men and women who were claimant unemployed, and 47,000 who were lone parents in receipt of Income Support. The very large numbers of Incapacity Benefit (IB) claimants have not traditionally been the focus of back-to-work initiatives, which have hitherto been primarily concerned with the claimant unemployed on Jobseeker’s Allowance (JSA). This is changing however. In 2006, the government set a target of a one million reduction in the number of IB claimants by 20161. If the East Midlands is to make a proportional contribution to hitting this national target, the reduction in the number of IB claimants in the region would have to be of the order of 65,000. Moreover, in October 2008 a new benefit –Employment and Support Allowance (ESA) –will replace Incapacity Benefit for all new claimants. For the first time, this will introduce an element of ‘conditionality’akin to that which has applied to Jobseeker’s Allowance for many years. In future, all but the most seriously ill ESA claimants will be required to ‘prepare for work’. This may involve engaging with physical or mental rehabilitation programmes, voluntary work, training or job search. One of the main consequences is certain to be an up-surge in the demand for training for incapacity claimants on the new benefit. 1 Department for Work and Pensions (2006) A New Deal for Welfare: empowering people to work, DWP, London. 8 Purpose of the report The purpose of the present report is to identify the key characteristics of incapacity claimants in the East Midlands, and in particular to assess their training needs and aspirations. The report is intended to assist the East Midlands Learning and Skills Council (LSC) in developing integrated employment and skills activity that addresses this key group of benefit claimants. More specifically, the report aims to: Identify the personal characteristics (age, skills, experience, health problems, job aspirations etc) of East Midlands IB claimants Identify the perceived obstacles to employment among these claimants Identify specifically the training aspirations and needs of IB claimants who might be re-engaged with the labour market Identify the policies and practices most likely to deliver effective support to IB claimants in need of training or support to take up employment The report draws on the nationally recognised expertise on of the research team at the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University and in particular brings to bear three main sources of information: The results of an existing large-scale survey of IB claimants, recently completed by the CRESR team Data on IB claimants nationally, regionally and locally from Department for Work and Pensions (DWP) sources Data on IB claimants, and comparisons with other claimant groups, from the government’s Labour Force Survey 9 Structure of the report The rest of the report is organised in four sections. Section 2 provides a basic statistical overview of IB claimants in the East Midlands.