It's not about cost-cuttingby Hannah Titley / February 4, 2016 / Leave a comment
Read more: The truth about welfare
Last year Work and Pensions Secretary Iain Duncan Smith argued that our welfare system is “parking” those with health conditions “forever beyond work.” Universal Credit—a monthly payment that will replace all other benefits—“opens the way for us to re-think the relationship between sickness benefits and work,” he claimed. To this end, he will bring forward a white paper on incapacity benefit reform. He is right to prioritise this key welfare challenge.
But this is not the first time that government has prioritised the issue. Only ten years ago, Labour brought forward a green paper on the topic, arguing that people were “trapped” on benefits. Announcing the introduction of Employment and Support Allowance (ESA) John Hutton, then Work and Pensions Secretary, claimed Labour’s reforms would lead to a million fewer people on the benefit within a decade. There were around 2.6 million people claiming incapacity benefits in 2007-08, there are around 2.5 million now. Less than one per cent of claimants leave the benefit each month, yet over half say they want to work.
These dire statistics show the need for a radically different approach. Osborne will not reach the “sustainable and affordable” welfare state he promised in the Autumn Statement unless he reduces demand for benefits, and to do this he must meet the government’s pledge to halve the disability employment gap. The forthcoming white paper will have to be bold, and Reform’s new paper provides a blueprint.
Firstly, the government should ensure that people with health conditions are paid the same level of benefits as jobseekers. Hutton talked about removing the “perverse incentives” created by paying more the longer a claimant stayed on incapacity benefit, but retained a higher rate. Excluding disability premia, the weekly payment for claimants in the ESA Work Related Activity Group is £102, and £109 for those in the support group. This compares to a basic rate of £73 for Jobseeker’s Allowance claimants. International evidence shows that for some people, a higher rate…