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paul treloar
kate green
jim murphy mp
questions to the minister
robin williamson
questions to the panel
more information
Taken from his speaking notes.
Welfare reform aims to move 1 million IB claimants into to work over a 10 year period. It's aim is to look at what sick and disabled claimants can do, rather than what they can’t do. The following speakers will be dealing with more practical issues. I will concentrate on the ESA scheme itself.
ESA was introduced in the Green Paper published January 2006. Following a period of consultation & responses the Welfare Reform Bill was published in July 2006. It is now before the Select Committee and should receive Royal assent next year. In 2008 (it now appears likely that this will be November rather than April due to IT problems) ESA will replace IB/IS. There is a strong cross party support for this bill.
Under ESA all claimants will have the right, indeed, a responsibility to access support and assistance to work. [for more background on this see our welfare reform pages]
ESA will be based on pathways to work (P2W) pilot model. Research on P2W has suggested that this has been successful. Within there is a a range of support - 6 work focused interviews (WFI’s), a specialist personal assistant (PA) for the claimant, choices of other support (employment programs and condition management programs), return to work credit and a range of in-work support, such as access to work.
A key concern with the new ESA is that of resources. In Standing Committee debate it has emerged that the £360million earmarked for the roll-out is a 40% reduction in the support available compared to that for pathways. The problem of resources will be compounded by the downsizing of Jobcentre Plus and the outsourcing of some of the ESA work.
When someone claims ESA there will be a 13-week assessment phase. During this period, claimants aged over 25 years will be paid an ‘assessment phase’ rate of ESA, equivalent to the weekly rate of jobseekers allowance (JSA) payable for people aged over 25 (currently £57.45). For those under 25, a reduced weekly rate of ESA will be payable, again in line with JSA rates (currently £34.60 for under 18, £45.50 for 18-24 years).
Most claimants will have a WFI (although there will be exceptions - the support group) and a pca test. There are no exempt groups. The pca will be used to decide benefit eligibility and also whether someone has a capability to undertake work activity or not.
Those in the support group will be considered to have a limited capability to undertake work activity – they will have no conditionality attached to receiving benefit though claimants in this group can volunteer to receive support into work. Members of this group will also receive higher rates of benefit (currently amount unknown).
Those in the work-related activity group will be expected to undergo a work focused health related assessment (WFHRA) to produce a capability report, have mandatory WFI’s and will face sanctions for refusing to comply. The system will be the same as for the current pathways to work pilots.
A key concern is the rules about conditionality – most claimants will have to undertake work-related activity. But with government’s own figures stating that one million IB claimants want to work, why is there a need to force claimants to engage? The Government states it will be a ‘sanctions last’ approach with safeguards but we still have worries over incorrect application. Standards of IB decision making are very poor. It is the benefit with highest number of appeals, and over 50% are currently found in favour of the claimant currently. Decision making must be improved.
Although when ESA is introduced it will follow the current pathways model in the longer term, ESA will follow JSA models more closely. There have always been discussions about creating single working age benefit and one wonders if ESA is a move towards this.
There is also concern about plans to outsource certain Jobcentre plus functions to private and voluntary sector contractors which will give powers to make decisions related to sanctions etc. There may be advantages to this but we do have concerns about the independence of these organisations as well as issues around possible coercion of claimants into work activities to meet targets. There is also the problem of inconsistency of service delivery in different areas - postcode lotteries (such as inconsistent application of sanctions etc).
Existing clients will be migrated across to ESA, starting with the most recent claimants and those with children. There are concerns about a potential drop of income given that we do not know the rate of benefit.
With regard to the notions of work as a route out of poverty/better health? - Recent DWP/DoH research found nature and quality of work is very important. But jobs should be safe and accommodating and of a good quality. We are not sure if there will be attempts to measure and ensure the sustainability and quality of jobs.
A recent survey said that six out of ten employers would not employ someone with a mental health diagnosis. RNIB has found that there are 140,000 blind and partially sighted of working age, but only one in four are working. Despite the Disability Discrimination Act those figures have remained unchanged for ten years. In an RNID survey one in five deaf people are unemployed and looking for work, compared to one in twenty in the UK labour market.
We need to pay attention to prejudicial attitudes from employers, accessible advice provision to tackle discrimination as well as pay attention to the need for equal pay.
We need attention to prejudicial attitudes from employers and ensure that there is accessible advice provision to tackle discrimination, attention to equal pay.
Joseph Rowntree published research which said that 60% disabled people experienced income poverty and were more likely to be in low paid jobs with a lack of promotion and training prospects.
There are issues around job retention, workplace rehabilitation and occupational health more generally.
With regard to the benefits system we need improvements and flexibility to the permitted work rules as well as higher earnings disregards. Currently someone cannot work 4 hours at the national minimum wage without losing money. We had the farcical situation recently where the DWP were going to take lunch expenses into account for volunteers. There are a number of things that need to be addressed about the world of work rather than placing the emphasis solely on the duties of the claimant, coupled with the threat of sanctions.
We need a benefits system that properly recognises the additional costs of disability, building on the research already undertaken. Only then can we begin to deal with the unacceptable numbers of disabled people experiencing poverty.
Taken from her speaking notes.
Child poverty and disability issues are at last coming together. It was not clear that child poverty was originally seen as being anything to do with welfare reform but this is now coming centre-stage. The scale of the child poverty challenge is enormous (and current policy is insufficient to reach halfway milestone in 2010). It is not clear that welfare reform proposals will take us very much further forward.
Policy is failing to reach children at greatest risk of poverty - we know who they are (BME families, workless families, lone parent families, families with a family member experiencing ill health or disability, etc etc), and we know that many overlap.
Welfare reform is an opportunity to ensure policy does meet the needs of those at greatest risk, but so far this not well targeted toward households with children. For example there is no recognition that sick and disabled adults may also be parents/parents of disabled children/lone parents/carers etc- and different regimes depending on which benefit you're on make for inconsistency and less holistic support.
Also the assumption that work is best route out of poverty may not be the case. There are issues around poor quality and unsustainable jobs, lack of skills and/or part-time work leading to poor pay, and cliff edges as benefits withdrawn
Specific areas where reform needs to go further:
1. Degree of investment in support programmes. Pathways to work has been quite good (though it's too early to say if the jobs that people move into are really sustainable and lift them out of poverty), but now seems there is insufficient investment to roll out nationally – hence targeting at parents. Vital that welfare reform is not done “on the cheap”
2. Role of employers - Government expectations of employers are too low. We need the language of “rights and responsibilities” to apply to them too. There is a clear need for better employment practices – pay (NPI research shows disabled people earn less at every level of qualification) , flexible working arrangements (employers failing to respond by changing duties or working hours), willingness to employ those with mental health problems /fluctuating conditions/learning difficulties etc. The Government also needs to offer more support – especially childcare, help with costs of going to work.
3. Benefit levels – need to be set at a rate to ensure that all escape poverty. This not only raises questions about the level of benefit but also about the benefit structure itself . There is a real worry under the new ESA that division into those who cannot ever work and the rest will leave people trapped on low rate of benefits, moving in and out of unsuitable or unsustainable work (frequent transitions significantly increase poverty), and/or facing sanctions because they can’t keep up. Also concern that people will be trapped on assessment rate for long periods and this will leave them in real poverty, and that participation in work-related activity will trigger reassessment for DLA - further reducing income.
Conclusion - One way to address these concerns is to pick up Sec of State’s commitment on poverty-proofing DWP policy –we should insist that welfare reform bill is child poverty proofed and proofed from a disability equalities perspective.
Jim Murphy being greeted by Paul Treloar (right)
The core purpose of welfare reform is to stop people being written off from the job market by the benefit system.
Our target is to take 1,000,000 off IB within 10 years. There are three specific strands to this strategy.
The Government expects the majority to be able to undertake work focused interviews (WFI) but there will be a group of people not expected to do this. These will be those who qualify for the support group. Those in the support group will have a higher level of benefit.
Looking back to the situation in the 1980s and 1990s and summarising progress since 1997. Between 1980 and 1990 the numbers on IB increased massively. The reasons for this were part of the political process at the time and also partly how the Welfare State chose to restructure the economy. Whilst unemployment increased IB claims trebled between 1979 and 1997. There is no real reason for this increase in terms of the general health of the population.
We are still dealing with this legacy. The number on incapacity benefits (not just IB) is 2.6 to 2.7 million but the trajectory has been halted. Had the Government not intervened the numbers on incapacity benefits would have been 4 million.
Some of this has been achieved by new deal, some by the national minimum wage and by other methods of making work pay such as the tax credits system.
My main regret is that welfare reform had not been made nine years ago. Three quarters of those on IB have been there more than two years. Half of those on IB are age 50 or over. It is often said that if someone has been on IB for two or more years they are more likely to die than get a job. Welfare Reform states that this is unacceptable.
Society's attitude to sickness and disability has changed. There has also been a growing expectation of the right work amongst disabled people.
The Welfare State has been slow in catching up with this. Even the name IB is inappropriate, focusing on incapacity. Welfare reform aims to change this, based on the idea that work is good both economically and for self esteem.
It is been particularly unfocused when it comes to dealing with those with mental health problems or learning disabilities.
With the national roll out each person will get access to a personal adviser. No one will be forced to work. The work focused interview will be about rebuilding confidence, skills and self esteem. In achieving this we need to ensure that support systems are in place.
One in six of those on IB have dependent children. Welfare reform can contribute to ending child poverty.
With reference to this the challenge to get one million off IB is as nothing compared to the target to end child poverty. The DWP recently commissioned Lisa Harker to produce a report "Delivering on Child Poverty: what would it take?" which states the need for more intervention by the Government to help parents and children.
The 2010 target to halve relative child poverty will not be reached despite welfare reform.
Nine out of ten of those on IB want work if they receive the proper support but welfare reform must also take into account the fact that they will be competing with a global workforce.
Q. With reference to arthritis sufferers and those with MS and Parkinson's has the Government calculated the numbers who will be taken off ESA by the new PCA test (which does not have any descriptors for 3 points). Will these people be more likely to find work once the support provided by ESA is denied them?
A. The expectation is that a similar number pass the new test as the old one. However it may not necessarily be the same people passing the test due to greater statutory pressure on employers to make adjustments in the workplace.. The expectation is that there will be an increased number of those with mental and learning disability passing the test.
There will be two pilots to iron out any problems before the new test is finally introduced. The new test and descriptors are available on the DWP website.
Q. Will those aged between 16 and 19 who are in education be expected to attend a work focused interview.
No, but we need to provide better intervention for those not in education.
Q. What will be done about encouraging employers to employ disabled people? Also what will you do to ensure that the public and voluntary sector do the work that you want them to to do in terms of rehabilitation and training as this has been poor in the past. How will you monitor this?
A. Our aim is not to force employers by legislation but to encourage those employers who do employ disabled people to share/cascade positive experiences.
The public sector is a massive employer and it must demonstrate that it has done everything it was supposed to do before trying to persuade the private sector.
Q. Under the current system there are problem with the withdrawal rates for benefits. Once someone goes off IB and starts work they will start to lose 85 pence in the pound once they begin to earn over £114 a week. This goes on until they have a low income of £16,000. Are there plans under the new ESA system to reduce that withdrawal taper?
A. This is not a new problem. There are two things we are doing. The first is we are seeing if we have got the permitted work rules right. We are also considering the role of return to work credits (these will be funded by the Treasury with the national role out and so will be extra to any funds for ESA provided out of the DWP budget). We should also promote other in work benefits such as housing benefit. "Delivering on Child Poverty: what would it take?" raises serious questions as it was found that four out of ten children in poverty live in homes where a parent works. I am not going to go into specifics about this problem at this point.
Q. One concern is prescription charges. Disabled people going back into work will need support, including that provided by prescriptions. Has any consideration been given to this?
A. We have tight resources and must use these effectively. Providing free prescriptions for all IB customers is not the best use of these resources but we are happy to continue discussing this.
Q. Two queries. With regard to backdating. Those eligible for the support element of ESA will not be able to get this backdated to the date of claim. My understanding is that they will not get this rate of benfit for the first 15 weeks. The second question concerns sanctions. You have stated that no one will be forced into work but don't sanctions do exactly that?
A. We are making no assumptions about anyone during the 13 week period. After that they will be moved onto ESA. This will not be backdated except in one circumstance. That is when a claim is not processed within 13 weeks and this is the fault of the DWP. Then the backdating will be to the 13th week. I should also mention that beyond 13 weeks those under age 25 will not be subject to discriminatory age rates following the 13 week assessment, though these will apply during the 13 week assessment period.
Robin gave a presentation on disabled people, work, and the tax system. You can download his PowerPoint presentation from the link below.
The Low Incomes Tax Reform Group (or LITRG) was set up in 1998 by the Chartered Institute of Taxation, an educational charity, to be a voice for the unrepresented in the tax system.
Four years ago as we did research for our work on pensioners and students and tax credit claimants, the penny dropped, and we realised that we were bumping into examples across the spectrum of taxation, where the tax system either discriminated against those with disabilities or had introduced provisions to help but was perverse in how it went about it.
We wanted to challenge the government and the tax gatherers so we published a report in 2003, which we still use as a base for measuring change (see LITRG report disability in tax and related benefits: the case for a modern and coherent approach).
One area in that Report that needed more review was the VAT reliefs on goods and services supplied to disabled people, and next January we’ll publish a new report suggesting how those rules can be made more generous and logical. For example, why should it be if you want one of Disability Alliance’s excellent books you can buy one without paying VAT, but if you are blind and want the same book on a cd you have to pay VAT?
For much of this year we, and specialist disability groups campaigned, during the progress of the Finance Bill through Parliament, for the very restrictive definition of ‘disabled person’ in the tax rules on trusts to be widened – something on which Disability Alliance has itself campaigned in the past (see the LITRG article the wrong sort of disability. Disabled trusts: what is the latest position?). We were successful on some points, and are refusing to give up on the others.
In our line of work we come across two common misconceptions:
The basic personal allowance for the under 65s – that tax-free slice of income that everyone gets – is little more than £5,000 this tax year, and even for people over 75, who get the highest personal allowance, is less than £7,500. So a household with two people under 65, each earning no more than the personal allowance, still has an income of well below the official Government poverty measure. And if that income is earnings from work and you are not a pensioner, you may also be paying national insurance contributions (which are administered by the taxman).
You may think it farcical that the basic tax allowance represents no more than 18 hours a week working at the national minimum wage.
If you are working for 16 hours a week or more you may also be claiming working tax credit (as well as paying some tax and national insurance contributions).
And even if your income is so low that you are outside the tax bracket, if you have a child or children, you are likely to be in receipt of child tax credit and experience the tax system through that route.
Such data show how tax and benefit rates and thresholds at this end of the income distribution are set without reference to other rates and thresholds elsewhere in the system, producing a web in which our clients can get hopelessly entangled. Tax is as much a part of that web as benefits and tax credits, particularly where work is involved.
I’d like to focus now on the tax obstacles disabled people may face when they enter the workplace, or when they wish to continue in work having become sick or disabled.
The tax system contains many reliefs for disabled workers, but more could be done through the tax system to ease the extra costs faced by disabled workers.
In our 2003 Report, we noted (nothing new here) that it costs disabled people more if they wish to work than it does their non-disabled counterparts. Given that tax is something that a person in work is confronted with on their first payslip, we asked ourselves whether the tax system relieves that problem, or contributes to it. The answer was that despite many tax measures designed to level out the playing field, there are still bumps and potholes.
For example:
1. An employee who incurs costs in moving to a new location because of their job can get a tax-free relocation allowance from their employer of up to £8,000. Disabled employees may well have greater costs than non-disabled employees, for instance if their new home is adapted; but there is no enhanced allowance for disabled employees on a job-related move.
2. If your employer helps out with your home to work commuting, you won’t have to pay tax on the ‘perk’ (if that is the right word for something which many would regard as a necessity); but if you, as a disabled employee, bear the cost yourself, you can’t claim the cost against tax. True, non-disabled employees can’t get tax relief for commuting costs either; but that leaves disabled employees with a higher bill for whatever extra costs they may incur, for which there is no recognition in the tax system.
The tax credits system helps disabled people to find work, but is bad at looking after people who become disabled while in work, and want to continue working.
If you fall sick or become disabled while in work, and you want to continue working, you could run up against some highly bureaucratic tax credit rules.
You can claim the disability element of working tax credit if you are in receipt of certain benefits, and have a disability that places you at a disadvantage in the workplace. You can also claim if you are already in a job, but because of a sickness or disability have had to work fewer hours, or take a lower-paid job, and this puts you within range of working tax credit.
That latter route is known as the ‘fast track procedure’. However, it is hedged about with so many restrictions that it is of little practical use. For instance, you have to have been incapable of work, and in receipt of statutory sick pay, incapacity benefit or national insurance credits for about 20 weeks before you can even claim, which makes ‘fast-track procedure’ a rather spectacular misnomer.
It does not help people who continue to work while sick, or who develop a debilitating condition over time while they are still in work. People who take time off work for treatment, but return to work before the 20 weeks are up, are also disadvantaged if on their return they assume different duties at a lower rate of pay, or fewer hours, than before their treatment.
At present, there is little sign that this defect is being remedied, or even that it will be as part of the work-focused reforms of the welfare system.
With a public body that is under such intense resource pressure as HM Revenue and Customs, having to do more over time with less, it is hardly surprising that they focus their priorities on those ‘customers’ who bring in the most revenue – ie large business, global enterprises. It would be hardly surprising if disabled individuals were not high on HMRC’s customer service priorities, and if disabled individuals on low incomes were lower down still. Yet we in LITRG believe that people on low incomes, who cannot afford highly paid tax advisers and whose only or main source of tax help is HMRC, should be the department’s highest, not lowest, priority.
Yet this tendency is what we have to combat as HMRC gains ever greater power and influence over the lives of individuals on ever lower incomes, because even in these days of Disability Discrimination Acts and disability equality schemes, disabled people still get a raw deal from the tax system. Much of this is because HMRC staff simply don’t understand the over-complicated system they are expected to administer, and this is compounded by a lack of training.
Example:
There is much confusion at tax and tax credit offices over the tax and tax credit status of various forms of incapacity benefit, with the result that non-taxable IB is all too often taxed, or counted as tax credit income, to the claimant’s detriment. We have even seen instances of non-taxable income support being taxed in error.
If a taxpayer gets something wrong, they generally have to suffer the consequences. If a tax officer or a Revenue computer gets something wrong, it is usually the taxpayer’s or tax credit claimant’s fault for not spotting the error.
Example:
Not long ago we assisted a tax credit claimant who was dyslexic and who had been overpaid because she was advised by a tax officer to claim the severe disability element of working tax credit, when in fact she was not entitled to it. As you will know, the Tax Credit Office generally write off overpayments if you can convince them that it was their mistake, and the claimant could not reasonably be expected to have spotted it. In this case, the Tax Credit Office refused to write off the overpayment because, they said, it was not reasonable for the claimant to believe the advice given by the tax officer, as the guidance notes accompanying the tax credits claim form set out the conditions for entitlement. We explained that the lady in question had sought advice originally because she couldn’t read the notes, being dyslexic. In the end the Tax Credit Office agreed to write off the overpayment – not without Head Office intervention.
That lady was fortunate – she sought advice. But for every disabled person in a similar situation who seeks advice, how many simply give in? Those are the hidden part of the iceberg. We in the VCS in both the tax and welfare rights professions owe them a duty to use our influence to bring about a change of priorities as the reach of the tax authorities extends ever further into our territory.
To conclude on a more hopeful note, HMRC seem to be taking their new duties under the DDA 2005 quite seriously. They will soon publish their Disability Equality Scheme, on which they have consulted us and no doubt many of you; in addition they have appointed a disability champion, a very senior Board member. So we remain hopeful that the framework will soon be in place within which HMRC can work in consultation with representative bodies to improve things for their disabled customers, in terms of both policy and administration.
Finally, in the New Year we will be revising our website to include a specific section to help those with disabilities. We welcome you contacting us and telling us about where you have had difficulties in either the law or your interface with the taxman. We can’t guarantee we can get changes made but we’ll have a jolly good try.
The panel consisted of Vanessa Stanislas, Chief Executive of Disability Alliance, Kate Green, Robin Williamson and Paul Treloar.
Q. Changes and improvements to the tax credits and benefits systems do not seem to solve problems but simply move them somewhere else. what does the panel think can be done about this?
A.Robin: There is a problem with crossovers, particularly since inflation has eroded the personal allowance. The tax system has always been thought of as something that affected the well off but the problem is made worse by the fact that benefits, tax and tax credits are all administered by different bodies and there is little crossover between the various departments - DWP, HMRC and local authorities). What is needed is a genius mathematician to go through all the different permutations for tax, tax credits and benefits to bring all those marginal reduction rates to a proper level.
A. Kate: I'm not a genius mathematician can suggest three things. The first is increase the role of child benefit, which is not means tested, is easy to administer and has no taper. If you haven't done so already I would urge you to sign CPAG's make child benefit count campaign. Secondly child support - we could maximise the amount of maintenance that people are allowed to keep. Thirdly don't reassess DLA when people commence work.
Q. From 4 December interviews by the DWP will be covered by the Disability Discrimination Act (under rules about public functions) up to the level of judicial decisions. Advisors may wish to make note of this. Also there are particular issues for families from black and ethnic minority groups (BME) given that these groups are among the most vulnerable in society and most likely to experience poverty?
A. Paul: It's a good point. I would like to think the Commission for Equality and Human Rights when they come into being next year will help us with some approaches. There are some opportunities within welfare reform to engage with BME communities though whether this will happen or not is uncertain. With reference to my previous job which involved advice provision. I think community groups as advice providers is the key to people from ethnic minorities getting advice on their rights and entitlements but there are few resources in terms of local and national funding. These groups remain hard to reach because services do not seem to have clue how to reach them rather than from any inherent contact difficulties. This is also made worse by the complexities of the benefits system which means that the attempt to make simple changes for the better can make things more complex.
A. Vanessa: Some time ago Disability Alliance gave evidence to the Select Committee about benefit delivery to BME groups and recommended that unless there was ethnicity monitoring of claimants the DWP would not know where to begin to deal with this problem. Unfortunately these recommendations were not acted on when we checked a year later.
Q. What specific responsibilities should employers have with regard to ESA?
A. Paul: There has been little new material on the DWP website since June and there seems to be no public strategy for employers, despite Jim Murphy's claims that the Government intend to cascade down good practice examples. One major problem is the difficulties experienced by sick and disabled people trying to keep their jobs once they fall sick.
A. Kate: There seems a lack of willingness to enforce the legislation that is already in place. Jim Murphy also mentioned the role of the public sector as employer. The public sector's record is as bad as the private sector when it comes to adaptation and accommodation for disabled workers within the workplace. In addition the public sector could also set an example by encouraging good practice from those firms contracted by the public sector.
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