As anticipated, George Osborne announced in the 2015 Summer Budget that from 2017 “new claimants of Employment and Support Allowance (ESA) who are placed in the Work-Related Activity Group will therefore receive the same rate as those claiming Jobseeker’s Allowance”. The reason given is that “The current system creates a financial incentive to claim sickness benefits over Jobseeker’s Allowance”. [1]In his speech, he also added: “The number of JSA claimants has fallen by 700,000 since 2010, whilst the number of incapacity benefits claimants has fallen by just 90,000. This is despite 61% of claimants in the ESA WRAG benefit saying they want to work”.[2]
Although technically true, the impression given is that after over 4.6 million Work Capability Assessments, only 90,000 claimants left incapacity benefits. In fact the picture is very different. Between May 2010 and November 2014, there were 5,274.740 new ESA claims (on flows) and this includes the IB claimants who upon being reassessed and entitled to ESA became New claims. And during the same period, 2,728.670 ESA claims were closed (off flows)[3]. Almost 3 million claimants who did not feel that ESA created a financial incentive for them. Although these numbers look big, because of DWP incompetence and the WCA disaster, proportionally more claimants left ESA or Incapacity Benefit under the previous Labour government than under Iain Duncan Smith’s DWP leadership, during which he has presided over a backlog of well over ½ million ESA claimants. In fact, their numbers were decreasing before the 2010 elections.
But where there is real deception is to imply that ESA is more attractive than the Jobseeker’s Allowance, discouraging claimants from finding a job. This argument was made in a recent report: How to run a country: Working age welfare [4]co-written by Charlotte Pickles, an aficionado of the revolving door between DWP and the CSJ (the right wing think tank set up by Duncan Smith), and who now works for Reform, another think tank set up by Conservative members, although one of advisory board member is Frank Field, who could qualify as an Honorary Tory.
This ‘report’ looks at the Work Programme and concludes: ‘Provider payment rates are higher for those in the JSA ex-IB group (ie. for claimants who moved from IB onto JSA) than for participants in the ‘new ESA’ payment group because they are judged harder to get into work. Yet the job outcome rates for the harder to help JSA ex-IB cohort are 18 per cent higher than those for the short prognosis new ESA claimants. DWP should look into what is driving this, paying particular attention to the effect of the differing levels of conditionality for JSA and ESA’.
The argument being that claimants in the JSA ex-IB group, who are supposed to be harder to help, fare better on the Work Programme in terms of job outcomes than new ESA claimants with a 3-6 months prognosis, and the explanation can only be, at least for the authors, that the level of conditionality for the WRAG group is not high enough (translated as not enough job searches, interviews etc. leading to more sanctions), which makes ESA more attractive.
What seems to have eluded this report’s authors is the differing status between claimants. The Ex-IB JSA claimants have been found fit for work, which is not the case for the new ESA claimants. Different levels of conditionality are applied, because it is recognised that the ESA claimants may work in the future, but are currently unfit to work. Although it is mandatory for them to undertake some work related activity or to attend some Job Centre work related interviews, they have no obligation to look for and apply for jobs, because they were assessed as unfit for work. Therefore, it is inappropriate but also disingenuous to make a direct comparison between the two groups.
However, the dishonesty does not stop there. The abysmal performance of the Work Programme, in relation to ESA claimants job outcomes, highlighted by the report and used by Osborne as the justification to cut benefits, may have a different explanation, and the OECD, that bastion of socialism, suggests that beyond improved interventions of providers and a better labour market situation, an improved WCA process ‘may help to better identify claimants were [sic] a 3-6 months prognosis is justified, thus increasing the average health level of this group’. [5]
It seems that even the OECD has heard of the WCA disaster and of its complete inability to assess accurately claimants’ fitness for work. What the OECD is saying is that claimants are given a too short prognosis and are nowhere near ready to move into work within 3 to 6 months, which explains why job outcomes for this cohort is so low (especially compared to ex-IB JSA claimants to whom they should not be compared anyway). At no point does the OECD mention that ESA creates a financial incentive or is more attractive financially or otherwise than JSA, and had it been the case, the OECD would be the first to say so.
The OECD also refers to something very interesting about the ex-IB JSA claimants on which the report’s comparison and Osborne’s justification for cutting disability benefits are based. According to the latest statistics released and updated in July 2015 by DWP[6], 257,700 reassessed IB claimants were found fit for work, but only 33.490 were referred to the Work Programme.
Put otherwise, 88% of IB claimants who have been assessed as fit for work do not go on to claim JSA and never appear on the Work Programme. They simply disappear from the statistics, neither in work, nor on benefits, a mystery also puzzling to the OECD[7]. Looking at the number of IB claims closed before assessment (just over 53,000 in September 2014, the most recent figures for this cohort[8]), it is not too stretching to suggest that the small number of IB claimants who go on to claim JSA are among those who closed their claims before assessment because they got better, and to look at this small cohort as a self-selected group of the healthiest claimants, ready to move into work, while the rest disappear under the radar. This would also explain why they fare better than the ESA claimants on the work programme.
An honest report would have looked objectively at all the evidence, and would not have had any pre-determined outcomes or used selective data to support a tighter alignment of ESA on JSA.
And an honest Chancellor would not portray the ESA claimant’s inability to move into work as an indicator of perverse incentives in the system and knowingly exploit the failure of the WCA to accurately assess them in order to cut disability benefits.
[1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443232/50325_Summer_Budget_15_Web_Accessible.pdf
[2] https://www.gov.uk/government/speeches/chancellor-george-osbornes-summer-budget-2015-speech
[3] https://tabulation-tool.dwp.gov.uk/flows/flows_off/esa/cdquarter/esa_phase/a_carate_r_cdquarter_c_esa_phase.html (accessed July 2015)
[4] https://www.reform.uk/wp-content/uploads/2015/06/HTRAC-WA-Welfare.pdf
[5] https://books.google.co.uk/books?id=L9sGBAAAQBAJ&pg=PA72&lpg=PA72&dq=ex+ib+claiming+jsa&source=bl&ots=FmZ1pYubMx&sig=OVVelJOGG0v_k_B6Vb_jSnx7BWA&hl=fr&sa=X&ei=3eegVainAcTiUbnIkOgF&ved=0CFMQ6AEwBg#v=onepage&q=chapter%204&f=false (Page 214).
[6] https://www.gov.uk/government/publications/dwp-business-plan-transparency-measures/dwp-business-plan-transparency-measures
[7] https://books.google.co.uk/books?id=L9sGBAAAQBAJ&pg=PA72&lpg=PA72&dq=ex+ib+claiming+jsa&source=bl&ots=FmZ1pYubMx&sig=OVVelJOGG0v_k_B6Vb_jSnx7BWA&hl=fr&sa=X&ei=3eegVainAcTiUbnIkOgF&ved=0CFMQ6AEwBg#v=onepage&q=ex-ib&f=false (Page 72)
[8] https://www.gov.uk/government/statistics/esa-outcomes-of-work-capability-assessments-claims-made-to-sep-2014-and-appeals-to-mar-2015 (see table 10)
What does OECD stand for ???
Organisation for Economic Co-operation and Development (OECD)
Interesting piece, thanks