THE BENEFITS SYSTEM
Fear of losing benefits as a barrier to work
48. Early retirement should not be seen as an
acceptable way to ease out older workers when they develop a health
problem, nor as an alternative to employers making the reasonable
adjustments to working arrangements or premises which they are
required to by law. We recommend that the Government include,
in its review of early retirement in the public sector, an evaluation
of the ways in which the needs of employees with health problems
might be met in the workplace, as an alternative to early retirement.
Response: The Government
wants to tackle the waste which arises when people's working lives
are disrupted by illness or disability. We recognise the need
to encourage employers to respond to employees' health problems
in a way which allows those who are capable of continuing in work
to do so, rather than opting for early retirement.
During 1999 Ministers examined how to improve the
co-ordination of the good work already carried out by employment
and health services, social services and the DSS Medical Services.
DfEE, DSS and DoH hope to bring forward proposals this year which
would enable creative partners to add value and to contribute
to this work.
Initiatives will be focused on the 17,000 people
who complete 6 weeks on Statutory Sick Pay every week and who
at that stage are at risk of not working again. It will be important
that work is done to change attitudes, and ensure that services
work in tandem and are able to carry out the work involved.
We feel it inappropriate for those who receive an
ill-health pension, by being found permanently incapable of teaching,
to be able to return to teaching without giving up that pension.
The policy of preventing the re-employment of teachers in receipt
of an ill-health pension was introduced on 1 April 1997 and is
supported by the current Government. The Department has recently
made changes to its circular on Medical Fitness to Teach to ensure
it complies with DDA requirements.
We are currently drafting Occupational Health Guidance
directed at occupational health personnel involved in the assessment
of fitness for teaching with the aim of achieving appropriate
and consistent recommendations.
The Government notes the Committee's recommendation
that any review of the public sector should include an evaluation
of the ways in which the needs of employees with health problems
might be met in the work place as an alternative to early retirement.
The Personal Capability Assessment
49. We welcome the replacement of the All Work
Test by the Personal Capability Assessment, in particular the
shift in emphasis from incapacity to capability. However, it is
likely to be more effective if it is accompanied by changes to
the other rigid benefit rules to allow greater flexibility to
try out employment options suggested by the PCA without risking
loss of benefit.
Response: We are pleased
that the Committee welcomes the more positive approach of the
Personal Capability Assessment. The new Assessment will help Personal
Advisers give the right advice and support to their sick or disabled
clients. It will not itself suggest employment options, but will
provide the Personal Adviser with expert medical advice about
people's work capabilities and restrictions. This will give a
firm basis for their discussions with clients on how best to return
to the labour market.
The changes to the assessment for Incapacity Benefit
will require Medical Services doctors to enhance their skills
in the principles of occupational health and disability awareness.
Early trials of the new PCA approach have indicated that they
can perform well in the enhanced role, providing potentially valuable
information to the Personal Adviser and the client. We will carry
out a detailed evaluation of the PCA over the next 12 months.
We have introduced a number of changes which make
it easier for people to try out intermediate options and gain
experience to improve their employability. We have removed the
16 hour limit on voluntary work—people on incapacity benefits
can now do as much as they want. In April 1999 the therapeutic
earnings limit was raised from £48.00 to £58.00 a week.
We are currently evaluating the effectiveness of a number of pilot
into-work measures for people on incapacity benefits such as work
trials, jobfinders grants and jobmatch payments. We are actively
considering what additional measures may be taken to build on
success so far.
Benefits during periods of study, training or
rehabilitation
50. The Committee recommends that the Department
of Social Security examines options to reduce the potential benefit
penalties for people trying out work, study, training or rehabilitation.
Response: We recognise
that the benefit system contains some disincentives for people
who want to try to work, and we are committed to removing barriers
where possible. People leaving Incapacity Benefit or Severe Disablement
Allowance to work with the help of the Disabled Person's Tax Credit
can, under current rules, return to their former benefit if they
need to reclaim within 2 years. We have already introduced a number
of new measures, such as the new 52 week linking rule for longer-term
incapacity benefits, and the removal of the restriction on the
amount of voluntary work people on those benefits can do. We are
piloting a number of other benefit flexibilities, and are continuing
to examine the scope for further measures to improve incentives
for people to move towards work.
Under the current rules Incapacity Benefit is not
affected when a person undertakes study unless they receive a
Government training allowance or the activities indicate that
they no longer satisfy the medical criteria for benefit. Where
benefit is withdrawn because a Government training allowance is
paid, a two year linking rule protects accrued benefit rates.
51. The current system of therapeutic work can
act as a disincentive to disabled people to try out work. We recommend
that the DSS undertake a survey of requests for therapeutic work
to ascertain the circumstances of those accepted or rejected.
We further recommend that the Government consider reinstating
the pre-1995 "good cause" provisions.
Response: We are aware
of concerns that the therapeutic work rules may be of limited
use to people whose conditions are not capable of being improved.
We are committed to removing barriers to work for people with
disabilities who want to take steps back to work, and are looking
at these rules, along with others. The evaluation programme for
the New Deal for Disabled People will include the role currently
played by therapeutic work.
52. We recommend that the Government set up new
systems to allow information from the PCA which indicates the
potential for therapeutic work to be flagged up in advance and
automatically approved as an alternative to doctor's advice. Where
therapeutic work is agreed with a claimant's personal adviser,
this should also be approved automatically.
Response: We believe that
personal advisers can play an important role in offering help
and advice on the opportunities available to sick and disabled
people. During early trials of the Capability Report, doctors
were asked to advise on the appropriateness of therapeutic work,
but advisers did not find this part of the Capability Report particularly
helpful. We recognise, however, that our developing welfare to
work programme will open up opportunities to reform and simplify
processes around therapeutic work, and agree that these should
be explored.
Earnings rules
53. We recommend that the Government consider
tapering earnings over the £58 limit or introducing a "rolled-up"
disregard over a longer period, say a quarter, to allow for fluctuating
earnings.
54. We recommend that the Government undertake
an evaluation of the likely impact of adopting one of these options.
Response to paragraphs 53 & 54:
We note the Committee's recommendations and will reflect on the
level at which earnings affect benefit entitlement as we consider
ways of providing more help and support for people who want to
return to work.
(The £58 earnings limit in the therapeutic work
rule acts to set a limit on the amount of work that may be undertaken
without affecting entitlement to Incapacity Benefit. It performs
a different function from the earnings disregards elsewhere in
the benefits system).
Hours rules
55. The Committee recommends that the Department
of Social Security and HM Treasury evaluate the role of the 16
hour rule, and its exceptions, for benefits and tax credit purposes.
Response: The 16 hour
rule applies across a range of benefits as a measure of what constitutes
a significant amount of work. For example, the 16 hour rule for
Income Support and Job Seekers Allowance reflects the fact that
benefits are primarily for people who are not in work, and ties
in with the minimum hours work qualification for in-work support
such as Disabled Person's Tax Credit. As part of our welfare to
work programme we are, however, continuing to examine all benefit
rules with a view to improving incentives and removing barriers
where possible.
Supported employment and benefits
56. The Committee recommends that the current
review of the supported employment programme should include the
impact of the benefits system on individual's work patterns, with
a view to changing regulations where they may be a barrier to
progression.
Response: The review of
the Supported Employment Programme is looking at the eligibility
criteria, progression, delivery mechanisms and processes of the
programme. It is therefore inappropriate to include the benefits
regulations. However, as part of our welfare to work programme
we are continuing to examine all benefit rules with a view to
improving incentives and removing barriers where possible.
The Disabled Person's Tax Credit
57. We recommend that the Inland Revenue undertake
a detailed evaluation of the role of the DPTC, in particular to
monitor the fast-track gateway and its impact on job retention.
Response: We attach considerable
importance to the evaluation of the Disabled Person's Tax Credit.
The Inland Revenue will mount an evaluation programme over the
period to 2002. This is expected to include use of administrative
statistics, qualitative research, survey of employers and surveys
of claimants and non-claimants. The programme will cover monitoring
and research on the fast track gateway and its impact on job retention.
Linking rules
58. We recommend that the Government consider
introducing an indefinite linking rule for young people credited
in to IB under the welfare reform proposals, to ensure benefit
security and to remove any incentives for this group to remain
incapable of work when they would prefer to be in a job.
Response: As now, the
52 week linking rule for those who enter work will apply to this
group. For those who leave benefit and who qualify for Disabled
Person's Tax Credit or start a work based training course the
linking period may be extended to 2 years.
In addition, we have announced our intention to introduce
a provision which will enable those who leave IB (paid under the
new rules) to take up employment, and who earn below the Lower
Earnings Limit (LEL) for a lengthy period, to reclaim benefit
at any time after the age cut-off even though they would fall
outside of the normal linking rules.
These provisions are specifically designed to provide
benefit security and reassurance to people disabled early in life
who wish to try work or training. If a person starts work they
will still have access to IB under the current linking rules.
If they pay National Insurance contributions they will be able
to claim IB on a contributory basis. However, if they work and
earn below the LEL they will still be able to re-claim IB but
under the new rules, despite the fact that the claim may be made
after the age cut-off.
The personal assistance trap
59. We recommend that the Government establish
a cross-departmental working party, to include external organisations
and experts, to examine a range of options within the tax and
benefits system that might ease the "personal assistance
trap".
Response: The Inter-Departmental
Review of Funding for Supported Accommodation was set up in 1996,
and charged with finding sustainable, long-term funding arrangements
for support services for vulnerable people. From April 2003 funding
streams for support services will be integrated into a single
"Supporting People" budget, to be administered by local
authorities.
This will consider pooling funding streams for support
services (eg the support element of Housing Benefit, Supported
Housing Management Grant, Probation Accommodation Grant, and Home
Improvement Agency Grants) into a single budget. The new single
budget will enable local authorities to plan and fund support
services to sustain vulnerable people in the community from April
2003.
"Supporting People" builds on the Government's
commitment to rebuild the welfare state around work and security.
It builds on other initiatives such as those to improve the role
of social services, and the Government's wider strategy of reforming
local government. To ensure that "Supporting People"
delivers on its objectives, the Deputy Prime Minister has established
an external reference group to inform the development of the "Supporting
People" policy. One issue that this group will be looking
at is how "Supporting People" can promote work incentives.
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