Select Committee on Work and Pensions Minutes of Evidence


Examination of Witnesses (Questions 239 - 259)

MONDAY 6 MARCH 2006

RT HON JOHN HUTTON MP

  Q239  Chairman: Good afternoon, and welcome to you, Secretary of State. The Government has set very ambitious targets to reduce the incapacity benefits caseload by a million and also to move 1 million older people into work. Can you say how you differentiate between those two targets, particularly for the over 50s, and if somebody is over 50 on Incapacity Benefit and moves into work will they count against both targets?

  Mr Hutton: It is an incredibly ambitious target, you are quite right, Terry, particularly if you look at the last 20 years of what has happened on incapacity benefits. We have seen very significant increases. I think I am right in saying it has trebled since the late 70s. We all have probably got a very good sense of why that has happened but I think the target of a million off in 10 years is the right general approach that we should set for ourselves. It is what we think we can achieve if we are successful in the national roll-out of the Pathways to Work schemes, and if we can provide more help to keep people staying at work when they are sick for as long as possible. It is going to be a really tough call to get to the million. We have not set about this exercise with a strict sense of "Every year we ought to set ourselves a particular individual annual target", I really do not think we could properly do it that way, but I think it is the right thing to do. It enshrines the ambition we have for these reforms. We do believe, based on the success of the Pathways to Work pilots, that it is an achievable objective for us to set, but I am certainly not going to try and pretend to the Committee today that it is going to be anything other than an incredibly tough challenge for us to realise. But I think we have a choice really on all these things. We could have chosen to continue as we were, and we are seeing now significant change. The numbers coming into incapacity benefits have come down by about a third over the last few years, and we are seeing now the first fall on an annual basis of the numbers on incapacity benefits, but that is all very incremental. Our analysis, basically, and the reason we have brought forward these reforms, is rooted in an argument that I hope Members of the Committee will feel able to support that the system is currently failing; there are literally hundreds of thousands of people who are sick and disabled. For that reason I do not think we should continue with a failing system. I think we should approach this reform from the basis of tackling poverty and social exclusion, which essentially is what happens if you have been on incapacity benefits for a long period of time. That it is the role and responsibility of a modern, active welfare state, to try and provide more support, help and encouragement to people who in the vast majority say they want to work again to try and realise that ambition. I think it is going to be tough but it is absolutely the right thing to do.

  Q240  Chairman: Do those targets reflect the almost certain increase in numbers on incapacity benefits following equalisation of state pension?

  Mr Hutton: They will have to take that into account. Potentially this could add maybe 200,000, maybe more, on to the target that we have to meet having set it for ourselves. But yes, they will have to take into account the effect of equalising the state pension age, which I think, as everyone recognises, is going to see more working age, because they will be working age, adults staying on the benefit system, particularly Incapacity Benefit and its successor, for longer than would otherwise have been the case if SPA, state pension age, had stayed at 60 for women. But again, I do not think there is any question of us trying to torture the data until it confesses here. It will be a million off incapacity benefits starting from where we are now over the next 10 years, and during that period of time from 2010 onwards, as state pension age begins to increase gradually for women, that will have an effect on the numbers we are dealing with. But that is the objective that we set for ourselves and yes, it does take into account the potential increases for the numbers on working age benefits, yes.

  Q241  Chairman: Looking at the role of GPs and primary care in this process as outlined in the paper, the BMA said "the central purpose of the primary healthcare team in managing the sick is restoration of health, or where this is unrealistic ensuring the best possible strategies for the patient to manage the chronic illness." Can you square that statement with the role that you envisage for GPs and primary healthcare teams in getting people back to work that you have set out in the Green Paper?

  Mr Hutton: I think we can. I think the principal responsibility here of the general practitioner is to secure the best possible outcome for the patient. We know in some cases that that would mean that it is the right thing to do to try and keep someone in the work place, and I think there is a significant body of medical evidence and research that confirms that, and I would be very happy to share that with the Select Committee. We are not trying to ask GPs to perform roles that are not consistent with their primary and over-arching responsibility to secure the wellbeing of their patients; I do not think that is true, and I think crucially, in relation to the incapacity benefits reforms and the replacement of the incapacity benefits with the new Employment and Support Allowance, we are saying that we think it is better for decisions about whether people should qualify for the benefits to be made by the benefit system, as it were. It is our responsibility to make those determinations and judgments, and to that extent I am at one with where I think the BMA are, but I think it is perfectly possible to reconcile the two statements because I believe very strongly that the vast majority of GPs do see their responsibility as being to secure the best possible outcome in the general sense of wellbeing in the wider sense of the word for their patients. That is principally about their medical condition, of course, they are physicians, doctors, that is their principal responsibility, but we know, for example, in relation to mental health the importance of keeping people in contact with the work place in terms of tackling depression and social exclusion that can often be the consequence of people being away from the work place, the isolation that sometimes follows from that. I do not believe that the Green Paper reforms in any way compromise the role of GPs, no, and I do not think it is right to say that we are trying to do something that is fundamentally at odds with the wider responsibilities that GPs I know have and feel and demonstrate towards their patients.

  Q242  Chairman: What future role do you see for what some would call the "infamous" sick note?

  Mr Hutton: I do not know who uses the word "infamous".

  Q243  Chairman: I will, then!

  Mr Hutton: I am glad it is not a speech of mine that you were quoting at me. I do not think I have ever used that word. Look, there is an obvious and proper role for GPs in relation to that process, and the Statutory Sick Pay scheme obviously, in particular. We are proposing a series of changes in the Green Paper that we think will make Statutory Sick Pay more easily understood by more employers and, together with the wider changes we are trying to introduce, that will have the combined effect of keeping more people in work than automatically assuming that the best place for them is to come out of work and on to the benefit system. So there will clearly need to be a continuing role for GPs in that system; I think that is taken as read. But I think we are right to look at the relationship between Statutory Sick Pay and incapacity benefits. There is an obvious connection between the two and the Green Paper has tried to make that connection and propose some changes. It is important to bear in mind here, as in other parts of the Green Paper, this is a paper for consultation. We are proposing a number of changes to Statutory Sick Pay on which we would be interested to hear the views not just of employers but others as to whether they make sense or not, but I am convinced that we have to look seriously at the relationship between Statutory Sick Pay and incapacity benefits, and we are proposing in particular, for example, that there should not be an automatic transition. I think it is absolutely essential before someone qualifies in future for the new Employment and Support Allowance, which will replace Incapacity Benefit, that there is a proper assessment of that person's health and eligibility for that benefit, and I think this is one, and there are other areas, where I think we can, as it were, make sure that the gateway into the new Employment and Support Allowance is properly controlled and accessed, not just for the benefit, clearly, of taxpayers and businesses and the wider community but for those people themselves as well.

  Q244  Mr Dunne: Just before we get into too much more of the detail, could I take you back, Secretary of State, to the overall target you were referring to at the beginning? Can I be quite clear that the one million reduction target is a net target, that you are not just coming off but also coming on?

  Mr Hutton: Yes.

  Q245  Mr Dunne: Can you confirm to us how many people the Department are estimating will come off naturally through progressing from incapacity benefits into pensions?

  Mr Hutton: I will have to give the Committee some detailed figures on that. I do not have those with me. I think it is true, it is a net figure, so we are starting from 2.7-2.72 million. By 2015-16 I would like to see that figure down to 1.72 million, so it is a net figure. We are not trying to do any clever statistical sleight of hand on this. The reduction will come principally from two sources. Certainly in the majority of cases the reductions will come from the roll-out of the Pathways to Work-type scheme, so we can do more in placing people who are currently on incapacity benefits and on the Employment and Support Allowance in the future back into work where they want to be, and that is where I think the majority will come, but I think there will be some who we can prevent coming into the benefit system altogether, through better occupational health, the work of the employment advisers, for example, whom we would like to see in GP surgeries as well. We have to do it from both ends of the curve, so to speak. Yes, more active help from people on benefit to get back into work, but also providing more help at the beginning of that process so they do not come into the benefit system altogether and, if we can be more successful at both ends of that curve, we have every prospect of realising that aspiration of getting a million people off incapacity benefits. I would be happy to share the details of figures on, for example, the numbers who currently leave IB and retire, because clearly there is an element of that too—but that happens now. Clearly, we are talking about going significantly further than the current trends. Roughly 650,000 of people a year come onto incapacity benefits. Last year we moved about 700,000 off, hence the net figure of just over 50,000, but clearly, if we are going to get a million off in 10 years we are going to have to systematically improve our performance right across the range, so it will not be achieved simply by relying on the current exits from incapacity benefits. I cannot change that; that is a demographic trend. We will come on to pensions reform at some point in the future, thankfully not today, so there is a statistical movement in that regard but that is not going to account for the minimum reduction. If we are going to get the million off, primarily it will be because we are more successful in getting people off benefit and back into work.

  Q246  Miss Begg: I have questions on the Personal Capability Assessment, the new proposed one. When Incapacity Benefit was introduced, the gateway to get on to the benefit was the old work test, and it was rightly criticised as being an all-or-nothing judgment that either somebody could do full-time work or nothing at all and concentrated too much on what people could not do and not on what they could do. So the Personal Capability Assessment was introduced to try and emphasise or concentrate on what people's capability of work was but, unfortunately, that has not worked because it does not operate terribly differently from the old work test, or in practice it does not. What is going to be different about the new PCA that is being proposed in the Green Paper that will in fact concentrate on a person's capability for work rather than just the negative connotations?

  Mr Hutton: That is the ambition we have for the new Personal Capability Assessment. It is a more accurate and more robust assessment of the capabilities of a person to, for example, perform tasks that could lead to employment eventually, and the analysis and the critique of the Personal Capability Assessment we did try and set out in the Green Paper. I think there is a general sense, a consensus, that the current system does not work terribly well and you can look at all sorts of evidence about that and particularly, for example, what happens on appeals, so I think it is perfectly right and sensible for us to have another look at this. Given the criticality of this part of the benefit system, this fundamental assessment of a person's capabilities, it is critical that we get this right because otherwise we are going to find ourselves five, six, seven years from now having exactly the same debate about the need to get the measurement process properly calibrated. What is different this time, I hope, is that we are going to set about this task of designing the Personal Capability Assessment in a different way, and the Green Paper made it very clear that we would, and we are going to, involve disability organisations, the voluntary sector and others; the medical profession obviously, and the BMA is welcome to be part of this; to make sure we draw on the lessons of the last few years that the PCA is currently structured; international evidence if that is appropriate; the best medical and occupational health evidence that is available to us, to design the new PCA to do the job we want it to do. So, as we intend to, if we do it in that consensual way, get people around the table who have a critique and analysis of the current system that is relevant and that we can draw on, we can get it right, but it is really important for the success of these reforms for people to have confidence that the PCA process, the new one, is going to treat them fairly and reasonably, and that they have themselves—and we should have, all of us here in this House and in the country, all of us as citizens and taxpayers—confidence that the system is doing things we want it to do. That is, in a rather longwinded way, how I hope we will get it right.

  Q247  Miss Begg: What is the timescale for starting the process of the redesign? When we had the charities in front of us last week they said they had not received an invitation to get involved in the process you have just mentioned.

  Mr Hutton: We have to crack on with this pretty soon, so if they have not got the invitations yet, they will be getting them very soon.

  Q248  Miss Begg: You are not going to wait until all the submissions are in for the Green Paper before you start that process? You will start that process as soon as possible?

  Mr Hutton: I think we should start as soon as possible.

  Q249  Miss Begg: There is also reference to other health professionals. What other health professionals do you envisage being involved in the process, and are they going to be involved from the NHS or the voluntary sector or contracted out to the private sector?

  Mr Hutton: We have a contract, obviously, with Atos Origin to perform the Personal Capability Assessments, and I think that contract does not run out until 2012, so I think it will be Atos Origin who will be delivering the Personal Capability Assessment. In terms of the range of healthcare professionals that need to be involved in it, I think that is going to have to be something that we discuss with people. I think it is sensible; generally, my understanding is that people agree that we should involve the skills and expertise of a wider relevant range of healthcare professionals to help us do this. There will be a list of people, I am sure, occupational therapists and physiotherapists and others, but who actually is involved in individual assessments I think is going to have to be something we discuss with people over the next few months.

  Q250  Miss Begg: If you are already tied into a contract for the delivery of this, will they be able to fulfil the 12-week target to get the PCA done? Do you think they will?

  Mr Hutton: I am confident they will, yes.

  Q251  Miss Begg: What about contingency plans if they cannot? That obviously has implications for what happens further down the line, particularly in regard to level of benefit.

  Mr Hutton: Yes. We will have to operationalise, obviously, the delivery of this part of the reforms sensibly and seriously. I am advised that we can deliver the Personal Capability Assessment within the 12-week target that we set out in the Green Paper. On a general level, obviously we have to get the details right but it is absolutely essential that somebody coming into benefit and claiming this benefit gets their case dealt with promptly and quickly. There are lots of other ways we could do it. We could say we will do it in 26 or 52 weeks or something—that is totally unacceptable. We have to do this and we should be able to swiftly, efficiently and promptly. My advice is that we will be able to do that and, obviously, I regard that as a fundamental part of these reforms and I will be doing all that I can to make sure that happens.

  Q252  Miss Begg: RNID, when they were giving evidence last week, came up with quite an interesting take on the PCA, that it should not be just about an individual's capability but actually a much more holistic approach, where you looked at what the labour market was, the chances they might have within the context of their lives, whether they have caring responsibilities and things. Is that the kind of route that you are likely to go down when you are redesigning the PCA, or will it be much more of the "tick box" that we have seen in the past?

  Mr Hutton: I do not think the "tick box" approach is a brilliant one to go down, but I think what emerges is that it is too early to tell, and I do not want to sit here and pre-empt the outcome of that exercise because I think it is very important that the Department goes into it with an open mind. We want the new assessment process to be right and to treat people fairly and reasonably, and at the end of the process for the person who is claiming benefit to feel that they have been treated properly, and their condition has been fairly assessed. That is an important thing to strive for and that is essentially the objective that I have asked my officials to make sure comes out of this. What that means in relation to specifics, and the specific point you have raised, I think it is quite difficult for me to give you a concrete answer on this afternoon.

  Q253  Miss Begg: The in-flow on to incapacity benefits is quite a different make-up from those who are sitting on stock. The majority is now mental health problems and their younger cohort as well. The way the PCA operates for those with mental health problems is different from those with physical disabilities. Somehow—and I can say this as someone with a physical disability—it is easier if you have a physical disability because you can quantify exactly the effect it has, but when it is a variable condition, as with mental health, sometimes it is dependent on perceptions and how the individual feels about themselves. Are you confident that it is possible to come up with a PCA that will take account of variable, fluctuating mental health conditions, where the points system really does not always give a proper indication of what an individual may be capable of one day as opposed to the next? With mental health, if someone has 9 points, they are capable of full-time work and 10 points they are capable of no work, and somehow the inability to go out on your own only gets one point but that may be the big barrier that stops someone from entering the work place. What extra work are you going to do on the mental health assessment to make it more responsive than the present one is?

  Mr Hutton: We have again in the Green Paper set out how we intend to do this. Clearly, this part of the PCA process has been the subject of sustained and longstanding criticism, particularly from the mental health organisations and many of the disability movements, and we have tried to respond to those concerns by saying again, very much in relation to my previous remarks about the wider tests, that we should be able to sit down, and we intend to sit down and talk to people about what these criticisms are and how we can, if we can, respond to them. I think it is perfectly possible to devise a sensible test in relation to mental health, of course. It will need to rely very heavily, of course, on expert medical opinion but I am sure it will need to go wider than that, and those are, again, discussions we will need to have with mental health interest groups and others who have an interest in this. I suspect we will see in the responses to the Green Paper more suggestions that will come forward; I very much hope that is what happens, and we can then sit back and reflect upon them. In relation to my earlier remarks about the wider PCA processes, I really do want to try and get to a point where these are historic arguments. Maybe there will always be an argument about this, and I suspect that probably is true, but I think we should be able to tackle head on some of the more fundamental criticisms in this redesign exercise. Just as it is important in relation to physical disability, it is just as important in relation to mental health that we get a broad consensus about a sensible way forward. You are quite right too, and I think this is a fundamental challenge to all of us, and it became very clear to me going through this in the run-up to the Green Paper, that we may have a stereotype of what it is to be on incapacity benefits. I think we should lose that because the picture is changing very quickly. We are seeing, for example, declining numbers on incapacity benefits in the traditional areas where we know there was a problem in the 80s and 90s. We are seeing an increasing number of people getting mental health problems, we are seeing rising numbers and increasing pressure on incapacity benefits in some areas not traditionally associated with incapacity benefits—London is a very obvious example—and increasingly it is much more likely that the person is a younger woman who has picked up either a mental health problem in an office-based work place or incapacity relating to work in the office, and we have to take account of that too. The situation is changing very quickly in relation to incapacity benefits and we have to try and stay ahead of it.

  Q254  Miss Begg: There is one particular thing with regard to mental health where there will have to be an element of trust in any PCA because it will be the individual's own perception of their condition as to whether they think they can work or not, and it is very difficult for an outsider, even though they may be medically trained or have an insight into mental health, to judge whether that individual is capable or not if they themselves believe they are definitely not capable of work.

  Mr Hutton: Those are going to be the hard cases, and there are probably quite a few of them. Yes, I am sure that is true, and we probably all know from our own constituency work that not everyone agrees with the diagnosis and assessment made in this process, so I think we all have to be honest about this. I do not think we are ever going to get to a point where we are going to have 100% of the cases 100% of the time properly analysed. I think that is unlikely to be the case. Remember, medical science is a human science, not a divine exercise. There are mistakes made in that process, and that is always going to be so. We have to have a system that deals with the obvious mistakes and so on, and I think the appeals system, properly functioning, can deal with that, but it is our ambition to try and respond to the principal criticisms and concerns that have been expressed about this, to have a dialogue, particularly in this case, with the mental health organisations and specialist interest groups who have been longstanding critics of the current arrangements to see if we cannot reach a sensible agreement about this, about the way this test should be constructed in the future. We certainly go into this exercise with that intention, very much so, and to the fore.

  Q255  Justine Greening: I think everybody welcomes the fact that the mental health test will be more comprehensive and hopefully reach a better outcome. When do you think you will come out with more detail? When we had the evidence sessions, some of the charities involved in this area expressed concern about the lack of detail. You said there was a review happening. When do you expect to be able to come back with more facts about what the new test will look like?

  Mr Hutton: I think we should be able to do that later this year.

  Q256  Justine Greening: Secondly, would that be something that Atos Origin, as an assessment company involved with a contract, would also continue to do? Whatever the new test is, would it be under the Atos Origin contract, or would you look at having another company perhaps do it if it was specialised enough that it needed skill sets that Atos Origin did not have?

  Mr Hutton: I do not know the answer to that. My assumption at the moment is that it would be Atos Origin because they have the principal contract working for us.

  Q257  Jenny Willott: Moving on now to the Employment and Support Allowance, although the allowance would be paid at a higher rate than currently, not everyone would benefit; it depends what they currently would be on. Has the Department made any assessment of how many winners and losers there would be under the new benefit when it is introduced in comparison with the current system?

  Mr Hutton: That will depend on what the actual benefit rate for the Employment and Support Allowance actually is.

  Q258  Jenny Willott: Any clue?

  Mr Hutton: We have not made a decision about that. We were consulting in the Green Paper about that proposal so I am sure people will come back with some specific recommendations to us. We have said it will be above the current long-term rate, which is about £76.50, and it will go up in April to over £78. We have said it will be fixed at a point above that rate, and clearly any calculation about winners and losers will depend on what that calculation is. I think it is important to bear a couple of things in mind, however. There are going to be no real cash losers because this is a new benefit claim for at some point after 2008, and we have made it very clear, Chairman, that we are not changing entitlement to benefit under the current system for the existing claimant, so there is going to be no actual cash lowering, and it is very important to be clear about that. We have also signalled, secondly, that for those who clearly have no prospect of a return to work, for the type of people who are terminally ill or who have serious disabilities, we want to pay on top of that a more generous allowance through the support component of the new Employment and Support Allowance benefit for the people in that category, so I can say very clearly this is not about cutting people's benefits. If anything, we are trying to make sure those who have the greatest need get more, and we treat people fairly and reasonably, as we will do in the new system, as we should.

  Q259  Jenny Willott: Will you be doing an assessment when the new level has been determined as to whether people would have got more on the old system and how many winners and losers there would be?

  Mr Hutton: Yes.


 
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