Select Committee on Work and Pensions Third Report


1.We welcome the Government's laudable aim of reducing the incapacity benefits caseload by one million. However, it will be very challenging to do this by 2016. Success depends very much upon the effort and resources that are invested by the Government, particularly over the next few years. Clarification of the baseline by which the aim to reduce the number of people claiming incapacity benefits is also required and we recommend that the Department publish this in the immediate future. (Paragraph 52)
2.The Committee is disappointed that the Department has not met its commitment to produce incapacity benefits caseload forecasts to 2016 and recommends that the Department does so as a matter of urgency. (Paragraph 53)
3. We recommend that there should be clarification of the status, importance and relevance of sickness certification in the process of applying for Statutory Sick Pay and other benefits (Paragraph 66)
4.We welcome the measures to reform Statutory Sick Pay as a necessary simplification that will improve the system for claimants and employers. The Committee is concerned, however, that further efforts need to be made to reconcile GPs with the changes that the Government proposes to make. The Committee recommends that the Department enters a close dialogue with health professionals, including those working for mental health services, GPs and their professional representatives in order to assess the most appropriate way that the Green Paper proposals on Statutory Sick Pay - and their wider role in helping ill or disabled people back to work - can be taken forward and to ensure full co-operation by all stakeholders. (Paragraph 73)
5.The Committee acknowledges that it is important to ensure that people are receiving the appropriate benefit for their situation and that it may be more suitable for some to remain on Jobseeker's Allowance rather than move to incapacity benefits. The Department should ensure that the distinction between the two is properly understood by Jobcentre Plus staff. (Paragraph 77)
6.The Committee welcomes the shift in eligibility criteria that the reformed Personal Capability Assessment will bring. However, the absence of detail in the Green Paper suggests that the Department has not made much progress in redesigning the PCA. This makes it difficult to consider how the reformed system will work in practice as we do not know what the new assessment will contain. We recommend that the Department carefully considers the evidence received during this inquiry, its own consultation, and the findings from the Pathways evaluation to ensure that the new assessment takes account of the complexity and reality of disabled people's lives, as well as the social elements of their disability, rather than simply whether they are entitled to benefit. (Paragraph 98)
7.We welcome the Government's decision to review the mental health component of the Personal Capability Assessment. However, in order to ensure that concerns with the current assessment are adequately addressed, the expert panel tasked with the review of the PCA for those with mental health conditions must include people with mental health problems, their carers and organisations representing them. The new assessment should also be piloted with those with mental health conditions to ensure it is suitable. (Paragraph 108)
8.The Committee welcomes the Government's commitment to carry out the revised Personal Capability Assessment within 12 weeks but is concerned about how often this will be achieved in practice. Those who are not assessed within this period should not suffer financially as a result. The Committee therefore recommends that the Department establishes contingency measures for such an occurrence to ensure that ill or disabled people are not financially penalised. (Paragraph 118)
9.The Committee recommends that, rather than carrying out ad hoc case checks of existing claimants, the Department should review claims systematically. Case reviews should not be random but based upon specific guidelines. We recommend that the Department re-examines the processes that currently govern case reviews and consult on the criteria upon which future checks would occur. (Paragraph 120)
10.We are disappointed that the Green Paper did not contain any detail on how the new Personal Capability Assessment will assess those with fluctuating conditions. This is a difficult area on which DWP should consult extensively with stakeholders, including employers, to ensure that those with fluctuating conditions receive the right assessment and do not continue to be excluded from the labour market. (Paragraph 124)
11.The Committee welcomes the proposals in the Green Paper to reduce the number of appeals. However, we believe that further action is necessary to improve the quality of medical assessments. The Committee recommends that:
a)  a review of the length of time taken to complete medical assessments is undertaken by the Department;
b)  doctors should be encouraged to take the time to undertake assessments appropriately and should receive more training on best practice in performing assessments, particularly when dealing with mentally ill claimants; and
c)  more effort is made to gather medical evidence that may affect a case. (Paragraph 134)
12.The Committee acknowledges the importance of involving all stakeholders in reforming all aspects of the Personal Capability Assessment (PCA) and welcomes the Government's commitment in the Green Paper to do so. We are not, however, content with the process that we understand the Department has now begun. Disability organisations as well as medical experts must play a key role in advising the Department on the content and delivery of the PCA, the 'reserved circumstances' group and the reform of the appeals process and we recommend that they are included in all discussions with the Department, and not merely consulted as a secondary process. We are also concerned by the delay in producing detail on the PCA and recommend that the Department produces a possible model for the reformed PCA as soon as possible. Once the Department has completed its work on redesigning the PCA we intend to examine whether it is satisfactory or not. (Paragraph 137)
13.The Committee is concerned that those moving onto the new 'holding benefit' may experience a substantial drop in income. We disagree with the Secretary of State's assessment that the Jobseeker's Allowance (JSA) level is an "obvious rate" at which to set the holding benefit. We recommend that the holding benefit be set at a level comparable with Statutory Sick Pay to ensure a more consistent income for ill or disabled claimants. If the holding benefit is set at JSA rates, it would be unfair to award younger claimants less benefit due to the age-related rates that currently apply to JSA. (Paragraph 145)
14.We are disappointed that there are a range of issues requiring further clarification on the level at which the Employment and Support Allowance will be set. We recommend that the Department provide more detailed information in the response to this report. We urge the Department to work closely with disability organisations to ensure a proper assessment is made of the structure of the new benefit, how it will affect the income of ill or disabled people in comparison with the current system and work to alleviate inconsistencies within the system. DWP should ensure that the resulting benefit levels maintain the principle of no loss to existing claimants when a new benefit is introduced. (Paragraph 150)
15.The adequacy of the level at which the Employment and Support Allowance will be set is of great importance. The new benefit must ensure that those claiming either the Employment or Support component receive an adequate amount. We also recommend that the Department publish a full analysis and explanation of its calculations of benefit adequacy in this area, including the basis of future upratings. (Paragraph 155)
16.The Committee has no objections to the list of work-related activities in the Green Paper: the range is suitably varied and covers activities that may be regarded as a useful stepping stone to work. However, the Department should develop a strategy to ensure that all disabled people, including groups such as people with learning disabilities, deaf and blind people have full access to the range of services offered. We are also concerned that the Department is intending to extend compulsion beyond attendance at work-focused interviews without adequate training or evidence-based guidance for Incapacity Benefit Personal Advisers (IBPAs) in distinguishing claimants who are 'unwilling' to participate from those who are 'unable'. As the evidence shows that many existing incapacity benefits claimants are volunteering to participate in Pathways to Work without compulsion, we are concerned that without adequate IBPA training and clear guidance, increased compulsion could damage both the relationship of trust between IBPAs and their clients and the reputation of the Pathways programme itself. We recommend that the Department further explore involving a wider group of trained professionals to assist personal advisers in the important role that they play. (Paragraph 179)
17.The Committee recommends that claimants who have been engaged in work-related activity for a specified period of time, for example, one year, should review their action plan with their personal adviser and other specialists to ensure that the activities contained within it are appropriate for them. Once the new benefit has been in place for two years, we recommend that it is reviewed by the Department to ensure that the work-related activity system is working properly. As with all new benefits, it should also be subject to a full evaluation. (Paragraph 185)
18.We are very concerned that, by introducing a two-tier system, the proposed reforms will establish a further level of complexity. The unconditional higher rate could build incentives into the system which might 'encourage' claimants to claim the Support component rather than the Employment Support component of the Employment and Support Allowance (ESA). (Paragraph 197)
19.It also appears that little consideration has been given to policing the boundaries and creating a mechanism by which people can move between the two components. We recommend that the Department should clarify the mechanism and resources needed for people with fluctuating conditions to move between the Employment Support and Support components of the ESA. (Paragraph 198)
20.We recommend that the Department publish quarterly statistics on the performance of Pathways to Work. (Paragraph 201)
21.The Committee recognises that Incapacity Benefit Personal Advisers (IBPAs) have an important role in supporting their clients and the majority do it well. We are, however, concerned that they may not be as well trained as they need to be. In particular, we recommend that IBPAs receive a fuller training package on disability awareness and mental health. In addition, all IBPAs should be sufficiently skilled to be able to offer advice on benefits and tax credits and the impact upon them of moving into work. They should be able to calculate whether or not a claimant would benefit financially from moving into work compared with staying on benefits, or be able to refer the client onto someone else who can. The Department should also consider how IBPAs can benefit from the sharing of best practice experience. IBPAs should also be able to benefit from a clearly defined career path. (Paragraph 216)
22.The Committee recommends that the Department closely monitor the caseload of Incapacity Benefit Personal Advisers (IBPAs) to ensure that they are able to offer a full service to all of their clients. IBPAs should not be relied upon to carry out tasks that other Jobcentre Plus staff are employed to do. In our report into the Efficiency Savings Programme in Jobcentre Plus, we recommended that Jobcentre Plus should set out its timetable for providing administrative support to Personal Advisers. We reiterate this recommendation. (Paragraph 219)
23.The Committee is also concerned that there will be insufficient trained staff to deal with the increased number of WFIs that will take place under the reformed system. We recommend that the Department develop, and publish, a strategy to develop the IBPA workforce to show that the future national roll-out will be sufficiently staffed. (Paragraph 220)
24.We recommend that the Department urgently review the pay levels for Incapacity Benefit Personal Advisers to ensure that it is sufficient to attract the right calibre of people. (Paragraph 222)
25.The Committee recognises that a delicate balance is required to ensure that compulsory Work-Focused Interviews (WFIs) provide claimants with the opportunity of accessing the range of support services available through Pathways and Jobcentre Plus in a sensitive manner. We recommend that the Department revise the standard letter sent to claimants requesting attendance at their initial WFI to ensure its tone is one that will encourage attendance. (Paragraph 230)
26.The Committee acknowledges the importance of the services provided through the Condition Management Programme (CMP) and supports its inclusion in the extensions to, and national roll-out of, Pathways to Work. We are concerned that the Pathways evaluation suggests a varying level of awareness of the content of the CMP among Personal Advisers and recommend that the Department makes further efforts to ensure that current, and future, Advisers are properly informed of the content of the Programme and how to refer their clients to it. In addition we are also concerned that there may be a capacity problem with the numbers of trained Cognitive Behavioural Therapies or other appropriate therapists when Pathways is further rolled out. (Paragraph 247)
27.The Committee recommends that the Department reviews the access of its services to all disabled people and monitors service use by different groups of disability and support needs. The Department should also ensure that, where specialist support is needed from external organisations, that this can be easily accessed by Personal Advisers. (Paragraph 252)
28.The Committee welcomes the financial support provided to disabled people by the Return to Work credit. However, problems may occur when this support ends after 52 weeks. We recommend that recipients of the credit are fully informed of the time limit at the outset of their claim. They should also be reminded of the date when the credit is ending by their Personal Adviser at least eight weeks prior to its withdrawal, with opportunities for them to discuss their options. (Paragraph 256)
29.The importance of providing stepping stones from incapacity benefits into employment will be crucial in the success of the Pathways to Work roll-out. The Committee recommends that Incapacity Benefit Personal Advisers (IBPAs) and all private and voluntary sector service providers are given accurate information and training on the range of options that are available to disabled people to enable them to move towards paid work. Jobcentre Plus and other service providers should develop close partnerships with employers and voluntary sector organisations to build links that will promote opportunities for part-time and voluntary work for disabled people. The Committee also recommends that the earnings disregard for those currently claiming Income Support, and those who will claim the means-tested element of the Employment and Support Allowance, be increased to enable people to work at least four hours at the National Minimum Wage. This disregard should be up-rated annually. (Paragraph 276)
30.The Committee is concerned that existing claimants of incapacity benefits are in danger of being left behind as Pathways rolls out to new claimants. They may receive less benefit and less support to enable them to move into work. We recommend that the Department publishes a date by which existing claimants will be included in Pathways. The Department should also work closely with disability organisations to plan how best to reach existing claimants - who may have been on benefit for some years - and ensure that they are able to access the full range of support available to help them move into work, if they so wish. (Paragraph 280)
31.The Committee welcomes the involvement of the private and voluntary sectors in delivering aspects of the reform programme, including work-related activity programmes and work-focused interviews, recognising both the potential benefits and some of the risks. We are aware that there may be difficulties for some voluntary organisations, due to coverage, capacity issues or potentially conflicting roles. However, the requirement to deliver sanctions for non-compliance is more complicated. The Committee recommends that the decision of whether to administer a benefit sanction should rest with a DWP decision-maker rather than a contracted service provider. The Department should carefully consider the views of private and voluntary sector service providers received during its consultation on this issue. (Paragraph 302)
32.We welcome the Department's commitment to extend outcome-based funding, but believe it needs to consider carefully how best to progress with such funding to ensure that all providers - private and voluntary sector - do not skew their focus towards helping into work those who are already closer to the labour market. Providers must receive payments that recognise the ongoing support needed, not only to move a disabled person into work, but also to ensure their jobs are sustained. We recommend that the contracts reward providers for a range of outcomes leading up to and including job entry and that job retention for at least 12 months is rewarded. (Paragraph 309)
33.The Department should clarify its intentions for the future with regard to the wide range of employment programmes it delivers, including the New Deal 50 Plus. (Paragraph 311)
34.The Committee acknowledges the local and regional differences in the rates of incapacity benefits claimants and recommends that the Government takes further action to help incapacity benefits claimants in areas with a high claimant rate move into work. While we welcome initiatives such as the planned 'city strategy', further effort and clarification of the content of the strategy are needed. We recommend that the Department develop further local strategies to tackle 'pockets' of high incapacity benefits caseloads and to address issues that are specific to an area. The Department should work closely on these issues with, for example, local and central government and the devolved administrations. (Paragraph 321)
35.We believe that the Government should be more positive about Rehabilitation Leave, and recommend that the Department work with the Department for Trade and Industry, disability organisations and employers' representatives to consider whether Rehabilitation Leave is a useful and appropriate element in reforming Statutory Sick Pay. (Paragraph 331)
36.The provision of in-work support is crucial to encourage job sustainability among incapacity benefits claimants who move into work. The Committee is concerned at the low level of take-up of In-Work Support in current Pathways areas and also the apparent lack of support provided by Incapacity Benefit Personal Advisers (IBPAs) once an incapacity benefits claimant moves into work. The Committee recommends that the Department further develop the in-work support that IBPAs can provide to their clients, extend the provision of in-work support beyond six months, where appropriate, and work to raise awareness of the In-Work service among both advisers and clients. (Paragraph 337)
37.The Access to Work scheme provides valuable support to those disabled people who know about it. Awareness among disabled people and employers is far too low and the Committee recommends that the Department takes steps to remedy this immediately. The budget for the Access to Work scheme itself should also be increased as a matter of urgency as success of the national rollout of Pathways to Work will suffer if the budget is insufficient. (Paragraph 341)
38.For the Government to meet its aim of reducing the incapacity benefits caseload by one million there remains much work to do in engaging employers and addressing the poor understanding that many have on disability issues. The Committee acknowledges the valuable recommendations made in the Strategy Unit Report on the Life Chances of Disabled People but is extremely concerned that the Green Paper does not address the issue properly. The evidence we received suggested that progress towards reforming employers' attitudes is wholly inadequate so far. We recommend that the Department urgently address this difficult but vitally important area. We also recommend that the Department utilises Jobcentre Plus, and its service providers, to work more effectively with employers in promoting incapacity benefits claimants as potentially valuable employees. Particular attention needs to be given to changing employers' attitudes towards employing those with mental health conditions. Finally, we recommend that the Department undertakes a review of the Job Introduction Scheme and considers whether further subsidies for employers would be effective. (Paragraph 366)
39.The Disability Discrimination Act represents a significant step forward in promoting equal rights for disabled people. However, awareness among employers appears to be limited, and frequently inaccurate, and DWP should work closely with the Disability Rights Commission to improve it. We recommend that the DWP issue guidelines to the whole of the public sector with the purpose of encouraging employers in this sector to employ people with a history of mental illness. We would like also to remind the Department that the new disability equality duty that comes into force in December 2006 places considerable focus on Jobcentre Plus, and the Department as a whole, to lead the way in tackling disability discrimination. (Paragraph 374)
40.We recommend that the Department provide us with detailed figures for any areas of expenditure related to the national rollout of Pathways that will come from budgets outside the announced £360 million allocated. It should also detail any savings it expects to make as a result of contracting out services. Without this transparency stakeholders will be unable to assess whether the rollout to the remaining two thirds of the country will be funded to the same level as the pilots. The Committee also believes that the success of the Pathways pilots will only be replicated across the country if sufficient resources are made available for the roll-out. (Paragraph 387)
41.We also recommend that the Department should publish statistics - at least bi-annually - on the incapacity benefits claimant caseload, progress towards the target reductions and estimates of the resources that would be required to achieve the target. (Paragraph 388)
42.We are concerned that DWP does not appear to have put aside resources for existing claimants who wish to access the services offered by Pathways to Work. Every effort should be made to offer existing recipients of incapacity benefits the same opportunities as those which are being made available to new claimants. (Paragraph 391)
43.We are concerned that the Department appears only to be in the very early stages of planning the IT needed to deliver the new benefit. The new Allowance is due to be introduced in 2008. Given the poor performance of IT in the Child Support Agency and the recent problems with the Customer Management System in Jobcentre Plus, DWP should not be complacent on this issue. (Paragraph 395)
44.We recommend that DWP accelerates its IT planning for the reforms. While we understand that IT cannot be approved until the final designs of the benefit proposals are determined, the Department should be able to indicate its likely technology requirements, given the proposals in the Green Paper, and should consult key stakeholders upon these. The Department should provide an implementation assessment, setting out the purpose, timing, costs, IT requirements and major risks of the project - this should include risks posed by making changes to the IT system following implementation. (Paragraph 397)
45.We welcome the Secretary of State's assurance that Incapacity Benefit Personal Advisers (IBPAs) will not be included in any headcount reductions. As a major new programme, reform of incapacity benefits and the national rollout of Pathways should not be expected to contribute to the efficiencies agenda. We recommend that resources for training IBPAs are also ring-fenced. (Paragraph 403)
46.The 2007 Spending Review presents an opportunity for ensuring adequate funding of the welfare reform programme. We hope the Department works closely with the Treasury to ensure that sufficient funds for incapacity benefits reform, Pathways to Work national roll-out and the full reform package are made available. Given that the 2006 Budget announced 5% annual reductions in the Department Expenditure Limit for the Department, it is important that schemes which offer the potential for savings over the long term, such as this one may, are not squeezed out. (Paragraph 406)

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