Memorandum submitted by the Chartered
Institute of Personel and Development after the publication of
the Welfare Reform Green Paper
The CIPD believes that the current
high level of Incapacity Benefit (IB) claims cannot be fully explained
either by the degree of health related problems suffered by claimants
or an overall shortage of demand for labour in those areas of
the country with the highest incidence of claimants. We believe
in turn that appropriate reform of IB can itself help reduce the
number of claims by improving the employment and re-employment
rates of existing and prospective claimants.
The CIPD is therefore supportive
in principle of the rights and responsibilities approach to IB
reform outlined in the recent DWP Green Paper A new deal for
welfare: Empowering people to work. However, the CIPD has
some reservations about the detail of the Green Paper proposals.
The proposals will lead to a
fall in the number of new incapacity benefit claimants, but will
have only a limited effect on the re-employment prospects of most
existing, predominantly long-term claimants. This is partly because
of the lack of conditions placed on existing claimants but mainly
because long-term claimants face the greatest barriers to employment.
According to a CIPD survey of 750 employers, one in three UK employers
deliberately exclude people with a history of long-term incapacity
when recruiting staff.
More practical advice and guidance
is needed on how GPs and employers can work together. Further,
the CIPD is concerned that placing employment advisers within
GP surgeries may increase anxiety and stress for some individuals.
There is an anomaly in the suggested
operation of the proposed new Employment and Support Allowance
(ESA), which would allow ESA claimants who fail to engage in work-related
activity to continue to receive ESA set at the basic level of
Jobseeker's Allowance (JSA). Such ESA claimants should at the
very least be subject to the same job search conditions as those
The Chartered Institute of Personnel and Development
(CIPD) has 124,000 members and is the professional body for all
those involved in the management and development of people at
We are currently consulting our members on the
detail of the Green Paper and will submit our response to the
DWP by mid-April 2006.
This memorandum to the Select Committee contains
our initial observations on the Green Paper proposals for IB,
prior to this consultation.
The CIPD considers the Green Paper a very positive
step forward. Its proposals would, for the first time, establish
a coherent link between public policy measures designed to improve
health in the workplace and measures that aim to retain in employment
or return to employment some individuals who might otherwise end
up on IB.
Our overall impression is that the main effect
of the DWP proposals will be a gradual reduction in the number
of people joining the IB count and a gradual increase in the number
leaving the count after a short period of on it. The proposals
are likely to have only a limited effect on the re-employment
prospects of most existing, predominantly long-term, claimants.
In view of this it is important that the public,
employers and claimant themselves recognise that the objective
of the Green Paper proposals is to reduce the level of IB claims
by around one million over the course of a decade. Any popular
impression that the aim is to "get one million existing IB
claimants off welfare and into work" is misleading. Consequently,
it would be equally misleading to conclude that there will be
significant early net savings to the taxpayer from the Green Paper
proposals, or a major immediate boost to the effective supply
of labour available to employers.
The CIPD strongly agrees with the Green Paper
that greater effort must be made to reduce the likelihood of people
developing health problems that may result in them having to give
up work and becoming dependent on benefits.
Absence management and occupational healthcare
The good news in this respect is that the most
recent (2005) CIPD Absence Management survey (with replies from
1,038 HR practitioners in organisations employing more than two
million people) finds that organisations in all sectors are making
progress in measuring sickness absence and taking steps to address
Around 70% of organisations surveyed by the
CIPD in 2005 had introduced changes during the previous two years
to the way in which they manage absence. Almost a third of these
had involved occupational health professionals for the first time.
However, there is still considerable room for
improvement when it comes to integrating absence management practice
into a broader approach to create healthier workplaces. And although
the CIPD survey finds that involving occupational professionals
is seen as the most effective means of managing long-term employee
absence, fewer than two-thirds (62%) of organisations surveyed
take this course of action. Similarly, rehabilitation programmes,
which are considered the second most effective means, are used
by fewer than one-third (30%) of organisations.
The CIPD therefore welcomes the various proposals
contained in the Green Paper to assist organisations to create
healthier workplaces, simplify Statutory Sick Pay procedures,
improve management of sickness absence, engage GPs and other healthcare
professionals to assist early return to work, and investigate
the potential for financial incentives (in the form of lower insurance
premiums) to encourage improvements in employer practices.
In all these respects the CIPD believes the
government is pushing at a partially open door, with the need
for greatest effort, as the Green Paper recognises, directed at
small and medium sized organisations.
It is possible, however, that the policy objective
to improve occupational health provision will confront serious
resource bottlenecks. For example, according to occupational healthcare
specialists the UK has only 3,500 qualified occupational health
nurses and fewer than 1,500 professional physicians to cater for
a market that is already described as 80 per cent un-serviced.
An increase in demand for these services of the kind implicit
in the Green Paper would have obvious implications for training
provision and pay in the occupational healthcare sector.
The role of GPs
With regard to the role of GPs as envisaged
in the Green Paper, the proposals to provide training and learning
support to help GPs make more informed judgements on individuals'
fitness for work is particularly welcome. The CIPD also welcomes
the intention to review the format of the fMed3 certificate to
make it more user-friendly so as to enable GP's to provide more
comprehensive and robust advice on fitness for work.
An omission from the Green Paper is any mention
of how to improve the way GPs and employers work together to ensure
that individuals' rehabilitation and return to work is managed
in a co-ordinated way. Some employers ask their employees for
permission to contact their GP and to try and co-ordinate their
rehabilitative treatment. But this practice is not as common as
it should be. More guidance or advice to enable GPs and employers
to work together more effectively would be extremely useful.
However, the CIPD is not yet totally convinced
by the Green Paper's proposal to install employment advisers within
GPs surgeries. The effectiveness of this idea will need to be
assessed carefully during the pilot exercises being conducted
in some Pathways to Work areas. The CIPD's reservations are based
on the concern that the presence of employment advisers within
surgeries could increase anxiety and stress for some individuals.
At worst this might deter some people who would benefit from rehabilitative
health care from visiting their GP in the first place.
If the employment adviser is an advocate of
the individual concerned whose function it is to help open people's
eyes to the employment options available to them then they might
play a positive role. However if employment advisers are Jobcentre
plus employees whose aim it is to try and push individuals into
job vacancies then it is likely their presence in surgeries would
IB AND INCREASING
The CIPD broadly supports the proposal to review
the Personal Capability Assessment in order to focus on prospective
IB claimants' potential capacity to work.
The proposed new Employment and Support Allowance
(ESA)earmarked for introduction in 2008is a welcome
innovation, encouraging return to work related activity on the
part of those who can be helped back into work and providing extra
financial support to those who are clearly unable to do so.
The rights and responsibilities ethos of ESA,
and the proposed incentive structure, should give a welcome boost
to work related activity and enable claimants to try out employment
opportunities. Within the context of the Pathways to Work model
this should also enable employers to increase their willingness
to hire individuals from the claimant pool. And, assuming that
there is no dilution in overall funding provision, the proposed
greater involvement of private and voluntary sector bodies in
delivering Pathways to Work is a positive development.
However, there seems to be an anomaly in the
proposed operation of ESA. Although benefit sanctions will eventually
be applied to individuals for whom a return to work is feasible
if they fail to engage in work-related activity, such individuals
will remain entitled to ESA set at the level of basic Jobseeker's
Allowance (JSA). This implies that there could be a cohort of
potentially employable ESA claimants who would, in effect, be
left in receipt of ESA long-term without condition. It is arguable
that ESA claimants in this situation should at the very least
be subject to the same active job search conditions as claimants
In comparison to the measures that will be targeted
at new claimants, the Green Paper's proposals for helping existing
IB claimants back to work are relatively modest.
There is an intention that existing claimants
will have their personal capability to work regularly re-assessed,
and to eventually require them to have work-focused interviews
and develop personal action plans. It is also hoped that changes
to benefit rules will persuade more claimants to try out jobs.
Other than this the main objective is to encourage claimants to
volunteer for more support in helping them return to work.
These proposals seem unlikely to make any significant
impact on the rate at which existing (mostly long-term) IB claimants
will enter work, partly because of the lack of conditions placed
on claimants but mainly because long-term claimants face the greatest
barriers to employment.
Disability discrimination versus employability
of IB claimants
One in three (33%) of a representative sample
of 750 employers drawn from all sectors of the economy surveyed
by the CIPD in 2005 responded that they deliberately exclude people
with a history of long-term sickness or incapacity when recruiting
On the face of things this looks like unlawful
discrimination which deserves to be stamped on. But when it comes
to people who have been on IB for long periods of time matters
are more complicated. What concerns many employers is the possibility
that long-term IB claimants may lack up to date skills and experience
or have lost the work habit, rather than their state of health
per se. For example, 43% of employers surveyed think long-term
IB claimants would be less productive at work.
This may help explain the apparent conundrum
of stability in the level of IB claims since the mid-1990s despite
a rise from 45% to 50% in the employment rate of people with a
disability. It is generally accepted that this latter outcome
has been assisted by the operation of the Disability Discrimination
Act (1995), which together with a tighter labour market has greatly
improved employment opportunities for people with disabilities.
The failure of IB claimants to take advantage of these opportunities
is almost certainly due to the operation of the IB system, which
serves to increase the duration of claims and thereby reduces
the employment prospects of long-term claimants.
It is of course possible that employers have
unfairly low expectations of the potential of long-term IB claimants.
But perception matters. Recruitment conveys risk and can be costly
if the wrong person is hired. Most employers thus prefer to play
safe rather than hire people whose potential they doubt.
The limits of the Green Paper proposals
In light of the various practical and political
difficulties in applying greater conditionality to existing long-term
claimants, the likely higher resource cost of improving the employability
of such claimants, and the evident reluctance of many employers
to recruit people who have been on IB for a long-time, it is perhaps
not surprising that the Green Paper places most emphasis on improving
the gateway to, and early exit from, the reformed IB.
This may be the only realistic course given
evident pressure on the DWP budget and the likelihood that a coherent
package of measures targeted at helping more long-term IB claimants
into work would generate negligible, if any, net saving to the
taxpayer. However, it is important that the public, employers
and IB claimants themselves are made fully aware of what the Green
Paper proposals are aiming to achieve and the limits of that ambition.