Select Committee on Work and Pensions Written Evidence


Memorandum submitted by the Chartered Institute of Personel and Development after the publication of the Welfare Reform Green Paper

SUMMARY

    —    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 on JSA.

BACKGROUND

  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 work.

  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.

GENERAL OBSERVATIONS

  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.

PREVENTION AND PROACTIVE INTERVENTION

  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 provision

  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 the causes.

  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 be counterproductive.

REFORMING THE GATEWAY TO IB AND INCREASING EARLY EXIT

  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 2008—is 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 of JSA.

RETURN TO WORK SUPPORT FOR EXISTING 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 staff.

  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.



 
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