Support to incapacity benefits claimants through Pathways to Work - Public Accounts Committee Contents

1  The number of Incapacity Benefit claimants

1. Incapacity benefits are a group of benefits claimed by working age people on the grounds of disability or ill-health. During 2008-09, the Department for Work and Pensions (the Department) spent £12.6 billion on incapacity benefits.[2]

2. The number of people claiming incapacity benefits peaked in 2003 at 7.7% of the working age population.[3] In August 2009, the number was 2.63 million (7.2% of the working age population), and has remained in excess of 2.5 million for over a decade (Figure 1).[4] Some 1.5 million of the 2.6 million people currently on incapacity benefits have been in receipt for more than five years, indicating that this a deeply intractable issue.[5] Around 650,000 people leave incapacity benefits every year and whilst the Department does not have reliable information on the destinations of around a quarter of these, it estimates that at least 55% move on to other benefits like Jobseeker's Allowance and Retirement Pension.[6]Figure 1: Incapacity benefits claimants volumes over time

Source: DWP Work and Pensions Longitudinal Study

3. In 2006, the Department set an objective to reduce the volume of incapacity benefits claimants by one million between 2005 and 2015.[7] A key part of its strategy to achieve this target has been mandatory participation in the Pathways employment support programme for new claimants of incapacity benefits. In contrast, most long-term claimants have so far not been required to participate in Pathways, but can do so voluntarily.[8] The Department also introduced the requirement for new claimants to attend work-focused interviews in order to receive their benefit, and to undertake a medical assessment earlier in their benefit claim than in the past.

4. In October 2008, the Department introduced a new benefit called the Employment and Support Allowance for all new incapacity benefits claims. The Allowance established a new medical assessment to help determine eligibility for the benefit which, following the Pathways experience, is completed much earlier in the claim. The Employment and Support Allowance also incorporated the programme of Pathways obligatory work-focused interviews (Figure 2).[9]Figure 2: Employment support routes for someone claiming incapacity benefits[10]

5. The Department uses external contractors ('prime providers') to lead the delivery of Pathways in 60% of Jobcentre Plus districts, paying 70% of the contract value on the basis of performance achieved. In the remaining 40% of districts, Pathways is led by Jobcentre Plus, but it also draws on the NHS and external contractors to support delivery.[11]

6. The Department accepted that the Pathways programme has not achieved the results intended in terms of the number of people helped into work or net financial savings and, for the £793 million spent on it to end March 2010, Pathways has not provided a net return to the Exchequer.[12] Although there has been a reduction of 125,000 claimants in receipt of incapacity benefits between February 2005 and August 2009, the Department accepted that Pathways will have contributed only modestly to this reduction, and cannot determine precisely its contribution.[13]

7. Moving those new and repeat claimants who are required to participate in Pathways into employment has proved harder than the Department expected. This has impacted both on the performance of the programme as a whole and on the performance of providers.[14]

2   C&AG's Report, para 2 Back

3   Q 186 Back

4   C&AG's Report, para 1.1 Back

5   Q 167 Back

6   Ev 22 Back

7   C&AG's Report, para 1.5 Back

8   C&AG's Report, para 8 Back

9   C&AG's Report, para 10 Back

10   Derived from C&AG's Report, Figure 2 Back

11   C&AG's Report, para 9 Back

12   Qq 126-129 and 166 Back

13   Qq 158 and 159 Back

14   Q 134 Back

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Prepared 13 September 2010