Can't work or won't work. Part 1 of the IB story in the UK

Incapacity Benefit (IB) claimants scare the UK Government shitless.

With the help of hard pressed GP’s ,long term jobless were stripped for political reasons from the "unemployment" figures in the late 80’s and throughout the 90’s – but their numbers have soared and age / sex / illness profile have changed dramatically.

Currently there are 2.7 million IB claimants, largely unchanged since 1995 up from approx 1 Mn in 1980

Last year, 170,000 people aged under 25 were on on IB, higher than the 140,000 who enrolled on the New Deal for Young People last year.

Office for National Statistics (ONS) figures show that there are 1.2 million people under 25 who are neither working, studying full time or training.

IB claimants with mental problems such as stress have risen alarmingly. Department for Work and Pensions figures show 1,073,000 IB claimants (39% of the total) with mental health reasons in 2005 up 51% from 709,000 in 1997.

Of all claimants last year 83 per cent of IB claimants have been on the benefit for at least a year; and 48 per cent have been on IB for longer than 5 years.

Work and Pensions Secretary John Hutton admitted last week the claimant who has been on the benefit for more than two years is “more likely to die or retire than to find a new job”,Data from 2001 (the latest comparable year) shows that the United Kingdom has the highest rate of inactivity because of illness or disability for men age 25-49 of any OECD country except Poland (which includes Slovakia, Greece, Czech Republic and Hungary), and in the top five for inactivity rates amongst women aged 25-49.

There are also dramatic regional variations in over 1.9 million people are on IB in England, representing 3.8 per cent of the total population, and in Scotland and Wales, the figure is 5.7 and 6.4 per cent respectively.

In Wales, 185,000 people claim IB, from a population of 2.9 million. In London the proportion of the population on IB is 3.7 per cent; in the South East, = 2.5 % compared with 6.2 % in the North East.

There is a huge incentive to stay on IB after six months, the value of the IB payment increases from £57.65 to £68.20 a week. After a year, the payment increases to £76.45 per week. This compares with the Jobseekers’ Allowance, the principal unemployment benefit, of £56.20 per week for those over 25, and just £44.50 a week for those under 25.

On top of this, the long-term IB claimants income may be boosted by £92.85 in Housing Benefit and £13.92 in Council Tax Benefit, giving a package of £179 even before Disability Living Allowance, ( £30 to£99 a week)



could begin. Remember , a 35-hour week on the minimum wage yields will Gross £177 a week. It is not surprising therefore that 83 per cent of IB claimants are on the benefit for over a year.

Result ? Massive costs, IB costs the Treasury t £7 billion a year add other sickness benefits and the totals leaps to say the same as the Council Tax raises.

To this you can add the increasing NHS expenditure on the number of people who need long-term treatment for chronic conditions. Ministers are aware that if people stay on Incapacity Benefit, their health tends to deteriorate and they start to cost the NHS more money.

After working himself in the recently appointed Work and Pensions secretary John Hutton, now proposes in a Green paper to replace the current incapacity benefit system with an 'Employment and Support Allowance', to be paid to people for undertaking work-related activity. The obligatory and unsnappy name change covers several proposed initiatives to cut IB claimants by 1 million over a ten year time frame.

Plans include rolling out a £360 Mn 'Pathways to Work' programme across the UK by 2008 - introducing mandatory work-focused interviews, working with employers to develop work-taster programmes for single parents and to extend flexible working arrangements for older workers.

All very laudable, desirable even, but no employers want to recruit people who have been claiming incapacity benefit for a long time, according to research from the Chartered Institute of Personnel and Development (CIPD).

Just 3% of 750 companies questioned by the CIPD said they actively targeted incapacity benefit claimants as part of their recruitment strategy, and one third deliberately excluded such people.

Most employers said they would be more prone to absence and 45% said they would be less reliable. "Such low expectations may or may not be unfair," said John Philpott, chief economist at the CIPD. "But either way, they pose a problem for the government."

Remember that the CIPD recently, also produced a report that showed 30,000 jobs have been transferred overseas each year over the past 5 years. It found that over 1 in 5 organisations they surveyed have offshored one or more business activities in the past 5 years or are considering doing so. The most likely business activities to be offshored are :-
· Manufacturing and production (43%)
· IT support (24%)
· Call centres / customer services (22%)

There is of course no reason why these trends for outsourcing will not continue or even accelerate.

Even the TUC general secretary, Brendan Barber, agreed and is quoted as saying "The reforms should recognise that employer prejudice is a key obstacle in the way of many claimants moving back to work."

The government aims to use the reforms to raise national employment to 80% from 75% and help 300,000 lone parents into work.

CBI deputy director-general John Cridland cautions against dismissing the employers as flinty hearted … "With skills shortages in many parts of the economy, employers strongly support the government's goal of helping more people back into work." He then added the expected rider that if the Government wanted their assistance it had to be paid for.

"The government must support companies in reskilling those who have been out of work for some time, and by contributing to the consequential costs of special equipment, transport or mentoring."

GP’s, who contributed to the problem by removing the whingers with persistent back pains from their waiting rooms are said to be being given a key role in getting people off incapacity benefit, with employment advisers to work alongside them and advise sicknote claimants of job opportunities.

GPs “could “be offered financial incentives to reduce the number of sicknotes they issue. Hutton said he hoped to pilot the idea in a number of cities across the country over the next year.... I bet the meedcial proession can hardly wait for such interference to their busy lives.

Dr Hamish Meldrum, chairman of the GP committee at the British Medical Association (BMA), wanted further clarification on how the proposals would work…. Which is a Doctor tells me is medical language for , “Great ideas John but SHOW US THE MONEY”.
"If these people [employment advisers] are able to offer helpful and sensitive advice to patients, they may prove a positive addition to the services available in a GP practice," he said. "They will only be effective if they are supportive in helping patients to return to work rather than acting as an enforcement arm of the Department for Work and Pensions with the sole purpose of getting people off benefit."

The Green Paper's proposals on older workers also support forthcoming age discrimination legislation, due to come into force in October 2006.

The plans include aligning employment support for long-term unemployed people aged between 50 to 59 with people in their 30s and 40s and improving back-to-work initiatives for jobseekers who are over the age of 50 and their partners. One consequence of this is that participation in New Deal 25+ will become mandatory for those aged 50-59 who are registered as long-term unemployed (i.e. unemployed for 22 months or more). Presently participation is voluntary for this age group.

The Third Age Employment Network, which supports older people in the job market, said the reforms are a vital part of the response to demographic change and increased life expectancy.

Chief executive, Patrick Grattan, said: "We can no longer use incapacity benefit as a surrogate form of early retirement."

A 12 week consultation period on the Green Paper has begun, responses must be in by 21st April 2006. (Visit www.welfarereform@dwp.gsi.gov.uk for a template consultation document or phone :020 7712 2492)