search.noResults

search.searching

note.createNoteMessage

search.noResults

search.searching

orderForm.title

orderForm.productCode
orderForm.description
orderForm.quantity
orderForm.itemPrice
orderForm.price
orderForm.totalPrice
orderForm.deliveryDetails.billingAddress
orderForm.deliveryDetails.deliveryAddress
orderForm.noItems
FEATURE A QUESTION OF BENEFITS A question of benefits


In April the government introduced cuts to the benefits system. Tom Waters of the Institute for Fiscal Studies examines the main effects of the changes, who is and will be affected, and the ways in which future recipients of the allowance may respond


allowance deemed healthy enough to carry out ‘work related activities’ will get up to £1,500 less each year than existing recipients. Combined with reductions in benefits through tax credits and universal credit for families with new-born third and subsequent children, the changes are expected to reduce government spending by over £5 billion a year in the long run.


A “


Cut to employment and support allowance Employment and support allowance (ESA) is the main out-of-work benefit for working age individuals who are judged not to be ‘fit for work’ due to a health condition. There are currently around 2.4 million individuals claiming ESA, of whom 350,000 are waiting for a health assessment, 1.6 million are in the ‘support group’, and 400,000 are the ‘work-related activity group’ (WRAG). The latter are those deemed healthy enough to carry out ‘work-related activities’, such as CV preparation or skills training.


A DWP survey found that


30% of WRAG claimants are already looking for work


Since April new WRAG claimants receive


£73.10 a week – the same as jobseekers’ allowance (JSA) claimants – rather than £102.15 a week as was previously the case (those in the support group are unaffected). This change will not create immediate losses of benefit income, because only new recipients are affected. Ultimately though, of course, all claims will be assessed under the new, less generous rules. To give a sense of how quickly this will cut the generosity of benefits in practice, in the recent past around 60,000 people a year have started an ESA claim and ended up in WRAG – so we would expect approximately that number to get less money over the coming year than they would otherwise have got. In the long run this is expected to save the government about £650 million per year, with around 500,000 recipients getting £1,400 a year less than they would otherwise have got, on average. What do we know about the sorts of people who are placed in the ESA WRAG? First, around half of them are entitled to ESA because of mental


” 10 SOCIETY NOW SUMMER 2017


PRIL SAW THE introduction of significant cuts to the generosity of the working-age benefits system. New recipients of employment and support


or behavioural disorders. Second, they tend to be somewhat older than JSA claimants, with about half being between 50 and the state pension age compared to about a quarter for JSA. Third, they tend to be on ESA for a relatively long time. Hence, while this change will align the weekly entitlements of ESA WRAG and JSA claimants, it is worth bearing in mind that the ESA claimants will tend to live on these amounts for substantially longer – around four in five WRAG claimants have been claiming for over two years, compared to less than one in five for JSA. People might respond to this change in several


ways. First, they may not choose to claim ESA in the first place: as JSA will afford the same financial support as WRAG, the financial incentives to go through the medical assessment rather than accept the additional work conditions of JSA are reduced. Second, those placed in the WRAG might challenge the decision to try to get into the support group and receive the now much higher entitlement. At the moment around 20% of those placed in WRAG challenge the decision at least once, so there is considerable scope for this to become more prevalent. Third, as the government’s policy costing


document points out, they may try to claim other benefits. The main option available is personal independence payment – a non-means tested disability benefit. Not only does this provide income directly (between £22 and £141.10 per week), but receipt can also be an automatic passport to higher ESA entitlements. Fourth, they could move into work. Claimants


may be constrained in the extent to which they can respond in this way – WRAG claimants have after all been declared by the government to have ‘limited capability for work’. On the other hand, a DWP survey found that 30% of WRAG claimants are already looking for work, and some research suggests that employment decisions among the disabled can be sensitive to the level of disability payments. However, many – perhaps the majority – will not respond in any of these ways and will therefore have to make do with an average of £1,400 a year less than they would otherwise have got. n


i


Tom Waters is a research economist at the Institute for Fiscal Studies and works in the Income, Work and Welfare sector.


Web www.ifs.org.uk/people/profile/3763


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32