Chapter 2
Additional costs of disability
92 As well as the higher amount of benefit paid either in recognition of the work-related activity an individual undertakes, or the unconditional support they need, many claimants will continue to be entitled to some of the disability-related benefits that currently exist. For example, Disability Living Allowance provides a non-contributory, non-income-related and tax-free contribution towards the disability-related extra costs of people who require personal care and/or have mobility difficulties. Because it is paid both in and out of work, it remains available to disabled people who are able to return to work. We do not intend to make changes to Disability Living Allowance as part of these reforms.
93 For those receiving the means-tested part of the new Employment and Support Allowance, we propose that the current basic Disability Premium in Income Support be replaced by the new Employment Support and Support components. This will provide a ‘something for something’ contract, recognising an individual’s right to support and responsibility to act within their capabilities. We also recognise that, for many disabled people, the extra support currently provided through the Enhanced Disability Premium and Severe Disability Premium is important. We anticipate that people on the income-related strand of the Employment and Support Allowance who meet the relevant criteria will continue to get the additional help currently provided through these premiums.
Question 5:
Is the combination of Disability Living Allowance plus the Enhanced Disability Premium/Severe Disability Premium for those on low incomes, the right way to target support towards disabled people with the greatest needs?
Contributory benefit additions
94 The current benefits system is complex and enshrines outmoded concepts that do little to support those with a health condition or disability back to work.
95 The new Employment and Support Allowance aims to tackle this and provide a modernised and simpler benefit. We propose that the Employment and Support Allowance should not contain age additions. These send the message to young people who are disabled early in life that society does not think it is a worthwhile aim for them to aspire to participate in the world of work. Instead, the new benefit will incentivise those incapacitated early in life to consider their capabilities and help them reach their goals.
96 We also propose that the Employment and Support Allowance should not contain adult dependency increases, which enshrine a system of ‘dependent’ spouses, rather than the equal partnerships of today.
Question 6:
Do you agree that these proposed simplifications more accurately reflect the principles underpinning our modern society?
What happens if people try working?
97 It is clear from our research that many people facing an illness or disability believe that to be on incapacity benefits you need to be incapable of any work and, worse still, that showing any potential for work risks disallowance.19 Alongside this, the name of the benefit clearly associates the claimant with being ‘incapacitated’ in some way.
98 These are not fair or helpful associations as they focus on what is limiting the individual, rather than focusing on their potential. The new system will not equate a person’s health condition or disability with incapacity to work. Rather the enhanced medical assessment and personal adviser processes will help people focus on what they could do, given the right support.
99 It is vital that a person making the move from benefits into work has the right financial security to back them up. Not least, people need to know they will be supported if things go wrong. The ‘linking rules’ in incapacity benefits previously allowed individuals to return to the same level of benefit they were on before going back to work (providing they still met the associated conditions) for the first year of being in work.20 But they were complex and claimants had to apply for them.
100 We recognised the importance of doing better than this and making it easier for people to return to their previous benefit levels. We announced in the 2005 Budget that we will double the linking period to cover the first two years of being in work and we will make the process automatic. These changes come into effect from October 2006. We will transfer linking rules to the Employment and Support Allowance and will continue to consider, in the light of evidence, whether we can improve them yet further.
101 Even with the security of the linking rules, we appreciate that moving into work can be a daunting prospect for many reasons. We also need to make sure there are the right incentives to try working. This is why there are a number of options for people to try out work before leaving incapacity benefits. For example, claimants can undertake unlimited voluntary work, and various forms of part-time paid work.
102 Volunteering is one of the key ways an individual can build up confidence and gain valuable work-related skills after a period out of work. People on incapacity benefits can already undertake unlimited voluntary work for charities and voluntary organisations and we intend to extend this provision to the new Employment and Support Allowance.
103 The recent Russell Commission report on youth action and engagement recommended that young people on benefits and their families should not suffer a financial barrier when they volunteer. The Department for Work and Pensions and the Home Office are working together to communicate existing rules more effectively to volunteer-involving organisations, local authorities and young people.
104 Key to making these changes have an impact is ensuring that people are aware of the opportunities. We are issuing detailed guidance to our staff about how to encourage claimants to volunteer without affecting their benefit entitlement.
105 For people currently on both income-related and contributory incapacity benefits, it is possible to earn a certain amount of money without affecting benefit entitlement. People can undertake some part-time and temporary work or engage in work trials without their benefits being affected. This allows people a period of financial stability while they adjust to working (via a small number of hours a week) and move towards more sustained employment. This option has often been a vital tool to build up an individual’s confidence to make that last step into work. But in their present form, these rules are not as effective as we would like in acting as routes into work, and are underused.
106 We are looking at this provision, alongside the measures outlined above, to see what improvements we can make to ensure that we offer the clearest possible incentives into work in the new Employment and Support Allowance. We are already moving in this direction. For example, we have announced changes to permitted work that will improve the support and guidance available from personal advisers and we have also announced that we are going to make it easier for people on incapacity benefits to undertake test-trading (preparation for self-employment) while retaining their benefit, as we believe that self-employment offers one of the best and most flexible routes back into the labour market for people with health conditions and disabilities.
107 These improvements will be carried into the new benefit and we will continue to look for further ideas to help people take opportunities without fear of their benefits being removed.
108 We will also need to ensure that work pays for people moving into employment. We would therefore envisage the roll-out of the ‘Return to Work Credit’ in new Pathways to Work areas.
Question 7:
How do you think that we can best improve work incentives within the new Employment and Support Allowance so that individuals have the opportunity to try out periods of work and progress to full-time work where possible?
