27 May 2008 – Publication of DWP research report 498: A cost-benefit analysis of Pathways to Work for new and repeat incapacity benefits claimants

This report  by the Institute for Fiscal Studies, the University of Maryland, Baltimore County and the Policy Studies Institute examines whether the financial benefits from Pathways are larger or smaller than its costs.

The overall findings suggest that the measured financial benefits of the programme exceed the measured costs for new and repeat incapacity benefits claimants, for the Exchequer, and for society as a whole.

The main findings are:

• The financial return to the Exchequer was £1.51 for each £1 invested in Pathways (based on the finding that the impact of Pathways lasts for at least 70 weeks).
• The net financial benefit to society was calculated to be £701 per incapacity benefits claimant enquiry.  This figure rises to £1683 if the impact is assumed to last 150 weeks.  The report says’ for every £1 invested in Pathways, society reaps a benefit of £3.06’.
• The main effect on the Exchequer is not just a reduced incapacity benefits bill but increased income tax and national insurance, Jobseeker’s Allowance, housing benefit and council tax benefit.

This research forms part of a comprehensive independent evaluation of Pathways to Work carried out by a consortium of research organisations using qualitative and quantitative techniques.

Notes to editors

1. The DWP research report: A cost-benefit analysis of Pathways to Work for new and repeat incapacity benefits claimants is published today on the DWP website.
2. Pathways to Work provides extra help for people on incapacity benefits to find work.
3. The report is based on a cost-benefit analysis conducted by a consortium of researchers. The estimates of costs and benefits here are averaged over all individuals who made an enquiry about IB, regardless of whether they ultimately claimed a benefit or took part in Pathways. About 78% of those making an enquiry became claimants.
4. The report authors were Stuart Adam, Antoine Bozio and Carl Emmerson from the Institute for Fiscal Studies, David Greenberg from University of Maryland, Baltimore County and Genevieve Knight from the Policy Studies Institute. This study is based on the analysis of survey and administrative impact and cost data.

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