An overview of the rules and payment arrangements for Cost of Living Payments.
Work Capability Assessment
Employment and Support Allowance (ESA) is an “income replacement” benefit for people with a health condition or disability which means that they are unable to work. ESA is intended to cover day to day living costs. It can be distinguished from disability benefits such as Disability Living Allowance and Personal Independence Payment, which help with the extra costs of being disabled and which are payable whether in or out of work.
Employment and Support Allowance (ESA) replaced incapacity benefits for people making new claims from October 2008. There are two forms: contributory ESA, for those with sufficient National Insurance contributions; and income-related ESA, which is means-tested.
To be eligible for ESA, a person must undergo a Work Capability Assessment (WCA). Claimants are assessed during the first 13 weeks of their claim (or longer if necessary) to determine whether they have a “limited capability for work”, and also whether they are capable of engaging in “work-related activity”. This second part of the assessment determines whether the person is placed in the “Support Group” or the “Work-Related Activity Group (WRAG)”. Claimants in the WRAG may be expected to take part in “Work Focused Interviews” and undertake work-related activity. This could include taking part in the Work Programme. Failure to do so could result in a benefit sanction.
ESA did not initially affect people receiving existing “legacy” incapacity benefits (Incapacity Benefit, Severe Disability Allowance or Income Support for incapacity for work), but from later 2010 around 1.5 million incapacity benefit claimants began to be reassessed for ESA. The incapacity benefit reassessment programme was too have been completed by spring 2014, but problems with the DWP’s Medical Services contractor – Atos Healthcare – led to delays and backlogs. In March 2014 DWP announced the “early exit” of Atos from the DWP contract. A new Medical Services contractor – Maximus – took over from Atos on 1 March 2015 and pledged to undertake one million WCAs in the first year, to help clear the backlog.
In a report published last month, the National Audit Office said however that there was still a backlog of at least 280,000 ESA assessments at August 2015, and that Centre for Health and Disability Assessments (the Maximus subsidiary which undertakes assessments) was not on track to complete the expected number of assessments for 2015 and had missed assessment report quality targets since the start of the contract.
Development of the Work Capability Assessment
The WCA is based on the principle that a health condition or disability should not automatically be regarded as a barrier to work, and that for such people work can itself have benefits. It has however been controversial from the outset.
Welfare rights and disability organisations have voiced concerns about aspects of the test and about the way it has been applied. There has been particular concern about how the test takes account of mental health problems and fluctuating conditions, and about the conduct of medical examinations undertaken by Atos Health Care Professionals (HCPs) on behalf of the DWP (Atos has now been replaced by Maximus). The decision on entitlement to ESA (and in the appropriate ESA group) is however made by DWP “Decision Makers” (DMs), who should take into account all the available evidence and do not have to follow the HCP’s recommendation.
Further information is given in Commons Library briefing The Work Capability Assessment for Employment and Support Allowance.
Changes have been made to the WCA following internal reviews, and the Government has also accepted most of the recommendations made by the five annual independent reviews of the WCA (the first three by Professor Malcolm Harrington, and the last two by Dr Paul Lichfield).
However, despite changes made to the WCA since its introduction, it still attracts strong criticism. Problems highlighted by disability and welfare rights organisations include, among other things:
- The number of claimants with serious health conditions or disabilities who are found “fit for work”, or placed in the wrong ESA group, due to deficiencies with the WCA descriptors or in the assessment process;
- The lack of information about outcomes for individuals following fit for work determinations, and concerns about the risk of poverty and destitution as a result of incorrect decisions;
- The relatively high success rate for appeals against ESA decisions (to date, 36% of all fit for work decisions have been appealed against, and on appeals relating to claims starting from July to September 2014, 54 %of initial fit for work decisions were overturned);
- Difficulties experienced by claimants seeking to challenge fit for work decisions, including the fact that ESA is not payable pending a “Mandatory Reconsideration” of the decision by the DWP, meaning that the only option in the meantime is to claim Jobseeker’s Allowance, potentially exposing the individual to inappropriate conditionality; and
- The impact of assessments, frequent reassessments, and poor decision making on the physical and mental health of claimants.
The latest statistics on outcomes from Work Capability Assessments can be found in the DWP statistical bulletin, ESA: outcomes of Work Capability Assessments: claims made to March 2015 and appeals to September 2015.
For assessments on new claims for ESA completed in the period from April to June 2015 the outcomes were:
- 64% of claimants were entitled to Employment and Support Allowance; of whom
- 13% were placed in the Work Related Activity Group, and
- 51% were placed in the Support Group; and
- 36% of claimants were assessed as Fit for Work.
Work and Pensions Committee report
In its report on Employment and Support Allowance and Work Capability Assessments published on 23 July 2014, the Work and Pensions Committee concluded that ESA was not working as well as it should, particularly in terms of achieving the intended employment objectives for claimants; that the outcome groups were “too simplistic”, with the WRAG becoming a “catch-all” group for those who failed to meet the conditions for the Support Group, but weren’t seen as fit for work. The focus on returning to work within a relatively short period of time was not appropriate for many of these claimants. In addition, the WCA failed to provide an accurate assessment of a claimant’s individual health-related employment barriers, or their distance from the labour market.
The Committee recommended a “fundamental redesign” of the ESA end-to-end process, including a reassessment of the effectiveness of the design and application of the descriptors used in the WCA, to make them more responsive, particularly for claimants with progressive and fluctuating conditions, and those with mental, cognitive and behavioural difficulties. It also recommended that DWP should reintroduce an assessment of health-related employment barriers into the redesigned ESA process.
In its response to the Committee, the previous Government said that while it recognised that there was scope for improvements to the WCA and to accompanying processes, in light of the reviews already taken and changes already agreed, it did not agree that the WCA was a “flawed mechanism” for assessing a person’s functional capacity.
Further reform of the WCA?
In his speech on Work, health and disability given to the think tank Reform on 24 August 2015 however, the Secretary of State for Work and Pensions signalled possible future reforms to the WCA and to ESA. Specifically, he spoke about how under changes being made to the welfare system, income-related ESA would become part of Universal Credit, and that this provided an opportunity to “re-think the relationship between sickness benefits and work.” Mr Duncan Smith suggested that the Work Capability Assessment should be reformed to focus “on what a claimant can do and the support they’ll need – and not just on what they can’t do.” He said:
“We know there remains a gap between the employment rate of disabled and non-disabled people. We want to ensure everyone has the opportunity to transform their lives for the better by getting into work.
That’s why, as part of our one nation approach, we have committed to halving this gap.”
The Secretary of State added:
”ESA may have been designed with the right intentions but at its heart lay a fundamental flaw. It is a system that decides that you are either capable of work or you are not. Two absolutes equating to one perverse incentive – a person has to be incapable of all work or available for all work. Surely this needs to change – in the world outside ESA things are rarely that simplistic. Someone may be able to do some work for some hours, days or weeks, but not what they were doing previously.
As ESA becomes part of universal credit, the two approaches seem at odds. We need to look at the system and in particular the assessment we use for ESA. The more personalised approach under universal credit sits alongside a WCA, which sets the wrong incentive.
That’s why I want to look at changing the system so that it comes into line with the positive functioning of universal credit. A system that is better geared towards helping people prepare for work they may be capable of, rather than parking them forever beyond work.
We need a system focused on what a claimant can do and the support they’ll need – and not just on what they can’t do.”
The speech did not actually contain any specific policy announcements, and Mr Duncan Smith was not specific about how he saw the future of the WCA or ESA working under these proposed reforms. According to DWP officials, the intention of the Secretary of State at this stage was to ‘start a “conversation” about the next phase of welfare reform.’
Ben Baumberg, The end of the WCA? Reaction to IDS’ speech, Rethinking Incapacity blog, 3 September 2015
The Guardian, “Benefits shakeup aims to force more disabled people into jobs”, 24 August 2015:
BBC News, “Iain Duncan Smith plans changes to benefit assessments”, 24 August 2015
There will be a Backbench Business Committee debate on the UN International Day of Persons with Disabilities on 24 November 2022 in the House of Commons Chamber. The debate will be opened by Marsha de Cordova MP.
A Westminster Hall debate has been scheduled for Wednesday 23 November on social security support for children. The debate will be opened by Anum Qaisar MP.