Time limiting of contributory Employment and Support Allowance from 30 April 2012

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. Claimants who satisfy the Work Capability Assessment may be placed in either the “Support Group”, if they are deemed to have a “limited capability for work–related activity”, or the “Work Related Activity Group” (WRAG).

The 2010 Spending Review announced that entitlement to contributory ESA for claimants in the WRAG would be limited to twelve months. The time limit takes effect on 30 April 2012. For some claimants, benefit will stop immediately. All recipients of contributory ESA in the WRAG, including Incapacity Benefit claimants “migrated” to ESA on reassessment, will be affected by the time limit. Savings of almost £1.5 billion a year are expected by 2015-16.

The Government argues that ESA for people in the Work Related Activity Group was never intended to be a long-term benefit, and that the change brings ESA closer into line with contribution-based Jobseeker’s Allowance, which is payable for six months only. It also points out that means-tested support will still be available for those affected. Of the 700,000 ESA claimants who will be affected by the time limit, around 60% are expected to have some entitlement to income-related ESA, but around 280,000 will lose ESA completely – because, for example, they have other income or savings, or a working partner.

The time limit is highly controversial. Welfare rights and disability organisations argue that it undermines the contributory principle and will increase poverty and financial distress for people with long-term conditions. During consideration of the Welfare Reform Bill, The Opposition did not reject time-limiting on principle but argued that the choice of twelve months was arbitrary. Government defeats in the Lords on time-limiting were overturned by the Commons, although some concessions were announced regarding people with cancer.

This note outlines how the time limit will affect ESA claimants and gives links to further sources.