Welfare Reform Bill

Law Centre (NI) briefing update   

June 2007

1.  Introduction

The Welfare Reform Bill received Royal Assent on 4 May 2007.  Some of its provisions came into force on that date, with further substantive provisions due to come into force on 3 July 2007.

The Bill was originally an Order in Council, due to have been passed at Westminster but as it did not complete the legislative process before 8 May 2007 the Bill was passed to the Northern Ireland Assembly for consideration. 

The Bill was first introduced into the House of Commons in July 2006 and was last debated by the Transitional Northern Ireland Assembly on 21 January 2007. 

Research and evidence gathering is still ongoing on the regulatory aspects of the Bill and the final proposals for the revision of the PCA and the development of a further work-focused health-related assessment are yet to be confirmed. 

This briefing paper outlines the key provisions of the Bill and Law Centre (NI)’s principle concerns about the possible impact of the Bill once introduced in Northern Ireland .

2.  Summary of Main Proposals Regarding Incapacity Benefit

	Incapacity Benefit and Income Support to be replaced by new income related Employment and Support Allowance (ESA)
	Claimants will be assessed during the first 13 weeks and placed in one of two groups; (i) the Work Related Activity Group for those capable of participating in work-focused interviews and activities and (ii) the Support Group for those who are assessed as being ‘severely functionally limited’ who will not have to participate in such activities but can choose to do so if they wish
	During the first 13 weeks all new claimants will receive a basic award while the assessment is completed
	Claimants in the Support Group will be entitled to an additional ‘support component’ payment which is likely to be a higher sum than the work-related activity component
	Each claimant in the Work-Related Activity Group will agree to an Action Plan with their Personal Adviser, detailing the agreements made at each interview and the steps a claimant will take to assist them to return to work
	If a claimant is unable to attend an interview ‘without good cause’ then a sanction will be imposed
	Prior to imposition of a sanction there are a series of safeguard procedures that will take place
	Existing claimants will be transferred to the ESA but will not be required to undertake work-related activity as a condition of receiving their full benefit and their current benefit level will be protected
	Overhaul of the Personal Capability Assessment (PCA) from an incapacity based tool to a more full assessment of capability, including health related interventions to assist those with a disability to engage in work.

3.  Other Key Aspects within the Bill

While this briefing paper focuses on the provisions relating to changes to Incapacity Benefit, the Bill also proposes changes in the following key areas:[1]

Housing Benefit and Council Tax Benefit (Part 2 of the Bill)

Local Housing Allowance

The Bill outlines a national roll-out of the Local Housing Allowance (LHA).  This will end the current case-by-case system and apply a LHA rate according to the number, range of occupiers and the locality of a claimant.  The proposed changes allow claimants to keep any difference between the allowance paid to them and their rent. More concerning are the proposals to introduce regulations for direct payment of housing benefit to claimants as opposed to landlords.  Minster Margaret  Richie has given an undertaking that she would not bring forward any regulations to change the current method of payment of Housing Benefit until the matter was discussed further with the Health, Social Services and Public Safety Committee.[2]

Anti-social Tenants

Proposals within the Bill allow for the removal of ‘anti-social’ tenants from Housing Benefit if certain conditions are met.  Namely, that a possession order has been made against a claimant on the grounds of anti-social or criminal behaviour; the claimant has ceased to live at the premises; the claimant has failed, without good cause, to comply with a warning notice issued by a local authority and the claimant is entitled to housing benefit. The Bill outlines a scale of sanctions to gradually reduce Housing Benefit  over an 8-week period and then cease payment until the local authority considers that the sanction should no longer apply or a period of 5 years has elapsed.  Pilot schemes will run in 10 areas of England and Wales for 2 years to test the effectiveness of these measures prior to national roll-out.

Extended payments

The Bill details new provisions to ensure continuity of Housing Benefit where there is entitlement to an extended payment, for example when a claimant returns to or starts work.  This streamlines the current system by removing the need for a claimant to make a new in-work Housing Benefit claim at the end of the extended payment period. 

Social Security Administration (Part 3 of the Bill)

Benefit Fraud – Local Authority Powers

The provisions within the Bill give local authorities powers to investigate and prosecute offences against Department of Work and Pensions administered benefits.  The draft regulations do not impose restrictions on existing statutory functions in relation to Housing Benefit or Council Tax offences.  However, authorisation for enquiries are restricted to income support, jobseeker’s allowance, incapacity benefit, state pension credit and employment and support allowance matters.  Local authorities powers remain under supervision by the Secretary of State for Work and Pensions.

Repeat Benefit Offenders

For repeat benefit offenders the Bill extends the period between the date of conviction in the first offence and the date of commission of the later offence from 3 to 5 years.  Therefore, a person’s benefit may be withdrawn or reduced if they commit a benefit offence, of which they are later convicted, within 5 years of a conviction for a previous benefit offence. 

Miscellaneous Provisions (Part 4 of the Bill)

Disability Living Allowance

The Bill proposes changes to the age conditions in Sections 72 and 73 of the Contributions and Benefits Act, which govern the application of entitlement to the care and mobility components of disability living allowance, altering the age conditions from those 16 years old to people on or around the age of 16 years.

Disability Living Allowance for Care Home Residents

The Bill also allows for the introduction of regulation to provide that no amount in respect of a disability living allowance which is attributable to entitlement to the care component of disability living allowance shall be payable in respect of a person for a period when he/she is resident of a care home in circumstances in which any of the costs of qualifying services are borne out of public or local funds.

Attendance allowance for Care Home Residents

As with the disability living allowance restrictions the Bill also allows for regulations that may provide that an attendance allowance shall not be payable in respect of a person for a period when he is resident of a care home in circumstances in which any of the costs of services provided are borne out of public or local funds.

Compensation for Pneumoconiosis

The Bill makes welcome amendments to The Pneumoconiosis etc. (Workers’ Compensation) Act 1979 to provide an easement of the ‘relevant employer’ condition and widen the group of dependents who make a claim to include in particular civil partners.  These sections are being brought into force in Great Britain on 3 (extension of dependents) and 24 July (relevant employer easement).

4.  Main Issues for Law Centre (NI)

	The practice of compulsory participation for claimants with mental health problems in the work related activity group is inappropriate in principle given the fluctuating and at time unpredictable nature of some mental health problems
	Proposals of conditionality may result in undue pressure for claimants to sign up to inappropriate or unachievable Action Plans rather than risk a reduction in benefit
	The ongoing threat of sanctions may have a negative effect on claimant’s health
	Reforms place a high degree of responsibility on Personal Adviser’s who may lack the knowledge or experience necessary to appropriately support people with mental health problems
	A lack of reference to the creation of employment opportunities or the need to address employer discrimination.

5.  About Law Centre (NI)

Law Centre (NI) is a public interest law non-governmental organisation.  We work to promote social justice and provide specialist legal services to advice organisations and disadvantaged individuals through our advice line and our casework services from our two regional offices in Northern Ireland .  It provides a specialist legal service (advice, representation, training, information and policy comment) in five areas of law: social security, mental health, immigration, community care and employment. 

Law Centre services are provided to almost 500 member agencies.  Members include local Citizen Advice Bureaux, independent advice agencies, local solicitors, trade unions, social services, probation offices, constituency associations of local political parties, libraries and other civic organisations. 

We welcome the commitment by the Department of Work and Pensions to provide more support to people on Incapacity Benefit and we are encouraged by the principles behind the Governments package for welfare reform as contained within the Bill.  However, we have considerable concerns regarding the outworking of some of the proposals within the Bill and outline these and other recommendations below.

6.  Conditionality

6.1 The main principle behind the Bill is to support and encourage more people in receipt of Incapacity Benefit to move into employment, where they are able to do so.  Although many of the reforms are welcome, some of the provisions within the Bill may create particular problems for those claimants with mental health issues who make up approximately 40 per cent of all Incapacity Benefit claimants.[3]

6.2  One in six people in Northern Ireland will suffer from a medically identified mental illness at any one time[4] and research indicates that the history of sectarian violence in Northern Ireland continues to have a serious impact on the mental health of individuals.  Recent research has found that almost a tenth of Northern Ireland ’s working population is claiming benefits for mental health.[5] 

6.3       The proposals made within the Bill are underpinned by the new Employment and Support Allowance (ESA).  This new income related allowance will replace Incapacity Benefit and Income Support paid on the grounds of incapacity for new claimants.  The Bill divides claimants for the new ESA into two groups: (i) those who are assessed as being capable of participating in work-focused interviews and activities, the Work Related Activity Group, and (2) those who are assessed as being ‘severely functionally limited’ who will not have to participate in such activities, the Support Group.   It is likely that the majority of claimants will have to take part in work-focused interviews and work related activities in order to qualify for the full benefit rate

6.4  We are concerned that sufficient thought has not been given to the particular needs of people with mental health issues in the drafting of the Bill and the proposals for required participation.   This concept of compulsory participation shows little understanding of the fluctuating and, at times, unpredictable nature of some mental health problems.  Nor does it take into account the fact that claimants with mental health issues may feel unduly pressurised to sign up to Action Plans they may be unable to fulfill rather than risk a reduction in their benefit.[6] 

7.  Personal Advisers

7.1  The proposals within the Bill place a large degree of responsibility on Personal Advisers to assess whether a person is complying with their Action Plan.  Personal Advisers are able to waive or defer work-focused interviews in certain circumstances.  In the first stage of the evaluation of the Pathways to Work pilots, however, Personal Advisers expressed concern that they had little understanding of the issues affecting people with mental health problems and in some cases were even fearful of them.[7] 

7.2 Considerable training will need to be available to Personal Advisers prior to any roll out of the new scheme.  Consideration needs to be given to the allocation of resources for this purpose and training should be informed and/or delivered by those with mental health issues.  It is vital that Personal Advisers working with people with mental health issues have a good understanding of the particular difficulties they may face and of the possible impact on their health of enforced participation in this new scheme. 

8.  Sanctions and Safeguards

Sanctions

8.1 Despite research by the Department of Work and Pensions, regarding the Pathway to Work pilots, which found that there is little evidence that the imposition of sanctions resulted in increasing interest in, or movement towards work[8], the Bill proposes a range of sanctions on those who do not fulfill their work activity obligations.  The Bill outlines a 50 per cent reduction of the work-related activity component in each of the first four benefit weeks and then a 100 per cent cessation in each subsequent week, until the claimant is compliant.

8.2 The imposition of conditionality and sanctions as part of the new benefit scheme may have a negative effect on the relationship between a claimant and his/her Personal Adviser, which the Pathways to Work pilot has shown is pivotal to its success.  Previous Department research found that Personal Advisers “felt that allowing customers to move forwards at their own pace, and emphasising the voluntary nature of participation, were critical to gaining customer commitment and co-operation.”[9] 

8.3  Given the risks of non-compliance for many people with mental health issues non-compliance, as a result of ill health, consideration must be given to the detrimental effect the ongoing threat of loss of income would have on an individual.

8.4 The Bill places an obligation on a claimant to show good cause for a failure to attend a work-focused interview within 5 days of the day on which the interview was to take place.  This timescale is too short and should be increased to allow for the unpredictable nature of some mental health problems.

Safeguards

8.5 The Bill details a series of safeguard procedures that will take place before a sanction can be imposed including, contacting the claimant to remind them of the interview, offering alternative locations for meetings with a Personal Adviser and visiting claimants with a stated mental health condition if a sanction is to be imposed.  While these safeguards are welcome, we concur with the concern raised by Disability Alliance and Child Poverty Action Group that the list of safeguard procedures does not include a safeguard to ensure that a claimant is correctly placed within the work-activity group rather than in the support group.[10]  Consideration needs to be given to the inclusion of a safeguard to ensure that a claimant is placed within the correct group prior to imposing sanction on them for non-compliance. 

9.  Personal Capability Assessment

9.1 As part of the welfare reforms the Government have also committed to an overhaul of the Personal Capability Assessment (PCA) from an incapacity based tool for determining eligibility to Incapacity Benefit to a more positive and full assessment of capability to include health related interventions to assist those with a disability to engage in work. 

9.2 The PCA is the initial assessment to determine whether a claimant will be placed in the Work-Related Activity Group or the Support Group.  However, proposals have also been made for the development of a further work-focused health-related assessment to explore not just functional ability but also a claimants approach and attitude to returning to work.  The timing of this assessment, whether it should follow on from the entitlement based PCA or be a separate appointment, is yet to be determined.

9.3 New PCA proposals, as made by the Department for Work and Pensions, Health, Work and Wellbeing Directorate, include increasing the relevant areas of limitations of mental function from 4 to 15 and developing the series of descriptors within each area of mental function to parallel the assessment of physical function.  There are also proposals to update the self-assessment questionnaire for those with mental health issues.  These proposals will greatly assist in the recognition and acceptance of the limited capabilities of those with mental health problems who need benefit assistance as a result of their condition.[11] 

9.4  The Health, Work and Wellbeing Directorate have stated that in the longer term they will consider exploring development of a combined physical and mental function PCA.  Given the frequent overlap between physical and mental illness however, there is the need for a holistic approach to the PCA to ensure that all descriptors, physical and mental are considered rather than pigeon holing a claimant into one descriptor or another and therefore providing only a partial assessment of their capability.[12] 

9.5 There is a clear need for examining doctors to be fully trained and have a thorough understanding of mental health issues to ensure that the PCA is fair and effective.  Examining doctors will also need to be given adequate time to conduct a full and comprehensive PCA, especially initially and resources will need to be allocated for this purpose.

9.6  An early and limited evaluation was carried out in Oct and Nov 2006 by members of the independent Technical Working Groups responsible for the review and reported on in Feb 2007.  They recommended immediate adjustment to avoid overlap between functional activities, clarify the wording of individual descriptors and add a physical function descriptor.  In a study of 58 cases an additional almost 14 percent of claimants with mental function difficulties would be granted incapacity benefit under the new PCA who previously would have been disallowed under the current test.  A further and more extensive evaluation is underway using a larger and more representative sample of cases and further changes to draft regulations will be made once the results of this evaluation are known.

10.  Employment

10.1    The move to encourage and support more people to return to work is welcome.  We are concerned however, by the practical issues faced by many incapacity benefit claimants when it comes to securing and maintaining employment as considerable prejudice and discrimination still exists in relation to mental health within the workplace.  

10.2    Recent statistics confirm that less than 40 per cent of employers would employ someone with a mental illness and 75 per cent state that employing someone with schizophrenia would be impossible or very difficult.[13]  For all the benefits of the increased support offered within the Bill there is little point in encouraging people towards work if employers are unwilling to employ them.  Further, the effects of encountering such prejudice or discrimination could have a devastating effect on the mental health of an individual who has successfully come off benefits only to return in a worse state of health.

10.3 The Government needs to take further action to reduce the stigma and discrimination faced by people with mental health issues, across all areas but particularly in the area of employment where prejudice is very evident.  The Work and Pensions Select Committee confirmed that the Government’s action on employers was “wholly inadequate” and this needs to be addressed.[14]

10.4 Consideration needs to be given to the fact that within the Green Paper the Government aimed to have one million less people claiming incapacity benefit.  However, statistics confirm that there are only just over half a million job vacancies, giving rise to the issue that the welfare reform may simply be moving people off one benefit (incapacity) and on to another (jobseekers allowance).[15] 

10.5 The Government has not adequately addressed this situation or put forward any proposals regarding the creation of employment opportunities in line with the welfare reform.  This raises concerns that people will be pushed into ill-suited jobs, which may only serve to exacerbate existing mental health problems and may ultimately work against people retaining long-term employment. 

11.    Where to Next

11.1 Overall the Bill is focused on supporting more people into work and this is a welcome aim.  Of people with long-term mental health issues who are economically inactive, 35 per cent would like to get back to work, as compared to 28 per cent of people with other health problems.[16]  Those with mental health issues are often keen and willing to return to work but lack the support to be able to achieve this goal. 

11.2 Many of the proposals within the Bill demonstrate a greater awareness of the needs of those with mental health issues.  However, further thought on the practical outworking of the Bill and the allocation of resources for appropriate training is necessary.  This is to ensure that those with mental health issues are not stigmatised or penalised by a lack of understanding on the part of Personal Advisers or other professionals involved in the assessment of their ability to participate in compulsory activities.

Notes