Social security update 1

Incapacity Benefit reform

Jacqui Loughrey, social security adviser at Law Centre (NI), outlines the debate surrounding the proposed reform of Incapacity Benefit.

As most people will be aware, a government announcement made earlier this year unveiled a series of reforms which, if enacted, will represent the biggest change to Incapacity Benefit since it was created.

The policy intention behind these reforms is that government seeks to introduce a sickness scheme which will be more reflective of a pause in the working lives of prospective claimants rather than representing a ‘full stop’.
Commenting on the current arrangements when the proposed reforms to Incapacity Benefit were announced, Alan Johnston, (then) Secretary of state for Work and Pensions at the time said, ‘It doesn’t make sense to have a scheme that lumps everyone together – treating in exactly the same way the person with back pain and the person with terminal cancer’.

What was needed was a scheme offering rewards to those with potentially more manageable conditions. This, with the right support, would make it easier to take steps towards a return to work instead of the current system where reward is based on the length of time a person is on benefit.

Key elements

For new claimants, the proposed reform is to introduce the following key changes.

Incapacity Benefit will be abolished and claimants will initially be placed on a holding benefit which will be paid at the same rate as Jobseeker’s Allowance pending ‘a proper medical assessment’ ie the Personal Capability Assessment (PCA). The fundamental nature of the Personal Capability Assessment (which is the requisite test at present for determining a person’s entitlement to Incapacity Benefit) will remain unchanged. This will take place within twelve weeks of claiming and will be accompanied by a fuller assessment of potential future work capacity. By this, the new assessment will become anEmployment and Support Assessment.

The PCA would then become the gateway to two new benefits.

1 Those with potentially more manageable conditions would receive Rehabilitation Support Allowance (RSA). This will be paid at a basic weekly rate equivalent to Jobseeker’s Allowance and will have a strong ‘return to work’ focus. To be entitled, claimants will be required to attend Work Focused Interviews and to engage in activities designed to assist them prepare for their return to work eg work preparation, training or basic skills support. In line with the emphasis on preparing claimants for their return to work, those who co-operate will receive a higher weekly rate of benefit than the current long-term Incapacity Benefit rate while those who refuse to comply will be returned to the basic weekly rate.

2 Those with the most severe conditions will be automatically entitled to Disability and Sickness Allowance (DSA). To be entitled, claimants will be required to attend some Work Focused Interviews and will be encouraged to engage in ‘Return to Work’ activity wherever possible. While claimants of this benefit will have access to the same programmes and incentives as at present, there will be no requirement on them to engage in such programmes.

Areas still under debate

While a Green Paper is to be published in the near future which will set out a more detailed framework for reform, it is widely believed that the reason for delay in its issue (it was expected to have been published in July 2005) is that the government has been forced to rethink many of the proposed changes. Moreover, the Prime Minister's office has taken a particular interest in the contents of the Green Paper. In particular, areas still under discussion include:

n the linking rules and how they can be improved;
n what will be best for existing Incapacity Benefit claimants and whether they should have an option of transferring to the new scheme;
n how access to the Working Tax Credit Disability Element can be improved.

Although early indications suggest that conditionality and sanctions will remain a large part of the new arrangements, there is on-going debate on the question of whether Incapacity Benefit is to be replaced by two benefits or just one. While the latter seems to be gaining momentum as the preferred option, it is envisaged that, if it is to be replaced by a new single benefit, Incapacity Benefit would be part contributory and part means tested but it will not be time limited.

Although there has been no proposal as yet to introduce a capital rule to the contributory element of the benefit, the means testing of Occupational and Private Pensions is likely to remain.

Conclusion

While the final framework for reform has yet to be announced, the Law Centre’s advice line has been responding to an increasing number of calls from those unable to work by reason of illness or disability for whom the climate of uncertainty represents fear and anxiety.