Background to Bill
The government has committed to introducing greater incentives for people to move from benefits into work.
The Welfare Reform Bill will also provide more employment choices for people with disabilities.
The Bill aims to better enable people to undertake training, to help find employment and to strengthen the benefit contract between the individual and society. It is intended to ensure equality for disabled people by 2025.
Among its welfare proposals, the government intends to strengthen requirements of non-resident parents to contribute to their children's upbringing and to modernise and simplify the benefits system.
The content of the Bill was heavily influenced by the outcome of the consultation on the Green Paper, which closed on October 22 2008.
Dame Carol Black's review of sick leave and health at work, in which she criticised "sick-note Britain", also played a role in the government's welfare reform plans.
The government has previously committed to piloting 'Fit for Work' services in Great Britain, through the NHS Next Stage Review and the recent green paper on welfare reform, 'No one written off'. Work and pensions secretary James Purnell, in the government response to Dame Carol Black's review, commented: "Being unable to work because of poor health can be devastating. These proposals will begin a new approach to health and work which has the potential to help people with long term health conditions to get their lives back."
Purnell added: "Everyone has the right to work and we want to design a system which supports people so they can work when they are able."
Dame Carol Black welcomed the government's response, saying: "I am especially pleased the fit note and the 'Fit for Work' pilots will be implemented along with support for small businesses.
"I believe the measures unveiled by the government will help make our society a healthier and happier one, where everyone recognises the link between good health and good work."
The Bill was significantly influenced by the review by Paul Gregg, which contained a number of recommendations on December 2. His key proposal was the creation of a new category of benefit claimant, the "progression to work group".
Gregg stated that conditionality regimes around the world have helped increase employment, and that the UK's regime for jobseekers is one of the best.
To make it more effective, he recommended making sanctions quicker and clearer with a simple and understandable system of fixed penalties for most occasions, and a targeted, escalating series of sanctions for repeat offenders.
An official government response has yet to be published. But James Purnell, work and pensions secretary, commented: "Paul's vision for realising potential is an important milestone in this debate. At the core of these reforms are clear obligations on what we expect in return for benefits and how we ensure the modern welfare state applies fair rules for all."
The proposed reforms are now creating controversy in the difficult economic climate, with the general secretaries of the GMB and PCS unions among those to have signed a joint statement issued at the weekend by a coalition of charities, campaign groups and academics.
PCS general secretary, Mark Serwotka, said: "The government needs to pay heed to the growing chorus of opposition to its plans for welfare reform. The plans are regressive and will lead to the removal of the state safety net and the introduction of the free market, where the only motive is profit for the few and not help for the many. As recession bites these are the wrong proposals at the wrong time."
Summation of Responses:
Age Concern
Support the government's objective that no one should be written off from the labour market and welcome the improvements in the flexibility of support offered to benefit claimants as they attempt to return to work.
State that there is not sufficient evidence to increase conditionality for those aged over 50.
Believe it would be counter-productive to implement any measures to increase conditionality until the economic climate has improved.
Wise Group
Welcomes the green paper's emphasis on what individuals can do, rather than disabilities per se, focusing on capability, skill acquisition and adjustments to workplaces in order to enable return to work for those previously claiming Incapacity Benefits.
Is concerned that there is no recognition of the special needs faced by black and minority ethnic communities and women in seeking, entering and retaining employment.
Cautions that conditionality needs to be tempered by recognition of the local economic circumstances, particularly the local demand for labour and skills.
Full responses:
Age Concern
The Welfare Reform Bill introduces further conditionality into the benefit system. Help the Aged and Age Concern support the government's objective that no one should be written off from the labour market and welcome the improvements in the flexibility of support offered to benefit claimants as they attempt to return to work.
However, we believe there is not sufficient evidence to increase conditionality for those aged over 50. Insufficient research and analysis has been undertaken to evaluate the likely impact of these proposals on the over 50s and the evidence presented by the government to support increased conditionality is not sufficiently disaggregated by age. People over the age of 50 have particular support needs and evidence from previous initiatives, such as Pathways to Work, shows they have had a different impact on older age groups compared to the rest of the workforce. We have commissioned further research into the barriers facing older people returning to work and what support is most helpful for them. We hope to share this with parliamentarians during the progress of the Welfare Reform Bill.
In the absence of this evidence, we do not support increased conditionality for people over the age of 50. Should this legislation be passed, then at the very least, sanctions to withdraw benefits must not be implemented among the over 50s unless three tests have been passed (i) there are enough jobs available; (ii) better back-to-work support is provided, tailored to the needs of this age group; and (iii) improved training is available for personal employment advisers which focuses on older people's employment needs.
Furthermore, it would be counter-productive to implement any measures to increase conditionality until the economic climate has improved. Government figures show that unemployment among those over 50 is rising at double the rate of any other age group and older workers were hit very hard by job cuts in the last two recessions. Even under good economic conditions, when people over 50 drop out of the labour market, they are much more likely to stay unemployed for longer periods than other age groups. Increasing conditionality against the current economic backdrop would undermine the government welfare to work and anti-poverty strategies and would be unfair to on those affected.
Elsewhere in the Bill, the provisions to introduce a power to pay pension credit automatically in some pilot areas is a vital step forward for the government in ensuring the poorest older people can access the benefits they are entitled to. We wholeheartedly support this proposal.
Benefits and Sanctions – Carrots and Sticks
Part 1 of the Bill introduces 'work for your benefit' schemes to assist people to obtain employment. While we agree that people who are capable of work should make steps to find employment, we believe that more evidence needs to be gathered to determine the most effective incentive structure for helping those who are furthest away from the labour market into work. In particular, we believe that greater attention needs to be paid to the use of 'carrots' as well as 'sticks'.
Paid work is a route to independence, health and well-being only if it is good quality, fairly paid and flexible. Increasing the personalisation of back-to-work schemes shows a welcome commitment to help people back into work but many over 50s who use employment services find that their individual circumstances, including existing work experience, are not properly taken into account. Many of the over 50s who use employment services can be apprehensive and lack confidence; others are frustrated and disillusioned by a system that does not meet their needs. A regime that has the effect of making clients anxious and intimidated, rather than supported and enabled, will dissuade them from using it. It is therefore important that the new regime creates an environment that is sufficiently encouraging, enabling and supportive. The government's goal of reducing social exclusion and poverty for the over 50s will not be fully achieved unless the structural causes of worklessness and poverty are tackled.
What works for older client groups?
We believe that increased conditionality can only be considered for clients who are able to work if they are offered appropriate and timely support. Historically, this has not always been the case. For example, workshops conducted by the Policy Studies Institute found that provision was not always appropriate for older people. The Intensive Activity Period, for instance, was less appropriate for those with considerable work experience. In these cases, although there was a need for skills to be refocused, more account needed to be taken of clients' existing experience. Age Concern's research also points to a mismatch been provision and need, particularly in relation to levels of emotional support provided.
Three Tests before more conditionality
In the absence of this evidence, we do not support increased conditionality for people over the age of 50. Should this legislation be passed, then at the very least, sanctions to withdraw benefits must not be implemented among the over 50s unless the following three tests have been passed:
Test 1: Older workers with different profiles are able to access a wide range of jobs suitable to their needs and employers see and value the benefits of employing people aged over 50.
At present, many employers do not see and value the benefits of employing people aged over 50. Particular attention, therefore, needs to be placed on tackling age discrimination in the workplace. The first fair treatment at work survey, based on face-to-face interviews with nearly 4,000 employees across Great Britain, found that age was the most common reason given for unfair treatment at work. Seven in every 10 employees who said they had been treated unfairly at work in the last two years considered this to be discrimination. Of the six equality strands, discrimination at work relating to age was the joint third most common reason given. We recommend that further initiatives are introduced to encourage employers to adopt age-positive employment practices and raise awareness about age equality amongst their staff.
Test 2: Services are available that focus on overcoming the full range of barriers that older clients face.
Our research and experience in providing employment services indicates that people over 50 require support to overcome the following barriers:
- poor IT skills;
- poor interview skills;
- lack of familiarity with modern approaches to job searches and selection;
- health problems which limit work readiness;
- increasing caring responsibilities or changing family roles;
- the need to retrain or transfer established, high-quality skills to a new sector.
Low confidence is a particularly significant barrier for some older job seekers. Many report that being out of work affects their self-esteem, morale and confidence. Yet only a few of them report that they have had support to come to terms with the psychological effects of being out of work.
We therefore recommend that effective and timely psychological and emotional support is provided. We believe that support to overcome these types of barriers needs to be provided at an early stage; otherwise unsuccessful job search is likely to reinforce negative self-perceptions.
If levels of conditionality are to be increased, we also believe that this should be done on an individually-specific basis and that choice between different options should be provided. This is because other employment programmes, such as Pathways to Work and New Deal 50 Plus, indicate that choice helps ensure ownership and a genuine commitment to the activities undertaken.
Test 3: Personal Advisers have the awareness, skills and confidence to provide personalised support suited to the needs of older clients.
Our research indicates that people over 50 would welcome the following support:
- advisers who provide one-on-one support, in assessing their skills and experience and giving them realistic advice on potential jobs and training activities;
- regular contact and feedback from recruitment agencies; and
- the provision of mutual support and information groups for people over 50.
Some have told us that they view Jobcentre Plus as being impersonal and remote, and about box ticking and statistics rather than providing a service genuinely useful to individuals and employers.
They feel that Jobcentre Plus workers are insufficiently trained to be able to meet their needs and have experienced poor provision of support and advice, such as being asked to apply for inappropriate jobs.
We therefore believe that further steps need to be taken to ensure that Personal Advisers fully understand the needs of the 50+ client group:
- Intensive support should be made available to over 50s on benefits and out of work after three months; after 6-12 months out of work very few return to work.
- Back-to-work programmes need to encompass confidence building, a focus on transferable skills and re-training for new careers where appropriate.
Employment and Support Allowance and work related activity.
Clause 8 of the Bill allows the Secretary of State to specify a work related activity which Employment and Support Allowance (ESA) claimants in the work related activity group must undertake in order to meet the requirements of the claim. We feel more clarity is needed over the process of assigning people to either Job Seekers Allowance or ESA - and for those assigned to ESA how they are assigned, to either the Work Related Activity Group or the Support Group.
Older people are increasingly likely to have health problems which impact their ability to work. It is important that issues of health and wellbeing are fully acknowledged and ensure that people with poor health are not unreasonably expected to undertake work related activity.
Key Call: Levels of conditionality for people aged over 50 who are able to work should not be introduced at this time – the focus should be on improving access to good quality jobs, re-tailoring back-to-work support, and improving training for Personal Advisers.
Older workers fact file:
- Unemployed men aged 50+ only have a one in five chance of being in work two years later.
- The chance of older men finding future employment falls by a quarter for each year they are out of work.
- Experts like Lord Turner, the OECD and even the DTI's (now called DBERR) own economists believe scrapping retirement ages will be good for the economy.
- The DTI (now DBERR) estimates that scrapping mandatory retirement ages would add up to half a billion pounds to the UK economy.
- Age discrimination is the most commonly experienced from of discrimination, with nearly one in four people (23 per cent) reporting that they have experienced it some form.
- Almost one in three (30 per cent) of people say the level of prejudice against older people is higher now than it was five years ago.
Pension Credit pilots
Clause 21 – 22 of the Bill provides for state pension credit pilots. It provides the power to test automatic benefit payment which Age Concern and Help the Aged wholeheartedly support. This will allow the government to test this important measure in key pilot areas which will allow the payment of pension credit without a claim needing to be made. We have long argued that system should move to one where payments made automatically and this is an important first step. Currently, up to 1.8 million older people are missing out on pension credit despite ongoing efforts by organisations like Age Concern and Help the Aged alongside the DWP to encourage people to claim.
Poverty reduction – after a number of years of falling poverty rates the number of pensioners in poverty increased by 300,000 in 2006-07 on a before housing costs basis (200,000 after housing costs). Increased benefit take-up through increased automaticity would help the government achieve the aims set out in Public Service Agreement 17 'To tackle poverty and promote greater independence and well being in later life'.
Pension Credit was introduced in 2003 – its forerunners were Minimum Income Guarantee (1999 to 2003), Income Support (1988 to 1999), Supplementary Pension (1966 to 1988 ), and, at the start of the welfare state National Assistance (1948 to 1966). Despite changes in rules and names, active work by welfare rights advice agencies and (from 1997 onwards) the government, estimated take-up levels have remained broadly similar with a quarter to a third missing out.
Take-up rate of benefits by pensioners (per cent)
1987 Supplementary Pension - 74
1992 Income Support - 65-75
1996-07 Income Support - 61-70
2001-02 Minimum income guarantee - 63-72
2006-07 Pension Credit - 59-67
Pension credit guarantee - 68-78
Key Call: MPs of all parties should support this key measure to test methods for improving take up of Pension Credit.
For more information on this briefing please contact Angela Kitching, Age Concern's Parliamentary Adviser on 020 8765 7299 or Angela.Kitching@ace.org.uk
Wise Group
The Wise Group is a third sector organisation that has worked to support disadvantaged unemployed people to access opportunities in the labour market since 1983. In June 2008 we were named Charity of the Year by the Scottish Council of Voluntary Organisations.
The Wise Group has a track record of developing a wide range of successful welfare to work projects, the best known of which is the Intermediate Labour Market (ILM) model. ILMs help unemployed and economically inactive people to gain the skills and experience they need to enter the labour market, whilst contributing to the wider regeneration of deprived areas.
Over our 25 years of operation, the approach and projects developed by the Wise Group have evolved in line with the substantial changes in the economy, labour market and amongst the unemployed population. Since 2002, we have delivered part of the government's New Deal programmes and are the main provider of New Deal for Young People and a substantial element of the Employment Zone in Glasgow. Our Workable project works participants in the New Deal for Disabled People across Scotland and the North East of England and has enjoyed particular success in engaging with this client group.
Our operation of these large-scale government contracted programmes is complemented by a plethora of smaller, specialist, client-driven projects. These projects work on an individualised scale, providing disadvantaged client groups with the targeted support often required prior to entry to mainstream employment or training programmes. This approach allows us to successfully deliver meaningful job outcomes, whilst maintaining our focus on supporting the individual, ensuring that our services are driven by client need, whilst meeting (and often exceeding) contractual targets, but not being solely driven by these targets.
The Wise Group welcomes the opportunity to respond to the Department of Work and Pension's Green Paper, No One Written Off (hereafter, 'the Green Paper'). We believe our experience of delivering employment outcomes over the past twenty five years gives us a unique insight into many of the issues outlined in the Green Paper, and we hope that the Department finds our comments useful. Our response comprises two sections – firstly we offer some general comments, and then address the specific questions posed in the Green Paper.
General Comments:
1. There are many aspects of the green paper that the Wise Group endorses.
2. We particularly welcome recognition of the broader benefits of employment – for individual well-being and increased life chances for children. Work is the most effective way to improve the well-being of individuals, their families and their communities. Specifically, entering employment raises self-esteem; improves general and mental health; promotes fuller participation in society; and reduces poverty and raises quality of life. In contrast, unemployment is detrimental to health: it increases mortality rates, causes physical and mental ill-health, and leads to greater use of health services.
3. Focusing on work as a route out of poverty, the Wise Group has utilised employment as a mechanism to bring improvements to the lives of not just those we help into work, but also their families and surrounding communities. We thus support the green paper's acknowledgment that employment (or conversely, unemployment) can have an impact not only on the individuals directly concerned, but also on families, communities and future generations.
4. Although work is a route out of poverty for many, we are concerned that the green paper seems to assume that work leads to a reduction in poverty for all. This is not the case, and we welcome recognition in the Green Paper (paragraph 4.22) of the need to raise incomes in order to end intergenerational poverty.
5. Explicitly, employment does not necessarily equate to reductions in poverty: low pay undermines the role of work in reducing poverty. One in three people moving from unemployment to work are moving from non-working poor to working poor. Of relevance to the government's ambition of ending child poverty, is the fact that half of all children in poverty are living with working families – and this proportion has not changed during the last ten years.
6. A Living Wage that reflects costs of living and ends in-work poverty is thus an urgent requirement, and we urge the government to consider implementation of Living Wages across the country. A Living Wage is fundamental in enabling individuals to truly break free of the benefits system.
7. Quality of work is also important – especially in terms of sustainability and the nature of work. Many young people, for example, can be shunted between many short-term insecure jobs. As we discuss further below, matching individual needs with vacancies is fundamental in ensuring sustained job outcomes, individual well-being and ability to meet other commitments (such as caring responsibilities). Any beneficial health effects are dependent on the nature and quality of work. Only when individuals feel valued and supported in work will the positive impacts of work set out above be realised. The benefits of work are thus influenced by how well a job fits with other responsibilities and aspirations.
8. The Wise Group has found that there are two key issues that impact upon the sustainability of jobs for those who have recently moved from unemployment into the labour market: firstly the withdrawal of support at a time when many challenges are just beginning, and secondly, having low or no skills. These are discussed in turn.
9. Support Needs: many of our clients require extensive personal and practical support during their time on our projects and although this need may reduce during their time on a programme, it increases again once they move into employment. Many of our clients are long term unemployed, and some have never had a job. Moving into work can therefore be a particularly destabilising and difficult experience. The Wise Group thus maintains contact with clients who move into work for at least 13 weeks (and sometimes longer if sought by the client). For example, the Step Up project provides post-employment support to clients who have moved from one of our projects and into the open labour market. This flexible project provides an individualised service incorporating confidence and aspiration building activities; career and training advice; support in accessing and funding training and further education; and support in progressing into an improved labour market position. Flow on of benefits for a period while newly in work is also crucial to create a transition for new employees.
10. Skills: there is an urgent need to respond to the steady decline in jobs for those with low or no qualifications. The employment rate of low skilled people has fallen from 51.7 per cent in 1997 to 49.4 per cent in 2006. Without continued emphasis on skills development, progression within the labour market is unlikely to be achieved by low skilled individuals. Moreover, relative low skills within the UK labour market will have a real impact on national productivity, thus addressing low skills is critical to the country's future financial health.
11. The Wise Group welcomes the green paper's emphasis on what individuals can do, rather than disabilities per se, focusing on capability, skill acquisition and adjustments to workplaces in order to enable return to work for those previously claiming Incapacity Benefits. In particular, the increased funding for Access to Work is a very welcome development.
12. A scheme that provides support for both new employees and those employers taking on individuals who have been out of work for some time would be of considerable benefit to both parties. This would facilitate necessary adjustments for employee and employer, with positive results in terms of job sustainability and the more general willingness of employers to take on recruits who might present some challenges. We note the rollout of the In Work Advisory Support service available to lone parents (paragraph 2.63), and suggest that such a service be available to all those entering employment – perhaps as part of Access to Work.
13. The Employment Partnerships and Jobs Pledge are also a welcome development and the government is right to emphasise employers as key partners in the process of moving under-represented groups into work. The Wise Group suggests that a further positive development would be for employer partners to commit to the introduction of flexible working, training and skills development and of other measures such as the payment of a Living Wage to ensure sustainable work outcomes and combat in-work poverty. How employers support, induct, train and mentor their employees, especially those who have been out of work for some time, is an area where government could facilitate sharing of best practice and assist with provision of such measures.
14. Devolution to advisors, providers and local communities is welcome in principle, but as set out in our answer to question 22 below, the quality of result is always contingent on the quality of advisor and provider – their access to information, empathy and understanding of local circumstances.
15. The Wise Group is concerned that there is no recognition of the special needs faced by black and minority ethnic communities and women in seeking, entering and retaining employment. For example, many people from BME communities face particular barriers in attaining and progressing in employment. One in five children in poverty are from ethnic minority communities, and this poverty rate is linked to disadvantage in the labour market for ethnic minorities. We regret that the first mention of BME issues is on page 121 of a 129 page green paper.
16. Also, much of the success in raising employment rates and reducing benefit claims (highlighted in paragraph 3) has taken place in benign economic circumstances. Many of the reforms proposed in the green paper will be difficult in the prevailing context of a stalling economy, particularly as trying economic circumstances will be experienced acutely by those sectors which may have otherwise been a destination for individuals coming off benefits – for example, the construction and hospitality sectors. We caution that conditionality needs to be tempered by recognition of the local economic circumstances, particularly the local demand for labour and skills. In light of the warning from Bradshaw et al that social exclusion is driven by demand for labour 'more than any other factor', the Wise Group urges the government to better link expectations of the unemployed to take up employment with realistic prospects to find work opportunities.
To read the Wise Group's full response to the consultation click here.
