Matthew Oakley is a senior researcher at the Social Market Foundation.
The Government has a weighty ambition to halve the disability employment gap. Getting anywhere near achieving it will require significant reform, political bravery and, ultimately, fast legislative progress in 2016.
With the gap currently standing at 33 percentage points, halving it would mean getting around one million more disabled people into work. Based on the recent speed of progress, this would take about 30 years. So, alongside the significant reforms announced in the last five years (including most recently at the Spending Review), from early in 2016 we should expect to see significant reform carried out at pace.
We already know that a White Paper is pencilled in for the first few months of 2016 and a new programme to provide employment support for this group will be commissioned later in the year. Little detail has been announced, but there are clear signals of where the Government’s attention is focussed:
- Reforming benefits: Alongside existing cuts to the rate of Employment and Support Allowance (ESA) for claimants in the Work Related Activity Group, Iain Duncan Smith’s summer speech pointed towards significant further reform. I expect to see reform of the Work Capability Assessment (WCA) and how eligibility for disability benefits is determined under Universal Credit. There is also likely to be further discussion of the balance and structure of ESA for the Support Group and the role of the extra costs benefit, Personal Independence Payment (PIP). A bold Government could head to a single-rate income replacement benefit for disability and combine this with significant reform of PIP. However, do not underestimate the scale of opposition this might attract and, with recent experience of opposition to tax credits reform in the Lords, appetite for reforms of this scale may have diminished.
- Reforming requirements: If it went ahead, such an approach would necessarily require significant changes to the system of conditionality (the requirements to move towards or seek work). In particular, moving to single-rate benefit would likely require splitting the assessment of benefit eligibility from the assessment of capability to work. A new way of assessing the appropriate level of requirements and conditions placed on individuals would then be needed.
- Improving employment support: To build on these changes, the Government has already been clear that it wants to change how support for those with disabilities and ill health is delivered. I expect to see a different focus under the guidance of the Work and Health Unit and, in particular, help opened up to more people including by encouraging those currently in the Support Group of ESA to engage with support. There will also be an enthusiasm for new approaches driven by the Government’s devolution agenda. A bold Government would go much further in supporting the piloting of new approaches and opening up budgets by aligning targets, outcome measures and, ultimately, finances between DWP, local government and, for example, the NHS.
- Changing attitudes and approaches: With a significant cut to contracted support (leaving it at just £130 million a year by 2020), it is clear that the Government will be expecting others to play a much greater role in achieving improved disability employment outcomes. I expect to see a push for businesses to do more to adapt their working environment and practices to support both disabled people to move into work, and existing employees to stay in work following the onset of a health condition or disability. Here the challenge for Government is in asking business to do more while simultaneously committing itself to cutting red-tape and regulation. Any further pressure on firms would also come alongside the introduction of the National Living Wage, the apprenticeship levy and pensions auto-enrolment.
- Modernising the welfare state: Finally, with continued pressure on the public finances, more emphasis will continue to be placed on personal responsibility. Personally, I don’t see much more scope to increase conditionality or the role of sanctions. Instead, a bold Government could transform the welfare state to reinvigorate the contributory principle – the idea that families are supported by the contributions they make. An obvious place to make progress here would be to support individuals or firms to enter income protection schemes. Doing so would take pressure off the public finances and mean more people facing health problems could be supported to recover. Other countries show us that such approaches can be developed collectively and schemes like Pool Re and Flood Re (that provide government-supported insurance for terrorism and flooding respectively) show us that Government has a key role in removing the tail-end risks that usually present a barrier to wide scale entry of the insurance industry into this market.
Each of these five themes represents a significant area of change. Together they would likely lead to a reform agenda of a larger scale than the introduction of Universal Credit in the last Parliament. However, with a weighty ambition, it is clear that these are the scale of reforms that will be needed and, with nearly a year of the fixed-term Parliament gone by the time the White Paper has been published, the clock is clearly ticking.