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Private sector to punish sick and disabled claimants

5 July 2006

Sweeping powers are to be given to unaccountable private sector and charity staff to cut sick and disabled claimants benefits. The shock new powers are contained in the Welfare Reform Bill laid before parliament on 4th July. Under the terms of the bill private and voluntary sector staff will summon claimants for repeated work focused interviews, oblige them to draw up action plans and to take part in work related activities. If claimants fail to satisfy the requirements of their private sector 'advisers' those same staff will be able to impose cuts in claimants benefits. The same organisations, at least one owned by a multi-millionaire, will be paid by result, depending on how many interviews their staff carry out and how many claimants they get into work.

No interest
The welfare reform Bill was published to almost no media attention yesterday afternoon. The lack of interest is in part accounted for by the dismal absence of detail in what is little more than a skeleton bill as far as the new Employment and Support Allowance (ESA) is concerned. So, even after the publication of the Bill, the public is none the wiser about such issues as:

How the Personal Capability Assessment, the test of incapacity for work, is going to be changed.
What rates ESA will be paid at.
What test of incapacity will be used to decide which claimants will go onto the more generous Support Allowance of ESA.
What levels ESA will be paid at.
How many work-focused interviews ESA claimants will have to attend.
How much of their benefits claimants will lose, and for how long, for each occasion on which they are deemed to have broken the rules.
When existing claimants will be moved off incapacity benefit and income support and onto ESA.

Yet the proposals contained in clause 15 of part one of the Bill, which deals with contracting out, amount to a virtual privatisation of parts of Jobcentre Plus and confer powers over private citizens on unaccountable, and quite possibly untrained, private sector workers which until now have only ever been available to fully accountable civil servants. They amount to a historic shift in the power which big business has over individuals.

Clause 15
Clause 15 allows the Secretary of State to delegate his power to as many private and voluntary sector organisations as he chooses. In practice this is likely to be organisations which are already involved in work and training schemes. These include private sector organisations such as A4e, Reed in Partnership, WTCS, Inbiz and Fern Training and Development and charities such as Mencap, the Salvation Army, RNIB, RNID and Shaw Trust.

The governments intention is that the process of getting sick and disabled claimants into work will be carried out by these private and voluntary sector organisations, rather than by Jobcentre Plus where staff are being slashed by a third. The powers the Secretary of State can delegate to these companies appears to cover everything involved in that process, from interviewing claimants to cutting their benefits for non-compliance.

Heaps and troughs
That the private sector is likely to be motivated by profit rather than philanthropy goes without saying. These are companies where the top people already do very well for themselves according to research carried out for the Public and Commercial Services Union by Steve Davies, Senior Research Fellow at Cardiff School of Social Sciences.

The Chief executive of Inbiz received payments of £283,662 last year, whilst the highest paid director of Reed in Partnership picked up £169,00. The owner of Fern Training and Development sold it to multinational Carter and Carter earlier this year for £13.6 million and continues to manage the company.

Top of the heap, however, is chairman and owner of A4e. Emma Harrison is worth £55 million and received £1.1 million in her most recent dividend payout, whilst the company's highest paid director picked up a salary of £329,000.

Many other companies are likely to want to get in on the act, however. The DWP is already handing over one third of a billion pounds a year to private sector companies in relation to employment services. With the introduction of ESA this figure is set to rise to a billion pounds a year.

Attracted by huge and potentially very lucrative contracts, it will be the role of companies like these to contact claimants and instruct them to attend a series of work-focused interviews. If a claimant seeks to have an interview waived or deferred, for example because they are unwell, private sector staff will decide whether to grant the request. However, because companies will be paid by result, including payment for each completed interview, granting a waiver or deferment will cost the company money.

If a claimant fails to attend an interview it will be their private sector 'adviser' who decides whether they had good cause for their failure and whether their benefit should be cut as a result.

At the interview, as now, claimants will be obliged to take part by answering a range of questions about such things as their health conditions and steps that could help them move into work. If the private sector 'adviser' decides that they have not fully participated in the interview they can impose a cut in the claimant's benefits. Clearly, whether someone has participated in an interview will be a subjective judgement. The claimant's ability to participate may be affected by their mental health, social and cultural issues and the degree of skill, training and understanding of the interviewer.

Action plans
Some claimants may be obliged to agree to take part in work related activities and all claimants will have to draw up an action plan, which may include work related activities. The legislation does not explain why there should be both work related activities and action plans which may include work related activities. It seems likely, however, that there will be a relatively intensive work related activity period during the initial stages of a claim followed by a period with an action plan which does not have to be adhered to if the claimant does not move back into work.
Work related activities will include such things as:

Work tasters
Programmes to manage health in work
Jobsearch assistance
Programmes to assist in stabilising a person's life.

The regulations will set out the amount of work related activity a claimant is required to undertake. Failure, without good cause, to carry out the activities will result in the claimant's benefits being cut.

The claimant cannot be forced by the 'adviser' to carry out the specific steps in their action plan, even if these are work related activities. Instead, it appears that the claimant is free to substitute others. However, the 'adviser' has the power to decide that a particular step will not count as a work related activity. In fact, it appears that the 'adviser' can even retrospectively alter directions given to a claimant, so that what would have counted as a work related activity when the claimant carried it out doesn't actually get taken into account at all.

Decisions of private sector 'advisers' to cut claimants benefits will be subject to revision and appeal, although it appears that revisions will be carried out by the same company that made the original decision.

Come again?
Confused? We certainly are. As far as we can figure it out, it might work something like this.

All claimants, except the most seriously incapacitated people who receive the support allowance, will have a series of work focused interviews. The first will take place in the assessment phase of their claim, before they have been considered under the reinvented personal capability assessment.

At subsequent interviews they will have to draw up an action plan and agree to take part in work related activities. The period in which they have to take part in work related activities will be a finite one, say six months for the sake of argument. After this six months they will still have an action plan and will still have occasional interviews at which they must discuss their action plan and agree changes to it if necessary. But they will no longer be obliged to carry out any of the activities listed in their plan.

During the work related activity phase, however, the claimant will have to carry out activities listed in their action plan. They may, for example, agree as part of their action plan that they will attend exercise classes once a week for the next four weeks. However, instead of going to exercise classes they go to ballroom dancing classes once a week. At the next work focused interview the private sector 'adviser' could accept that ballroom dancing was good exercise and that therefore they had met their work related activity requirement for that period. Or they could issue a written direction to the claimant stating that exercise classes do not include ballroom dancing. The 'adviser' would have the power to make this direction retrospective. In this case, the claimant would therefore have failed to meet their work related activity requirement and would, we imagine, be liable to have their benefits cut.

But we must stress, we can't guarantee that we've got this right - the Bill is extremely sketchy and confusing and requires a great deal of explanation before anyone will be able to claim they really know what it's all about.

What we can be certain of, however, is that the ramifications of these proposals are huge. Not only do they put hitherto unheard of powers in the hands of unaccountable private sector companies, they also threaten to change the way in which the public regard the voluntary sector.

Charities risk becoming seen as purely self-interested organisations - part punitive governmental body doling out benefits sanctions and part big business striving to maximise profits through manipulation of the very people they were set up to help. What possible reason will the public then have for donating their time or money? You'd be as likely to volunteer to spend your free time changing tyres at Kwikfit.

As yet, we don't know if any charities will be prepared to act in the place of DWP decision makers and impose financial penalties on their clients. It's one of the things it will be vital to discover whilst parliament is on its summer break. But we can be reasonably sure that private sector companies will have few qualms about taking over the role of the DWP.

It's not too late to pull back from the precipice over which the government seems determined to drag its citizens, but there's an awful lot of work to do in raising awareness of just what is proposed in the Welfare Reform Bill. Benefits and Work has set up a private discussion forum, visible only to members, where we can begin co-ordinating research and proposals on how to influence the passage of this bill through the house. You're welcome to join us . . . but we won't punish you if you don't.