PIP and DLA spared, but ‘perverse incentives’ for ESA claimants axed
- Category: Latest news
- Created: Wednesday, 08 July 2015 15:26
Today’s budget does not include any cuts, taxes or uprating freezes for personal independence payment (PIP) or disability living allowance (DLA), much to the relief of disabled claimants. However, employment and support allowance claimants have been hit hard, with the ending of the ‘perverse incentive’ of the work-related activity component.
No cuts for disability benefits
There had been fears that DLA and PIP would be made subject to income tax or frozen in today’s budget. Happily, neither of those things happened.
However, we won’t be certain that no changes to PIP qualifying criteria are being made until we see tomorrow’s ‘Welfare Reform and Work Bill’.
ESA uprating freeze
The support component of ESA will not be frozen from April 2016.
But the ESA basic allowance of £73.10 (for people aged 25 and over) and the work-related activity component of £29.05 will both be subject to the four year freeze.
This will lead to many more ESA claimants struggling to survive by 2020.
End of the work-related activity component
Osborne announced the end of the work-related activity component of £29.05 a week for new claimants, but not for ‘current claimants’.
He told the Commons:
“We also want to increase employment amongst those who have health challenges but are capable of taking steps back to work.
“The employment and support allowance introduced by the last Labour government was supposed to end some of the perverse incentives in the old incapacity benefit. Instead it has introduced new ones. And one of these is that those who are placed in the work-related activity group receive more money a week than those on jobseeker’s allowance, but get nothing like the help to find suitable employment.
“The number of JSA claimants has fallen by 700,000 since 2010 while the number of incapacity benefit claimants has fallen by just 90,000. This is despite 61% of claimants in the ESA WRAG benefit saying they want to work.
“So for future claimants only, we will align the ESA work-related activity group rate with the rate of jobseeker’s allowance.
“No current claimants will be affected by this change and we will provide new funding for additional support to help claimants return to work.”
Serious and degenerative conditions
The removal of the work-related activity component will not just hit people who are supposedly capable of moving back into work.
Osborne’s ‘perverse incentive’ will also hit many people with serious degenerative conditions such as multiple sclerosis, Parkinson’s disease and motor neurone disease who are not yet sufficiently incapacitated to qualify for the support group, but whose condition will only get worse.
These are people who are extraordinarily unlikely to ever work again.
Their conditions will mean that they face substantial extra costs for things like heating, disability aids, transport and special diets. But to Osborne, the extra £30 a week is merely a ‘perverse incentive’ that keeps them from making the necessary effort to find an employer willing to take them on.
Who are ‘current claimants’?
Osborne says that ‘current claimants’ will not be affected. But who does that cover?
For example, does that include claimants still stuck in the assessment phase after many months waiting for a medical? Will they get the work-related activity component if placed in the WRAG?
Does it include incapacity benefit claimants who have yet to be transferred to ESA?
Tomorrow’s ‘Welfare Reform and Work Bill’ may make things clearer.
Massive disincentive to try work
Removing the work-related activity component may actually create a strong incentive for current claimants in the WRAG to avoid ever attempting work again.
At the moment claimants know they can try working and, if turns out that their health just isn’t up to it, they can return to claiming ESA.
However, a WRAG claimant attempting work in the future would know that if it didn’t work out, and they weren’t covered by any linking rules, they would be condemned to trying to live on almost £30 a week less than they had been surviving on before.
Now that George, really is a ‘perverse incentive’.