Advice NI social policy briefing paper in relation to:

Welfare Reform: A welfare state fit for the 21st Century

(An ‘Inside Government’ conference to consider Government’s aim to move people

from being passive recipients of benefits to active job seekers)

July 2008

CONTENTS

Advice NI background Page 1

Conference overview Pages 2 - 6

Advice NI perspective Pages 7 - 14

Advice NI Background

1. Advice NI is a membership organisation that exists to provide leadership,

representation and support for independent advice organisations to facilitate the delivery

of high quality, sustainable advice services. Advice NI exists to provide its members with

the capacity and tools to ensure effective advice services delivery. This includes: advice

and information management systems, funding and planning, quality assurance support,

NVQs in advice and guidance, social policy co-ordination and ICT development.

2. Membership of Advice NI is normally for organisations that provide significant advice

and information services to the public. Advice NI has over 80 member organisations

operating throughout Northern Ireland and providing information and advocacy services

to over 110,000 people each year on over 214,000 enquiries including: social security,

housing, debt, consumer and employment issues. For further information, please visit

www. adviceni.net .

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Conference Overview

3. As part of the Government’s debate on the future of the welfare state, Advice NI was

invited to participate in a conference held at One Great George Street, Central London in

June 2008. In particular debate centred on the health of the population, the cost of ill

health and models of intervention. The event aimed to offer the opportunity to address

key issues including:

How best to utilise the different resources and expertise that the private and

voluntary sectors utilise to ensure that those who need it receive the required

support;

Through long term mentoring, help keep customers in work and progress in their

roles as opposed to return to benefits;

How best to reward organisations that are successful in helping claimants find and

stay in work;

How best to role out local employment partnerships;

Greater personalisation of employment support, ensuring the hardest-to-help are

targeted;

Retain and revise the role of Jobcentre Plus (Jobs & Benefits Offices in NI);

How a higher employment rate can be achieved through partnership with local

communities;

How Pathways to Work can be continued to be rolled out across the country;

How reform to the welfare reform system can help the government eradicate child

poverty;

How addressing the skills deficit can address unemployment and keep people in

work;

4. Introducing the event Lord Archie Kirkwood, former chair of the Work and Pensions

Select Committee, talked about welfare reform to date. Regarding future direction he

highlighted the need for welfare reform to be co-ordinated & integrated with other

government policies; monitored to ensure reforms are appropriate and effective; properly

resourced; and have employer buy-in.

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5. Terry Rooney MP, Chair of the DWP Select Committee, spoke about the target of an

80% employment rate (against a current figure of 75%) and if this target is to be achieved

then people with disabilities, lone parents, people from minority ethnic communities and

the low skilled must be better supported. He outlined that there is a comparable person

from each of these groups in employment and any barriers must be addressed to help

more people move into employment. Mr Rooney also expressed the view that when

employees are notified that they are loosing their job, there should be a process whereby

they can make contact with their Jobs & Benefits Office to be supported to find another

job as soon as possible.

6. From the point of view of government responsibilities Mr Rooney believed that the

issue of sanctions required attention. He outlined that if sanctions were meant to change

claimant’s behaviour, claimants must clearly know why they are being sanctioned and

must clearly be informed as to what steps they need to take to have the sanction removed.

There should also be more flexibility around testing work with greater use of Permitted

Work, a review of earnings disregards and more supportive benefit run-on periods. He

also outlined that government has a duty to address the issue of benefit uptake.

7. The Right Honourable Stephen Timms MP, Minister of State for Employment and

Welfare Reform, spoke about the goal of an 80% employment rate from the present

figure of 75% and the need to open up employment opportunities to those who previously

have missed out on these opportunities.

8. The Minister focused particularly on three areas:

New Deal: more intensive job search requirements, increased expectations on

people who have been on benefit for a long time;

Lone Parents: a goal of 70% employment rate amongst lone parents,

introducing regulations requiring lone parents (depending on the age of the

youngest child) to move from Income Support to Job Seekers Allowance with

associated work seeking responsibilities;

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Pathways and Employment & Support Allowance: greater focus on what a

person can do, not what they cannot do; more help available for people to stay

in work and to return to work more quickly;

9. Mark Lovell Executive Chairman of A4e spoke on the role the private sector can play

in the reform agenda. According to their website1, “A4e is a successful international

business and a market leader in global public service reform. We work with government

and the private and third sectors to design, develop and deliver front line public services

that benefit individuals, organisations and communities.”

10. Mr Lovell spoke about putting customers at the heart of the design process; about

models of engagement in other European countries, including France where there is a

voluntary model of engagement, Germany where there is a family model of engagement

and England where the model is the Pathways to Work programme. Mr Lovell spoke

about the need for partnership, effective services require vibrant diversified supply

chains, mixed portfolio of services focused on client need, commissioning and contract

structures must support demands for delivery, he described a consumer model of services

‘for people’ not ‘to people’, the need for sufficient government investment and for

financial risk to be managed at the top tier and not passed down to service providers. He

finally highlighted that providers would need to be aware of the need to provide value for

money, efficiency and productivity.

11. A view from the advice sector perspective was put forward by Teresa Perchard, Head

of Policy, Citizens Advice. Teresa outlined that people, particularly those who have been

claiming out-of-work benefits for a long period, often lack the confidence to be able to

consider moving into employment; often the staff in Jobcentre Offices do not have the

time to provide the required support; moving from benefits to employment is often

considered a risk because finances are so tight; effective advice services must be in place

to assure claimants that (1) they will be better-off; and (2) ensure that in-work benefits

are put in place swiftly and accurately.

1 http://www.a4e.co.uk/Home.aspx

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12. In terms of integrating welfare reform with Employment and Skills, Ruth Owen

(Jobcentre Plus) and David Cragg / Karen Riley (Learning & Skills Council) spoke about

transforming the welfare state: and supporting people to move from welfare to skills and

employment. Ruth spoke about the need for core skills & employment support that was

available to all, with associated tailored solutions to fit local needs. Karen talked about

the need to conduct skills screening with claimants to ensure that skills could be

developed; matched to job content; and employer needs. The idea of Any job, Better job,

Career (ABC) was raised which appears to be a particularly US concept. David

highlighted the need for alignment with government strategies including investment,

regeneration, housing and health. He also highlighted the need to engage with employers

to ensure that any claimant-support programmes were meeting their needs. The ultimate

aim of all speakers appeared to be sustainable employment leading to career progression.

13. Ann Watt, Deputy Director, Cabinet Office Social Exclusion Taskforce2, spoke about

the challenges in terms of employment relating to people with complex multiple

problems, with no/low skills and no experience. She particularly referred to (1) young

people leaving care, (2) adult offenders, (3) mental health service users and (4) people

with moderate to severe learning disabilities. These categories of people could

additionally include those who are homeless and / or have drug and alcohol addictions.

Ann outlined that compared to the average 75% employment rate across the entire

population, these groups had employment / education / training rates of 63%; 35% 20%

and 10% respectively.

14. Paul Kirk Head of Worklessness, Communities and Local Government, believed that

the introduction of the new Employment & Support Allowance and the rollout of

Pathways was significant. He made the following points:

Monitoring / Quality: the need to be better able to track off-flows from Incapacity Benefit

/ Employment & Support Allowance to ensure people remain in employment and actually

embark on career progression;

2 http://www.cabinetoffice.gov.uk/social_exclusion_task_force.aspx

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Conditionality: greater conditionality may create resistance from claimants and support

groups; greater conditionality in the form of sanctions may cause hardship and may also

force people to accept jobs that are not right for them;

Contracts: government needs to create contracts which will allow for effective delivery;

Health: the health service must be able to react effectively to the needs of claimants with

disabilities; needs to be better integration between health and work agendas;

15. Finally Dame Carol Black, National Director, Health and Work Well Being, provided

a review of the health of Britain’s working age population. She outlined that outflows

from incapacity benefits have fallen by 35% in the last decade and that 30% of children

who have a parent with a disability or health condition live in poverty. She added that if

we are to achieve full employment and reduce child poverty, no discussion on welfare

reform can take place without considering:

• How best to promote health and well-being in the workplace and protect the health of

those in work; and

• How best to support those with health conditions to stay in work or return to work.

16. She spoke about the review which she carried out ‘Working for a healthier

tomorrow’3 which had at it’s heart “a recognition of, and a concern to remedy, the

human, social and economic costs of impaired health and well-being in relation to

working life in Britain”. The overall message from Dame Carol was that work is

generally good for both physical and mental health and well-being; and she outlined 3

key objectives which were:

1. Prevention of illness and promotion of health and wellbeing;

2. Early intervention for those who develop a condition; and

3. An improvement in the health of those out of work

17. Closing the event Lord Kirkwood urged all stakeholders to engage in the welfare

reform debate. He quoted George Bernard Shaw: “Be careful to get what you like, or you

may have to like what you get”.

3 http://www.workingforhealth.gov.uk/Carol-Blacks-Review

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Advice NI perspective

18. Taking up Lord Kirkwood’s challenge, Advice NI would wish to focus more

keenly on government’s responsibilities and ensuring that these responsibilities are

discharged. This can most plainly be illustrated by looking at the issue of

government’s responsibility from the perspective of someone in work and paying

their tax and National Insurance contributions.

19. The government has recently expended much effort in terms of researching,

developing and implementing pathways from welfare-to-work. This has included a wide-

ranging public relations offensive in particular around the achieving the goal of an 80%

employment rate and in particular focusing on vulnerable client groups which may find

themselves furtherest from the labour market. The focus of the welfare reform debate has

clearly been on the personal responsibility of benefit claimants to move into employment

– in particular lone parents and people with disabilities.

20. Advice NI believes that the starting point when government talks about welfare

reform needs to change. There needs to be account taken of the views of people who are

in employment because these may be the very people who are not engaged now, who will

find themselves out of work and who will become very disillusioned with government

and the social security system for not protecting them in their hour of need.

21. Advice NI would wish to highlight that pathways from work-to-welfare must not be

further undermined. People pay National Insurance contributions with the expectation

that should they become unemployed or ill they will be supported by the social security

benefits system – in particular in terms of accessing contribution-based benefits. If the

government tip the balance so far that in effect this support is not forthcoming for people

who find themselves out of work, the question may rightly be asked ‘why should I pay

National Insurance contributions at all?’ Advice NI believes that the time has come for a

debate on the issue of National Insurance contributions; the extent to which these

contributions allow access to social security benefits; the extent to which this access has

diminished over time / will diminish in the future; & the role and cost of private

insurance packages which are in effect replacing this support.

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22. From the perspective of people who are in receipt of benefits, government has

very clearly put forward a rights and responsibilities agenda4. Again Advice NI

would challenge government to do more to meet it’s responsibilities towards those

on benefits.

23. In respect of benefit claimants, areas where government responsibilities have not been

adequately discharged include:

Benefit uprating: in respect of the Income Support Personal Allowance (aged 25 or

over) the increase in 2008/9 was from £59.15 to £60.50 representing an increase of £1.35

which is 2.28%.

Benefit uptake: the extent to which people are not receiving the support they are entitled

to needs to be addressed. For example in Northern Ireland take-up of Pension Credit is

considered to be as low as 49% by caseload and 60% by expenditure.

Earnings disregards: the earnings disregard for a single person (£5) has remained

unchanged since the introduction of Income Support in April 1988. The disregard has

now become less than the National Minimum Wage hourly rate which currently stands at

£5.52 an hour. This in no way incentivises claimants to move into paid employment.

ESA & permitted work: the differential treatment of those claiming contribution-based

and means-tested Employment & Support Allowance in relation to earnings. It appears

that relatively generous earnings disregards for contribution-based ESA do not apply to

means-tested ESA. As well as being confusing for ESA claimants and staff alike, this

differential treatment effectively discourages means-tested ESA claimants from engaging

in paid employment.

Benefit run-on: the transition from benefits into paid employment acts as a disincentive

for claimants. More financial support could be provided: which in effect could empower

claimants to themselves proactively seek to work. This could be funded from monies

which otherwise would have gone to government agents to provide back-to-work support.

Better off in work: other incentives should be considered including the extension of Free

School Meals provision which will help government meet it’s goal of trying to ensure

parents move into work; and improved support with housing costs which is a key

consideration for people moving from benefits to work.

4 http://www.dwp.gov.uk/welfarereform/readyforwork

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National Minimum Wage: the NMW should become a National Living Wage which

again would encourage people to take that first step into paid employment. In respect of

the NMW uprating, in October it will increase from £5.52 to £5.73 an increase of 3.8%.

Childcare: there is a distinct lack of accessible, affordable childcare, particularly as

regards Northern Ireland. In addition no government department here has lead

responsibility for childcare and there is no strategy in place to deliver accessible,

affordable childcare in the foreseeable future.

Education / training / volunteering: the focus of moving people from benefits into paid

employment has left many people feeling sceptical about the motives behind welfare

reform – more about a numbers game rather than seriously tackling heath and well-being

issues. Given that many people within vulnerable client groups are furtherest from the

labour market, government needs to be realistic and understand that many will have a life

changing journey to make before they are ready to move into paid employment.

Social fund: the provision of lump sum payments via the social fund should be reviewed

and broadened to encompass support for low waged households.

Cross departmental support: government still tends to operate within silos which

negatively impacts on the support that can be given. For example intense activation

activity within the benefits field may run in parallel with lengthy waiting lists and delays

in treatment within the health field.

24. Advice NI asked the following questions at the event: (1) given that welfare

reforms are now targeted at the more vulnerable within our society, is there enough

recognition that these people have a journey to make; that they are furtherest from

the labour market; that they are the least attractive to employers; that they may

need to take part in up-skilling, further education, training, volunteering permitted

work, part-time work before getting to the stage where full time paid employment

might be a possibility? & (2) given the research that expresses the view that work is

generally good for you, how fit do you have to be to be considered fit for work;

where is the tipping point from being unfit for work / work being detrimental to

your health as opposed to being fit for work / work being beneficial to your health?

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25. As expected the answers were non-committal and perhaps underlined that when the

surface is scratched the issue is not as straightforward as may first appear. In respect of

(1) the response was that employment is the end goal and in fact government does not

want to incentivise any activity other than moving claimants off benefits and into

employment. This disheartening response perhaps underscores the view of the sceptic

that number counting rather than tailored support is the order of the day. This is perhaps

further evidenced by the stated policy objective of reducing the number of people on

incapacity benefits by one million from 2005 levels [Ready for work: full employment in

our generation (Dec 2007].

26. In answer to (2) it was agreed by Dame Carol that work is not the best place for

everyone; that decisions have to be taken on a case by case basis; that it is difficult to

generalise and that it is not about lumping people all together. This again demonstrates

how coming at the issue of welfare reform from a different perspective leads to responses

which are diametrically opposite to initial headline comments.

27. It is the view of Advice NI that there is always a balance to be struck between

encouraging families in receipt of social security benefits to move into paid

employment and providing adequate support for families while they are in receipt

of benefits. In our view the government has taken a predominantly ‘work focused’

approach, concentrating primarily on ‘making work pay’ and using employment as

the principal means of tackling child poverty. However, in taking this approach,

there is a concern that families on benefits are being left behind and marginalised.

In general terms, just as government would urge those on benefits not to have a

phobia about working, Advice NI believes that Government itself should not have a

phobia about seeking to improve the quality of life for those people and children

reliant on benefits.

28. Benefits sanctions, for example regarding a failure to carry out a job seeker’s

direction, impacts upon the whole family and there needs to be a balance between

‘encouraging’ people to move into employment and ensuring that these same people are

adequately supported while on benefit. Previous Advice NI Social Policy Papers (‘New

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Deal for Disabled People’; ‘The Contributory Principle – On the Agenda or in the Firing

Line’ and ‘Welfare Reform: Challenges, Choices and International Insight’ available on

www.adviceni.net) indicate that the focus may be too heavily weighted in favour of

moving people off benefits rather than firstly ensuring that people are adequately

provided for on benefit. In our previous Welfare Reform paper we highlighted the plight

of so-called floundering families in the USA:

“Welfare reform was successful because the US economy was good and because in-work

supports – child care and health insurance – helped make work pay. With the downturn

in the economy, problems with the US approach were highlighted as being the difficulty

for welfare recipients to secure continuous employment (often a focus on ‘take the first

job’ and not the ‘best job match’). There was also a very significant issue related to

‘floundering families’ – with a significant increase in single mother households without

work and without access to welfare (number has almost doubled since 1990).”

29. In terms of people with disabilities, Advice NI notes the analysis of the impact of

Pathways5 as highlighted in the report ‘The impact of Pathways to Work’ which

focuses on the overall impact of Pathways on employment, earnings, receipt of

incapacity benefits, and a potential indicator of the extent to which individuals'

health affects their everyday activities.

30. Whilst generally positive about the impact of Pathways it should be noted that the

report highlights that Pathways had little effect on the employment or self-reported health

condition of people suffering from mental illness. Given that people with mental illness

account for over 40% of the Incapacity Benefit caseload, Advice NI remains concerned

that a suitable form of support has not been developed to meet the needs of this particular

client group. In the push to remove claimants from benefit, we would remain concerned

that people with mental illness may find themselves in the position of being removed

from benefit and / or placed in employment; a position which may do nothing to improve

their health and well being.

5 http://www.dwp.gov.uk/asd/asd5/rports2007-2008/rrep435.pdf

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31. Dame Carol also highlights a ‘consensus statement’6 from leaders of the healthcare

profession which supports the view that healthcare providers should be doing all they can

to help people enter, stay in or return to work. Again the fine print of the statement

clarifies that:

“Work which is appropriate to an individual’s knowledge, skills and circumstances and

undertaken in a safe, healthy and supportive working environment, promotes good

physical and mental health, helps to prevent ill health and can play an active part in

helping people recover from illness.”

The key word in the statement is “appropriate” and again Advice NI would be concerned

that decisions as regards entitlement to benefit, fitness for work and taking up

employment may be overly concerned with simple head count considerations rather than

providing tailored support which is appropriate to meet the needs in each individual case.

32. Finally on the question of ‘is work good for your health and well-being?’ Advice NI

notes the report7 with the same title which interestingly makes the point that:

“There is also growing awareness that (long-term) Worklessness is harmful to physical

and mental health, so the corollary might be assumed – that work is beneficial for health.

However, that does not necessarily follow.”

33. The report highlights a number of issues including: employment is generally the most

important means of obtaining adequate economic resources; work meets important

psychosocial needs in societies where employment is the norm; there is a strong association

between worklessness and poor health; there is strong evidence that re-employment leads

to improved self-esteem, improved general and mental health, and reduced psychological

distress and minor psychiatric morbidity; claimants who move off benefits and (re)-enter

work generally experience improvements in income, socio-economic status, mental and

general health, and well-being.

6 http://www.workingforhealth.gov.uk/documents/healthcare-professionals-consensus-statement-4-march-2008.pdf 7 http://www.workingforhealth.gov.uk/documents/is-work-good-for-you.pdf

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34. Whilst the report does conclude that “work is generally good for health and well-

being”, it makes a number of provisos to this statement:

These findings are about average or group effects and should apply to most

people to a greater or lesser extent; however, a minority of people may experience

contrary health effects from work(lessness);

Beneficial health effects depend on the nature and quality of work (though there is

insufficient evidence to define the physical and psychosocial characteristics of

jobs and workplaces that are ‘good’ for health);

The social context must be taken into account, particularly social gradients in

health and regional deprivation.

Again Advice NI would draw attention to the journey that many will have to make before

being work-ready. We would like to see a continued focus on different elements of this

journey including ‘is volunteering good for your health and well-being’; ‘is education and

training good for your health and well-being’; ‘is part-time work good for your health and

well-being’. Advice NI will continue to advocate on behalf of those people for whom the

transition from benefits to work may not be a straightforward process. We will try to

ensure that the needs and views of this section of the population are heard despite the

rhetoric and sweeping statements to the effect that work is good for everyone – the

evidence appears to suggest that appropriate work can be beneficial with decisions to be

made on a case by case basis. This is not such a good sound-bite but it does perhaps

more accurately reflect the situation.

35. In conclusion, Advice NI note that commentators are predicting the first signs of

recession in Britain. A slowdown in the British economy with associated job looses must

be factored into the welfare reform equation. As highlighted above:

“There needs to be account taken of the views of people who are in employment because

these may be the very people who are not engaged now, who will find themselves out of

work and who will become very disillusioned with government and the social security

system for not supporting them in their hour of need.”

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36. Advice NI is keen to stay involved in the welfare reform debate and would be keen to

be kept informed of developments.

Contact information on this Social Policy Briefing Paper:

Bob Stronge (Director)

Fiona Magee (Deputy Director)

Kevin Higgins (Head of Policy)

Advice NI

1 Rushfield Avenue

Belfast

BT7 3FP

Tel: 028 9064 5919

Fax: 028 9049 2313

Email: bob@adviceni.net

fiona@adviceni.net

kevin@adviceni.net

Website: www.adviceni.net

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