The government must ensure it overcomes business concerns over the employability of people with poor health if its Welfare Reform Bill is to succeed, experts have warned.
The Bill, unveiled by work and pensions secretary John Hutton last week, will see incapacity benefit replaced with an employment and support allowance from 2008, in a bid to save £7bn a year.
Under the reforms, the criteria on which people are judged fit either to seek work, or to be refused benefit if they do not seek work, will be toughened.
The so-called ‘capability test’ will also be altered, so that it measures mental health conditions such as stress and anxiety better, and offers targeted help to get people back to work.
The Chartered Institute of Personnel and Development (CIPD) said the Bill represented “a major step forward” in addressing the waste of potential, and the cost to the taxpayer caused by having 2.7 million people drawing incapacity benefit.
But it said the government must address the concerns of the third of UK employers that exclude people with a history of long-term sickness or incapacity when recruiting, on the grounds that they will be less productive and more prone to absence.
“The key to success lies in getting employers large and small on board. Without this, even the best welfare reform might not end up with more people in work,” said John Philpott, chief economist at the CIPD. “This may require greater use of direct financial incentives for employers, such as the offer of recruitment subsidies, or low-cost work trials for claimants.”
John Cridland, deputy director-general of the CBI, agreed that financial assistance is key. “Many employers are willing to play a full role in bringing those not currently employed back into the workplace,” he said.
“But the government must support companies in re-skilling those who have been out of work for some time, and must contribute to the consequential costs of special equipment, transport or mentoring.”