Overcoming employer concerns is the key if Welfare Bill is to be effective

The government must ensure it overcomes employer 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 pension secretary John Hutton yesterday, 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 be refused benefit if they do not will be toughened. The so-called capability test will be also be altered so that it more effectively measures mental health conditions, such as stress and anxiety, and to offer targeted help to get people back to work.

Hutton said: “What we want to do is to measure people’s capacity to work more intelligently rather than simply measure their incapacity to work. We’ve got to see people as potential jobseekers and help them to get back into the labour market.”

The Chartered Institute of Personnel and Development (CIPD) said the Bill represents “a major step forward” in reducing the waste of human potential, and what it describes as the huge cost to the taxpayer, caused by an unnecessarily high level of incapacity benefit claims.

But the measures will need to overcome employer concerns illustrated in a recent CIPD survey, it warned. The study of more than 1,000 employers revealed that 18% do not consider job applications from people on incapacity benefit for reasons of mental ill health. One in 10 employers do not consider applications from people on incapacity for reasons of physical ill health.

John Philpott, chief economist at the CIPD, said: “The Bill contains exactly the sort of rights and responsibilities approach to reducing the incapacity benefit count that the UK needs.

“But the key to success lies in getting employers, both large and small, on board. Without this, even the best welfare reform might not end up with more people in work,” he added.

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