Who will benefit from reform?

With problems continuing in Iraq, discontent rumbling over education reforms and the NHS under fire, Tony Blair could have been forgiven for putting controversial proposals on overhauling incapacity benefits on the back burner.

But the government’s own figures show that the 2.7 million people currently claiming incapacity benefit are more likely to give up looking for a job or die after drawing the benefit for more than two years, so ignoring the issue was simply not an option.

Last week’s Green Paper on welfare reform, unveiled by work and pensions secretary John Hutton, proposes to replace the current incapacity benefit system with an ‘Employment and Support Allowance’, to be paid to people for undertaking work-related activity.

Pathway programme

The plans include rolling out a 360m ‘Pathways to Work’ programme across the UK by 2008 – introducing mandatory work-focused interviews, working with employers to develop work-taster programmes for single parents and to extend flexible working arrangements for older workers.

The plan is to cut one million of the 2.7 million claimants over a 10-year period, resulting in a substantial reduction to the annual 12.5bn cost of the benefit.

Laudable aims, but most employers are reluctant to recruit people who have been claiming incapacity benefit for a long time, according to research from the Chartered Institute of Personnel and Development (CIPD).

Just 3% of 750 companies questioned by the CIPD said they actively targeted incapacity benefit claimants as part of their recruitment strategy, and one in three said they deliberately excluded these people.

More than half the employers thought long-term claimants would be more prone to absence and 45% said they would be less reliable.
“Such low expectations may or may not be unfair,” said John Philpott, chief economist at the CIPD. “But either way, they pose a problem for the government.”

TUC general secretary, Brendan Barber, agreed.

“The reforms should recognise that employer prejudice is a key obstacle in the way of many claimants moving back to work,” he said.

The government aims to use the reforms to raise national employment to 80% from 75% and help 300,000 lone parents into work.

But mental health charity Rethink estimates that 80% of people with severe mental health illnesses are long-term unemployed, and said there was still a long way to go to change this.

“The government package will go a little way to addressing some of these barriers, but it is only half the story,” said chief executive Cliff Prior.
“These plans would be greatly strengthened by government action to end labour market discrimination by employers.”

The National Autistic Society also expressed concern about the proposals. Its policy officer for adults, Mia Rosenblatt, said that many autistic people had difficulties with social interaction.

“We are concerned that individuals with autism may be penalised for not appearing to be fully ‘engaged’ in the proposed work preparation process, when their behaviour is a consequence of their disability,” she said.

But we should not be too quick to write off employers, according to CBI deputy director-general John Cridland. “With skills shortages in many parts of the economy, employers strongly support the government’s goal of helping more people back into work,” he said.

Government funding

Employers need the backing of the government, Cridland warned. “The government must support companies in reskilling those who have been out of work for some time, and by contributing to the consequential costs of special equipment, transport or mentoring,” he said.

Under the government’s proposals, GPs will be given a key role in getting people off incapacity benefit, with employment advisers to work alongside them and advise sicknote claimants of job opportunities. GPs could be offered financial incentives to reduce the number of sicknotes they issue. Hutton said he hoped to pilot the idea in a number of cities across the country over the next year.

Dr Hamish Meldrum, chairman of the GP committee at the British Medical Association (BMA), wanted further clarification on how the proposals would work.

“If these people [employment advisers] are able to offer helpful and sensitive advice to patients, they may prove a positive addition to the services available in a GP practice,” he said. “They will only be effective if they are supportive in helping patients to return to work rather than acting as an enforcement arm of the Department for Work and Pensions with the sole purpose of getting people off benefit.”

The Green Paper’s proposals on older workers also support forthcoming age discrimination legislation, due to come into force in October 2006.
The plans include aligning employment support for long-term unemployed people aged between 50 to 59 with people in their 30s and 40s and improving back-to-work initiatives for jobseekers who are over the age of 50 and their partners.

The Third Age Employment Network, which supports older people in the job market, said the reforms are a vital part of the response to demographic change and increased life expectancy.

Chief executive, Patrick Grattan, said: “We can no longer use incapacity benefit as a surrogate form of early retirement.”

Opinions on the Green Paper are clearly divided. While employers seem to be in favour of the principle of getting people back to work, many remain cautious. It is clear the government will need to clarify its guidelines and provide extensive support to employers if the proposals are to be a success.

Asda employs long-term strategy

One employer including the long-term unemployed in its recruitment strategy is Asda. At its Breck Road store in Liverpool, which opened in November, more than 60% of the 277 jobs created went to the long-term unemployed. It’s a similar picture at Asda’s stores in both Gwent and Barrow – John Hutton’s constituency where the pilot for the Pathways to Work Scheme has been taking place.

An Asda spokeswoman said: “We employ people based more on personality than skills or experience – we believe that a person with the right attitude and personality, can easily learn the skills required ‘on the job’.”

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