My Lords, I gave notice that I wish to oppose Clause 13 standing part of the Bill and I now wish to do that in support of the noble Lord, Lord McKenzie, and the noble Baroness, Lady Manzoor. Clause 13 would cut ESA by just under £30 a week, or £1,500 a year, for new claimants in the WRAG group from 2017. The Government’s reasoning is that the £30 a week uplift from the JSA level constitutes a disincentive for those in the WRAG group to seek work and that cutting this premium would remove that disincentive.
As I hope many noble Lords will by now know, with my noble friends Lady Meacher and Lady Grey-Thompson I have just carried out a review of this policy approach and its impact on the Government’s objective of halving the disability employment gap. The review was published yesterday; copies have been distributed and I hope that many noble Lords will have had a chance to look at it. I place on record my thanks to the disability charities which supported the review, including Leonard Cheshire Disability, Mind, the Multiple Sclerosis Society, the National Autistic Society, the Royal Mencap Society, Scope and RNIB, of which I am a vice-president and I declare my interest. I also thank the 30 or so organisations which responded to our call for evidence and the nearly 200 disabled people who gave us eloquent and often very personal accounts of their lives and aspirations, and the hardships that they face.
Our review found no evidence to support the Government’s approach. The Government’s impact assessment contains no detail on how disabled people might be affected and seems to be concerned only with savings to the Government, which would amount to £640 million by the end of the Parliament—not a massive amount as these things go. The Government rely principally, as the noble Lord, Lord McKenzie, said, on a 2005 OECD study which deals only with unemployment generally and not the unemployment of disabled people at all, which is generally reckoned to be very different, as evidenced by the intractability of the disability employment gap. Officials have referred us to a 2010 study by Barr and others in the Journal of Epidemiology & Community Health, which suggests that there is a significant negative association between benefit levels and employment. But the authors commented that:
“While there was some evidence indicating that benefit level was negatively associated with employment, there was insufficient evidence of a high enough quality to determine the extent of that
effect. Policy makers and researchers need to address the lack of a robust empirical basis for assessing the employment impact of”,
the 2010 welfare reforms.
The central recommendation of our review is therefore that the proposal to reduce payment to claimants in the WRAG group to JSA level should be put on hold in order to carry out a thorough assessment of ESA and the impact that any reductions might have, not only on disabled people, their families and carers but on other services that might be affected, such as social care and the National Health Service, as well as knock-on effects on other benefits. As we conducted our review, I was hugely impressed by the wealth of expertise possessed by the organisations which came and gave evidence to us. If the Minister were to establish a working group to tap into this expertise, I am sure that these organisations would be only too happy to help him get this matter right.
ESA is an income replacement benefit for those assessed as not fit for work. It is important to stress this point, as the noble Baroness, Lady Manzoor, has done. They are assessed as not fit for work; they may have been assessed as capable of undertaking activities potentially leading to work but the essential point to grasp is that they are in the WRAG group because they are not currently fit for work. Moreover, the extra £30 a week is there in recognition of the fact that it takes much longer and costs more for disabled people to take steps towards work, during which time savings run down. It is important to remember that this is a group many of whom are already in or close to poverty.
According to the Office for National Statistics, 31% of disabled working-age adults live in poverty compared with 20% of non-disabled adults. Currently, roughly 60% of people spend approximately two years in the WRAG group. This may be even higher for some groups. For example, blind and partially sighted people are five times more likely than the general population to have had no paid work for five years. This compares with 60% of people spending roughly six months on JSA. As I have said, the extra payment is there to reflect that but also to recognise the additional costs that disabled people face when looking for work or undertaking work-related activities. Respondents told us about increased travel costs, as well as the cost of assistive technology. Of course, DLA and the personal independence payment are designed to cover additional costs associated with disability. However, respondents reported that DLA and PIP are not enough to cover all their costs—it is only a contribution to them—and we know that only around 50% of individuals in the WRAG group also receive DLA or PIP in any case. Individuals would really struggle to cover those additional costs if the ESA WRAG component is removed.
Our review took place in the context of the Government’s welcome aim to halve the disability employment gap. It concluded, however, that the proposed cut to ESA would hinder rather than promote this aim. One respondent said that they would need to cancel their phone and broadband contracts, with the result that,
“I would not be able to make calls regarding workplace volunteering that I want to do”,
in order to help them get back to work,
“or make job applications when I am ready. I would also no longer be able to afford smart clothes which you need for work”.
An important contribution came from the Disability Benefits Consortium, which surveyed 500 disabled people in the ESA WRAG group. Almost half of these—49%—said that such a cut would mean that they were not able to return to work so quickly. The disability employment gap is a long-standing structural one, exacerbated by failed back-to-work schemes—the Work Programme in particular—as well as societal and employer attitudes. It is not generous benefits that are holding people back.
Our review identified a very close connection between the proposed cuts and people’s mental health, which, in addition to the human cost, would lead to people being pushed further from the labour market. As one respondent commented:
“Losing this money would make me more worried and stressed which would impact my mental health considerably turning the whole thing into a vicious circle”.
The noble Lord, Lord Patel, stressed this point very eloquently. It is important because the current ESA WRAG group consists of close to quarter of a million people with mental health problems as well as learning disabilities.
In summary, our review concludes that there is no evidence to suggest that disabled people can be incentivised into work by cutting their benefits. Instead, the Government should look to improving support by making it more tailored to people’s individual needs as well as working with employers to tackle attitudinal barriers. If the Government could only do this effectively, and halve the disability employment gap, that would really make dramatic inroads into the size of the ESA bill.