ESA and 'fit for work'

It is very common to see a statement that some whose ESA has stopped has been found 'fit for work'. This is not really correct and is worth examining in some detail.

I think the problem is that the people at the top, who should know what they're doing with it,  have become very confused about what role ESA is supposed to have.

When it was introduced, the stated aim was that it was supposed to be a system to support those with barriers into work, rather than 'writing them off' -  as, it was claimed, the old system did. This was the whole point of having the work-related activity group, into which most people on ESA would go. People in it would be encouraged to eventually find work but with their barriers recognised. In other words, people on ESA would *not* be seen as 'written off'.

Section 8 of the Welfare Reform Act 2007 bears this out: the test for eligibility is not whether a person is incapable of any work, but whether their capability for work is limited, such that it is not reasonable to *require* them to work. It is easy to imagine a situation where a person could work but due to disability it is not reasonable to require them to: it might causes pain or psychological distress, or could risk a relapse. The test in the primary legislation is therefore, on paper, less strict than being a need to be 'incapable' of work.

But when the first ESA criteria were published in 2008, it was obvious to everybody that the level of disability needed to get even into the WRAG was more severe than under IB. This has led to the bizarre and cruel situations where people are having their ESA stopped after medical assessments even when it's obvious that it would not be reasonable to require them to work. (Problems with wild speculation about people's abilities made at ATOS assessments do compound this further, but the criteria that ATOS have to apply must share the blame.)

Purnell, and now IDS and Grayling, have justified this by claiming that it is actually better for people to have their ESA stopped, and that being on ESA is to be 'written off'. This is where the confusion really starts. If you recall, this ignores, and in fact reverses, the very purpose that ESA was stated to have: that people on it were not supposed to be being 'written off' as the benefit was supposed to be more like a lighter form of JSA, and not just a clone of IB. But they've always talked about it as though it were just a clone of IB: hence the misleading headlines that people have been found 'fit fork work' when their ESA is stopped. Even welfare campaigners have bowed to the inevitable and have started to adopt the 'fit for work' terminology as a shorthand, driving the vicious cycle of misunderstanding.

The situation has got even more confused with some of the latest amendments, where the actual stated reasoning behind them has been to exclude people from ESA if they could work at all, even in some highly theoretical scenarios. Hence now being unable to walk but able to push a wheelchair 50m, but not 100m, precludes entitlement to ESA at all, unless combined with another problem. Of course there are jobs that could be done, but how (for example) is the person supposed to get to work in the first place and to get home again, every day, and on time?

Similarly, a person who can get only to familiar places and only with a support worker scores only 9 points and is precluded from ESA, unless there is another problem in combination with it to get them up to 15. But the number of available mental health descriptors has been cut down to avoid so-called 'double counting'. 9 points gets the person nothing and they are 'fit for work' with full JSA conditionality. Although again, there would be jobs the person could do, how would they avoid falling foul of the (it seems) universally accepted system of job selection by interview, when turning up frightened and with a support worker? Yet ESA potentially does not even recognise this as a limitation at all any more.

I would very much like to see the 'fit for work' terminology challenged as well, but due to the very great confusion at the top over what ESA is, it is somewhat realistic under the current criteria of very severe incapacity. But to acknowledge this is also to acknowledge that ESA has failed its most basic stated aim of reform, as almost by definition anyone able to receive it at all has been 'written off'.

Examining the government's claims for universal credit

I present what I will presently call 'Case 0':-




This is the government's poster child for universal credit. On the face of it, it apparently shows that universal credit will meet the government's stated aims of 'making work pay' by removing some of the cliff edges in the current benefits system at 16 and 30 hours work.

The red and blue lines show the family's net income, including wages and benefits, after housing costs and child care are paid for. In effect, their disposable income.

Variations of this graph have been bandies around ever since IDS announced universal credit, and it does appear to be fairer and more generous than the current system, as it irons out the period of limbo for work under 16 hours a week where working more hours leads to no gain in income.

The problem is, this scenario is only correct for the poster child family of 2 adults, 2 children, where everyone is healthy and 'normal'. It also hasn't been made clear enough that it only applies to families in rented housing.


So I tried plugging in some other scenarios, and producing equivalent graphs.




Here's a single person who is disabled and entitled to ESA, as he goes into work:-


 Case 1: A single claimant with limited capability for work, moving into a moderately paying job, renting.

Immediately, it's obvious that Case 0 was misleading. Universal credit for someone coming off the future equivalent of ESA/incapacity benefit into work is far less generous, and also includes a similar cliff edge at 16 hours. This is because universal credit contains no equivalent of the disability element of working tax credit in the current system, and because the  equivalent of the incapacity benefit is still lost at 16 hours work.






Case 2: a couple with one child, paying a mortgage, where one person moves into work from the equivalent of ESA/incapacity benefit.

Here we can see one of the most troubling parts of universal credit. For people with mortgages, the cliff edge where help with it is lost has been moved from 16 hours work to 1 hour. In other words, help with the mortgage is lost with the first hour's work. The loss of the disability element of working tax credit then compounds with this to leave a far less generous new system for someone starting work. At 16 hours work, under universal credit, the person is scarcely any better off in work. The person has to work 52 hours a week to be as well off as in the present system.




 
Case 3: a couple, renting, with three children, where one is a carer for the other, moving into work.

Admittedly, the present system does not excel at rewarding work here. The effective withdrawal rate for a carer moving into work is harsh, and universal credit does mitigate this after 16 hours work. But it's also considerably less generous overall, it leaves the carer irredeemably worse off than now, and it still contains a cliff edge where the carer's addition is lost at £150 earnings.






Case 4:  A lone parent, renting, paying £1.50 per hour child care costs for two children.

Lone parents have been mentioned a lot in criticism of the current system, but haven't so far featured in the government's own graphs. This is why. Universal credit is disastrous for people paying child care costs. This is because the current system disregards most of those costs from a person's earnings, but universal credit does not. The marginal % taper is now steeper than in the current system, and UC is less generous overall as well after 16 hours work.




Case 5: As above, but £4.80 per hour child care costs.

Once the child care costs go above £1.50 per hour, universal credit is now not just a disaster, but is actually so cataclysmic that work for a lone parent  above the disregarded amount of income is basically impossible. Net income plummets as more hours are worked.






Case 6: Single person with no children, renting, low paid work.

The objection could be made that Cases 1-5 are untypical. Perhaps they are, but they're not especially rare. Here we go back to a simpler situation, but this time a single person with no children. Again, it is very different from the poster child of Case 0.  Universal credit does reward work better than the present system for small amounts of work, but this gain is cancelled out by the loss of the 30-hour element of working tax credit. The marginal withdrawal rate is no better overall than the present system. As I observed in an earlier post, before looking at exact figures, this was inevitable because of the failure to integrate council tax benefit into the single taper. Typical marginal rates in UC remain at around 85%+.

Another thing that is notable is that UC officially uses monthly, rather than weekly rates. A cynic might think that this is to disguise how relatively ungenerous the rates are in many cases. The above graphs show it converted into weekly amounts.

Universal credit was a reasonable idea, but the way that's it's been designed in practice to act as a smokescreen for severe cuts, means it's is a disastrous system, built on a foundation of lies and spin, and the sooner it gets dropped, the better.