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A very social problem, by Judy Hirst

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28 October 2005

Never one to shrink from a challenge, David Blunkett has taken the incapacity benefit bit between his teeth. Judy Hirst reports on the work and pensions secretary's controversial measures to get claimants 'off the sofa' and into jobs

Britain isn't working. Not yet. True, we have one of the lowest unemployment levels in the eurozone. And true, 2 million more people are in work than in 1997. As the chancellor never tires of telling us, Britain could teach Europe a thing or two when it comes to achieving full employment.

But then it all depends what you mean by full employment. The government has an ambitious 'aspiration' to raise employment levels from 75% to 80% of the working age population. And in the Southeast, the Southwest and more prosperous parts of the country, the labour market already feels pretty tight. But venture to less blessed regions – the Northeast, the Northwest and South Wales, to name a few – and the picture is somewhat different.

Typically, jobless levels are between 4.5% and 5.5% of the working age population in these areas, compared with 3.5% to 3.7% in better-off regions. The proportion out of work is far higher if you are male and over 50; there's not much call for former miners and shipbuilders in call centres and other service industries that traditionally take up the slack. Nor is this just a North-South divide – 6.7% of London's working age population is jobless, not that it's always apparent. Unemployment, increasingly, is the social problem that dare not speak its name.

This leads to the second paradox. How is it that, if job prospects are so bright, the number of people who are economically inactive and living on incapacity benefit has not only barely fallen since 1997, but has in fact quadrupled over the past quarter century? The headline total entitled to IB – the main benefit for those too sick or disabled to work – currently stands at 2.8 million, compared with just 0.7 million drawing the equivalent benefit in 1979. Three times as many people are claiming incapacity benefit as unemployment benefit. And once again, there are striking regional variations.

In the English Southeast, around 3% to 4% of the working age population are incapacity claimants. In much of North England, Scotland and Wales, the figure is over 10%. In Glasgow, it is 16%, in Liverpool 15%, and in parts of County Durham and South Wales, it is as high as 20%.

This could, of course, mean a number of things. One interpretation – popular with Daily Mail readers in the home counties – is that Geordies, Scousers and the rest are feckless, workshy benefit scroungers, all too happy to sponge off the state for years once they've been signed off 'on the sick'. It's an accusation the government is acutely sensitive to – witness the number of high-profile anti-fraud initiatives announced in the past fortnight alone.

Another theory, with a ring of historical truth about it, is that the high numbers on IB are 'Thatcher's legacy': the end-product of a deliberate policy in the 1980s and early 1990s of massaging down official unemployment figures by encouraging claimants off the dole and on to sickness or invalidity benefit. The fact that more than half of male IB claimants are aged between 50 to 64, and more than two-thirds are former manual workers, would seem to testify to that. Half of them have been on the benefit for five years or more.

Yet another view, put about to varying degrees by the Institute for Public Policy Research, the Social Market Foundation, Catalyst and other think-tanks, is that there simply aren't enough jobs for the estimated 1 million incapacity claimants who want to work – that this is a demand as well as supply-side problem. According to this analysis, a mixture of regional job-creation initiatives, with incentives for employers to take on more disabled people, is the only way to tackle the problem. The soaring level of IB claimants 'does not reflect any deterioration in the nation's health, nor an epidemic of malingering by the workshy', says Steve Fothergill, professor of regional development at Sheffield Hallam University, and co-author of a Catalyst paper on the issue. 'It is basically the result of the destruction of jobs in Britain's older industrial areas.'

Whatever its causes, incapacity benefit – with its cost to the Exchequer of £13bn annually – has been a constant nagging headache for as long as most ministers can remember. A succession of secretaries of state have tried unsuccessfully to tackle this, one of the most incendiary issues in the welfare reform minefield. Too many botched attempts at thinking the unthinkable – remember lone parent, pension and disability benefit cuts, and the ensuing backbench revolts? – have made ministers understandably cautious about sweeping reforms, particularly now, with a much-reduced parliamentary majority.

But needs must. Deteriorating public finances, slowly rising unemployment – and a prime minister who, with hindsight, wishes he'd gone much further on public service reform – is piling on the pressure at the Department for Work and Pensions. Ministers and their civil servants need to come up with something radical to tackle welfare dependency in general, and the IB bill in particular. The issue has become particularly pressing with the Public Accounts Committee claiming that billions of pounds are being lost annually to benefit error and fraud, the tax credit system being accused of 'systematic maladministration' by the parliamentary ombudsman, and the Child Support Agency in meltdown. Notwithstanding the achievements of Welfare to Work and the New Deal, it doesn't look good for either the DWP or the Treasury.

Enter one David Blunkett. Earlier this month, with the media's guns firmly trained on everything but his welfare policies, the work and pensions secretary managed to momentarily attract attention with a get-on-your-bike sound bite. Work is a better cure for incapacity than 'sitting at home watching daytime television', he told a Whitehall symposium on welfare reform. The labyrinthine benefits system, with its perverse incentives to prove you're incapable of work, was 'crackers', he said, in a speech that promised a 'something for something' contract with claimants, conditional on a 'clear commitment to self-help'.

Blunkett was punching out his 'eight principles of welfare reform', which propose to transform the welfare state from a safety net into a ladder of opportunity for the sick and disabled (or, as one unfortunately worded official release put it, 'from a crutch into a ladder'). Medical advances, and the changed nature of work, make it far less justifiable to stay aboard the 'incapacity benefit train', he said. Not quite US-style workfare yet, but surely a step further along the work-or-lose-benefit route.

All this was intended as a curtain raiser for the soon-to-be published welfare reform green paper – widely touted as the second stage in a large-scale reform of the welfare state (and itself the subject of some hard negotiating between the DWP, the Treasury and Number 10). In fact, much of what is likely to be in the green paper has already been rehearsed in the DWP's Five Year Strategy, published under the shortlived watch of Blunkett's predecessor, Alan Johnson. The supply-side focus on shaping up claimants for work, the 'it's-good-to-work' official mantra – all the elements were there. Plans for a two-tier IB system were sketched out, whereby claimants with 'more manageable conditions' will receive a basic rate of benefit, no higher than Jobseeker's Allowance. Those with more severe conditions or impairments will receive a higher rate of benefit, and top-up payments will be available to claimants who take up training, rehabilitation or a job.

Johnson too, emphasised work – or at least, the aspiration to work – as the cure-all for a range of ailments, and rolled out a series of Pathways to Work pilots to test out the new model. These are intended to smooth the path back to work, with help from personal advisers, 'condition management' courses and the like. Early results from the pilots look promising, says the DWP. There are plans to extend the scheme to more 'discouraged workers' nationally from 2006.

What is distinctive about Blunkett's agenda is his determined focus on joined-up, interdepartmental working. Whitehall might be woefully underprepared for bird flu, or the Siberian winter promised by the Met Office. One lot of disaster and emergency planners might not have a clue what the other lot are up to. But when it comes to co-ordinated government action to get the incapacitated up off their sofas and into meaningful pursuits, the work and pensions secretary is already streets ahead.

The Department of Health, the Health & Safety Executive, the Home Office and Revenue & Customs are all apparently shoulder to shoulder with the DWP's campaign to get claimants to turn off Trisha, and prepare for work. At the core of a rash of interdepartmental initiatives are plans to tackle what ministers call the 'sick note culture'. GPs have been too willing in the past to just sign people off sick, says the government. In future there will be employment advisers in surgeries, more counselling of claimants and closer links to Jobcentre Plus.

Doctors are predictably suspicious; there has been a lot of harrumphing from the British Medical Association. But the NHS Confederation has broadly signed up to the strategy. However, cannily, it too wants 'something for something' in the form of an 'invest to save' fund that diverts savings made from getting claimants off benefit into the NHS and social services. 'The money could be used to set up panels of advisers, pay for adaptations and give psychological support to the 40% of IB claimants with mental health problems,' says a spokesman.

Other initiatives are flowing thick and fast. The creation of a new national occupational health directorate. A joint 'Health, work and wellbeing' strategy, launched jointly by the DWP, the DoH and the Health and Safety Executive. And, when all else fails, Blunkett is drawing upon Home Office expertise for his distinctly stick-not-carrot plans to combat benefit fraud. 'Voice stress analysis' telephone lie detectors and data-matching exercises with Revenue & Customs are among the measures being trialled.

Alongside the joined-up governmental approach, Blunkett has quietly been on a charm offensive with disability and poverty charities. He has set up a new 'welfare reform advisers forum' of external experts, to advise on 'big picture' issues, and DWP ministers have been touring the country to get an ear to the ground. So cosy have things become, there's even talk in some government circles of hard man Blunkett having been 'captured' by the welfare lobby and going soft on reform.

Dave Simmonds, director of the welfare charity Inclusion, doesn't see it that way. 'There's been an immediate and radical difference in how Blunkett and also [DWP ministers] Margaret Hodge and Ann McGuire have been approaching the issues. They've really been talking with people, and are much more aware of the need to consult.'

And it's working, up to a point. The Disability Alliance, the Child Poverty Action Group and other lobby groups have serious concerns that the two-tier IB proposals will be punitive rather than supportive in practice. John Adams, director of research at IPPR North, warns that the new system will be timewasting. 'More fundamentally, it misjudges the nature of disability and work, as there are no hard and fast categories into which people can be allocated,' he says. Yet, despite all the caveats, a consensus is slowly emerging around the DWP's reform strategy.

But will the people who really count – the millions 'parked' by the government on IB – really buy it? Danny Alexander, Liberal Democrat spokesman for the DWP, seriously doubts it. 'The prime minister is very keen to see the government talking tough on the issue. But focusing on fraud and “benefit cheats” is a mistake. It's not the way to achieve success with the 1 million on IB who want to work. The tone of this debate is very important,' he says.

And there's another problem too. Underpinning the entire strategy is the assumption that personalised support will be on hand to assess claimants' ability to work, and to offer training, mentoring and appropriate work. The difficulty with this sensible-sounding approach is that the DWP is in the throes of losing 30,000 jobs, outsourcing Jobcentre Plus and closing many New Deal training programmes. As the government department in the vanguard of Sir Peter Gershon's efficiency drive, how is it going to provide all this individualised support?

Adams says that the impact of Gershon's review is a major concern. 'People in the Employment Service are uniformly worried about their capacity to deliver. Unless the government sorts this out, the whole strategy is threatened.' Writing in a recent IPPR report, Adams says that Jobcentre Plus will have to start 'punching its weight', arguing that 'the DWP cannot allow the number of personal advisers to be reduced'.

Alan Walker, professor of social policy at the University of Sheffield – and a member of the department's new advisers' forum – believes that everything hinges on how the new policy is implemented. 'Those responsible must be aware of the potential danger otherwise of recreating a distinction between the “deserving” and “undeserving” poor.'

And then, there's still the issue of jobs. Steve Fothergill knows what's needed: intervention from the Department of Trade and Industry and the Office of the Deputy Prime Minister to match job opportunities to claimants, particularly with the decline in European Union funding to the regions. 'If the government wants to cut the numbers on the benefit, it must provide employers with support,' argues Ann Rossiter, director of the Social Market Foundation. Taking on someone who has been on IB for a time represents a risk, she says, and businesses cannot be expected to do it out of pure philanthropy.

So that's the Office of Government Commerce, the Treasury, the DTI and the ODPM that need to sign up more wholeheartedly to Blunkett's back to work agenda, which on reflection is still not looking quite as joined up as it could. But no pressure, guys. Just whatever it takes for welfare to work.

PFoct2005

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