Changes in Benefit Rules Follow IES Evaluation
Sara Dewson  In keeping with the shifting welfare-to-work agenda, which is becoming more and more focussed on labour-market-inactive people on benefits, the 2004 Pre-Budget Report announced changes to existing government policy that allows claimants of incapacity benefits to undertake some work while continuing to receive benefits. The changes have been informed by an evaluation of the existing rules undertaken by the Institute, in partnership with MORI.
The rules on permitted work while on benefits The current permitted work rules, as they are known, were introduced in April 2002. They enable claimants of incapacity benefits to work up to 16 hours per week and earn a set amount each week, for up to 26 weeks, with a possibility of a further 26 weeks if claimants can show they are making progress to full-time work. They were introduced to encourage claimants, where they were able, to make a gradual return to full-time work (or work of more than 16 hours per week) but over a fixed time frame. Only claimants with specific support needs, usually those with more severe health conditions and impairments, can continue to do some work and receive incapacity benefits indefinitely.
The evaluation for the Department for Work and Pensions (DWP), began in 2002 to assess the extent to which claimants were using the rules as a stepping stone to employment, and in particular to look at how claimants with different health problems and disabilities fared. The design had a longitudinal element with two telephone surveys of claimants who had worked under the old therapeutic work rules and those who had started work under the new permitted work rules, 12 months apart to establish changes in economic activity over time, and importantly, the reasons for any changes. The surveys were supported by two waves of qualitative in-depth interviews with a smaller number of claimants and focus groups with Jobcentre Plus staff. IES and MORI are currently undertaking a third wave of research with respondents to the first and second wave surveys to establish the longer term impact of the permitted work rules and will be reporting in Spring 2005.
What we found
The research found that the 2002 permitted work rules are working for some claimants, in particular, those who are new to work, ie those who have started working under the new rules. There is clear evidence that, for a (not insignificant) minority of claimants, the permitted work rules have acted as a stepping stone to employment, and as a shift away from benefits.
Providing a stepping stone to work
One half of all claimants who took part in the surveys had been in work at both survey points, that is, they had sustained their employment, whilst just under one in ten claimants reported that they had given up work between the two survey waves. During the qualitative interviews, claimants reported that the permitted work rules had given them the opportunity to have a taste of work before they committed to permanent employment. Importantly, some respondents said that the permitted work rules had been a stepping stone to full-time work and that they would not have moved into work without it. The study also found some evidence that claimants were moving away from benefits towards economic independence, or support from tax credits.
Impact varies with actual (and perceived) incapacity
The new rules, however, have not been a success for all claimants and there are indications that some people fare better or worse depending on their particular health conditions and impairments. Clients with musculo-skeletal difficulties and mental health conditions appear to be the most likely to have moved into sustained employment over time. People with progressive illnesses seem to have gained the least from the new permitted work rules.
Wider benefits
People taking part in the research also reported many other gains from their experience of working. Most survey respondents reported that they felt a greater sense of achievement in work, felt more involved in society and preferred to earn a living rather than rely on benefits. The majority of respondents also said that working had improved their self-confidence and motivation, and had given them a greater sense of independence.
Low awareness
Although the rules have been in place for over two years, awareness and understanding of the 2002 permitted work rules continues to be low, and few survey respondents had actually had any contact with their local Jobcentre about the new rules. Claimants have requested additional information, help and support about work-related issues, including more face-to-face contact. This is backed up by Jobcentre Plus staff, who believe that one-to-one contact can help people to progress into successful and sustainable job outcomes and would result in more successful transitions to work.
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