Work and pensions secretary Iain Duncan Smith. Photo: Getty
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The Tories are set to breach their own welfare spending cap – here’s why

Despite all the distress and financial hardship caused by a malfunctioning assessment process, spending on the government’s main sickness and disability benefit is set to rise.

The BBC are reporting that spending on Employment and Support Allowance (ESA) – the benefit for those who are unable to work as a result of a health condition or disability – is rising to the extent that the work and pensions Secretary Iain Duncan Smith could breach his own self-imposed welfare spending cap.

ESA was a response to the sharp rise in the numbers claiming its predecessor – Incapacity Benefit – under Thatcher and Major in the 1980s and 1990s. Unfortunately controversy has dogged it since its introduction in 2008. The test to determine entitlement – the Work Capability Assessment (WCA) – has produced thousands of incorrect decisions, with at least 15 per cent of those declared “fit for work” having this overturned on appeal.

Although the Tories knew about these issues when they came to power, they actually increased the number of assessments – moving beyond just looking at new claimants (as Labour had done) to the reassessment of the 2.2 million existing Incapacity Benefit claimants.

And yet the internal memo seen by the BBC today predicts that the cost of ESA will rise by nearly £13bn between the current financial year and 2018-19.

This could reflect a trend that I first identified in a House of Commons debate in April. I noted that although the total number of ESA/Incapacity Benefit claimants was set to fall by 150,000 between 2011 and this year, figures that isolate the impact of the Incapacity Benefit reassessment reveal that between the start of the process and March last year, 235,000 claimants had been reassessed as “fit for work”.

So over a shorter time period, 235,000 people were kicked off benefits, and yet the overall reduction in claimants was only 150,000. Clearly something was and is awry. What?

The leaked document suggests that the severity of ESA claimants’ illnesses and disabilities had been underestimated and noted that a new contract for the face-to-face part of WCAs could cost three times as much as the £100m per year currently paid to the much-criticised French IT firm Atos.

However I would argue that another key factor is the failure of the government’s Work Programme, where contractors are paid to support people into jobs. Figures from March 2014 show that between June 2011 and December 2013, only 2,500 of the 24,620 former Incapacity Benefit claimants declared fit for work and on the Work Programme had found a job. Perhaps unsurprisingly, those left behind will simply reapply for ESA for a second time round.

This demonstrates that despite the excessive severity of the test and all the distress and financial hardship this has caused claimants, the government’s attempt to reduce the numbers on benefits and control spending will have fallen well short.

If Labour win power in 2015 we have committed to overhauls of both the test and the support given to people to find work – both of which, as today’s reports demonstrate, are clearly needed.

Sheila Gilmore is MP for Edinburgh East and a member of the Work and Pensions Select Committee. She keeps a record of her work and research on ESA on her website.

Sheila Gilmore is Labour MP for Edinburgh East

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.