What Employment and Support Allowance cuts mean for disabled people

ESA is a lifeline for those unable to work. But those claiming it are now treated as if they are healthy job seekers. 

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Those who do not work due to illness or disability are simply riding a wave of inflated benefits. Or so this government would have you believe - and that wave is about to come crashing down, leaving many recipients marooned without the support they need.

Cuts to Employment Support Allowance that came into effect on Monday reduced weekly payments from £102.15 to £73.10 (£57.90 if you’re 24 or under) - the rate of standard job seeker’s allowance, in a bid to encourage more people back into work.

However, research conducted by the Disability Benefits Consortium - a national coalition of over 70 charities - suggests the move will have the opposite effect, with 45 per cent of those surveyed believing the loss of income would likely mean a later return to work.

“The ESA was designed to replace your income when you’re too sick to work,” says Phil Reynolds, policy co-chairman of the DBC. “But the government feels having a higher rate than job seeker’s allowance is a disincentive, and so believe equalising it is the right way to incentivise people to work.

“However, there is no evidence to suggest taking money from disabled people will do anything to get them back into work." A survey of ESA claimants conducted by the DBC found 70 per cent believed the cut could cause their health to suffer, and a third said they were already struggling to put food on the table and heat their homes.   

Although those currently eligible for cold weather payments will still receive the same benefits - and there will be no change to payments for existing recipients of ESA - the figures should already be cause for action before even considering the thousands who, if struck by illness or disability from this week onwards, will suffer further financial hardship.

Two-thirds of those surveyed believe they would struggle to pay their bills and their health would suffer if their payments were cut by £30 per week, while of those who have already had their ESA withdrawn or reduced under the scheme, 24 per cent could no longer afford their weekly food shop.

Why the changes? 

The Welfare Reform and Work Act impact assessment for the benefit cap, published in August, stated overarching changes would “promote even greater fairness between those on out of work benefits and tax payers [sic] in employment (who largely support the current benefit cap), whist [sic] providing support to the most vulnerable.”

A Department for Work and Pensions spokesperson said: “Our reforms are ensuring we have a welfare system that offers work for those who can, help for those who could, and care for those who can’t.

“The ESA work-related activity component was originally introduced to incentivise people to find work but is not working – just one per cent of people leave the benefit every month.

“New ESA claimants who are placed in the Work Related Activity Group will instead receive a Personal Support Package with practical help to move closer to the labour market and re-enter the workforce when they are ready.”

However, the Work and Pensions Select Committee, which scrutinised the policy, found that the evidence that lower benefits would encourage people back into work was “ambiguous at best”. It’s easy to see why. The DWP has cited two main studies in its evidence. The first, a 2005 OECD report, which states “financial incentives to work can be improved by either cutting welfare benefit levels, or introducing in-work benefits while leaving benefit levels unchanged”, but does not specifically consider those suffering illness or disability.

The second, a 2010 paper by Barr et al. does report that “eight out of 11 studies reported that benefit levels had a significant negative association with employment” - the take-away line for government. However, it also states “there was no clear evidence from these countries that changes in the eligibility requirements of disability benefits had a measurable impact on employment”.

Crucially, it concludes "whilst changing benefit levels may affect the employment of some claimants at the margins, the consequences of this, in terms of loss of income, affects all claimants." If benefit cuts leave "more vulnerable groups such as people with mental health problems on reduced benefits, the negative consequences may outweigh the gains made in increasing employment".

Worse off than healthy claimants

The Select Committee’s report also noted that given those on ESA are likely to have higher living costs associated with their conditions, they will ultimately be left with less disposable income than JSA claimants, even though they are also not expected to find work as quickly as their JSA counterparts, and so will require the benefit for longer.

More poignant of course is the impact assessment’s following point, that the reform will “further reduce benefit expenditure and continue to help tackle the financial deficit”. As highlighted by Julia Rampen earlier this week, these latest benefit cuts are largely the brainchild of former chancellor George Osborne, whose commitment to austerity was unwavering during his time in government.

The ESA cuts, which arrive the same week as reductions to child and working tax credits, housing benefit, incapacity benefits, universal credit (that some ESA applicants will now receive) and bereavement support payments, are expected to save the Treasury £1bn by 2020-21, and come into effect at the same time as changes to Personal Independence Payment criteria that are expected to save £3.7bn. Many disabled people rely on both.

A green paper published in October put forth a bold ambition by the government to reduce unemployment among those suffering from long-term illness and disability.

It stated:

“For many people, a period of ill health, or a condition that gets worse, can cause huge difficulties. For those in work, but who are just managing, it can lead to them losing their job and then struggling to get back into work. Unable to support themselves and their family, and without the positive psychological and social support that comes from being in work, their wellbeing can decline and their health can worsen. The impact of this downward spiral is felt not just by each person affected and their families, but also by employers who lose valuable skills and health services that bear additional costs. There is a lack of practical support to help people stay connected to work and get back to work.

“This has to change.”

It has changed. Not for the better.