unveiled today by work and pensions secretary Alan Johnson.
The reformed benefit will provide enhanced financial security for the
all those claimants who take part in work focused activity. Those who
completely refuse to engage - failing even to attend interviews -
will receive JobSeekers Allowance rates.
This reform will build on the extension of the successful Pathways to
Work initiative which recognises that nine out of ten people who go
onto IB want to work again and provides the help and support to
enable them to do so. It will also involve more active support from
employers, GPs and the NHS to help people get back to work when fall
Mr Johnson said:
'We know that a million people on Incapacity Benefits want to work.
So we must end the stifling of ambition caused by a system which for
too long has assumed that all people with health conditions and
disabilities are condemned not to work and instead live in isolation
as passive recipients of benefits'.
'It doesn't make sense to have a system that lumps everyone together
- treating in exactly the same way the person with back pain and the
person with terminal cancer. And for people with conditions that the
right support can make more manageable, we should be rewarding steps
towards work instead of the length of time on benefits.
'Our radical reform should mean that sickness benefit represents a
pause in people's working life, not a full stop. Our agenda is one of
rights and responsibilities: we can expect more of people as long as
we safeguard their right to financial security and expand their
opportunities to engage with the labour market.
'With unemployment at record low and 600,000 vacancies in the economy
we have a golden opportunity to tackle this problem and help one
million people achieve their own aspiration of staying in or getting
back to work.'
The strategy makes clear that benefit reforms will only work if they
are part of a much bigger programme of change - involving the role of
employers, GPs and full civil rights for disabled people. The key
elements of benefit reforms for new claimants are:
* The name 'Incapacity Benefit' will be scrapped so that people are
not immediately classed as incapable.
* Initially people will be put on a holding benefit paid at JSA
rates, accessing the new reformed benefits only once they have been
through a proper medical assessment. This will take place within 12
weeks, and be accompanied by a new Employment and Support Assessment.
* Two new benefits 'Rehabilitation Support Allowance' and 'Disability
and Sickness Allowance' will differentiate between those who have a
severe condition and those with more potentially more manageable
* The majority who have more manageable conditions will receive the
'Rehabilitation Support Allowance'. It will offer everyone a basic
benefit at JSA levels (about£55), but then ensure that they can
build up to get more than today's long-term IB rate by giving them
extra money, first for attending Work Focused Interviews, and then
also for taking steps to get them back towards the labour market.
* Those with the most severe conditions will automatically receive
more money than now on the 'Disability and Sickness Allowance'. They
will be able to volunteer to take up employment support.
* All of this will be built on the foundations of our successful
Pathways to Work programme which is being extended to a third of the
country on the road to making this a national offer.
* The new proposals will be piloted and consulted on with all key
stakeholders including disabled people themselves. Our goal is that
key elements will be in place for new claimants by 2008. Existing
claimants should also be able to take advantage of elements of the
extra support on offer and the new system.
* Placing employment advisers in GP's surgeries will also be piloted,
as the doctor's surgery becomes the first step back to work not the
route to a life of inactivity.
* The chancellor announced in the Pre Budget Report that the Pathways
to Work approach would be extended to a third of the country,
covering 900,000 people on Incapacity Benefits. This will be rolled
out over 14 new pilots by October 2006. This will extend the scheme
originally rolled out to seven pilot areas starting in October 2003.
EMPLOYMENT OPPORTUNITY FOR ALL: DWP FIVE YEAR STRATEGY
Employment opportunity for all is at the heart of the DWP Five Year
Strategy published today.
The strategy recognises the major future challenge facing the
Department is the welcome fact we are all living longer. Since the
1940s, when Beveridge introduced the state pensions system, the
average person now spends six more years retired. Helping more people
into work and then supporting them as their lives and work patterns
change is the best response to this challenge, as well as delivering
a fairer more inclusive society.
The strategy sets the ambitious long-term aspiration of increasing
the overall employment rate from 75% to 80% by tackling inactivity
while still supporting those who are unable to work. This would mean
achieving the highest employment rate in the UK's history and the
highest of any major industrialised country.
An 80% employment rate could mean as many as 300,000 more lone
parents working and as many as one million more people in jobs rather
than on incapacity benefits. We also envisage one million more older
workers being given the choice and opportunity to work for longer.
Alan Johnson, secretary of state said:
'We know employment is the best route out of poverty and our
achievements speak for themselves. There are now more people in work
than ever before and we have one of the strongest labour markets in
the world. This success is rooted in policies like the New Deal and
Jobcentre Plus as well as the stable macro economic framework we've
put in place.
'This strategy today sets out how we can go further. Through our
successful Pathways to Work Pilots we have started to provide real
help to people with a health condition or disability, with greater
employment advice, NHS support and a£40 a week credit to make work
pay. But we need to build further on this.
'Nine out of ten people coming onto incapacity benefit expect to go
back to work and we need to do even more to help them make this
happen. We need to make the most of people's talents to give all the
opportunity to work and ensure those who cannot do so get the support
Specifically the Strategy details;
* How on the back of a big expansion in Pathways to Work we will
build the fundamental reform of incapacity benefits to help more
people who are able to work, get back to and stay in work. This is
part of a six step strategy designed to ensure more people with
health conditions and disabilities, are helped back to work. The
strategy also includes a£20m trial to improve workplace
health and measures to support GPs in providing fitness for work
advice, including placing employment advisers in GP's surgeries.
* A package of help for lone parents. An integrated package of
measures to support lone parents into work, together with the
extension of childcare, will mean more people will be able to take up
employment and have more flexibility and choice about how to enter
the labour market.
* Increased opportunity to work longer and save more for retirement.
We will fight age discrimination, increase welfare to work help and
give people the chance to save more for their retirement by deferring
the state pension and getting a lump sum, which could be between
£20,000 and£30,000 when someone works for an extra five years.
The Five Year Strategy also sets out how the welfare state is being
reformed so that services are now tailored to the individual.
Mr Johnson continued:
'We are moving from a passive to an active welfare state and this
reform means we are doing more than just providing a safety net.
'We are now supporting people throughout their lives by providing
employment opportunity and security, helping people as they care for
their children as well as giving the choice to receive the state
pension as a lump sum.
'We will continue to build on the progress we've made. Yes, there are
now 600,000 fewer children living in poverty but we want to go
further. Yes, we've lifted 1.8 million pensioners out of absolute
poverty, but I am determined to do more.
'Giving people the opportunity to work whilst supporting those who
can't is what social justice is all about and this Strategy today
sets out how we can go further than ever before.'
PATHWAYS TO WORK BOOST FOR LONE PARENTS
A package of support to help lone parents move into jobs and ensure
work pays was announced today by work and pensions secretary Alan
Johnson, as new figures show the lone parent employment rate at its
highest ever level.
Pathways to Work for Lone Parents willgive more choice and more help
than ever before to lone parents to enable them to move off welfare
and into work.
The new pilots, announced in the Department for Work and Pensions
Five Year Strategy, bring together extra support and childcare help
with added financial incentives to look for and move into work. The
new measures will ensure a clear gain from work for lone parents, as
well as guarantees about childcare support and ongoing help of
professional job advisers, in return for a commitment to search for
and take up the offer of work.
Pathways to Work for Lone Parents will pilot an additional payment of
a£20, on top of existing benefits, for lone parents with children at
secondary school, in return for taking steps to find work.
New figures released today showed that the lone parent employment
rate has hit a record high of 55.8%, an increase of 11 percentage
points since 1997, but Mr Johnson said this new package would help
even more lone parents move into jobs.
'There are nearly a million lone parents in work now, more than ever
before. The New Deal for Lone Parents has been a real success story,
helping nearly 300,000 lone parents into jobs since it started six
years ago and saving the taxpayer£40m a year.
'We intend to build on these achievements as we know that helping
lone parents return to work is the best route out of poverty for
themselves and their children.'
The government's Ten Year Childcare Strategy also gives further help
for working parents, proposing nationwide 8am until 6pm affordable
childcare for children up to 14 by 2010.
The package being piloted in 5 areas from April 2005 brings together
the most successful government policies, ongoing pilots and new
measures into a single offer. This is designed along the lines of the
increasingly successful Pathways to Work approach for sick and
Mr Johnson also announced the extension of the In Work Credit, which
gives lone parents making the crucial step into work an extra£40 a
week, on top of all other benefits. It has already been announced
that this will be available across London, but it is now to be
extended to a further six areas in the South East, recognising the
higher housing costs faced in these regions. The areas are:
* Surrey and Sussex
* Berkshire, Buckinghamshire and Oxfordshire
* Bedfordshire and Hertfordshire
* Hampshire and the Isle of Wight
Mr Johnson added: 'These measures will ensure even more lone parents
can take the step into the workplace, confident they can support
their families and leave a life on benefits behind them.'
1. In-Work Credit (IWC) gives£40 a week for the first year of a new
job to lone parents who have been on Income Support or Jobseeker's
Allowance for 12 months or more. It aims to help lone parents leave
benefits for full-time employment, ensuring work pays.
It was introduced in April in the three extended schools childcare
areas of Bradford, North London and South East London and extended to
cover Dudley and Sandwell; Lancashire West; Leeds; Leicestershire;
Staffordshire; West London; Edinburgh, Lothians and Borders; Central
London; and Cardiff and Vale in October this year. It is being
extended to a further four districts (Brent, Harrow and Hillingdon;
City and East London; Lambeth, Southwark and Wandsworth; and South
London) in London from April.
2. IWC is payable to lone parents who have been in receipt of a
qualifying benefit for at least 12 months and who are starting work
of at least 16 hours a week. The employment must be expected to last
a minimum of five weeks.
3. The employment rate for lone parents is now 55.8 per cent,
compared with 45.3 per cent in 1997 - an increase of ten percentage
points. The number of lone parents claiming Income Support has fallen
by 205,000 since 1997 and by 38,000 in the last year.
4. The Pathways to Work for Lone Parents pilots will run in
Leicestershire; Dudley and Sandwell; Bradford; South East London; and
5. In some of these areas, parents with children over the age of 12
will be required to attend quarterly Work Focused Interviews. Under
additional proposals announced today, DWP will also be piloting
further measures to help lone parents with older children find work.
Lone parents with children of secondary school age will receive an
automatic payment of a£20 activity premium on top of their benefit
if they undertake work-related activity. Locations and detailed
arrangements for these pilots will be announced in due course.
6. The government has introduced a range of measures to help lone
parents move into work. The New Deal for Lone Parents, the National
Childcare Strategy, the National Minimum Wage and Tax Credits are
making work possible and making sure that work pays. The introduction
of Work Focused Interviews for lone parents has proved extremely
effective in providing them with information about the range of help
available to prepare them for work.
7. The government is committed to eradicating child poverty within a
generation and halving it by 2010 and finding work is the most
important route out of poverty; changes in labour market earnings
account for roughly two thirds of exits from low income.