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REFORM OF INCAPACITY BENEFITS ANNOUNCED

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The biggest change in incapacity benefits since they were created was...
The biggest change in incapacity benefits since they were created was

unveiled today by work and pensions secretary Alan Johnson.

The reformed benefit will provide enhanced financial security for the

most severely sick and disabled as well as more money than now for

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

ill.

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

conditions.

* 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.

Note

* 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

they need.'

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

disabled people.

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

* Essex

* Kent

* 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.'

Notes

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

North London.

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.

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