The Department for Work and Pensions said the ESA proposals were not government policy, but that they reflected ministers’ search for a solution to the backlog of claims for ESA and its higher than forecast cost. George Osborne, the chancellor, has said he is seeking a £12bn cut in the welfare bill, and has so far identified a quarter of these cuts mainly through freezing the value of most benefits for two years.
The DWP has been struggling with ESA ever since it replaced incapacity benefit. The main contractor, Atos, quit the contract assessing claimants after a massive backlog built up and criticism grew of the way in which the medical assessments were made. The backlog is currently running at more than 600,000. It is thought an American firm, Maximus, has been selected to replace Atos.
Government officials will be looking at cutting the value of ESA, partly because of concern that JSA claimants are moving off JSA to claim the higher value ESA.
The government will be focusing on the differential paid to ESA recipients in the Work Related Activity Group (WRAG) – individuals who have to prepare for employment.
Those in the WRAG group currently get £28.75 more per week than people receiving JSA, who are aged 25 or over, who currently get £72.40 per week.
The ESA is paid to approximately 2 million people. Claimants have to undergo a work capability assessment to determine whether they are eligible and at what level.
As ministers focus assessments on new claimants, recipients who should have been reassessed under the terms of the benefit are not being seen, creating much of the backlog. Most of those receiving incapacity benefit, who should also have been assessed, are also not being tested.
The Office for Budget Responsibility said in a report earlier this month: “Early evidence suggests there may be some recycling of those found fit for work into jobseeker’s allowance and then back onto ESA. The design of ESA means that more people are moved around the benefit system, while the backlog of applications encourages claimants previously not found eligible for ESA simply to reapply. Moreover, the backlog of applications encourages claimants previously not found eligible for ESA simply to reapply”.
The OBR forecasts spending on incapacity benefits to rise from £13.4bn in 2013-14 to £14.5bn in 2018-19.
The caseload is due to fall but the value of the average award is due to rise from £5,300 per year in 2012-13 to £6,000 in 2018-19. GDP is forecast to grow faster than that in cash terms, so spending is expected to fall from 0.8% to 0.7% of GDP over that period .
Claimants applying for ESA initially go into the assessment group, during which time they receive a basic rate of ESA and must undergo a work capability assessment. There are three possible outcomes from this assessment.
An individual can be:
• Found to be fit for work, in which case they will cease to be eligible for ESA.
• Judged to have limited capability for work, in which case they are placed in the work related activity group. This group is able to claim up to £101.15 a week – for a period of up to one year on contributory ESA, but with no time limit on income-based ESA. Those in the work related activity group must attend regular interviews with an adviser, with failure to attend triggering a sanction process.
• Judged to have limited capability for work related activity, in which case they are placed in the support group. This group is able to claim up to £108.15 a week with no time limit on contributory ESA and £123.70 without time limit on income-based ESA.
A spokesman for the DWP said: “We are committed to supporting those people who are able to work to make the positive move into employment.
“The current work capability assessment contract was inherited from the previous government – and we have taken numerous steps to improve it. We will shortly announce a new provider. No one should doubt our commitment to ensuring that people who need an assessment get the best possible service and are seen in the quickest possible time.”