Yesterday’s Welfare Reform Bill contains huge changes for the UK’s social security system - as well as a number of damaging new sanctions and fines, reports Nicola Smith.
Yesterday’s Welfare Reform Bill contains huge changes for the UK’s social security system – as well as a number of damaging new sanctions and fines. But it also contains a small, but significant, new cut: the ‘youth provision’ is being removed from contributory Employment and Support Allowance.
ESA-C is a benefit for unemployed disabled people who have paid sufficient National Insurance. It is currently a lifetime award, although further recently announced government changes will mean that from 2012 it is time-limited for one year.
After this point disabled people who do not pass a household means test (for example because they have savings or live with a partner who works) will lose all benefit entitlement, while those whose incomes are low enough will move to an income based version.
The qualifying conditions for ESA-C require claimants to have paid contributions in one of the three complete tax years before their claim, and for them to have been credited for contributions over each of the last two complete tax years. But if you are 19 and have already spent 28 weeks incapable of work for medical reasons, it is unlikely that you will have enough National Insurance Credits (NICs).
The youth provision of ESA-C therefore allows young people (those aged 16-19 or those aged 20-24 who started to study before their 20th birthday) to receive contributory benefit without having to satisfy the qualification criteria which currently apply to other older claimants. It is intended to protect young people from unfairly missing out on support.
The impact assessment accompanying the announcement therefore misses the point when it states that the rationale for this change is to ensure “consistency for all groups whilst simplifying ESA conditionality”; inevitably young people are not the same, as they will not have had the same chance that other adults have had to build up enough NICs to qualify.
The youth provision rule was brought in when Severe Disablement Allowance was ended (now several years ago), with the policy rationale of ensuring that after the abolition of SDA all severely disabled young people would still retain access to benefits even if they wouldn’t pass a household means test for income based ESA.
From now on this will no longer be the case. While many severely disabled adults will continue to receive a benefit that takes account of their disability, regardless of their household income, young people who live in households who earn slightly too much to qualify for an income related benefit will lose out.
By 2015/16 the policy is expected to affect approximately 15,000 people who would have been claiming contributory ESA. Most will receive a cut of around £25 a week in their income, as they move to the income rather than contribution based version of the benefit and 10 per cent (approximately 1,500 people) will receive nothing at all.
This is a pertinent example of how attempts to ‘simplify’ the benefits system can cause more harm than good. Should this move pass unamended, a small number of severely disabled young people will lose up to £100 a week (for the most severely disabled). The total estimated saving from the change is £11 million a year – small money in the scheme of things, but a cut that will have significant consequences for some of the most disabled young people in our society.