Do economists support the Work Capability Assessment?

Thu, 20/12/2012 - 15:19 -- nick

Blowing the dust off a leather bound book in the UnemployedNet library earlier today, it turned out to be the 2010 Organisation for Economic Co-operation and Development (OECD) report on disability and unemployment.

This has lessons for all who are interested in this issue, as across the countries of the developed world the same patterns in disability and unemployment have been in evidence for some time:

  • Unemployment benefit spending is typically only half of disability benefit spending, and the gap has been growing;

  • Part of the reason why the number of people on disability benefits has grown is that the rules on getting unemployment benefit have tightened. This puts to bed the old saw beloved of some papers and politicians which is based on the idea that there is widespread faking of disability and that the rise in claimants is evidence of this; it turns out that the old, less rigorous unemployment benefit system supported many genuinely disabled people but toughening requirements had the effect of making this regime unsuitable for them, shaking them out of unemployment and on to a more appropriate disability benefit;

  • The majority of disability benefit claims across the developed world are now linked to mental health problems. As diagnosis has improved, mental health problems have been understood more widely, and the stigma attached to mental health issues been reduced, more people have been moved from unemployment benefits to disability ones, a far more fitting system that recognises their needs. This is not evidence of a greater level of disability, just evidence that a greater level of disability is being discovered, treated and supported.

The OECD is a sober economic and governance organisation that takes an evidence-based approach to its work, so when it tells us that we are dealing with similar problems across the developed world it is worth listening to its conclusions.

The previous government instituted the Work Capability Assessment (WCA) as a way to address its perception that more disabled people were able to work. The current government has recently been trumpeting its success: according to a report in The Telegraph more than a third of those who have been through the WCA have been found fit for work, although the article leaves out the 38% successful appeals rate and the widespread hardship caused to genuine claimants.

The report makes clear that part of the reason for the introduction of the WCA is to move some disabled people into a lower benefit category; if entitled, their Employment and Support Allowance is £105.05 per week, but Jobseeker’s Allowance (JSA) is only £71. The 145,000 people who have already been moved from ESA to JSA will save the government £256million in a full year; when the WCA is complete that figure could be three times as high, not counting other disability benefits that the claimant may no longer be entitled to.

The WCA has the effect of defining people out of disability and in to unemployment, a reversal of the process of the 1980s. But those who point to the increase in disability claimants over the last thirty years as evidence that many are fakers who have found a way of getting money from the state without the kind of oversight that demands stringent work activity are guilty of misunderstanding how the previous process worked.

As the OECD report states, “disability benefits have become the benefit of last resort for people unable to stay in, or get into, the labour market”, linking this directly to the tightening of regulations on looking for work for those receiving unemployment money. It recognises that employment should be encouraged for those who can and wish to work, understanding that an apparent lack of desire to work can be linked to a disability, particularly a mental health issue, which isn’t always obvious to outside observers.

Recognising this, and making sure that we deal with disabled people fairly and reasonably, needs the kind of cool heads not always brought to this debate by newspapers and politicians, or by a struggling population looking for scapegoats as their own earnings are eroded year after year, and living costs, particularly for staple goods like energy and food, keep rising. We need leadership from politicians to show why disadvantaged people need specific support to help them work where possible and to help them live decent lives where it is not.

It is easy to see how a government could look at this report and see support for its policies to move disabled people closer to work. But in this dry evidenced-based economic document, the compulsion present in the UK system isn’t presented as an answer:

“the single most important to strengthen the financial incentives  of all actors involved to promote the same objective: increase employment opportunities for individuals with disability.”

Not to push unready people in to the job market, not to cut benefits, but to increase incentives to move in to work.

In moving away from the idea of positive financial incentives and increased employment market opportunities – cutting the number of Remploy factories by more than half has had a direct influence here – to punishment and reduced benefits, the government has disregarded the OECD’s evidence and made it harder for some disabled people to live reasonable lives and to get in to work.

The government, and some elements in the press, may be celebrating the WCA’s effect in finding many disabled people fit for work. But when the test is so flawed and the economic case for the policy uncertain, the hardship caused may be to the country as well as individuals.