Employment and Support Allowance

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Employment and Support Allowance (ESA) is a United Kingdom welfare payment for adults younger than the State Pension age who are having difficulty finding work because of their long-term medical condition or a disability. It is a basic income-replacement benefit paid in lieu of wages.

ESA superseded three older benefits: Incapacity Benefit; Income Support paid because of an illness or disability; and Severe Disablement Allowance. New Labour legislated for ESA at the very end of the Blair era and it became the main out-of-work sickness benefit for new claims during the financial crisis of 2007-2008. The Conservative-Liberal Democrat coalition was quick to extend its scope: ministers gave the go-ahead for a compulsory reassessment of all long-term recipients of ESA’s predecessors and the transfer of those confirmed as unfit for work onto ESA.

One key feature of ESA is "conditionality": some recipients must take part in "work-related activity" in exchange for their payments. A second key feature is that recipients are liable to be repeatedly probed by a government-approved nurse about their state of health — a reflection of a policy belief that most conditions will improve over time, either spontaneously or as a result of medical intervention.

ESA is received by more than two million people. It has not achieved its aim[1] — despite tougher eligibility criteria, "conditionality", and multiple medicals for established recipients — of reducing the sickness benefit caseload by one million by 2018[2].

The Coalition’s long-serving Welfare Secretary, Iain Duncan Smith, eventually concluded that ESA was “fundamentally flawed”. One of his successors, Damian Green, added that it was “pointless” to repeatedly assess people with permanent disabilities.[3] In 2016 the government published a Green Paper envisaging an overhaul of ESA - no specific action has been taken as a result.

In 2018, the Department for Work and Pensions (DWP) began to repay money to ESA recipients who had been inaccurately reassessed, in circumstances where the recipients had been required to stop claiming their old benefit - usually Incapacity Benefit - and make a completely new claim for ESA. The department's approved health professionals had controversially reassessed these claimants' long-term disability against the DWP's new medical criteria, but the DWP itself had not tried to reassess their financial situation: evidence of any deterioration was not sought by the department, so none was taken into account when calculating what type of ESA was appropriate, and the rate of payment.[4]

The government plans to stop all ESA payments by 2023, if and when Universal Credit is fully rolled out.

Who can claim?[edit]

An individual can put in a claim for ESA if they satisfy all of these conditions:

  • They live in the United Kingdom
  • They are over the age of sixteen
  • They have not reached their State Pension age
  • They have a sick-note from their doctor

They will not be paid ESA if they are entitled to Statutory Sick Pay (this usually means "if they have a job", but there are exceptions) and it is not possible to receive ESA at the same time as the other main out-of-work benefits, i.e. Jobseekers Allowance, received by 440,000 people, or Income Support (given nowadays to 560,000 people, mainly lone parents).

Universal Credit, which is received by one million people nationally, can contain a component analogous to ESA.

The scale of the allowance[edit]

No money is paid for the first week. After that, the basic allowance is paid to the claimant until their Work Capability Assessment (WCA) at - in theory - week 13, after which a successful claimant might receive an enhanced level of payment (depending on the level of disability and whether they enter the work-related activity group or the support group after their assessment).

ESA Rates for 2018/2019
paid in weeks 2–13
paid from week 14
Basic allowance (for those aged under 25) £57.90 £57.90
Basic allowance (for those aged 25 and over) £73.10 £73.10
Work-related activity component (no longer paid to new claimants)* ——— £29.05
Support component* ——— £37.65

* Only one of these components is payable per claim

In April 2017, the work-related activity component was abolished for new claimants, even if they had ‘passed’ their WCA and been put in the work-related activity group; the same applies to successful reclaims, if more than a certain time has elapsed since the last period of receipt of ESA (long-term successful claimants who had a WCA before April 2017 continue to receive it). People receiving the support component are unaffected.

An enhanced disability premium of £15.90 a week may be paid to single people receiving the support component of income-related ESA; for a couple, the rate is £22.85 where one or both partners qualify.

In some circumstances, an additional severe disability premium of £62.45 a week may be paid.[5]

Types of ESA[edit]

ESA can be either contributory or income-related. If claimants have paid enough National Insurance they can claim contributory ESA for up to one year if they get the work-related activity component, or indefinitely if they get the support component. Income-related ESA is for people who have not paid enough National Insurance and is subject to a means test and certain other conditions (although the amount paid as contributions-based ESA can also be affected by financial circumstances).[6] Income-related ESA is not time-limited[7] and is not usually subject to Income Tax, but contribution-based ESA is.[8] If a spouse or partner is also receiving out-of-work benefits, this might affect entitlement.

Universal Credit is incorporating income-related ESA in stages. In the parts of the UK where it already has, contribution-based ESA has been rebadged as "new-style ESA".

The claim process in detail[edit]

Someone wanting to claim ESA will need a medical certificate, i.e. a sick-note, signed by their GP to say that they are not fully fit for work. The new claimant must then contact the Department for Work and Pensions (DWP), usually by phone,[9] who will log their claim and usually post them an ESA50 questionnaire to complete (except in rare circumstances where a full assessment is not required, such as when a doctor has officially certified the claimant as being likely to die within six months).[10] The completed form must then be sent in the envelope provided to the Health Assessment Advisory Service - the trading name of the assessment provider, Maximus.[11]

Once a person has submitted a claim for ESA, they will normally be paid "assessment rate" ESA at the basic rate given above. At some point in this "assessment phase" a Work Capability Assessment will normally be carried out to determine whether the claimant: a) meets the criteria for receiving ESA long-term, or b) does not, in fact, qualify for ESA at all.

First, the ESA50 form, together with any other information sent with it by the claimant, will be read by a qualified healthcare professional, who will then decide on whether a face-to-face medical assessment is actually necessary: some people with severe disabilities can be granted ESA based solely on the documents supplied, if that is clear from the paperwork. For this reason, Maximus encourages new claimants to send as much relevant information as possible and give a detailed description of their disability when filling in the claim form.[12]

Although the DWP says it tries to make the claims process as straightforward as possible, the process of claiming can nevertheless be stressful for claimants (see Criticism of the Work Capability Assessment). Many complain that their mental health deteriorated as a result of claiming.[13]

Assessing capability for work[edit]

The Department for Work and Pensions (DWP) contracted Atos to perform the core medical assessment, the Work Capability Assessment (WCA), when it introduced ESA. Maximus took over the contract - worth £170million a year to the US firm - from Atos in March 2015.[14] The WCA's performance in 2010, 2011 and 2012 was reviewed by Professor Malcolm Harrington[15][16][17] and in 2013 and 2014 by Dr Paul Litchfield.[18][19]

The assessment is often described as consisting of two separate assessments. In practice, if they have a face-to-face assessment, an individual claimant will experience only one assessment on the day (the decision-making is done afterwards). The two stages are:

  • The "limited capability for work" assessment, which determines whether the claimant is entitled to ESA at all.
  • The "limited capability for work-related activity" assessment, which tells the DWP whether somebody who has passed the first stage of the test is able to take part in "work-related activity". It also influences the rate of ESA paid to the claimant.

A DWP official makes the final decision on entitlement, based on all the available evidence.

ESA terminology[edit]

ESA is often loosely but inaccurately described as being for people who are "unfit for work", while the official term "limited capability for work" is not clear in its meaning. In fact, people on ESA can and do take suitable jobs when the opportunity arises, without their impairment necessarily having improved[20] - on paper, relatively few people receiving ESA are incapable of any work whatsoever.

There are two groups of successful ESA claimants: the Work-Related Activity Group and the Support Group. People in the Support Group tend to have the more severe impairments, they are classed as having both "limited capability for work" and “limited capability for work-related activity” and they are not required to prepare for work. The Work-Related Activity Group contains people who also have "limited capability for work" but who do not have “limited capability for work-related activity”; they are required to participate in pre-employment coaching because they are considered by the DWP to be likely to work in the future - specifically, within two years.

Limited capability for work[edit]

At their WCA, an ESA claimant must be found to have "limited capability for work" in order to qualify at all. The testing process gauges the claimant’s ability to perform up to 17 activities; these activities are set out on the ESA claim form. For each activity, a claimant can score 15, 9, 6 or 0 points: the more severe their disability, the more points they will score. Points are scored by having physical impairments, mental ones or a mixture of the two (if they are likely to significantly affect the claimant's ability to work). In order to be entitled to ESA, a person will need to score at least 15 points in total.

Other factors, such as some aspects of pregnancy, are also considered by the assessor, who will be a nurse, doctor, occupational therapist or physiotherapist; these factors do not operate on a points system but might nevertheless qualify the claimant for ESA.

Limited capability for work-related activity[edit]

This is, in theory, about whether a successful claimant of ESA is capable of taking part in interviews and pre-employment training, or whether their ability to do so is limited to a significant degree. As far as the way the WCA actually operates is concerned, this is about whether the claimant has one or more severe disabilities, affecting mobilising, manual dexterity, etc.

Success at this stage usually qualifies the claimant for the Support Group.

Development of ESA[edit]

New Labour 1997–2001[edit]

In May 1997, Frank Field was made Minister for Welfare Reform.[21] He approved of the principle of self-help through mutual organisations such as friendly societies, he thought the state should have only a small role to play in the provision of welfare, and he disliked means-testing and non-contributory entitlement. These ideas were out of step with those of the new Chancellor, Gordon Brown, in particular, and Field's ministerial tenure was short-lived.[22]

A Green Paper published in 1998 foreshadowed New Labour's approach to out-of-work benefit reform from that point on: being in work was vital and the government would encourage people on benefits to find jobs, using the carrot and the stick; the claimant's contribution would be to try to find work; and Incapacity Benefit would be partially means-tested, with people receiving an occupational pension incurring a deduction in the amount of Incapacity Benefit they would receive.[23]

New Labour 2001–2005[edit]

In 2001, on the first full day of New Labour's second term in office, the Department of Social Security was amalgamated with the Department for Employment to form the Department for Work and Pensions (DWP). The new department set to work overhauling the eligibility test for sickness benefits and vastly expanding its scope.

Replacing Incapacity Benefit[edit]

A new benefit was envisaged that would "accentuate the positive" rather than lead recipients with moderate disabilities to feel that they were permanently incapacitated. However, policymakers acknowledged that some people really were incapable of all work so they needed a new medical test, one that would do more than just give a "yes or no" answer to the question of sickness benefit entitlement. The new test would need to do three things:

  1. Identify claimants who were already capable of work - they would get no sickness benefit at all
  2. Identify claimants at the other end of the disability spectrum, who were very disabled and could not be expected to work
  3. Identify claimants in the middle, who could be helped to find a job despite their disability

The belief in the DWP was that the new approach would not just cap the total number of people on sickness benefits, as Incapacity Benefit was supposed to have done, but actively reduce it to a small group of people with severe disabilities and another modestly-sized group who were undergoing fixed-term pre-employment training.

The new policy was expected to achieve its objective in four ways:

  1. The new benefit would be harder to get in the first place, because its eligibility test would be tougher
  2. All new recipients would be reassessed at appropriate intervals in the expectation that the health of many would improve
  3. Successful claimants with mid-range disabilities would be expected to prepare for a return to suitable work
  4. Once the new testing process had bedded in, there would be a mammoth re-evaluation of the claims of as many as two million long-term Incapacity Benefit recipients, in the belief that many were actually able to work

The background trend[edit]

While the new sickness benefit was still at the planning stage, the total caseload peaked in 2004. Since then, the background trend has been gradually downwards.[24]

The main reason for this change in trajectory was demographic: in particular, World War Two "baby boomers" on sickness benefits had begun to draw their State Pension instead. Other specific reasons were: men suffering from industrial diseases, such as asbestosis and silicosis, caused by working in mines, shipyards and other hazardous environments, were dying prematurely; eligibility criteria had become stricter since 1995; and the economy had improved and was creating more jobs.

"Thinking the unthinkable"[edit]

In February 2005, as another general election loomed, the BBC analysed New Labour's record on welfare reform:

Thinking the unthinkable on the welfare state has been one of the New Labour mantras since before the party was elected in 1997. So it has been a disappointment to many [...] on the Labour benches that, eight years later, the thinking has still to produce any concrete results.[25]

On the same day, the Welfare Secretary Alan Johnson announced plans to replace Incapacity Benefit with two new benefits: "Disability and Sickness Allowance", for people deemed too ill to work; and "Rehabilitation Support Allowance", paid at the same rate as Jobseekers Allowance to less disabled people, who would be "supported" by the DWP back into work.[26] In reality, no benefits with these names ever materialised, and the policy behind "Rehabilitation Support Allowance" was still being debated more than a decade later.

Atos gets the contract[edit]

In March 2005, there was a sign of action on the ground: Atos was awarded the contract to work with the DWP to build the software programme that would be used in the assessment of claims for the allowance that would take the place of Incapacity Benefit. The firm, which was already carrying out the DWP's existing disability assessments, would employ hundreds more healthcare professionals to carry out the new test once it went live - in late 2008.[27]

New Labour 2005–2010[edit]

This term of office was notable for the high turnover of Welfare Secretaries:

  1. David Blunkett: 6 months in post
  2. John Hutton: 20 months in post
  3. Peter Hain: 7 months in post
  4. James Purnell: 16 months in post
  5. Yvette Cooper: 11 months in post

In January 2006, John Hutton published a White Paper outlining the government's latest plans for welfare reform: the benefit that would replace Incapacity Benefit would be called Employment and Support Allowance and its "gateway" assessment would be transformed. Over the course of a decade, Hutton expected the number of people on Incapacity Benefit to fall by one million, thereby saving £7billion a year.[28][29]

The resulting Welfare Reform Bill was introduced to Parliament for consideration in July 2006. On 3 May 2007, the bill received royal assent and a week later Tony Blair announced his decision to leave Downing Street.[30]

The Freud report[edit]

Blair appointed David Freud, a former vice-chairman of investment banking at UBS, as an advisor on out-of-work benefit reform in December 2006. Freud's 2007 report - dubbed "the Freud report" but officially titled Reducing dependency, increasing opportunity: options for the future of welfare to work - called for the greater use of private sector companies who would be paid by results, for substantial resources to be made available to help people on Incapacity Benefit back into work, and for a single working age benefit payment to replace Housing Benefit, Jobseekers Allowance, etc.[31] His central thesis was that spending on "delivery" - such as schemes to get people back to work - would save money in the long run because there would be fewer people being paid money in the form of benefits.[32][33] The DWP coined the term Invest to Save to describe this idea and referred to it in-house as "the AME-DEL switch".

In July 2008 a Green Paper was published, which James Purnell said was "inspired by the reforms proposed by David Freud". It declared that "between 2009 and 2013, all Incapacity Benefit claimants will be reassessed using a medical assessment called the Work Capability Assessment" that would divide them into three groups: fit for work; unfit for work but fit for "work-related activity"; or fit for neither.[34] In the same month, Professor Paul Gregg was asked by the DWP to conduct a feasibility study of "conditionality" - a compulsory quid pro quo - as it might be applied to sickness benefit claimants.[35] When responding to the Gregg Review, the DWP said that the study had recommended that conditionality be applied to "the vast majority of people in receipt of Employment and Support Allowance".[36]

ESA introduced[edit]

In October 2008, ESA and its eligibility test, the Work Capability Assessment, were introduced for new claims.[37] Reformers were disappointed to find that the total number of people on sickness and incapacity benefits went up, largely as a result of the financial crisis of 2008 and the consequent rise in background unemployment.

Plans were made to tighten up the eligibility criteria still further - something that would set the Incapacity Benefit reassessment programme back by two years. The Welfare Secretary wrote that these and other planned changes would ensure that "only those who are genuinely incapable of work" would get full ESA - other sickness benefit recipients would have to comply with plans drawn up with the DWP's private partners to get them back to work.[38]

2010 manifesto[edit]

The Labour Party manifesto, drafted by Ed Miliband[39] and published before the general election in 2010, declared that if Labour won:

More people with disabilities and health conditions will be helped to move into work from Incapacity Benefit and Employment and Support Allowance, as we extend the use of our tough-but-fair work capability test. This will help to reduce the benefit bill by £1.5 billion over the next four years. We will reassess the Incapacity Benefit claims of 1.5 million people by 2014, as we move those able to work into jobs.[40]

Coalition 2010–2015[edit]

In early 2011, the Incapacity Benefit reassessment programme got underway using a more stringent version of the WCA and the caseload's falling trend resumed - until the middle of 2013, when the caseload began to grow again after fresh guidance had to be issued on how to judge fitness for work.

By 2015, the picture was clear: in the absence of the huge fall in recipients prophesied by the architects of ESA, and in spite of the broadly downward natural long-term trend, the total caseload was little different from when ESA was introduced.[41]

As a reflection of this failure of ESA to achieve its goal of shifting large numbers of people off benefits and into work, the cost to the Exchequer of out-of-work sickness benefits did not fall at all after ESA was introduced: the annual cost is now predicted to rise to £14 billion or more in the course of 2016, largely because more people than anticipated have gone into the Support Group - particularly since the second half of 2013.[42]

Underpayment scandal[edit]

Roughly 70,000 claimants were paid between £5,000 and £20,000 too little from 2011 to 2016 because the DWP did not ensure they got their correct entitlement when they were moved from incapacity benefit on to employment and support allowance. A Public Accounts Committee report accused the DWP of haste over the transfer while failing to take legal advice or make basic checks. Evidence that people were underpaid was disregarded and warnings from its own policy advisors that it should delay and sort out the issues before proceeding were ignored. The report said the DWP’s lack of urgency - it took six years to start to deal with the error - showed “a culture of indifference” to people being paid too little. Meg Hillier said the affair demonstrated “weakness at the highest levels” of the DWP. “Thousands of people have not received money essential for living costs because of government’s blinkered and wholly inept handling of ESA” she said.[43]

2016: ESA "fundamentally flawed"[edit]

In January 2016, the Conservative Welfare Secretary, Iain Duncan Smith, announced that ESA was "fundamentally flawed" and declared that a brand new policy, which would get nearly all ESA recipients back to work, would be unveiled within weeks.[44] A hint of what that policy might be was given in a detailed report on ESA published the following month by Reform, the right-of-centre think-tank:[45]

  • Effectively, ESA would be abolished: the amount of money paid each week to the claimant would be reduced to the level of Jobseekers Allowance
  • The resultant savings would be ploughed back into the Personal Independence Payment to balance the drop in ESA
  • The WCA might be replaced by another assessment that set out to identify any barriers to work faced by the claimant, but which would play no role in determining eligibility to benefits
  • As a way to "nudge" claimants towards overcoming those barriers, extra money might be made available to fund a tailored programme of rehabilitation - although participation in this could be made a requirement of continued receipt of the benefit.

In March 2016, Duncan Smith unexpectedly resigned after a clash with the Chancellor of the Exchequer, George Osborne.[46] In his resignation letter, "IDS" complained that there was "not enough awareness from the Treasury, in particular, that the Government's vision of a new welfare-to-work system could not be repeatedly salami-sliced". Duncan Smith's replacement, Stephen Crabb, declared that there would be no new welfare policies, other than those set out in the Conservative Party manifesto of 2015, in that parliamentary term - thereby scotching IDS's plan.

In October 2016, Damian Green announced a consultation exercise on reforming the WCA. Two years on, no concrete action has been taken as a result by the DWP.[47]

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