Addressing Social Security Policy

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In no more than 3,500 words analyse how one social security policy area has been, and should be, addressed in your country, or a country of your choice


The negative impact of changing labour market conditions on the aims of social security policy in relation to sick people in the UK.


Introduction

Employment rates in the UK are high in comparison to most other countries and although the number of people in employment with a health condition or disability continues to increase, approximately 7% of the working age population remains in receipt of incapacity related benefits (Black, 2008).


Over recent years the numbers of people in receipt of incapacity related benefits has become a thorn in the side of policy makers who face the dilemma of balancing the moral imperative to provide financial support to those who are sick and disabled, with increasing demands to reduce the cost of doing so.


This essay aims to consider how social security policy in the UK has delivered its objectives in this area, namely to help sick and disabled people off benefits and back into employment, and the inherent problems within the labour market which may negate the impact of such policies.  It will conclude by arguing that policy makers need to address the cause of the problem, not the symptom. Firstly it will look at the origins of benefit provision for sick and disabled people and evaluate the key policy changes over recent years.


Background and aims

At its inception, the welfare state in the UK was imagined by Beveridge as protection for the population from the five giants of illness, ignorance, disease, squalor, and want, and would do so for all inclusively, from the ‘cradle to the grave'.  Beveridge's aim was that the social assistance benefit he introduced would ‘prevent want in all normal cases and it will last as long as the unemployment or disability lasts without a means test' (Beveridge, 1942).  The vision of benefit provision for the sick and disabled has changed considerably since.  Beveridge, and Lloyd George before him, saw benefits as a way of protecting vulnerable people from the social evil that was poverty, yet in recent years poverty alleviation has almost vanished from the language of policy makers when articulating policy aims (Sainsbury, 1999).  It may persist as the overarching and assumed policy intent but the objectives are generally, relatively speaking, more modest. For example the current key phrase for the Department of Work and Pensions is ‘work for those who can, support for those who can't' which is predicated on active welfare policies and mutual obligation.


Although these changes to the aims and objectives of social security policy in this area had started prior to the election of New Labour in 1997, Tony Blair's premiership increased both the scope and pace of welfare reform.  After succumbing to the influence of US policy, ‘the importance of bonding welfare rights and obligations won the war of ideas in the mind of Tony Blair and ‘no rights without obligations' became ‘a prime motto for the new politics' under New Labour (Giddens in Cerny and Evans, 2004, pg 62).


This essay will now briefly outline the changes to incapacity related benefits that preceded, and may have even influenced, the paradigm shift from Beveridge's vision of ‘cradle to grave' care, to the Blair legacy of ‘rights and responsibilities'.  (Although the paradigm shift applied to welfare and public sector provision as a whole, for the purposes of this essay it will be considered specifically in relation to incapacity benefits.)


Policy Direction

Following the relatively high employment rates of the post war years and the intervening decades, the recession of the early 1980s saw unemployment increase significantly, and ever since the number of people claiming incapacity related benefits has increased exponentially.  In 1981 there were 570,000 people in receipt of incapacity related benefits, by 2003 the number had risen to 2,700,000 (Beatty and Fothergill, 2005). A common explanation for this significant increase is that a series of policy changes to the provision of long term incapacity related benefits in the 1960s, led to a perception that the benefits for sick and disabled people were more attractive than those for the unemployed.


According to Bolderson and Mabbett, the introduction of Invalidity Benefit (IVB) in 1971 and the subsequent regulatory revisions of it, meant that ‘a new territory  - invalidity - was mapped out where the grass was greener than on the side of unemployment benefit, which remained of limited duration and provided less generous benefits' (Bolderson and Mabbett, in Clasen, 2001, pg 57).


This led to the suspicion that people classed as long term unemployed would try to switch to the more attractive benefit (Bolderson and Mabbett, in Clasen, 2001, pg 58).


The continual increase in caseloads, and the longevity of claims, became a politically sensitive issue and by the mid 1990s, policy makers were looking for ways to ‘tighten up' incapacity related benefits ‘by making eligibility rules stricter and lowering benefit levels, as well as emphasising strongly active measures to promote the employment of disabled people' (Van Oorschot and Hvinden, 2000, pg 293). In 1995, in recognition of the problems with IVB, the Conservative government replaced it with the more stringent and less generous Incapacity Benefit (IB), which included the ‘All Work Test' which looked at not only an individuals ability to fulfill their usual or previous occupation, but their capacity for any form of employment.


Paradigm Shift

It was certainly evident that the status quo was unacceptable particularly following a paradigm shift described by Jessop as a significant departure from the Keynesian national welfare state (KNWS) to Schumpeterian workfare post-national regime (SWPR) (Jessop, 2000).


The new Scumpeterian workfare post-national regime favoured innovation over bureaucratism, individual responsibility and entrepreneurialism over monetised entitlements and the social democratic politics of the post war era.  SWPR demanded a flexible labour market and the involvement of the private sector and was concerned with the obligations of individuals rather than their rights (Jessop, 2000).


Similarly, according to Pierson, ‘pressures associated with global economic change create a new context where the generous social provision characteristic of advanced industrial societies represents an unaffordable luxury' (Pierson, 2001, pg81) It is evident that the pressures for reform brought to bear by economics is still very relevant. The current economic climate has strengthened this argument with the number of customers in receipt of IB once again being a point of media interest and public concern (www.telegraph.co.uk, accessed 11/08/2009).  Certainly in a recession, such high numbers in receipt of benefits is considered an unaffordable luxury by the electorate. Once this paradigm shift had occurred and social security policy turned away from Beveridge's vision of ‘cradle to grave' care, it was inevitable that those benefit systems, such as those for sick and disabled people, which ‘functioned much like early retirement programmes in that they provided a route for quasi-permanent exit from the labour market' (OECD, 2003, pg 156) would not and could not survive.


In order to satisfactorily balance the characteristics of the SWP regime - without compromising the obligation of states to protect its citizens - the human cost of a life on benefits has been adopted and accepted as sufficient justification to compel sick and disabled people to participate in more work related activity.  According to the DWP, long term benefit recipients' ‘skills, confidence and expectations diminish rapidly' and ‘after 12 months on benefit, 38 per cent of people say they never expect to return to work - a percentage that increases the longer people remain on benefit…which is bad for the individual, bad for the economy, which loses their talents, and bad for the taxpayer who has to foot the benefits bill' (DWP, No One Written Off, 2008, pg 61).  This provides the rationale for reform.


New Labour

After gaining power in 1997, New Labour policy makers clearly saw the growth in the numbers of people claiming incapacity benefits as endogenous to social security policy, (Evans in Clasen, 2001, pg213) which was moulded around the traditional KNWS values.  The Blair government embarked on a programme of radical welfare reform which would ultimately see Incapacity Benefit replaced with Employment and Support Allowance (ESA) in October 2008.


Prior to the introduction of ESA, the government did initiate a series of reforms to try and address the inherent problems of IB namely its generosity in both cash payments and the lack of customer engagement it demanded. In 1999 the rules of entitlement were tightened which made it impossible to join IB directly from unemployment benefit. In keeping with the tenets of the ‘rights and responsibilities' agenda, mandatory work related activity (in the form of Pathways to Work (PtW)) was also introduced for customers in receipt of IB.  The All Work Test was also replaced by the Personal Capability Assessment (PCA) which looked at what work an individual could do rather than what they could not. (Bolderson and Mabbett, in Clasen, 2001, pg 58).  This essay will now briefly consider the impact and effectiveness of these changes.


Evaluation

The shift of focus to what customers could do, rather than what they could not, and the introduction of mandatory work related activity has failed to produce a significant reduction in claimant numbers which remain higher than they were in 1995 (DWP, 2009).  (This is the number of IB claimants as of the introduction of ESA - it is too early to empirically consider the impact of ESA)


The Pathways to Work programme may be considered a success by its creators, and has helped 148, 320 people off Incapacity Benefit back into work (DWP, 2009) yet when considering the deleterious effects of long term benefit dependency, in conjunction with a particularly buoyant labour market (at least until the recent economic downturn), the number can hardly be considered significant.  PtW was enforced with a regime of mandatory Work Focused Interviews and sanctions, but it is unclear as to whether sanctions are effective and, more worryingly, there is evidence ‘sanctions imposed on Incapacity Benefits in the UK hit more socially deprived or isolated customers, and customers who had been on benefits for longer, harder' (Mitchell & Woodfield, 2007). Although government policy continues to ‘get tougher' for incapacity benefit customers, it is evident that there must be other significant barriers that prevent a return to work and a life away from benefit dependency. This essay will no consider some of the underlying obstacles and their impact.


Poverty

It is clear that the overall health of the nation is improving (Black, 2008) yet this appears incongruous with the increasing number of people dependent on incapacity related benefits.  The most disadvantaged groups are showing the slowest improvement in terms of health and ‘that there is a causal link from unemployment and poverty to ill-health is no longer disputed' (Beatty and Fothergill, 2005, pg 840).  It seems reasonable to posit therefore that individuals who experience poverty and unemployment may well develop health conditions as a result of their circumstances, which divert them from actively seeking employment, on to incapacity related benefits.  It is also true that those who fall into poverty whilst claiming benefits due to unemployment (caused by incapacity or otherwise), are less likely to remain on benefit than those who claimed benefits whilst already experiencing poverty (McKay and Rowlingson, 1999).


So poverty simultaneously increases the chances of claiming benefit and also the longevity of the claim.  It would be conceivable that those people who are not yet in receipt of benefit but who are in poverty, may well be working in a low income, low quality job which perhaps is part time or casual.  Thus potentially setting them up for a cycle of poverty and benefits, should they ever need the safety net of welfare. This essay will now go on to argue that one of the key obstacles which leads to the circumstances outlined above and prevents governments achieving the objective of helping sick people back to work, is the number of increasingly low quality jobs available in the labour market.


Impact of Economic Modernization

According to Duncan Gallie, ‘with economic modernization, the health risks of work shift from those of physical injury to those of psychological strain. This could well accentuate the problem of increasing numbers withdrawing from the workforce early through disablement or early retirement' (Gallie in Esping-Andersen, 2002, pg 97). This would indicate that there are individuals being alienated from the workforce, perhaps due to technological advancements that can come with little training for example.  A significant number of the caseload in receipt of IB are over 50 years of age (DWP, 2009) and it could be surmised that these could be characteristic of those who experience ‘psychological strain' caused by economic modernisation.


It is universally accepted that employment is a source of personal stability and development. (Jahoda, in Esping Andersen, 2002, pg 99).  However Gallie argues that semi and non skilled workers and older workers, who make up a third of the workforce, are employed in jobs ‘that are particularly deprived in terms of the job characteristics associated with personal development' (Gallie, in Esping Andersen, 2002, pg 100) Unlike jobs where decision making skills are required and some autonomy exists, ‘low quality work does not provide social integration in the sense that it is usually understood but rather a restricted form of social participation' (Gallie, in Esping Andersen, 2002, pg 110). This evidence could suggest that it is the quality of the work available that drives individuals onto sickness benefit in the first instance and also prevents them from returning to the labour market by failing to offer a proposition more appealing than a life on benefits, which is described Bradshaw and Holes as the ‘unrelieved struggle to manage' (Sainsbury, 1999, pg 44)


Similarly, Beatty and Fothergill purport that a flaw within the current initiatives designed to help people move back into work (such as sanctions) is that they assume that the problem is one of labour supply. They argue that it is not that the jobs are available but there's no one to fill them, but conversely, that the problem lies in that there are not enough suitable jobs to match the skills of the labour supply. (Beatty and Fothergill, 2005, pg 852).  This is perhaps a symptom of what is known as the ‘hourglass economy' which is characterized by ‘strong demand for high-level and specialised skills at the top end, and for cheap relatively low-skilled labour for services such as caring and catering at the bottom end' which ‘is counterbalanced by shrinking demand for the semi-skilled occupations in the middle' (Equalities Review, 2007, pg 43). It seems reasonable to suggest that as the middle of the hourglass contracts, the people in semi-skilled occupations who become redundant as they do not have the requisite skills to move upwards, find themselves in the cycle of unemployment, poverty and illness rather than joining the ‘bottom end'.


Mental health conditions represent the biggest cause of claims to incapacity benefits (DWP, Ready for Work, 2007) and there is a strong association between unemployment and poor mental health, however what is less clear is the ‘mechanisms and causal direction in which the relationship operates' (NHS, 2005, pg 12). Theoretically, the potentially short term unemployment of an individual squeezed out of the by the hourglass, could become long term unemployment through sickness due to the lack of suitable work.


The next part of this essay will consider the reasons for the (relatively recent) prevalence of low quality employment, and continue to evaluate its impact on the efficacy of social security policies which aim to facilitate a return to work for the sick and disabled.


Competition State

According to Cerny and Evans, the UK displays the characteristics of a ‘competition state' meaning the traditional post- war values of full employment and universal benefits are replaced by policies which pursue economic success as a priority (Cerny and Evans, 2004).  As a result, the UK has adapted and made changes in order to bring labour market flexibility, symptoms of which are lower wages and less regulation, in order that states can compete in a globalised economy.  This shift from post war values mirrors Jessop's theory and has brought an unintended consequence in the shape of what Rubery and Grimshaw describe as ‘junk jobs' (Rubbery and Grimshaw, 2003).  In order for states to compete globally, they require a flexible workforce which means a move towards shift work, more anti social hours, fixed term contracts, casual work.  For the employee, this can lead to increased job insecurity and considerable stress. (Heery and Salmon, 2000; Gallie in Esping Andersen, 2002).


The directive from the current government is clear ‘there should be no choice between working and a life on benefits. If people can work and there are opportunities available to them, they will be expected to do so' (Gordon Brown, DWP, 2008). However, if ESA realises its goals and successfully transfers people from the benefit caseload into employment, how long will it be - under the stressful conditions outlined above - before the person returns to claim benefit.  Whilst ever the quality of employment available continues to deteriorate in terms of job security and job satisfaction, it seems reasonable to conclude that the objectives of helping customers return to sustained work will not be achieved using current methods. A failure to deliver not necessarily due to a poorly conceived or executed policy, but rather as a consequence of the prevailing conditions of the labour market on which it's success depends.


In considering the limitations of current policy, it is important to understand the nature of the regime to which the policies will apply. This essay will now briefly outline the three different welfare regimes as categorized by Esping Andersen.


Liberal Regime

Traditionally, poverty had been used as an outcome measure of welfare state effort (Bradshaw, 2002) however Esping Andersen's seminal work Three Worlds of Welfare (1990) attempted to measure social rights rather than welfare state effort. Esping Andersen considered a variety of different measures, including the generosity, accessibility and eligibility criteria of benefit systems, before calculating a decommodification score for the nations he researched.  Defined by Arts and Gelissen as ‘the degree to which a service is rendered as a matter of right, and the degree to which a person can maintain a livelihood without reliance on the market' (Arts and Gelissen, 2002 pg 141).


When considering the decommodification scores of each nation, Esping Andersen developed his Three Worlds of Welfare typology.  He argued that there are liberal, corporatist and social democratic regimes with the UK being classified as ‘liberal'. Esping- Andersen describes liberal welfare regimes as being defined by the following characteristics: primarily universal/means tested benefits which are designed as a safety net for the poor and provide for minimal needs only - as a result claimants are stigmatised and private provision is encouraged. Liberal regimes have a low decommodification scores and low levels of social expenditure are evident (Esping-Andersen, 1990; Arts and Gelissen, 2002).


By providing for minimal needs only and engendering conditions where recipients are stigmatised, it is arguable that the liberal regime will not provide sufficient support, financial or otherwise, to mitigate the effects of the competition state. It may provide a safety net in terms of subsistence but it also has a stratifying effect and once an individual has to rely on the safety net, it may become increasingly difficult to disentangle from it (Esping Andersen, 1990).


Alternatives?

It is reasonable to conclude that, by definition, the characteristics of the ‘competition state' are unlikely to lead to the conditions required to tackle the high number of incapacity benefit claimants e.g. availability of suitable jobs.  When combined with the features of a liberal regime which offers only basic subsistence and where benefits rules are replete with restrictions on part time/voluntary/supported work, it seems unlikely that mandating customers to engage in work related activity will offer a solution. In fact, this essay concludes that even the most robust and aggressive of workfare policies will fail to tackle the growing numbers of incapacity benefit claimants. Although policy makers may acknowledge that “it is essential that measures aimed at getting people off incapacity benefits and into work are also linked to ensuring suitable jobs are actually available, and that these jobs are on fair terms' work.” (www.citizensadvice.org.uk accessed 11/08/09), until the effects of the hourglass economy are mitigated or reversed, it seems that the numbers claiming incapacity benefit will continue to increase.


A radical departure in economic policy would be required in order to address the issue of low quality jobs however making recommendations on how that could be achieved is beyond the scope of this essay.  But to conclude, government policy in this area will remain ineffective whilst ever the labour market with which it is symbiotic, continues to devalue jobs.  The root cause may lie with economic policy rather than social policy but the net result is the same.


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