# Presentation: 484258

## Pathways to Work

- Richard Dorsett
- Policy Studies Institute
- 19 July 2006
- US Social Security Administration

## Items to cover

- Incapacity benefits in the UK
- The case for intervention
- Pathways to Work
- The evaluation of Pathways
- Early effects
- Looking forward

## Incapacity benefits in the UK

## What are incapacity benefits?

- Incapacity benefits (IB) used as shorthand for:
- Incapacity Benefit
- Income Support
- Severe Disablement Allowance
- Replacement income to those under SPA who stop working/searching due to health/disability
- Payable after 28 weeks for those entering from employment or immediately for those not entering from employment.

## The IB process

- Start with GP’s note and claim form
- Those entering from employment undergo own-occupation test (OOT) first then, after 28 weeks, Personal Capability Assessment (PCA)
- Those entering from non-employment undergo PCA
- Delays in PCA process – GP’s note serves as proxy during interim

## Tests of incapacity

- OOT
- Assesses whether able to do own job
- Medical certificate provided by GP
- PCA
- Assesses whether able to do any work
- Points system with two parts: physical health & mental health
- Approved doctors advise DWP
- 20-25% very severe problems – exempted (based on GP evidence only)
- Takes from 2 weeks to 5 months to complete

## The case for intervention

## Background to Pathways

- 90% of new claimants want to work
- Most have manageable conditions where work should be realistic
- Before Pathways, claimants treated as ‘lost’ to the labour market
- Recuperative benefits of work
- Perverse incentive structure of IB
- Aim of reducing IB rolls by 1m in 10 years

*	*

## Duration of claim, Nov 2005

*Duration of claim, Nov 2005*

## Main condition, Nov 2005

*Main condition, Nov 2005*

## Pathways to work

## The treatment for new claimants

- Early focused intervention
- Specialist support
- Clearer financial incentives

## Early focused intervention

- Specialist teams of trained IB personal advisers
- Monthly work-focused interviews beginning 8 weeks into claim, for those likely to additional need help finding work
- Action plans
- More efficient PCA process

## Specialist support

- Choices package
*New Deal for Disabled People* (job brokers) - tailored assistance finding work and support during first 6 months
*Condition Management Programme* (health providers)– help managing disability/illness (coping strategies, strength-building, managing depression etc)
- In work support (contracted out) - mentoring, job coach, debt counselling, in-depth support etc

## Clearer financial incentives

- Return to work credit (RTWC) - £40 ($75) per week for a year for those entering work of 16+ hours/wk paying <£15k ($28k) per year
- Adviser discretion fund (ADF) – awards of up to £100 ($188) per claimant to support job entry (travel costs to interview, clothes etc)
- Reduce risks associated with *losing* job – waive repeat PCA

## Differences for existing claimants

- No screening
- 3 WFIs, not 6
- Job Preparation Premium (JPP) – discretionary £20 ($38) per week for up to 26 weeks for those engaged in activity linked to finding work

## The evolving policy

**Oct 2003 & Apr 2004** Pathways introduced in 7 pilot districts for new claims (flow)
**Feb 2005** extended to stock with <=2 years claim at intro (same 7 districts)
**Oct 2005** include 4 additional districts (flow)
**Apr 2006** extension to stock with (2,6] years claim at intro (original 7 areas)
**Apr 2006** include 7 additional districts (flow)
**Oct 2006** include 3 additional districts (flow)
**2006 Green Paper** – extend nationally for flow by 2008.  Replace IB with Employment & Support Allowance

## The evaluation of Pathways

## The research consortium

- Policy Studies Institute (lead)
- Institute for Fiscal Studies,
- Mathematica Policy Research,
- National Centre for Social Research,
- Social Policy Research Unit,
- David Greenberg (University of Maryland).

## Elements of the research

- Qualitative
- Quantitative surveys
- Impact analysis
- Cost-benefit analysis
- Literature review

## Qualitative research

- Early focus groups with IBPAs and claimants
- Focused studies (focus groups and/or depth interviews)
- IB Personal Advisers
- NHS rehabilitation providers
- Return to work credit
- In-work support
- Longitudinal claimant surveys
- Job Preparation Premium

## Impact analyses

- Overall impact  (difference-in-differences)
- Impact of components (matching, instrumental variables, regression discontinuity, timing of events):
- New Deal for Disabled People
- Condition Management Programme
- Return to Work Credit (?)
- Job Preparation Premium
- Generalisability

## Early effects

## Slide 25

## Early flow findings

- 10.5 months after claim start
- probability of working increased by 9.4pp (from 22.5%)
- net monthly earnings increased by £72 ($135) from a base of £172 ($323)
- probability of still claiming IB reduced by 8.2pp
- suggestion of small (2.9pp) fall in probability of reporting health problem (from base of 91.4%)
- stronger effects for: Oct 2003 areas; those aged over 45; those with a non-mental health problem

## Looking forward

## Suggestions from Green Paper

- Overall, aim to:
- Reduce health-related work exits
- Increase number leaving benefits
- Better address needs of those on benefit
- Pathways to be extended nationally for new claimants by 2008,
- Pathways to be delivered by private and voluntary sector with payment by results
- Replace IB with Employment and Support Allowance from 2008

## The Employment and Support Allowance

- 12-week assessment phase
- Assess functional capability
- Receive payment at the JSA level
- WFI at 8 weeks
- PCA completed within 12 weeks
- Employment and Support phase
- Those who can work receive increased benefit conditional on work-related activity
- Those who can’t work receive increased benefit without conditionality

## Some final points

- Pathways represents a break from the past with regard to treatment of disabled people
- Rights and responsibilities
- Philosophy carries over to Employment and Support Allowance
- Cautious welcome from disability organisations, albeit concern about sanctions
- Unions worried about privatisation of delivery, adequacy of budgets and use of compulsion