‘New blow to sickness benefit applicants’

Figures obtained by the Financial Times indicate that two thirds of new applications for work related sickness benefits are now being rejected.

Story by Alex Barker, Political Correspondent, 12 July 2009

More than two-thirds of applicants for sickness benefits are being rejected under a new testing regime, casting doubt on the validity of 2.6m existing claimants deemed unfit for work.

According to data seen by several welfare industry figures, up to 90 per cent of applicants are being judged able to work in some regions and placed on unemployment rolls rather than long-term ill-health benefits.

The results, yet to be officially confirmed, offer an incoming government next year the chance to cut a £175bn budget deficit by forcing the long-term sick to seek work. A three-year programme starting in 2010 will subject 2.6m incapacity benefit claimants to the new work capability assessment.

Every person returning to work would reduce the £12.5bn total bill of incapacity benefit and start to pay some income tax and national insurance.

“These are remarkable figures,” said Lord Freud, Conservative welfare reform spokesman. “The tragedy is that it has taken so long to tighten the system, with the effect that hundreds of thousands of people have been locked into long-term dependency.”

Initial results from the new test imply the bar for sickness benefits is at its highest level for decades. About 65 per cent of applications for incapacity benefit were approved until it was replaced last autumn – suggesting the chances of passing and failing have been reversed under the new ill-health benefit, the “employment and support allowance”.

Successive Labour welfare secretaries have sought to tighten the system and shift claimants from “inactive benefits” – such as incapacity benefit and income support – to “active benefits” such as jobseekers allowance, which require people to look for work.

The unofficial test results are the first strong sign the latest reforms are having a big impact, at least in terms of how new benefit claimants are classified.

If the results are repeated when incapacity benefit claimants migrate to the new benefit, it could cause resentment among claimants with the side-effect that the claimant count measure of unemployment would remain high.

The new test was expected to increase refusals marginally and it is still too early to know whether the unforeseen jump in numbers put on jobseekers allowance reflects an old system that was far too lax or a new regime that is too strict.

The Department for Work and Pensions said the figures were “initial indications as to how the new system is working”.

“However, it is encouraging that people are being helped to reach their potential, and this was a clear policy intention from the outset as we moved from looking at what people can do rather than what they can’t.”

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