Below is the text of the speech made by Alan Johnson, the then Work and Pensions Secretary, at the IPPR Conference on 7th February 2005.
I’m very pleased to be here and grateful to the ippr for organising this afternoon’s event.
The support that we give to help people into work and the security that we provide for those who can’t work is one of the most important responsibilities placed upon Government.
It’s a responsibility that Government can only fulfil in partnership:
– with employers – to fill their vacancies and ensure good occupational health in the workplace.
– with the medical profession – to encourage patients to see work as a route back to good health; and
– with the individuals concerned – and their representative organisations – to understand their problems and learn from their experiences.
Change and reform is necessary for two main reasons.
Firstly because of the position we found ourselves in when we came to office in 1997.
Over the previous 18 years, boom and bust had seen unemployment twice hit 3 million, whilst the numbers on Incapacity Benefits trebled to 2.6 million.
By 1997, one in five families had no-one in work and one in three children were growing up in poverty. Radical measures were necessary to tackle this inheritance.
But more importantly, reform was necessary because the welfare state had to evolve to meet the needs of modern society.
It’s a very different society with very different problems than those which Beveridge tackled so adroitly in 1945. The security provided by the old monolithic state institutions has vanished and the world of work has changed beyond recognition.
That is why, since 1997, we have begun to transform the welfare state from the passive one-size-fits-all inheritance to an active service that tailors help to the individual and enables people to acquire the skills and confidence to move from welfare to work.
There are now more people in jobs than ever before. Unemployment is at its lowest level for 30 years – with long-term youth unemployment 90% lower than in 1997. And with almost three-quarters of the working age population in work, our employment rate is the highest of any of the G8 countries.
But there is more to do. Last week I launched our Five Year Strategy: “Opportunity and security throughout life.” Central to which is a reform of Incapacity Benefit that builds on our investment in the New Deal and Jobcentre Plus and focuses on what people can do rather than what they can’t.
Our goal is genuine inclusion, stamping out the discrimination and disadvantage that prevents people from fulfilling their potential – and denies society the skills and contributions of those who want to work, but who remain outside the labour market.
We know that perhaps a million Incapacity Benefit claimants would like to work if they were given the right help and support. Indeed, nine out of ten people coming onto IB expect to get back to work in due course.
What’s more, there is growing medical evidence that for many conditions working is much healthier than being inactive.
Take back pain for example. We used to think that rest was the best response. But now, as Gordon Waddell’s work has shown, rest might actually delay recovery. In contrast, by advising patients to stay active, they can expect a faster recovery and a speedier return to work.
The same is also true for mental health, where periods of unemployment or inactivity can be even more damaging. Suicide rates are 35 times higher among the long-term unemployed than the employed.
One piece of research from the mid-1990s – found that being unemployed has a higher mortality risk than any occupation – even the most dangerous ones. And it stated that – and I quote – “so heightened is the risk of death, that being unemployed is equivalent to smoking 10 packs of cigarettes a day!”
What is clear is that failing to help those on Incapacity Benefit who want and expect to get back to work is not just bad for the economy but bad for the people on IB themselves.
We already know that early active intervention works. The ground-breaking Pathways to Work pilots have achieved extraordinary success and we are now rolling them out to a third of the country.
Already in the pilot areas, we’ve seen six times as many people getting back to work help and twice as many people recorded as entering jobs, compared with the rest of the country.
But the problems with the current Incapacity Benefit have been well documented – not least by our hosts today.
It focuses on what people can’t do and incentivises them to stay on the benefit by increasing it with time. These mixed messages mean confusion, uncertainty and risk aversion for both individuals and potential employers.
What’s more, Incapacity Benefit classifies those receiving it as incapable of working, even before they have had a formal medical examination.
And when they’ve had this examination – the Personal Capability Assessment – those who are entitled get no appraisal of their likely future ability to return to work. It makes no distinction between whether the case is one of terminal cancer or back pain.
It was to tackle these problems, that I announced last week that, when we have the extra support of Pathways in place, we will implement a radically reformed version of Incapacity Benefit.
This will provide a basic benefit below which no-one should fall. A speedy medical assessment linked with an employment and support assessment. Increased financial security for the most chronically sick; and more money than now for those who take up the extra help on offer.
For the first time ever we will differentiate between those with the most severe functional limitations – who will get more money without having to do anything extra – and those with potentially more manageable conditions.
We’re not writing anyone off – we’d encourage those on the new Disability and Sickness Allowance to engage in some work-focussed interviews.
But for those who can and want to work these reforms -with conditional payments for engagement in Work Focussed Interviews – and further conditional payments for fulfilling an action plan personally tailored to the circumstances and ambitions of the individual – offer clear support and rewards for seeking the path back to work.
We will need to shape these reforms on the basis of the evidence of what works – with piloting playing an important role. And we will consult carefully and thoroughly with all of you.
We need to work through the detail of linking rules so that people can try out a job safe in the knowledge that if it doesn’t work out they can rapidly go back to benefit on exactly the same terms as they were on before.
We’ve introduced and strengthened Permitted Work Rules to make part-time work an option. For at least the first year individuals can now work up to 16 hours a week on the minimum wage and keep their benefit in full.
And if beyond this year they work just 16 hours a week then the Working Tax Credit guarantees a take-home pay of at least £150 a week.
For many part-time work can be a stepping-stone towards a full-time return to the labour market. And for those for whom full-time work will never be possible but for whom some work would still be good – our reforms to Permitted Work are going to expand the right to part-time working on an ongoing basis to those for whom a return to full time work is least feasible.
Our full package of reforms will transform the experience of new claimants. But we are also determined to help those who have been on IB for some time.
Already in Pathways areas where involvement has only been mandatory for new claimants, over 10% of those taking part and 18% of recorded job entries are for those on IB for longer than 12 months who volunteered to take part.
Today we are extending Pathways to existing customers in seven of the pilot areas.
This means the introduction of mandatory Work Focused Interviews with those existing customers who started their claim in the two years prior to the date the pilots commenced.
As important as the role of Incapacity Benefit itself, is the backdrop against which it operates – the workplaces, the doctor’s surgeries and the society that disabled people have to live within.
We need employers to create healthier workplaces and play a more active role in the rehabilitation of their employees. Early and on-going communication enables employers to support employees who are off sick and to agree a return-to-work plan.
Take for example, the case of a street lighting co-ordinator who had to have his leg amputated because of a long-term medical condition. His employer was quick to consider how to assist him to return to work. They made adjustments to his working environment including altering the height of his desk, allocated him a company car with automatic transmission that enabled him to fulfil his driving duties; and modified his hours to allow a structured return to work 3 months after his operation.
It’s not just a social issue – it’s an economic issue. The benefits to business are very clear: Retaining trained and experienced employees and avoiding unnecessary recruitment and training costs.
So employer involvement in helping individuals to recover is not just socially responsible but actually makes business sense.
With around 120,000 people on average moving from Statutory Sick Pay to Incapacity Benefit each year, I’m interested in whether we might be able to reform SSP to ensure that the information and incentives for employers, the NHS and individuals make this a step back to work, rather than a slide onto benefit.
The role of medical professionals is also crucial. I look forward to hearing Gordon and Roy speak later.
For now, let me say that the success of our whole approach hinges on GPs and other health professionals re-enforcing the message that work is a route back to health – and not something that people need to be protected from. And we see from the success of Tomorrow’s People, how effective the combination of workplace and health advice can be.
We will continue to fight discrimination on all fronts; especially for disabled people. This is the last great emancipation issue of our time. In years to come, I believe that the mis-treatment of disabled people typical of the last century – and still too often the case today – will be seen as the affront to humanity that it is.
Ultimately real social security means more than a benefits system. It comes from the relationships that we have with each other. Working in partnership with employers, the medical profession, and individuals themselves, we can deliver a welfare to work system that enables everyone to fulfil their true potential – with an Incapacity Benefit that is fit for purpose because it offers a tailored route to employment for all those that can work and financial security for those that can’t.