The Welfare Reform Bill – Scrapping Disability Living Allowance and Overhauling Unemployment Benefits

18 Feb 2011

This week the government has announced further details about the Welfare Reform Bill. The legislation is thought to be the most radical reform of the welfare state since it was created. The aim is to save £5.5 billion over the next four years and to introduce the concept that work always pays. Two of the major reforms concern an overhaul of unemployment benefits and the scrapping of the Disability Living Allowance.

2.5 million people in the UK are currently unemployed, with 1.5 million of these claiming Job Seeker’s Allowance. Whilst the unemployment rate is much lower than previous recessions the cost to the economy is still significant. The Welfare Reform Bill plans to introduce a new Work Programme to help get the long term unemployed back into jobs so that, in the words of Iain Duncan Smith, “work rather than hand outs are at the heart of the welfare system”. The practical consequences of this move means that job seekers will have more conditions attached to their benefits and may lose payments if they are unemployed for more than 12 months. The underlying principle is that work should always pay more than hand outs so there is a real incentive to get a job.

The Disability Living Allowance (DLA) will be replaced with a new benefit called the Personal Independence Payment (PIP). There are frequently stories in the press about people falsely claiming DLA whilst being photographed playing golf or lifting heavy bags. Under the current system two thirds of DLA recipients have an “award for life” which means that they will never be contacted to see if their condition has changed and whether they can return to work. Under the new scheme the government will be imposing a much stricter regime with “face to face” assessments and frequent reviews of claimant’s health. Disability charities have expressed concerns about the changes worrying that some people who genuinely need help will be left out. This is especially true of the mentally ill who may have difficulties with proving their disability in the face to face assessments.

It is anticipated that far less people will be entitled to receive a PIP than are currently in receipt of the DLA. This means that there will be more disabled people in the marketplace searching for work. Employers will need to be more open to employing disabled people and fully aware of their obligations under the Equality Act 2010. The provisions relating to positive discrimination in recruitment and promotion come into force on 6 April 2011. This imposes increased obligations upon employers to consider selecting those with protected characteristics above other applicants – e.g. offering a role to a disabled applicant above an able bodied person. The obligations in relation to pre-employment health questionnaires will also come into play as employers must be cautious when asking questions about applicant’s health.