Pathways to Work

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Pathways to Work

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

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Items to cover

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

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Incapacity benefits in the UK
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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.

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The IB process

• Start with GPs 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 GPs note serves as proxy
  during interim

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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

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The case for intervention
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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

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Duration of claim, Nov 2005
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Main condition, Nov 2005
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Pathways to work
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The treatment for new claimants

• Early focused intervention
• Specialist support
• Clearer financial incentives

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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

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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

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Clearer financial incentives

• Return to work credit (RTWC) - 40 (75) per week
  for a year for those entering work of 16
  hours/wk paying
• 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

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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

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The evolving policy

• Oct 2003 Apr 2004 Pathways introduced in 7
  pilot districts for new claims (flow)
• Feb 2005 extended to stock with 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

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The evaluation of Pathways
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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).

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Elements of the research

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

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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

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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

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Early effects
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(No Transcript)
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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

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Looking forward
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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

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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 cant work receive increased benefit
  without conditionality

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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