ESA WRAG cut briefing

A £30 a week ESA cut will have a devastating effect on disabled people be a barrier rather than an incentive to find work

Impact of the removal of the work related activity component payment on disabled people

Precise cut:

  • a reduction of £29.05 a week that aligns with the Jobseeker’s Allowance the rate of £73.10 a week (reduction of 28% per week);
  • will apply to new ESA and Universal Credit claimants from April 2017

The proposed ESA-WRAG cut will hit households with a disabled person hard – a third of whom are living below the poverty line.

The latest annual Family Resources Survey found that the percentage of people living in households where at least one member was disabled who were in “absolute poverty” rose from 27% in 2012-13 to 30% in 2013-14.

The proposed £30 per week cut must also be seen in the context of other cuts and freezes to support for disabled people, their families and carers – such as the bedroom tax, personal independence payment, council tax support and social care.

Disabled people being supported by ESA receive a higher rate than those on JSA because they face additional barriers as a result of their illness or disability, and typically take longer to move into work.

Almost 60% of people on JSA move off the benefit within 6 months, while almost 60%  of people in the WRAG remained on ESA for at least two years.

Research by Scope has estimated that disabled people spend on average, £550 a month on disability-related expenditure.

Welfare payments aimed at alleviating these costs – Disability Living Allowance (DLA), Personal Independence Payment (PIP) – fall far short of meeting them. In 2015/16, the average award of DLA or PIP will be around £360 a month.

Even with the current Work Related Activity Component added to this £360 total, a shortfall of around £60 a month exists.

It is unreasonable and unrealistic to expect disabled people to survive on £73.00 a week for two or more years.

The WRAG cut’s impact on disabled people’s ability to look for work

80% of working age people with no health issues have a job but less than 50% of those with a disability have a job.

In his Summer Budget 2015 speech the Chancellor referred to the WRAG component as a “perverse incentive” to disabled people gaining employment.

As of February 2016, 68% of claimants in the Work-Related Activity Group of all ESA claimants had claimed for between 2 and 2 ½ years,

But there is no evidential basis for the belief that the ESA-WRAG payment has acted as a barrier to disabled people gaining employment or that its removal will incentivise disabled people to find work.

Ian Duncan Smith resigned as Secretary of State for Work and Pensions as he felt proposed cuts to PIP were a step too far.

However, in August 2015 he also said that the gap between the employment rate of disabled and non-disabled people –  “isn’t because of a lack of aspiration on the part of those receiving benefits….in fact, the majority want to work or stay in work.”

Instead, he said the gap exists because of two factors:

“First, some employers are reluctant to employ people with disabilities.…

Second, the poor quality of support they receive leads to many sick and disabled people languishing in a life without work, when work is actually possible for them.”

Surely if the level of ESA paid to the WRAG group of claimants itself was a currently “perverse incentive” to them becoming employed – such that it requires a 40% reduction – then the former Secretary of State would have also highlighted this?

Halving the Gap?  a December 2015 Parliamentary Review led by Lord Low of Dalston found that:

  • a drop of £1,500 a year in their benefit income would be “catastrophic” for many people and exacerbate poverty amongst disabled people;
  • there is no evidence to support the Government’s assertion that the Work-Related Activity Component acts as a disincentive for people to look for work;
  • the claim that disabled people would be more likely to get a job if their benefit was cut did not stand up;
  • the barrier to employment for disabled people was not any financial disincentive created by ESA, but factors including “employer attitudes, their health condition, illness or impairment, difficulty with transport, and lack of qualifications, experience, confidence and job opportunities;
  • while the Government’s aim of halving the disability employment gap was welcome, the proposed cut would hinder people’s ability to look for work;
  • rather than providing generic back to work support to disabled people “personalised support tailored to the individual’s particular needs” is key”.

What will the WRAG cut save?

The Government forecasts that the WRAG cut will save to £450 million a year for 2020-2021.

But the Learning and Work Institute say that:

  • the government is reinvesting just £1 in every £5 saved by the WRAG cut; 
  • funding for the Work and Health programme will be less than half that spent on supporting disabled people in previous programmes.  

A report by the Reform think tank highlights that employment support spending for disabled people is still set to be cut by about 80%.

17 November 2016