Welfare Reform (Further Provision) (Scotland) Act 2012: annual report 2017

9. Assessment of disability and incapacity benefit measures

9.1 Personal Independence Payments

9.1.1 Background

Personal Independence Payment ( PIP) is replacing Disability Living Allowance ( DLA) - the benefit for disabled people and people with a long-term health condition - for working-age adults. Central to the PIP system is a change to eligibility for the benefit with tighter criteria backed by "descriptors" and a points-based approach to entitlement. PIP is one of the benefits being devolved to Scotland.

At January 2017, there were an estimated 131,737102 PIP claims in payment to Scottish residents, this figure has been rising rapidly with the transition from DLA to PIP.

9.1.2 Latest Developments

The process of replacing DLA for people of working-age and replacing it with PIP started in April 2013. At present all new applications in Scotland are made for PIP, and the process of migrating existing working-age DLA recipients to PIP should be completed by 2019.

On 3 April 2017 The Personal Independence Payment (Amendment) Regulations 2017 ^[103] came into force. The regulations amended Schedule 1 to the Social Security (Personal Independence Payment) Regulations 2013 in order to clarify the drafting and reverse the effect of two recent judgments of the Upper Tribunal. In both cases the UK government considered that the Upper Tribunal judgment departed from the intended meaning of the PIP Regulations, and that the amendments were necessary to restore the original policy intention, provide clarity for all users of the legislation and avoid increases in public expenditure.

It is not clear how many people will be impacted by these regulation changes. On 1 March 2017 Minister for Social Security, Jeane Freeman, wrote to Minister for Department for Work and Pensions, Penny Mordaunt MP asking for further clarification on how many people in Scotland will either be excluded from financial help or potentially see a reduction in the level of financial help through PIP as a result of these changes.

On 6 July 2016 the Secretary of State for Work and Pensions appointed Paul Gray, chair of the Social Security Advisory Committee, to lead the second independent review of PIP. The report ^[104] , which was published on 30 March 2017, focussed on how effectively further evidence is being used to assist decision-making, the speed and effectiveness of information-gathering, and progress on recommendations from the first review. The second review made a further fourteen recommendations.

The recommendations focussed mainly on:

• Clarifying the evidence provided as part of the assessment process and the weight given to evidence by assessors;
• Clarifying the responsibilities on the claimant to provide further evidence;
• The responsibilities on DWP to provide better transparency regarding their decision making;
• Auditing of the assessment and awarding process with a focus on quality improvement and consistency checks; and
• Potential improvements regarding data sharing to allow claimants and health care professionals to share documents online securely and confidentially.

9.1.3 Impact

As of November 2016, around 122,000 people received PIP in Scotland compared to around 128,600 working-age people who remain on DLA. However, the majority of PIP cases (61%) were for new claims, not reassessments. This means that in Scotland around 48,000 people have been reassessed and were successful in retaining (at least partially) their entitlement to disability benefit. However at least 128,000 remain to be to be reassessed ^[105] .

DWP released data in October 2016 which revealed for the first time the initial outcome of reassessments for individuals moving from DLA to PIP, however detailed data on the outcomes post mandatory re-considerations and appeals is not available. Between April 2013 and October 2016, 526,500 working-age DLA claims (52,800 in Scotland) have been reassessed to PIP. In Scotland, 45% of reassessed claimants received a higher PIP award than their DLA entitlement, 12% of claimants in Scotland and GB retained the same level of award, 22% received a decreased award and 22% lost their entitlement to disability benefit ^[106] . Around two-thirds of people who appeal there PIP award are successful ^[107] . The OBR have said that, taking account of MRs and appeals, around 17% of people who are reassessed will lose entitlement all together.

Reassessment outcomes for different age-groups are very different. The trend is that older cohorts of DLA claimants are more likely to keep their entitlement than younger cohorts. However, of those that do maintain entitlement, younger cohorts are less likely to see their award decrease. For example, of those aged between 16 and 19, 12% saw a decrease in their award compared to 28% of those aged between 60 and 64. These figures are only available for GB as a whole.

DWP figures give information on reassessment outcomes by disease type. Those most likely to retain entitlement include deaf/blind people and those with neurological diseases such as Motor Neurone Disease or Parkinson's disease. Those most likely to lose entitlement include those with epilepsy, haemophilia and psychiatric disorders.

The change in criteria used to assess people's needs under PIP and emphasis on the most severely disabled has meant people losing out in some areas and gaining in others. Where people have lost access to their Motability vehicle this has caused particularly negative impacts on independent living.

For more detailed analysis of the specific impact of PIP on disabled people see section 5.2.

9.2 Employment and Support Allowance

9.2.1 Background

Employment and Support Allowance ( ESA) was introduced in 2008 and aims at providing financial support and personalised assistance to help claimants who are ill or disabled back into work. The Work Capability Assessment allocates claimants into one of two groups:

• Support group - the claimant is assessed as having limited capability for work-related activity.
• Work-related activity group ( WRAG) - the claimant is assessed as being able to participate in work-related activity.

Only individuals in the WRAG are required to take part in interviews or training and thus only they can be sanctioned (similar to JSA ^[108] ) as a result of not fulfilling particular job searching activities. As of November 2015, 64,110 individuals in Scotland belonged to the ESA WRAG, accounting for 25% of all ESA claimants.

From April 2012, the contributory based ESA ^[109] for WRAG claimants was limited to one year (a policy introduced by the Act). Provisions allowing young people to qualify for contributory ESA without meeting the normal National Insurance conditions were also abolished by the Coalition government and the removal of the work-related activity component from new claims to ESA ( WRAG) was a policy introduced by the Conservative government. Sanctions for ESA were also introduced by the Act (see section 7.7)

9.2.2 Latest Developments

Income based ESA is one of the benefits that will be replaced by Universal Credit. Contribution based ESA will remain separate from Universal Credit. According to the current timetable for UC roll-out, there should be no more new claims for income based ESA from June/July 2018 and the current caseload should be migrated over to UC by 2021.

The rate for new claimants in the WRAG was reduced from £103 to £73 per week from 6 April 2017 to bring the rate into line with Jobseekers Allowance. The UK government believe too few people are moving from the WRAG ESA into work and that although £30 million is expected to be saved (total savings across the UK) ^[110] in the first year of the lower rate, £60 million would be spent to support people to get back to work.

9.2.3 Impact

As set out by the OBR, the limit of contribution based ESA ( WRAG) to 1 year was expected to be a significant saving (£2 billion by 2015/16), but is now only thought to have saved around £0.2 billion ( see section 2.3). The original saving estimate was based on assumptions about the behavioural response of those affected by the change, for example, whether people would move onto the income-based version of the benefit once their contribution-based entitlement expired. The assumption at Budget 2012 was that 36% of the WRAG caseload would be made up of those entitled to the contributory-based benefit. In practice, the percentage is much lower (less than 5% in Scotland), which implies that far more people moved from contribution-based to income-based ESA after 1 year than originally expected.

The impact of the removal of the national insurance conditions for young people is set out in section 5.3.1. The removal of the work-related activity component from new claims came into force in April 2017, data covering this period is not available and data on the number of people starting an ESA ( WRAG) claim is also not made available by DWP. At full rollout around 70,000 people in Scotland may be affected by this change.