FULL FACT: Welfare Reform: Update on impact of changes to ESA

Full Fact.Org: Promoting accuracy in public debate
29 September, 2011 – 11:27 — Jenny Gulliford

Earlier this week we looked at whether or not 400,000 people stood to lose all the support they currently receive from the Government as it introduces changes to the contributory Employment and Support Allowance (c-ESA), as the Disability Alliance suggested. 

The estimate was based on the the idea that the Department for Work and Pensions was planning to make £2 billion in savings from the change. However when we looked into it further, we found that the DWP had actually made more than one estimate of the savings that might be made, and that this changed the number of people potentially affected. 

Keen to learn more, we got in touch with the Department to find out why they had produced more than one estimate. 

They told us that the initial £2 billion estimate was first published in a policy costing for the Budget in June 2010. This was based on ESA caseload forecasts agreed with Office for Budget Responsibility (OBR) at the time. 

There were changes in ‘underlying case-load forecasts’ in the subsequent Autumn Statement which were also signed off by the OBR. This reduced expected savings to £1.2 billion. It was this estimate that Full Fact used to calculate that around 246,000 might stand to lose all of their ESA support. 

However the trail does not end there. The Impact Assessment was updated in April 2011, revising anticipated savings down to £1 billion; half of the original amount. This was due to “modelling improvements and some changes to ESA caseload forecast.” 

The DWP then goes on to argue that “these changes have made the estimates more robust and are the estimates that should be currently used.” 

It does however recognise that these figures are “sensitive to a number of assumptions and may change in the future as new evidence becomes available.” 

So what effect does this statement have on our conclusion? 

The most recent impact assessment maintains that 700,000 people will be affected by the introduction of a time limit on c-ESA for those in the WRAG group. Working from this document’s estimate on savings reduces the minimum number of people required to lose all ESA benefits to 205,000. 

It should be pointed out however that the Impact Assessment argues that 40 per cent of c-ESA recipients are not expected to qualify for income related ESA. This figure is 280,000. 

In the interest of fairness we wrote to the Disability Alliance to see what they had to say on the subject. 

They replied saying: 

“It is very important to know that the people affected have worked previously (contributions-based ESA being determined by previous National Insurance contributions) and that they are tested using the Work Capability Assessment which is a very tough system and means only disabled people or people with very significant health problems can access ESA. 

“The income-based alternative is also not paid to people who have a partner earning about £140 per week after tax or who have a very modest occupational pension of about £90 per week. These figures are below the UK poverty threshold (see www.poverty.org.uk). A third of disabled people already live in poverty. This policy will force thousands of disabled people and their families to be pushed further into poverty. 

“Our statement that 400,000 would lose out was based on the DWP projected saving of £2 billion from cutting c-ESA in Spending Review. DWP have recently downgraded the cut to £1.2 billion. The DWP Q and A briefing online at: http://dwp.gov.uk/docs/esa-changes-q-and-a.pdf suggests 60 per cent of the people affected will receive income-related ESA when losing c-ESA.impac If 700,000 are ‘affected’ by 2015/16 then 40 per cent losing c-ESA not getting an income-based alternative would mean 280,000 losing all out of work benefits (cutting £1.36 billion from expenditure, higher than the £1.2 billion figure suggested in the latest DWP impact assessment). But it is also far from clear how DWP have ascertained the 60 per cent figure.”


1 thought on “FULL FACT: Welfare Reform: Update on impact of changes to ESA

  1. Diana Harrison says:

    Enforcing a system that is in itself totally corrupt. Billions spent on wars and yet so very little if anything spent on those who actually need it! War yes this has become a war, and many will die or be permenently harmed by this.

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