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

Report on the impacts of the Welfare Reform Act 2012 on the people of Scotland and other welfare measures passed since 2010.

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5. Impact of welfare reforms on equality groups

This section examines the evidence of the impact of welfare measures on equality groups with particular emphasis on the impacts on women and disabled people.

5.1 Gender

5.1.1 Women

Most working-age low income benefits are paid for the household as a whole and therefore the impact on gender can be challenging to distinguish. Certain benefits are, however, more likely to be paid directly to the woman in the household, even where the household is a couple. The most recent HMRC statistics, for December 2016, show that of all in-work families receiving Child Tax Credits, the vast majority (87%) of those receiving the payment were women, with the proportion even higher (94%) amongst in-work lone parents. Around 47% of families on tax credits are lone parent households. [46] However, it should be noted that the tax credit payments are for the household as a whole and in opposite-sex couples, also form part of men's income - even if the payment is not directly received by them.

As of April 2017 child tax credits ( CTC) have been capped at two children for new births ( see section 8.2). Families on tax credits who have a third or subsequent child after April 2017, and families with more than two children making a new claim to UC, will no longer receive the child element for the third and subsequent children. DWP's impact assessment [47] of these policy changes estimates that 640,000 families will be affected as a result.

Rates of most working-age benefits, elements of tax credits and Child Benefit have been frozen at their 2015/16 levels for four years from 2016/17 to 2019/20. DWP's impact assessment of the policy suggests that women are more likely to be affected than men, with 33% of women claimants affected compared to 29% of men. Given the latest inflation forecasts, according to the Resolution Foundation: "the real-terms squeeze is now expected to amount to a 5.9 per benefit cut cent in total, up from a forecast of 4.4 per cent in March 2016. This has increased the expected savings from the measure by £0.9 billion a year in 2020, or an extra £2.7 billion over the next four years."

As well as the benefit freeze, the lower Benefit Cap introduced in November 2016 could impact women disproportionately. The lower Benefit Cap limits the amount of benefit award a working-age household can receive to £385 per week (£20,000 p.a), including Child Tax Credits and Child Benefit. DWP modelling suggests that around 66% of those affected will be single women (of which most are lone parents), but only around 13% will be single men. 89% of households affected by the Benefit Cap contain children. Of this 89%, half are single parent households. The latest DWP figures, for February 2017, show that 3,640 households were affected by the new cap. Of these, 2,759 were single person households, of which 2,376 (86%) were women. 2,394 of single person households were lone parent households (with children).

The introduction of Universal Credit and policies associated with changing UC entitlement is expected to impact women disproportionately. Institute for Financial Studies ( IFS) analysis suggests that the reductions in UC work allowances mean that working lone parents, most of whom are women, see a big reduction (of around £1,000 a year) in their benefit entitlements on average.

This is also picked up in a briefing paper by CPAG, [48] which highlights that "lone parents will be hit particularly hard, and stand to lose £46.15 per month or around £554 per year if renting, or over £2,600 if not" by the cuts to Universal Credit. CPAG points out that a single parent on the 'national living wage' "will have to work 46 extra days each year" to get the same income.

UC may also weaken the incentives for many second earners (mainly women) to enter or continue working in the labour market , because there is a lower 'earnings disregard' for second earners. At the same time, the rollout of UC represents a significant expansion of conditionality compared with the legacy system, affecting those working part-time and non-working partners of full-time workers. This means that many women and lone parents will be encouraged to take on extra hours or a second job, or find an alternative job that pays the 'earnings threshold'.

In addition, under UC, where there are two adults in a household, a single payment is made to one person in a couple. Before UC, payment of separate benefits could have been split between both people, i.e. one person could receive tax credits, and another income support. In opposite sex couple households, for example, where the man receives the single payment, this may represent a loss of independent income for the woman, potentially decreasing the woman's financial autonomy and independence. [49]

Policies introduced during the 2010-15 UK Parliament included the removal of the Baby Element of Child Tax Credit, increase in the taper rate for Tax Credits, limiting of Sure Start Maternity Grant to the first child, as well as the 2011 to 2014 freeze to Child Benefit and lowering of the qualifying age of the child from 7 to 5 for Income Support. Furthermore, since April 2013, Carer's Allowance ( CA) has been uprated using the Consumer Price Index rather than the higher Retail Price Index, and over 70% of CA recipients are women. Again, whilst these benefits are more likely to be paid to women, and form a higher share of their income - largely because single parents are more reliant on them - they will also form part of men's incomes.

5.1.2 Men

Some welfare measures have affected men more than women. The most visible examples are changes in sanctions policies ( see section 8.3). Since October 2013, Jobseeker Allowance claimants have had to sign a Claimant Commitment, personalised for each jobseeker, which sets out the particular job readiness and job searching activities that must be undertaken. If claimants do not fulfil the requirements, JSA payments are stopped for a certain period - this is known as a 'sanction'. According to DWP data, 67% of male claimants have faced at least one adverse JSA sanction since 2012, and 76% of all adverse sanctions have fallen on men. [50] Around two thirds of JSA claimants are men.

DWP Data on sanctions under Universal Credit indicate that in 2016, 10,333 people in Scotland were sanctioned. Men were sanctioned at a slightly higher rate compared to women. Men made up around 71% of the UC caseload [51] over 2016, whilst 8,071 (77%) of sanctions were applied against men.

ESA sanctions are also applied marginally more frequently to male claimants. Whilst only 51% of Scottish ESA claimants are male, men account for of all ESA sanctions under the new (post-2012) sanction regime, and 54% of male claimants have faced at least one adverse ESA sanction.

5.2 Disability

A number of welfare measures affected disabled people directly as both disability and incapacity benefits have been subject to significant reforms and policy changes over the last two UK Parliaments. The introduction of PIP to replace DLA, and cuts to ESA form a substantial part of the Welfare Reform Act 2012. There have also been several policies that have changed ESA since its introduction, making it less generous.

Disabled people are affected by changes to both disability-specific and non-disability-specific benefits. In Scotland, based on 3-year average data for 2013/14 to 2015/16, after housing costs, 23% of individuals living in families where someone was disabled had household incomes below the 60% median. This compares to 16% of individuals in families where no one was disabled. Households on lower incomes derive a higher share of their income from social security benefits and would therefore be expected to be affected more by changes to welfare measures.

5.2.1 Employment and Support Allowance

Employment and support allowance ( ESA) is a benefit that provides support to people whose disability or health condition causes them to have limited capability for work. ESA was introduced in October 2008 to replace the existing incapacity benefit ( IB) for new claimants ( see section 9.2). The managed migration from IB to ESA is now complete. One of the key differences between IB and ESA is the form of eligibility assessment, which has been perceived by disability groups as stricter. [52]

In order to qualify as eligible for ESA, applicants must attend a work capability assessment ( WCA), and be scored 15 or more points according to performance in relation to a range of physical and mental impairments. Following assessment, claimants are assigned to one of two categories: the work-related activity group ( WRAG) and the support group. Whilst the IB assessment - the Personal Capability Assessment ( PCA) - included a group of assessment exemptions, including for people with a learning disability, no such group exists for the WCA. These assessments have come under sustained scrutiny, from disability rights groups, unions, and medical professionals, who have commented that they are "inhumane and ineffective". [53]

Dr. Paul Litchfield, appointed by the Secretary of State for Work and Pensions to carry out the fifth and final independent review of WCA, [54] expressed concern about the assessment for those with mental health issues and learning disabilities. A key deficiency of the work capability assessments appears to the participants to be a lack of understanding of the assessors about fluctuating or 'invisible' health conditions. One respondent in a SG tracking study said: "obviously people have complicated medical conditions they don't just conform to a tick box. People have good days and bad days. I do. Some days I'm able to do quite a lot and other days not very much at all."

In the same way as JSA, ESA can be both income and contributions based. As part of the Welfare Reform Act, contributory ESA was time-limited to one year for claimants in the WRAG group. According to the DWP impact assessment of the policy [55] , the change was expected to affect around 700,000 people in total by 2015/16, as they lose their entitlement to contributory ESA. This change particularly affects couples where one is working full-time, so the sick or disabled person loses this independent income which is based on contributions paid when in work, and is reliant on their partner. According to DWP's impact assessment, the policy is expected to affect more men than women; this difference will start to erode as the female State Pension Age, and therefore the upper limit for claiming ESA, is increased.

Another key reform to ESA came into force in April 2017, when the work-related activity component (£29.05 p/w) was abolished for new claimants. The policy was motivated by the aim to align ESA WRAG with JSA, However, Disability Rights UK [56] have criticised this approach by arguing that: '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.' There is not yet sufficient data to assess the full impact of this policy.

5.2.2 Personal Independence Payment

The introduction of PIP is a substantial part of the Welfare Reform Act 2012 (see section 9.1). PIP replaces DLA for working-age claimants (those under 16 will continue to receive DLA), and as such, all DLA claimants between 16 and 64 are required to apply for PIP and attend reassessment. Claimants are assessed against a range of criteria, and, if successful, awarded a 'daily living' component and/or a 'mobility' component at standard or enhanced rates.

Initially, the shift to PIP was intended to reduce expenditure on disability benefits by 20%. However, spending forecasts have been continuously revised upwards and the latest OBR assessment puts savings at around 5%. [57] This has been driven by the higher success rate of DLA reassessments; higher average awards; and higher number of new PIP claims.

5.2.3 DLA to PIP reassessments

Scottish claimants currently make up around 10% of the total DWP PIP reassessment caseload (72,700 of 748,000). [58] Natural migration from DLA to PIP began in October 2013 and managed migration started two years later in October 2015. Of the 52,800 cases that were reassessed to October 2016 (latest available decision statistics), 22% of claimants saw their benefit reduced and 22% had their award disallowed. On the other hand, 45% had their award increased while 12% saw no change in their award (see Table 9).

Table 9: Outcome of DLA reassessments for PIP in Scotland (April 2013 to October 2016)

Reassessment outcome Completed to October 2016 %
Award Increased 23,800 45%
Award Unchanged 6,300 12%
Award Decreased 11,600 22%
Disallowed post referral to the AP 9,500 18%
Disallowed pre referral to the AP 2,100 4%
Withdrawn 500 1%
Total* 52,800

*Note: the breakdowns do not sum to the total due to the rounding in the published percentages of reassessment outcomes.

Although, as the data above shows, a large number of people reassessed from DLA got the same or higher level of award, there has been controversy around the assessment process. For example, Citizens Advice Scotland ( CAS) highlight the emotional and psychological burden placed on claimants who lose some or all of their award as a result of reassessment. [59] In order to assess the impact of welfare reform in Scotland, the Scottish Government carried out a study tracking the experience of forty three individuals, each with different reasons for claiming benefits. [60] The first report of this study shows that those claiming disability benefits experience high levels of anxiety in relation to the impending move to PIP and the required medical assessment related to that. The ongoing uncertainty and associated stress of being reassessed, including the length of time for decisions to be made, and of the process of future reassessments, was strongly expressed.

Similar findings are reported in the second independent review of PIP by Dr. Paul Gray [61] , who states:

"The vast majority of responses from claimants who had gone through the claim process were negative. Common concerns were that the process from application through to the decision of entitlement was very stressful, too long and that the Health Professionals conducting the assessment were not adequately trained to understand their condition."

One respondent to Gray's review call for evidence had to wait 12 months for an appeal date, and said that, as a result, 'the affect the whole process had on [their] mental health was a dramatic worsening of it', adding that 'it is a horrible system to navigate when you are so weak mentally".

The Review suggests three key areas where PIP assessments are failing to deliver the desired outcomes: clarifying the role of further evidence; claimant trust and transparency; quality and consistency between cases.

The Review highlights the functional focus of the assessment and the disjuncture between this and the kinds of evidence provided by claimants alongside their PIP2 form - often medical in nature. Gray's review concludes that it should be the responsibility of the claimant to provide additional evidence, but that the DWP must clarify the guidelines for this. Indeed, an overarching theme of the report is the simplification of communications across the claimant journey, and a more joined up digital journey.

A frequent concern of claimant respondents to Gray's review call for evidence surrounded the ability of health professionals to accurately record what is said in face-to-face assessments. In order to allay some of these concerns, the Review recommends a more transparent process where claimants have routine access to their assessment report, and audio recording becomes the norm for face-to-face assessment. Gray's review notes that there has been positive developments here, with such recording currently being trialled by DWP and Atos.

The quality and consistency of PIP assessments is criticised in the report, with the robustness of the application of system-wide audit criteria highlighted in particular. To this end, the Review identifies four particularly significant sources of potential inconsistency:

a) The amount of support claimants have in making their application and at the assessment;

b) The amount of Further Evidence considered in any particular case;

c) Differences in process between the two Providers;

d) Differences in the approach of individual assessors.

The Review asserts that this lack of consistency reduces claimants' perception of the fairness of the system, and recommends a deepening and broadening of the audit process to take account of assessment as well as the resulting report.

5.2.4 Mandatory reconsiderations and appeals

Claimants who disagree with the outcome of their assessment may request a mandatory reconsideration ( MR) from DWP. Should the MR result in no change in decision, claimants can appeal to a tribunal through HM Courts and Tribunals Service ( HMCTS).

The number of mandatory reconsiderations has been gradually increasing over the past year, whilst the success rate has remained relatively stable at around 20% over the past year. Data on mandatory considerations are collected for each month at a GB-level.

Table 10: Number and proportion of successful mandatory reconsiderations (reassessments and new claims)

Mandatory reconsiderations
(excluding withdrawals)
Successful reconsiderations Successful reconsiderations
(as % of total)
Nov-15 14,300 2,400 17%
Dec-15 13,300 2,000 15%
Jan-16 14,000 2,300 16%
Feb-16 18,000 2,800 16%
Mar-16 16,800 2,800 17%
Apr-16 17,300 3,000 17%
May-16 18,100 3,200 18%
Jun-16 21,900 4,100 19%
Jul-16 20,700 3,700 18%
Aug-16 21,400 4,500 21%
Sep-16 20,000 3,800 19%
Oct-16 29,000 5,100 18%
Nov-16 33,300 6,100 18%
Dec-16 29,600 6,300 21%
Jan-17 31,800 6,400 20%

By the end of January 2017, at the GB level, 85% of new claims reconsiderations and 79% of reassessed DLA reconsiderations for normal rules resulted in no change to the award. [62]

The data on appeals does not show how they break down into appeals in relation to new claims and appeals in relation to reassessment. In total 55,500 appeals have been ruled in favour of the applicant at the GB level. From October to December 2016, there were 34,500 PIP related appeals within the HMCTS total Social Security and Child Support disposal caseload. Of these, 65% were found in favour of the claimant, and the original decision overturned. [63] The MR and appeal process can take a number of months, during which the claimant does not receive their award. This could be a source of considerable stress. [64] If successful, however, payments are backdated to the date of the original decision.

Following a 2015 consultation on further changes to PIP, the Government announced that they would halve the number of points awarded in the PIP assessment for reliance on aids an appliances in relation to the 'dressing and undressing' and 'managing toilet needs' activities from two to one. [65] This policy was reversed before it was implemented.

5.2.5 Motability

The Motability scheme allows those who are on the highest rate of PIP or DLA to lease a suitable car, scooter or powered wheelchair in return for their weekly award.

One key change in the Mobility component of PIP, compared with DLA, is the use of the distance benchmark for assessing claimants' ability to move around unaided. Under DLA, if a claimant is unable to move 50m or more unaided, they qualify for the highest rate under the benefit's mobility component and gain access to the Motability scheme. This benchmark is reduced to 20m for PIP. The DWP [66] projected in 2012 that 42% of claimants would lose their eligibility for Motability as a result of lower award at reassessment. Using the latest data on reassessment outcomes to better inform the estimate of the number of working-age people who could lose Motability, a comparable figure would be around 31% [67] . Analysis of written responses to the consultation on social security in Scotland shows that this loss of entitlement to Motability has a clear negative impact on affected claimants' independence, risking social isolation and worsening health. [68] In April 2017, the Government announced that those who lose their entitlement to Motability and, as a result of an unsuccessful reassessment from DLA to PIP, and appeal the decision, would be able to keep their Motability vehicle for eight weeks from the end of their DLA award.

5.2.6 Carers

Whilst some carers may gain entitlement due to reassessment, many unpaid carers of working-age disabled people who lose eligibility for disability benefits as a result of reassessment from DLA to PIP will no longer qualify for Carer's Allowance. Carer's Allowance is set at £62.70 per week in 2017/18 (£3,269 per year). This loss of income would be exacerbated if the disabled person who lost their entitlement and their carer live in the same household.

5.3 Other protected characteristics

5.3.1 Age

Some welfare policies have affected young people (16-24 year olds) disproportionately. The abolition of the ESA 'youth' provision, which allowed those aged 16 to 19 (or 25 if in education) to qualify for contributory ESA without meeting the normal National Insurance conditions, is one example. Ahead of introducing the policy, the DWP [69] estimated that 15,000 young people would lose their entitlement in the first three years of the policy. [70]

Furthermore, changes to UC announced in the 2015 Summer budget remove default entitlement to the housing element of UC from young people aged 18-21, limiting it to those in specific circumstances, for example those with children. The DWP has assessed that around 10,000 people will be affected by these restrictions to UC. [71] The support available to young people (Extended to under 35s from 2012, formerly under 25s) without dependents in the private sector (and from 2019 the social sector) is also limited by the application of the Shared Accommodation Rate of UC, which is based on the market cost of renting single room in a larger property or sharing a property with other tenants, over 35 households of a similar composition would be entitled to a more generous one bedroom rate, based on the costs of single household occupancy of a one bedroom (2-apartment) property.

Young people are also more likely to be affected by adverse JSA sanctions than older claimants. Indeed, whilst nearly one third of JSA caseload are aged 18-24, 41% of all adverse JSA sanction decisions in Scotland since 2012 have been applied to that age group. [72]

Pensioners' incomes have been protected by the triple lock, with the Basic State Pension guaranteed to rise with either earnings, inflation or by 2.5%, whichever is higher. However, had the previous approach where the basic state pension was uprated with the RPI been maintained, the level of basic state pension would have been higher.

5.3.2 Ethnic minority groups

The DWP estimated that of the households likely to be affected by the Benefit Cap, approximately 40% would contain someone from an ethnic minority. They explain this by reference to the prevalence of larger families in certain ethnic minority groups. By contrast, ethnic minority groups tend to benefit from the move to UC, since they are more likely to be among the group of low earners who benefit from changes to entitlement. The DWP's UC impact assessment [73] estimated that, on average, houses with an ethnic minority would see an increase in their entitlement of £51 per month. However, this assessment was made before a number of changes to UC, for example cuts to Work Allowances and limit of entitlement to two children for new claims were introduced. Indeed, the DWP impact assessment of the two-child cap on UC Child Element [74] predicted that ethnic minority households may be more likely to be impacted by the reform because they are, on average, more likely to be in receipt of these benefits, and on average have larger families.

However, certain ethnic minority groups are may be likely to be affected by the bedroom tax, because of their tendency toward higher occupation of rooms in a household (see figure 6).

Figure 6. Occupancy Rating by Ethnic Group, Scotland

Figure 6. Occupancy Rating by Ethnic Group, Scotland

Source - 2011 Census

As of April 2016, tax credit rates have been frozen in cash terms for four years. According to Runnymede [75] , tax credits account for 10% of Bangladeshi and Pakistani household income, 6% of Black household income, and 2% of White household income, implying that ethnic minority groups are disproportionately affected by this freeze.

5.4 Summary

There have been a range of impacts on equality groups as a result of the Act and subsequent welfare reforms.

There is some evidence to suggest that women are disproportionately impacted by the UK government reforms to the social security system. The fact that lone parents are more reliant on many low income benefits is a big factor in this. However, the extent is difficult to assess because most benefits are paid for the household as a whole. It should also be noted that men are marginally more likely to be sanctioned for JSA and ESA.

There have been large-scale reforms to disability and incapacity benefits which have affected disabled people. The process of assessments for ESA have received criticism and further changes to entitlements reduced incomes for disabled people who were assessed as being in the Work-Related Activity Group.

The reassessments from DLA to PIP resulted in a number of people receiving no award or a reduced award, whilst the introduction of a stricter test meant that some lost their Motability entitlement. It should be noted, however, that 57% of those reassessed from DLA saw no change to their award, or had their award increased.

Other equalities groups have also been affected by reforms. Young people, for example, are marginally more likely to be sanctioned, and have been affected by some policies directly, e.g. a removal of default entitlement to housing element of Universal Credit. Ethnic minority groups are more likely to be affected by the Benefit Cap, due to the tendency toward larger families, whilst they may be less likely to be hit by the bedroom tax for the same reason.


Email: Philip Duffy, Philip.Duffy@gov.scot

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
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