Welfare Reform Bill

The income-related employment support allowance replaces income support for people with an incapacity or disability. It takes account of a customer’s and their partner’s income and capital in determining the amount of benefit payable. It is not just payable to those with no income, but to those with a small amount of income that needs to be below their applicable amount. Not all income affects benefit entitlement, and some income, including earnings, may be disregarded in full or in part. For example, in the case of income support, disability living allowance is entirely disregarded, whereas earnings in excess of £20 per week reduce entitlement for people who are entitled to the disability premium. The Government regularly review the level of the earnings disregard in the benefits system, taking into account a large range of relevant factors, one of which is the prevailing labour market conditions. We also need to maintain a balance between ensuring that we do not undermine incentives for people to move off benefits into full-time work, allowing people to try out work to build self-esteem and confidence and to find out what is right for them. In addition, we need to maintain consistency across the benefits system to avoid complexity and help ensure better understanding of the rules by customers and staff alike. Currently, people on income support who receive the disability premium are able to earn up to £20 per week before their benefit is affected, but people in receipt of incapacity benefit, which has a quite different structure, are for a limited period able to earn up to £86 a week provided they work fewer than 16 hours per week. That is commonly known as ““permitted work””. The permitted work rules act as a valuable stepping stone to returning to full-time work, giving customers the opportunity to explore what kind of work is right for them, and should be encouraged. That is why in recent years we have extended the provision to enable more disabled people in receipt of IB to take advantage of the provision. We recognise that the permitted work rules, which provide a gateway into the world of work and a balance between recognising the worth of work and a safeguard to protect the benefits system, are not as well understood as they could be and are seen as complex and inflexible—we touched on that point earlier. One of the advantages of introducing a unified benefit is that it provides the opportunity to go back to the drawing board and to make improvements which build on the current system. As we stated in the Green Paper, we want to make these rules even more effective for employment and support allowance, allowing people to try out work, build skills and confidence, and move towards greater independence. That is why we are continuing to look for more flexible ways of helping people take up opportunities and increase their options without fear of their benefits being removed straightaway. It is right that people should be given the opportunity to help themselves whenever they can. However, we also believe that people should not be allowed to claim benefits while working full time. There is an important balance to be struck, and this power will enable us to do so. The noble Lord asked what plans there are for the £40-a-week return to work grant and whether there are any plans for softening the end of the second year.