Welfare Reform and Pensions Bill
The Welfare Reform and Pensions Bill had its report stage in the House of Commons on 20 May. Sixty seven Labour MPs voted for the amendment to delete the clauses on restricting eligibility for incapacity benefit and reducing entitlement for those with occupational pensions.

Cuts in benefit
Increase in means testing
Widows' benefits
Single work-focused gateway

CPAG, working with the Disability Benefits Consortium, opposed a number of measures in the Bill, in particular:

• the change in the contribution conditions for incapacity benefit. Under the Bill, claimants will need to have paid national insurance contributions over the last two years to be entitled to benefit;
  
• the ‘means testing’ of incapacity benefit for those with occupational pensions of more than £50 per week;
  
• the abolition of severe disablement allowance, affecting in particular women who have paid insufficient contributions for entitlement to incapacity benefit due to caring responsibilities.

These cuts will exclude significant numbers of disabled people from benefit and break the promise the Government made on 30 March 1998 that ‘future savings would come from helping disabled people to get jobs rather than reducing benefit entitlement’.

The cuts to incapacity benefits, together with those for widows' benefits, are inconsistent with comments made in last year’s Welfare Reform Green Paper about the need to reform the welfare state ‘on the basis of a new contract between citizen and state; where we keep a welfare state from which we all benefit, but on terms that are fair and clear.’ The Welfare Reform and Pensions Bill breaks that contract. People who have paid national insurance contributions in the past and planned their financial future on the basis that state benefits will be payable, may find they are now excluded from entitlement.

Cuts in benefit
Long term savings in benefit expenditure are expected to be £1.2 billion a year. The majority of these long term savings will come from the changes to incapacity benefit/severe disablement allowance (£780 million) and widows’ benefits (£600 million). The expenditure involved in some of the positive measures is comparatively small, £90 million on disability benefits and £125 on bereavement benefits.

Forty-five thousand people will lose from the changes to contribution conditions for incapacity benefit and the offsetting of occupational pensions, rising to 335,000 people after 10 years.

Sixteen thousand people a year will lose from the abolition of severe disablement allowance.

Increase in means testing
The Bill will result in more people being pushed onto means-tested benefits. It is difficult to see how this is compatible with policies to reduce poverty and social exclusion. The abolition of the widow’s pension is expected to increase the number of income support claimants by 5,000 in the first year and up to 30,000 in the long term. It is expected that the majority of people no longer entitled to incapacity benefit or severe disablement allowance will claim income support instead. For these people, the poverty trap increases. Income support is reduced for each pound of earnings over £15 a week, whereas a severe disablement allowance claimant can earn up to £58 in therapeutic work.

Some people will be excluded from entitlement altogether. Thirty per cent (5,000) of those people who will be excluded from entitlement to severe disablement allowance will also not be entitled to income support. Those with partners in full time work, for example, will therefore lose their financial independence.

Widows’ benefits
While we welcome the extension of widows’ benefits to widowers, we urge the Government to bring forward the implementation date (currently 2001). If it is unfair and discriminatory for widowed fathers to be excluded from benefit, and it is unfair to expect them to wait until 2001.

Furthermore, we are concerned that payment of bereavement allowance, which replaces widow’s pension for those without dependent children, is to be restricted to 26 weeks. The Government’s argument is that this is reasonable on the grounds that many more women are now in work. However, while 52 per cent of widows aged 45-60 (the group entitled to widow’s pension) are in work, only 28 per cent work full time. CPAG believes the bereavement allowance should give the bereaved person time for:

• grieving;
  
• reorganising home and taking care of financial matters connected with the bereavement; and
• preparing to take up work.

Twenty-six weeks is, in our view, inadequate. We would therefore like the Government to consider extending the period of entitlement to two or five years.

Single work-focused gateway
The Bill introduces compulsory work-focused interview for people claiming most benefits. CPAG welcomes the ‘personal adviser'; approach because of the potential to simplify the claiming process and maximise benefit take-up. However, we are concerned that:

• the claiming process threatens to become overloaded for those at a crisis point at their lives;
  
• vulnerable people risk losing benefit, particularly if staff are not adquately trained, experienced or knowledgeable;
  
• there is potential for a 'ratchet effect, with compulsory interviews now, leading to compulsion to work in the future.
  

The Bill has just started its passage through the House of Lords. It is to be hoped that the Government takes the opportunity to reconsider the proposals in the Bill in the light of the very real concerns of CPAG and other groups.

Djuna Thurley
Poverty 103 Summer 1999