Research and Statistics

Leaving Incapacity Benefit

This large report has been split into small files for easy download.

Research Summary for Research Report No. 86

by Richard Dorsett, Louise Finlayson, Reuben Rord, Alan Marsh, Michael White and Gerry Zarb

Incapacity Benefit was introduced in April 1995, when it replaced Invalidity Benefit (IVB) and Sickness Benefit (SB). The Department commissioned the Policy Studies Institute to carry out a large-scale survey of people leaving Incapacity Benefit to help evaluate the changes. The aims of the research were to find out what happens to people after they leave Incapacity Benefit, and to identify the factors which influence their destinations.

The main findings are:

top of page

Introduction

Incapacity Benefit (IB) was introduced in April 1995, when it replaced Invalidity Benefit (IVB) and Sickness Benefit. The Department of Social Security commissioned the Policy Studies Institute to carry out research to help evaluate the introduction of the new benefit and effects of the changes it brought.

The study involved a face-to-face interview with a 'flow sample' of people leaving Incapacity Benefit between June and November 1996. The sample included both voluntary leavers and those who were disallowed by the All Work Test. The main features of the sample were:

top of page

Leaving Incapacity Benefit

Two-thirds of respondents had been disallowed Incapacity Benefit by the All Work Test but the remaining third had left voluntarily. Compared to those remaining on benefit, both voluntary and disallowed leavers were much younger, and more likely to be women.

The most common medical conditions that formed the basis for their spell on Incapacity Benefit were musculo-skeletal, specifically problems affecting the back and neck. Overwhelmingly, respondents reported some continuing health problems at the point of leaving benefit, even amongst those who left voluntarily. The majority reported experiencing continuing disadvantage in the labour market, which they linked to their condition.

top of page

What happens to people when they leave Incapacity Benefit?

By the time of the follow-up survey, the main destinations were:

The remainder had a mix of arrangements. Some were relying on their own or a spouses income, and a few were mixing part-time work and other income - typically a pension of some kind. Others were reporting neither work nor other income, those these were quite a small minority.

A number of factors influenced these destinations. Older people and those with no qualifications, for example, were less likely to report any spell in economic activity or paid employment since leaving Incapacity Benefit. Self-assessed improvement in health was associated with greater subsequent economic activity and work. Time out of paid employment and length of incapacity also had a significant impact on people's chances of employment post-Incapacity Benefit. Although only 23 per cent of disallowed leavers had any kind of paid job by the end of 1997, 39 per cent had worked at some time since leaving benefit and the majority had been 'economically active'. On the other hand, much of the reported economic activity was, in terms of active job search, rather slight and did not lead to lasting work.

top of page

Employment after Incapacity Benefit

Those who had moved into work following their spell on Incapacity Benefit reported shorter periods of time out of the labour market. Subsequent multivariate analysis, on the other hand, showed that this apparently important difference was due to difference in 'human capital' resources and health, rather that to the time spent on benefit itself.

Voluntary leavers were mostly moving from Incapacity Benefit into employment. Half returned to a previous employment and others to previous self-employment, which was an important form of re-employment for them. Their earnings, whether hourly or weekly, were considerably greater than those of the (rather fewer) disallowed leavers who got jobs, especially for those who returned to previous jobs.

The employment of the much smaller proportion of disallowed leavers to enter work was primarily influenced by the process of appeal against disallowance in which half of them were, or had been, involved. Those who had appealed were far less likely to be in employment than those who had not appealed.

The earnings of disallowed leavers entering employment were confined within a low and narrow range, overlapping considerably with their recent entitlement levels under Incapacity Benefit.

Multivariate analysis of the job-entry of disallowed leavers up to the follow-up survey emphasises the role of appeals in placing appellants in non-employed 'limbo' for considerable periods of time. Work entry was also increased by the effects of lower out-of-work income, having working partners, finding training while on benefit, and improved health.

top of page

Continuing disability

When they were interviewed, only 15 per cent of the sample felt they had recovered from the condition associated with their spell on benefit, while the majority of the rest felt unchanged or worse, By the follow-up study, those saying they had recovered had risen to 25 per cent. Nearly all these recoveries were limited to those who had left voluntarily or who had decided not to appeal.

The overwhelming majority of respondents interviewed felt that their condition prevented them from doing as much or quite the kind of work they would otherwise be able to do, and usually both. They went on to cite problems with heavy work, doing enough hours, taking time off and generally being as productive as employers might fairly expect them to be.

Even those who had paid jobs still reported considerable difficulties - only 18 per cent of workers denied any health effects on their capacity to work. On the other hand, their reports of experiences of the barriers placed in the way of work did not emphasise their disability, or even an employer's likely view, as much as problems associated with their age, qualifications and local competition for jobs. Even the unemployed felt that other barriers to work were more significant than their disability; only those among the large numbers still classifying themselves as being sick and disabled placed their disability to the fore among reasons that make looking for work more difficult than it might be.

top of page

Job search activities

Among disallowed leavers without jobs, seven out of ten classified themselves as sick or inactive rather than as unemployed. This group undertook little job search activity compared to the (self-classified) unemployed, who were far more active. Search activity among the disallowed sample not in employment was strongly associated with the appeals process; those who were actively seeking work were the least likely to have appealed.

Amongst the disallowed sample who classified themselves as unemployed, and had not appealed against disallowance, a wide range of search channels or methods was in use, indicating both familiarity and contact with the job market. The majority of this group used family and friendship networks, while direct approaches to employers were used by more than four in ten of the active group. Nearly one in five had approached former employers.

Far fewer of the groups defining themselves as sick or inactive were exploring job opportunities through any channel. Among those wholly inactive in the period (a group constituting 44 per cent of disallowed leavers as a whole), about four in ten expressed a hope of returning to work in the future. Few of these were ready to take up work immediately, but they could be said to have a residual attachment to employment despite current lack of search activity.

Unprompted reports of assistance received from the Employment Service were relatively few; 10 per cent or so of those who now classified themselves as unemployed reported each form of assistance. Amongst those not expressing the hope of returning to work, few said they would change their minds if given help to do so. However, amongst those under 45, a substantial proportion were unsure what their response would be.

top of page

Changes in benefit status and income composition

In the month after the end of the IB claim, average benefit unit income dropped 12 per cent. Incapacity Benefit income was replaced in a fifth of households by earnings, and for smaller proportions of the sample by Income Support, Unemployment Benefit or Job Seekers' Allowance. Small numbers supplemented low earnings with Family Credit or Disability Working Allowance.

By the date of interview, average incomes had recovered to the level reached before exit from Incapacity Benefit. But this average recovery conceals a divergence of incomes between those with jobs and those relying on other income. In this way, just under half (44 %) of Incapacity Benefit leavers then had incomes exceeding what they received when on Incapacity Benefit. Those who left Incapacity Benefit voluntarily were more likely to leave to a higher income, and more likely to achieve further gains in their income, than those who were disallowed. Those who did not appeal recovered their incomes more quickly than those who did appeal, averaging a better income than when claiming Incapacity Benefit.

top of page

Conclusions

The main destinations show there are two widely divergent paths from Incapacity Benefit. There is a strong bias towards work and independent income for voluntary leavers and some disallowed non-appellants. The people in these categories tend to have shorter IB durations, have recent work experience, be those who have recovered their health, and have greater 'human capital' resources. There is a contrasting bias away from work and towards benefit dependent incomes for the disallowed leavers and appellants. The people in this category tend to have longer IB durations, have had little recent work experience, be those reporting continued disability, and be people whose attachment to the labour market had decayed and have little to offer employers. The evidence of the research shows that disallowed IB leavers have equivalent disadvantages, especially low wage potential, little recent work experience and few modern skills, compared to other groups found suited to a New Deal approach. An active case management approach for disallowed IB leavers that involves employers and individual caseworkers, could set many leavers onto a far more promising path away from benefit and towards work.

top of page

Relevant publications

G Zarb, N Jackson & P Taylor (1996) “Helping Disabled Workers ”(Department of Social Security Research Report No.57), London: TSO

K Rowlingson & R Berthoud (1996) “Disability, Benefits and Employment ”(Department of Social Security Research Report No.54), London: TSO

B Erens & D Ghate (1993) “Invalidity Benefit. A longitudinal survey of new recipients ”(Department of Social Security Research Report No.20), London: HMSO

S Lonsdale, C Lessof & G Ferris (1993) “Invalidity Benefit. A survey of recipients ”(Department of Social Security Research Report No.19), London: HMSO.

J Ritchie, K Ward & W Duldig (1993) “GPs and IVB. A qualitative study of the role of GPs in the award of Invalidity Benefit ”(Department of Social Security Research Report No.18), London: HMSO

Swales, K (1998) “Incapacity Benefit Tracking Exercise ”(In-House Research Report No.44), DSS: Social Research Branch

Swales, K & Craig, P (1997) “Evaluation of the Incapacity Benefit Medical Test ”(In-House Research Report No.26), DSS: Social Research Branch

Porter, T (1997) “Early Customer Reactions to the delivery of Incapacity Benefit ”(In-House Research Report No.23), DSS: Social Research Branch

Lonsdale, S (1993) “Invalidity Benefit: An International Comparison ”(In-House Research Report No.1), DSS: Social Research Branch