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Annie Hayes

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Business applauds incapacity benefit shift

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This week’s announcement that the Government was moving to end the present incapacity benefit regime has, it seems, earned it copious brownie points with a full spectrum of business interests, from the Federation of Small Business to the Institute of Directors.

The changes, says the Government, provide “enhanced financial security” for those genuinely unable to work, while providing more money for those taking part in “work-focused activity.”

Current claimants who “completely refuse to engage” will receive payments based on the current JobSeekers’ Allowance rates.

The Government says that one million of those currently claiming Incapacity Benefit are keen to re-enter the workplace, but require the support and encouragement.

Launching the scheme, Work and Pensions Secretary Alan Johnson said that the “radical reform” should mean that sickness benefit “represents a pause in people’s working life, not a full stop”.

Borrowing the traditional vocabulary of the Conservative Party, he described the Government’s agenda as “one of rights and responsibilities: we can expect more of people as long as we safeguard their right to financial security and expand their opportunities to engage with the labour market.”

As a first step to implementing its “radical” reform the government is scrapping the term Incapacity Benefit entirely. It has yet to announce its more up-to-date equivalent.

Key changes to the system will be that claimants will initially be paid at the current Jobseeker Allowance rate of £55 per week, and only able to access “the new reformed benefits” having undergone a thorough medical evaluation.

They will then be given a “Rehabilitation Support” or a “Disability and Sickness” allowance depending on whether they pass as fit for the workplace.

Those on the £55 rehabilitation support allowance will be financially rewarded for showing willingness to re-engage with the workplace, for example by turning up at “Work Focused Interviews.”

The announcement of the changes drew applause from the Institute of Directors almost before the curtains were drawn, with Gerain Day, head of health policy claiming in a statement: “The fact that so many people who actually want to engage in employment, but for one reason or another have not been able to, means that action is needed.

“This would not only benefit individuals, but also business and the economy as a whole.”

For its part, the Federation of Small Business was slower on the draw, but having read through the proposals quickly articulated its support, its spokesman David Bishop telling sister site AccountingWEB that the FSB’s legal advice line received 3,000 calls in 2004 from employers confused or concerned by the provisions of – and their liabilities under – the current regime.

Bishop said this represented a 40% increase on previous years, and that Incapacity Benefit was thus clearly a growing concern. Welcoming the “shift in emphasis from compensation to rehabilitation,” he said that it was the experience of the Federation’s members that “the longer employees stay on benefits, the longer it takes for them to get back work.”

He did, however, have a word of caution: that many small businesses, lacking substantial HR departments, might find it difficult to accommodate a rush of “job applicants” keen to prove their enthusiasm for re-entering the workplace.



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Annie Hayes

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