Autumn Statement and Back to Work Plan: IES explainer

IES News

22 Nov 2023

Today’s Autumn Statement set out the detail of the government’s new Back to Work Plan. The main elements of this were pre-briefed last week, and IES responded to these at the time.

In summary, our view is that there is a lot to welcome in the new plan, with around £2.6 billion of investment in employment and related support over the next five years, particularly focused on supporting the long-term unemployed and people with significant health conditions. However the Autumn Statement also includes major changes to benefit rules for people with long-term health conditions, which are forecast to lead to nearly 400,000 people getting around £5,000 a year less than under current rules. These will cause real hardship and worry for many people and appear very hard to justify, even on the government’s own terms.

The Back to Work Plan employment measures

The main employment related measures in today’s Autumn Statement are:

• An extension of the Restart Scheme by a further two years, alongside bringing forward eligibility to those reaching six months of unemployment. Final referrals to Restart will now be in summer 2026.
• An additional 100,000 places in ‘Individual Placement and Support’ programmes, which offer personalised employment support to people with severe mental ill health.
• Doubling the size of the proposed Universal Support programme, which was announced in the Spring Budget but is now expected to benefit up to 100 thousand people a year. This will provide specialist employment support for disabled people, those with long-term health conditions and others with significant disadvantages in the labour market, using the ‘supported employment’ model.

Alongside this, the government has also committed to:

• An expansion of access to talking therapies through the NHS, which is not an employment measure as such but which may enable more people with mental health conditions to stay in work or engage with employment-related support.
• Rollout of new ‘WorkWell’ pilots, which will fund local partners in up to 14 areas to develop an integrated employment and health strategy and deliver new, integrated work and health services.
• Further expansion of ‘Additional Jobcentre Support’ pilots, which are testing more frequent and intensive requirements on unemployed Universal Credit claimants earlier in their claim (for example through daily signing on). This will now pilot the effectiveness of applying this after seven weeks of a claim instead of 13 or 26 weeks.
• A new ‘claimant review point’ for those who leave the Restart scheme without a job (so typically people who have been continuously unemployed for at least eighteen months). The emphasis in the Chancellor’s speech was on ‘mandatory work placements’, but in our view the costings for the policy suggest that at most around 10% of those returning will be referred for placements. The review point therefore seems more likely to focus on more intensive jobsearch monitoring and referral to other provision.

The government also briefed quite heavily last week changes to the sanctions regime, whereby people who have been continually sanctioned for the full amount of their Universal Credit for at least six months would have their claims closed.  Our suspicion that this was primarily an administrative exercise with little likely fiscal or economic impact has been borne out in today’s documents, which suggest that the net impact of this measure will not save any public money at all.

Finally, arguably the biggest headline of the Autumn Statement was the significant cut to employee National Insurance, which will cut taxes for those in work by around £9 billion a year. This is of course welcome news for those in work, and will also have a modest positive impact on employment too.

Overall, as we said last week, many of these new measures are welcome. We need to do more to expand access to good quality employment support and to join up across public services, and these measures are a welcome start. 

Changes to the Work Capability Assessment

Less positively however, today also sees the announcement of significant changes to the Work Capability Assessment (WCA) in Universal Credit. This is the assessment used to determine whether people with significant health conditions are entitled to additional financial support, as well as the extent of any requirements around attending jobcentres and preparing for work. These changes were consulted on during September and October and there are two sets of changes now being made:

• Firstly, to amend criteria that (in the government’s view) need to be updated to reflect the availability of home working – these rules relate to mobility and getting about.
• Secondly, to amend a rule that awarded the highest rate of benefit and no requirement to attend jobcentres where it was deemed that not awarding this would lead to a substantial risk of harm to that individual or others (for example because of severe mental ill health). In their consultation, the government imply that in these cases any work-related activity would be voluntary.

The government’s argument is that by assessing more people as having capability for work related activity (or indeed fit for work now), this will bring more people within the scope of employment support. However in our view, it is entirely feasible – and would be far better – to substantially improve access to support without requiring people to attend jobcentres.

The main impact of the changes though will be to significantly reduce benefit entitlements for future claimants. The OBR forecast that nearly 400,000 claimants will be worse off by around £5,000 a year, which will save £2.8 over the next five years. For context, this means that around half of those who are currently assessed as being entitled to the higher rate of benefit (and not having to attend jobcentres) will in future get the lower benefit (and be required to attend interviews).

It is very hard to justify these changes around working from home, given that only around a quarter of the workforce can regularly work from home and that this falls to just one sixth of those in lower paid work.  Disabled people are also just as likely to work from home as non-disabled people. In reality this appears to be a cost-saving measure, intended to try to contain the rapid growth that we have seen in the number of people being assessed as too ill to work. This growth has been driven both by a higher incidence of ill health, but also by more of those who go through the WCA being awarded the higher rate (around two-thirds currently, compared with barely one in ten when the system was introduced in the late 2000s).

Our concern is that these changes will create real hardship for many of the most vulnerable in society, and will cause significant worry for people who are currently on benefit and who may be facing reassessment in future. There will also be a significant challenge in equipping advisers in Jobcentre Plus to effectively support these groups and to ensure that requirements to attend meetings or the threat of sanctions does not lead to more worry, hardship and even harm. It would be far better if these changes did not go ahead, and that we focus instead on improving access to support and on getting right the longer-term replacement for the WCA.