Press release

Proposals to close ESA loophole may have unintended consequences

The SSAC is consulting on the government's proposals to close a loophole about Employment and Support Allowance (ESA) repeat claims.

The Social Security Advisory Committee (SSAC) is considering the government’s intention to close a loophole it believes is currently being exploited by some Employment and Support Allowance (ESA) claimants. Claimants whose award of benefit has ended after a Work Capability Assessment determines that they do not have limited capability for work will no longer be able to make a successful repeat claim for benefit unless their health has deteriorated or changed. The committee will be hosting a small number of workshops in the coming weeks to gather evidence on the potential impact of this proposal which might extend to those with a legitimate claim.

Paul Gray (the committee’s Chair) has commented:

We fully endorse the government’s determination to protect the benefit system from abuse and to close off opportunitunities for exploitation by a determined few. However, we want to look more closely at whether these proposals are the most appropriate way of achieving that ambition as it is not entirely clear who is likely to be affected and how. For example, some of those affected may have mental health or fluctuating conditions with no intention of manipulating the system. That is why we want to speak to stakeholders who have direct and relevant insight on this before we submit our report to the government.

Current rules allow claimants to make another claim 6 months after being refused benefit. Provided they are able to produce a fit note, they will be awarded ESA at the assessment rate even if their health is unchanged. Some people are exploiting the system to continue to get ESA at the basic rate, even though they have been assessed as not having a limited capability for work and their health remains unchanged. It is additionally possible to prolong a period of entitlement on ESA by lodging an appeal. Even if the appeal is lost, a claimant can make another claim to ESA and start the entire process again.

The government intends to close down this loophole by introducing the following proposals:

  • anyone seeking to make a repeat claim to ESA after they have been found to have limited capability for work, will need to produce medical evidence indicating a deterioration in an existing health condition, or the onset of a new condition

  • ESA will not be paid to claimants in these circumstances pending an appeal

The Department for Work and Pensions advise that there are around 700,000 new claims for ESA each year. Of these about one third are repeat claims. And of those repeat claims an estimated 15% are from people whose health is unchanged from their previous award of ESA (ie about 35,000 claimants).

The department intends to introduce these changes from 30 March 2015. As part of its scrutiny of the regulations, the committee intends to host 2 workshops to gather relevant evidence and views from a range of its stakeholders. The workshops will be held on 17 December (London) and 18 December (Glasgow).

The evidence received by SSAC will help inform its report which will be submitted to the Rt Hon Iain Duncan Smith MP, the Secretary of State for Work and Pensions, in January. In particular we would like informed views on:

  • who is likely to be unintentionally and adversely affected by these proposals
  • is there a more effective way to close the loophole while continuining to protect vulnerable claimants who have no intention of exploiting the system

Organisations and individuals who have direct experience or evidence that will help inform SSAC’s deliberations of this proposal and who would like to participate in the workshops should send their details to the committee’s Secretary by no later than Thursday 11 December:

The Committee Secretary
Social Security Advisory Committee
5th Floor
Caxton House
Tothill Street
London
SW1H 9NA

ssac@dwp.gsi.gov.uk

Those who are unable to participate in the workshops may submit written representations. The deadline for written contributions is 19 December 2014.

Read the regulations, explanatory memorandum and equality assessment relating to this proposal on GOV.UK.

About SSAC

SSAC is an independent advisory body of the Department for Work and Pensions. The committee’s role is to:

  • give advice on social security issues
  • scrutinise and report on social security regulations (including tax credits)
  • consider and advise on any matters referred to it by the Secretary of State for Work and Pensions or the Northern Ireland Department for Social Development

The committee’s Chair is Paul Gray. Its membership comprises: John Andrews, Adele Baumgardt, John Ditch, Keith Faulkner, Colin Godbold, Chris Goulden, Jim McCormick, Gráinne McKeever, Matthew Oakley; Seyi Obakin, Judith Paterson, Nicola Smith and Diana Whitworth.

Most draft social security regulations dealing with benefits come before SSAC for scrutiny. When SSAC has considered them it can ask for them to be formally referred. In most cases SSAC will conduct a public consultaion and will then write a report to the Secretary of State for Work and Pensions. That report must be presented to Parliament when the regulations are laid, together with a statement from the Secretary of State showing what has been done (or is intended to be done) about SSAC’s recommendations. Reasons for not accepting any recommendations must also be given (section 174(1) and (2) of the Social Security Administration Act 1992).

Further enquiries should be directed to Denise Whitehead, Committee Secretary, on 020 7829 3354.