New Savoy Partnership Conference

Speech by Lord David Freud.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Rt Hon Lord Freud

Employment, work, the job we do, is central to our lives.

It offers more than just income, it provides structure, an opportunity to learn, to build friendships and relationships, it can provide a sense of self, of fulfilment and indeed of achievement.

It is bluntly, absolutely central to participating in the modern world, certainly the modern Western world.

Our understanding of how employment and health impact on each other has evolved, and has evolved relatively recently.

It used to be that when someone fell ill it was felt to be the job of the state, employers, health services, to protect that person from work.

If they are signed off sick they should only go back to work when they were fully recovered.

But actually what we now know is that condemning people to inactivity can actually worsen their health and hinder their recovery.

There is a growing body of evidence that helping people back into work on a managed basis can be very supportive to managing their sickness whether it’s mental or physical. So, employment can be part of the recovery process.

In the mental health area we are still looking at what really works, the data is still pretty sparse.

But there is beginning to be an understanding that using employment as part of the recovery process can be of real value.

Clearly the implications of this changing attitude to work and health means that how we configure services and what we do to help people is going to change.

And I think personally change quite substantially in the years ahead,

Employment support has become quite a reasonable part of the talking therapies offered by the health services.

The NHS has made employment one of its healthcare objectives, making a return to work an integral part of recovery from illness.

Getting someone not only out of bed, but actually back in to the work place is now being seen as one of the functions of the health service.

We are beginning, but only just beginning, to knit together the provision we have in the welfare to work part of the state and the health part of the state.

Getting this join to work is becoming increasingly important part of our welfare reforms.

If we look at the figures, around 40 per cent of people are claiming incapacity benefits because of a mental health condition.

That data does not give the full picture because we tend to only look at one factor - the top line factor - as we know there is an awful lot of co-morbidity when people are in this position so mental health issues are probably a bigger element than that 40 per cent suggests.

There are also some shocking figures to show that by the time you have been off work and in the arms of the welfare state for any length of time the number of people with mental health problems goes up.

So that is obviously something of absolute key concern for myself and my Ministerial colleagues at the Department for Work and Pensions.

And as we reform the welfare system, and as you know we have embarked now on the most massive reform agenda that the welfare state has seen since its invention.

As we embark on that process we are determined to get this join between health and welfare to work.

I’m aware that I am with an audience who may not know absolutely every aspect of the welfare system as it is or as it’s meant to be.

There is a core state offer from Jobcentre Plus, which is basically when you first come out of work that’s where you go to and most people frankly navigate their own way back into work.

The people who find it more difficult and have been out of work longer we are putting into this new service called the Work Programme which is delivered by contractors and consortia.

And those consortia are made up of private sector, voluntary sector and indeed the public sector.

For the first time Work Programme providers will be paid partly out of the benefit savings they help to realise when they support claimants into sustained employment.

Once on the Work Programme a participant stays on it for two years. This gives providers time to invest in addressing claimants’ long term challenges.

Providers will be paid primarily for supporting claimants into employment and helping them stay there for longer than ever before, with higher payments for supporting the hardest to help.

We have said we want that person back in work and back in work on a sustained basis.

If you do that we will pay you and we don’t mind how you get that outcome. Get that person into work and maintain them in work - that is what we pay for

So, that process, as you can imagine, means we are seeing a lot of innovation because providers are tailoring the product to what people need.

And you can see the philosophy here that people have different requirements so the pricing mechanism forces the providers to deliver a tailored individualised service.

Work Programme providers are free to design support based on individual and local need. Coupled with the incentives in the differential pricing mechanism, we expect the outcome to be a personalised service for participants.

Three main types of payment is available for the provider. The first is a small amount of seed funding to assist with start up costs. It reduces in the first three years to zero in year four.

If you are a provider, by getting someone into a job you will receive a job start payment. But more importantly you get money each month a participant stays in work, for a period of up to two years. This is designed to encourage providers both to find jobs that are appropriate for their claimants in the long term and to continue to support them once in work.

It does not need to be the same job just stay in the world of work.

It’s a much more flexible process.

Clearly, if there are a lot of people with mental health problems claiming benefits and those providers want to make money - then they have to start to understand what works in getting people with mental health problems back into work - it’s got to happen.

When we commissioned providers in the contracting process we made sure they had a rich supply chain which they were going to use - lots of different experiences and capabilities and specialisms and that was one of the main criteria by which we awarded contracts.

For example, Paul Farmer’s organisation Mind is sub-contracted to a number of Work Programme providers to deliver specialist support as is Lord Adebowale’s organisation, Turning Point.

I know there are concerns about the flow of referrals.

We have made a considerable effort to improve recent referral rates.

A key part of driving up referrals is to make sure the prime providers understand the kind of support that is available, what works, what it costs, and they need to start pricing it in.

Clearly, if a mental health provider can boost a Work Programme provider’s performance it will be in that provider’s interests to use those services.

We are investing a lot of money in this. We know some people need more help to get into work than others so we will pay providers more when they help those who are furthest from the labour market - up to £13,700 for someone who has been on incapacity benefits for some time.

That is, as you are all aware, an order of magnitude beyond anything that any state, anywhere in the world has been prepared to pay to help people back into the workplace.

In this process mental health providers may need to reconfigure their services to provide packages of support which are commercially viable, aimed at these providers and designed to deliver different levels of help.

To accelerate the process of understanding this and to encourage shared understanding I held a roundtable in July this year, bringing together the Work Programme providers and mental health organisations.

There was pretty rapid agreement that there was something to do here between both parties.

An informal working group developed out of it and it is currently working to share knowledge and experience and develop a resource directory for Work Programme providers and mental health organisations to draw upon. I think that was published yesterday.

That group is chaired by your very own Jeremy Clarke.

Indeed I can see some of the Work Programme providers, who sit on the working group, in the audience today.

Jeremy may have mentioned earlier in this conference that you have agreed a consensus statement setting out the shared understanding that will form the basis of this group’s work. 

I cannot emphasise enough how important this work is potentially. We are developing a bank of evidence demonstrating what works; it will mean providers will have the confidence to pull in the mental health teams to be part of the support for these individuals.

For Work Programme providers it is about getting the information about how and when to bring in specialist services and where they will have the impact when they are pricing out someone’s journey back to work.

The other thing as we develop this, I think it will be part of the process of removing stigma associated with mental health issues.

One of the things we know is that very often the things people need to help them into the workplace are not very costly or very complicated, because small changes can make big differences.

What I would like to see out of this is a common system of measurement so mental health providers can clearly demonstrate how the support they offer can improve someone’s health and contributed to their return to work.

I was very interested in the (PHQ9 and GAD7) measurements that Jeremy recently described to me which are currently being used to assess mental health.

I am not going to pre-judge what the industry comes out with but clearly there is some basis upon which we needs and prescribe suitable treatment and I wonder if something like this could build.

I know this is a completely different way of thinking about mental health services but it is one I firmly believe has got potential to really make us think hard about the very best ways we can support people.

As you look at Government services more generally it is the way that Government services are increasingly going to develop.

I think what I am saying is that this is really important because payment by results works.

For the simple reason that if you have a payment by results model which says get someone help next week and it works, then they will get help next week.

You don’t have that system you end up with a rations system where you might get help for someone in 14 weeks and the whole process is not effective.

That is why this is a methodology which is about making sure what is done applies to the individual.

There are a lot of building blocks around to support this work.

The national Occupational Health Advice services have proven to be a really valuable resource for small and medium-sized businesses dealing with employee health problems at work, including mental ill health.

Because of that value we are pleased to be able to continue funding these services.

Earlier this week independent reviewers Dame Carol Black, National Director for Health and Work and David Frost, formerly of the British Chambers of Commerce, published their review of managing sickness absence.

One of the things highlighted by the review was the importance of early intervention.

I am hoping we can develop much better and earlier intervention for people at risk of falling out of work.

Clearly it is much better to intervene early than to wait months, maybe years before starting effective intervention.

The review recommended that we start providing independent support after four weeks of receiving sick pay.

This is an independent report and it shows that people can now wait up to 28 weeks without any effective support

My job is to cut in at an early stage to get that support

Clearly, this is an independent report it sets a lot of challenges for Government.

But I have been tasked with making sure that we do deliver a system for getting on top of sickness absence.

We are considering their recommendations carefully but I think in years to come this could become a key element of intervention and support by the state and industry to help people manage their health and remain in work.

We have specialist disability employment programmes including Work Choice, which provide support for those disabled people who face the most complex barriers to getting and keeping a job.

Support is also available through the Government’s Access to Work programme, which is designed to meet the extra costs of overcoming the barriers disabled people face in getting and keeping jobs.

The shocking fact is that at the moment fewer than two per cent of people using Access to Work are people with mental health issues, despite the fact that poor mental health is the single largest reason people are signed off work.

One of the things I am keen to change is to make sure that money is pushed much more towards the mental health area.

As a first step, we are in the process of letting specialist contracts designed to encourage take up of Access to Work by people with mental health issues.

One of the first things we are doing is letting specialist contracts designed to encourage take up of Access to Work by people with mental health issues.

Going forward, we are currently considering the responses arising from an independent review of employment services for people with disabilities - the Sayce Review.

Many people came forward with ideas around how Access to Work could work better. We hope to be able to announce our plans for this and other employment support services soon.

I am currently taking the Welfare Reform Bill through the House of Lords.

The essential heart of that Bill is the creation of a new benefit, Universal Credit, which sweeps away many of the existing income based benefits into one.

Why are we doing this, what are the attractions of it?

Firstly it is simple. Rather than a multitude of different benefits, delivered by different organisations, with different criteria with different overlapping complexities - that all goes and we will have one application form for one streamlined benefit.

Secondly, it is designed in a way to mean work will pay.

The structure of it means if you earn extra money, you’ll have extra money in your pocket - amazingly that is not the position today.

One application form for one streamlined benefit.

It will be predictable. We will withdraw your benefit money as you earn more on a consistent basis at a clear and consistent rate.

We’ve infantilised people, we’ve frozen them, we’ve made it impossible for them to plan their lives because they don’t know how the state benefit system will interact with them if they change their lives.

The other thing we are doing is creating a real time link between what people are earning and what we will pay them under Universal Credit. So, what that means is that there is immediacy about the system. In the month when you don’t earn very much money because there is some problem the Universal Credit goes up, that month to match the shortfall.

So, for many of the people with fluctuating conditions, the fear of a benefits system that is so rigid will go away. You won’t have to report your earnings each month because that information will already be there.

The fear so many people have that they may have another episode of mental ill health, be unable to work, and then the devastating effect that will have on their family’s finances and themselves. That is going to be very significantly reduced.

For those claiming Employment and Support Allowance we are working with Mind and others to ensure the assessments we have in place are suitably nuanced and therefore able to accurately assess the needs and abilities of people with mental health conditions.

As I said at the start, we are gaining a much deeper understanding of the interaction between employment and health.

We are learning from each other.

This is great - it’s much more collaborative between employment and mental health services have been in the past.

But the thinking has remained quite separate.

We don’t want to be in a position where we are just adding services on here and there to what we already do.

The challenge we have is to actually combine the services between health and employment so we are working together not putting bits and pieces on our own product.

So what we are doing is very radical, it has lots of implications, it will change the way we do things in a lot of industries, in a lot of areas.

I think in this area the impact will be wholly beneficial and incredibly valuable and useful.

And I think that will be true for a long time coming.

Published 25 November 2011