The Economist

LEADERS:
  22 May 99

Down with disablement: If people are healthier, why are the
numbers           claiming welfare benefits on grounds of
disability rising so fast?.

PEOPLE in the rich world are eating better, smoking less, exercising more
and receiving better medical care than they did 30 or 40 years ago. But
are all these healthy activities not just boring but positively unhealthy?
So it would seem: more and more people are also living on welfare benefits
intended for the disabled. The numbers in some countries are so dire that
it is a wonder they can hobble along at all. In the Netherlands, for
instance, 13% of the working-age population claims to be disabled . In
Britain, almost half the people of working age who claim a welfare benefit
are receiving money for being disabled or sick; one man in four aged
between 60 and 65 is claiming incapacity benefit. In Norway, more than 57%
of people aged between 55 and 64 are registered as disabled. Can the
figures be reconciled? Or is disablement simply the rich world's biggest
welfare scam? Incontrovertibly, the health of the old has been improving.
Being old has never been much fun-the joke used to be that, if you woke up
in the morning and nothing ached, you were probably dead. But life
expectancy for people aged 65 has continued to rise, and so have the
number of years that older folk can expect to live for without suffering
severe or even moderate disability. Most people can expect a couple of
unpleasant years of incapacity at the end of their lives, but that period
now typically arrives when they reach their mid-to-late 70s or even their
80s, rather than their 60s. Moreover, American research suggests that the
decline in disability among older people has accelerated: it was faster in
the first half of the 1990s than in the 1980s. So why the near-universal
rise in the number of people of working age who claim to be disabled? The
truth is that most claimants are merely suffering the pains of being past
the prime of life and unwanted by employers. Plenty of rich countries have
long used disability benefits as a way to shovel out of sight the most
intractable group of the unemployed: people-mainly men-in their 50s and
early 60s. Indeed, some governments have encouraged older workers to claim
to be disabled by obliging doctors to consider the state of the job market
when deciding whether a patient should be registered as disabled. Germany,
Italy and Finland all make access to disablement benefits easier when
unemployment is high. Disabled or dissembled Using disability benefits to
"solve" labour market problems is unwise and unkind. It inflates the cost
of supporting older unemployed people, and deflects governments from
searching for better solutions for their plight. But tightening the rules
is politically fraught, as Britain's prime minister, Tony Blair, has
found: he has faced a furious parliamentary revolt over a plan to make
disability benefits harder to claim . Even when governments try to tighten
the rules, people may find ingenious ways around them, if the incentive is
great enough. In Britain, a rise in the number of supposedly disabled
claimants seems to have coincided with tighter policing of access to
unemployment benefit. In the Netherlands, arguably the world leader in
phoney disablement, a tougher government line on physical disability has
encouraged more folk to claim mental disability. Proving that somebody
does not suffer from disabling stress is even harder than proving that
their backache is too bad for them to work. One option is to tighten the
rules on what counts as disability, and to administer them vigorously.
Another is to change the balance of incentives. In many countries,
benefits reward those who retire early, especially if their incomes are
already low. It would be better to ensure that those who continue to work
in late middle age also continue to clock up extra pension entitlement. A
third possibility is to alter expectations. Of course, some disabled folk
cannot work and will never work. But, for many, a job would bring
self-respect. If governments assumed that even the disabled should
sometimes work for their welfare, the truly disabled might be the most
grateful of all.


BRITAIN:
  22 May 99
  Wheelchairs in Whitehall: The battle over
welfare: Spending on benefits           for the sick and disabled
has quadrupled in 20 years. But radically           reforming the
system may prove beyond the Blair government.

UNDER Tony Blair, backbench Labour MPs have become notorious for their
docile loyalty. Ever ready with a sycophantic question for the prime
minister, nervously checking their pagers for fresh instructions from the
leadership, New Labour MPs seem incapable of rebellion. Except on welfare.
On May 20th, as The Economist went to press, the government was facing its
biggest ever backbench rebellion. As many as 60 Labour MPs were expected
to vote against government proposals to reform disability benefits. The
only time the government has faced a similar revolt was early in its
term-when 47 backbenchers opposed proposals to cut benefits for single
mothers. New Labour MPs may be able to swallow cuts in income tax but
slicing welfare benefits is apparently a bridge too far. It is, of course,
a fine thing to have principles. It is just a shame that, in this case,
they seem to be so misplaced. Virtually everyone agrees that genuinely
disabled people deserve taxpayers' help. But the growth in the numbers of
people registered as sick or disabled defies belief in a society which is
generally getting wealthier and healthier. Some 2.9m people of working
age-8% of the potential work-force-now get benefits for sickness and
disability. Spending on sick and disabled people has quadrupled in 20
years to around Pounds 25 billion (Dollars 40 billion) a year. Over the
past four years, as the unemployment rolls have shrunk, the number of
people claiming some sort of disability benefit has continued to rise (see
chart). More than 40% of working-age benefit recipients claim for illness
or disability. Plenty of people smell a rat. But the politics of reform
are hyper-sensitive. Under the Conservatives, it became so easy to qualify
for Invalidity Benefit that there were cases of javelin- throwers and
mountain-walkers claiming. But Tory attempts to reform this benefit were
portrayed as heartless. Staff at Richmond House, the social- security
department's headquarters, had to thread their way to work through a
picket-line of protesting wheelchair users. Ministers were forced to water
down the test for Incapacity Benefit, which replaced Invalidity Benefit.
Reforms of other disability benefits were placed on hold. And even a major
extension of disabled people's rights in the Disability Discrimination Act
failed to shake the Tories' reputation as hard-hearted scrooges ..TX.- The
Labour government started with an advantage and a handicap. On the plus
side, Labour had earned the goodwill of many disability groups by
championing their cause in opposition to the Tories. But in doing so,
Labour had also raised expectations. Tony Blair had repeatedly stressed
his wish to cut the Pounds 100 billion social-security budget in order to
pay for health and education. But he had not prepared disability groups to
think that the axe would fall on them ..TX.- So in office, Labour has been
forced gradually to dilute its plans. When rumours of reform first
surfaced in the autumn of 1997, the Disability Benefits Consortium, a
group of charities, protested directly to the prime minister. This did not
prevent ministers continuing to mull over significant changes in benefit
rates and entitlement conditions through the following spring. But fear of
revolts led to much more limited changes in the consultation paper on
disability reform published last October. Instead of trying directly to
confine disability benefits to the genuinely disabled, the government is
now trying a more oblique approach. The old slogan about cutting the bills
of social and economic failure has been replaced by a new one: "work for
those who can, security for those who cannot." Hugh Bayley, a
social-security minister, estimates that over 1m people on disability
benefits would like to work. So the government plans to advise disabled
people who want to work, is encouraging employers to take them on, and is
piloting changes to the benefit rules to help disabled people take jobs
..TX.- Much of this is laudable. But it is all carrot, no stick.
"Disabled" people will in future be interviewed about work, but will be
under no obligation to do any even if they are capable of it. And the
government tacitly admits that some undeserving claimants will continue to
receive benefits. Incapacity Benefit, for example, is meant to be paid
only to people incapable of work. But the government is proposing to allow
claimants to keep Pounds 15 a week of earnings on top of their benefit,
acknowledging that many claimants are capable of some work. This contrasts
with the increasingly tough line the government is taking with unemployed
people not on disability benefits. On May 19th, David Blunkett, the
employment secretary, announced that young unemployed people who
persistently refuse jobs will in future lose benefits for six months. No
such sanction will apply to people claiming disability benefits ..TX.- But
if the government's reforms are so timid, why have Labour backbenchers
kicked up such a fuss? In part, because some think that a Labour
government should be aiming to spend more, not less, on disabled people.
Two particular measures have drawn their fire. The government wants to
restrict Incapacity Benefit to people who have paid national-insurance
contributions-a payroll tax-in the two years before making their claim.
And it plans to taper off Incapacity Benefit payments to people with
early-retirement pensions of over Pounds 50 a week. Backbenchers claim
these two measures will mean Pounds 750m less for the disabled. Nonsense,
retorts the government. The changes will not apply to existing claimants,
and the savings, particularly in the early years, will be small. Indeed,
claims Mr Bayley, taking account of new disability spending on younger or
poorer disabled people, there will be no net reduction in spending on
disability for the foreseeable future. In fact, the specific cuts look
like a pretext for the revolt rather than its cause. Ian Bruce, the
co-chair of the Disability Benefits Consortium, says that the government
could have avoided the revolt by offering token concessions two or three
weeks ago. But the disability lobby is annoyed at being under valued and
misrepresented by the government. After the government's general welfare
strategy was published, it set up a Disability Benefits Forum to give
disability charities the chance to put their case to government ministers.
But Mr Bruce claims that the government in some cases refused even to
consider evidence put to it by forum members, and that the responses of
over 300 disability groups to a government consultation paper were
ignored. Worse, Mr Bruce says that government ministers used the existence
of the forum to argue, wrongly, that disability charities supported their
proposed reforms. In frustration, on May 11th, a group of disability
charities walked out of the forum. This week's parliamentary revolt was a
chance for the disability lobby to display its formidable political power,
and to bludgeon the government into treating it with more respect. Expect
more wheelchairs in Whitehall.

The Economist
Copyright (C) The Economist Newspaper Ltd, 1981-1997


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