Invalidity Benefit

Invalidity Benefit was a benefit from the United Kingdom's National Insurance scheme that was introduced in 1971 by Edward Heath's government. It was paid to people who had been invalided out of their trade or occupation after sustaining an injury or developing a long-term illness. It was replaced by Incapacity Benefit in 1995.

History

In September 1971, Keith Joseph, then Secretary of State at the Department of Health and Social Security, introduced Invalidity Benefit in the National Insurance Act 1971.[1]

The caseload grew rapidly from the middle of the 1980s.

In 1995, the Conservative Secretary of State for Social Security, Peter Lilley, abolished Invalidity Benefit for fresh claims and replaced it with Incapacity Benefit. The Prime Minister of the day, John Major, had complained about the burgeoning caseload, saying: "Frankly, it beggars belief that so many more people have suddenly become invalids, especially at a time when the health of the population has improved".[2]

Eligibility

Men under the age of 65 and women under 60 were entitled to claim Invalidity Benefit.[3] To be eligible for Invalidity Benefit, claimants needed to have claimed a short-term sickness benefit, such as Statutory Sick Pay for 28 weeks prior to the claim and have paid National Insurance contributions.[4] The claimant's age and qualifications were taken into consideration when deciding if the claimant was capable of working.[5]

Payment

Invalidity Benefit consisted of three components:[3]

  • Invalidity Pension, which was paid at the same rate as the state pension.
  • Invalidity Allowance, which was an additional payment for people under 50 years old. This was only available to people who started claiming the benefit before 1985.
  • Additional Pension, which was for people who belonged to an occupational pension scheme or State Earnings-Related Pension Scheme (SERPS) and related to their earnings since the 6 April 1978.

Invalidity Benefit was paid at a higher rate than the unemployment benefit paid to people without disabilities. People who had been on Invalidity Benefit for more than one year were paid the long-term scale rate.[6] The table below shows the amount claimants were paid.[3]

Invalidity Benefit payment rates per week in the 1990-1991 financial year
Invalidity Pension Invalidity Allowance Additional Pension
Claimant £46.90 £10 (under 40 years old)

£6.20 (between 40 and 50 years old)

 Varied according to earnings prior to April 1978 and membership of SERPs or occupational pension
Spouse £28.20 (only paid if the spouse earned less than £37.35 per week)
Dependent Children £9.65 per child


Controversy

Invalidity Benefit has had both a positive and negative reactions.

Improvement in finances for disabled people

Tania Burchardt from the London School of Economics has described the 1970s and 1980s as decades that were notable for an "improvement of the coverage of earnings-replacement benefits", and produced data showing that a disabled person who was unable to work would be receiving more money in real terms than they would have done in the 1950s and 1960s.[5]

Rise in number of claimants

The number of claimants of sickness benefits increased rapidly from the 1970s onwards.[7][8] In the late 1980s, unemployment levels fell without a corresponding rise in the number of jobs created, while Invalidity Benefit claims continued to rise without any indications that the population's health was declining.[9] A number of reasons have been proposed for this rise:

Growth in Structural Unemployment

A study published in the British Medical Journal suggested that the decline in manual employment was the main reason for rising levels of Invalidity claims, as men who had been in a manual occupation were the most likely to be claiming Invalidity Benefit. The authors of the study also suggested that people who had lost their job found claiming Invalidity Benefit preferable to claiming Unemployment Benefit because it paid more and did not carry the same stigma as being unemployed.[9]

Changes to the Benefit System

A paper published in the Economic Journal suggested that changes to the benefits system encouraged claimants to go onto Invalidity Benefit rather than Unemployment Benefit. It argues that changes to the criteria for receiving Unemployment Benefit made it harder to receive. The paper also says that people who were near retirement age were possibly incentivised to stay on Invalidity Benefit because they could claim the benefit for five years after their retirement, and unlike the state pension, it was not taxed.[10]

Use of Invalidity Benefit to conceal unemployment levels

There have been claims that the government was using Invalidity Benefit to lower the unemployment statistics. A report by Sheffield Hallam University showed that Invalidity Benefit claims started to rise when unemployment rose in the late 1970s and early 1980s, and argued that this indicated that many claimants were not too unwell or disabled to work, as the number of people with serious illnesses and disabilities would be expected to be constant.[8] An earlier paper by two of the same authors made a similar argument, and showed that people living in areas where there had been a high number of job losses (such as traditional industrial areas) had the biggest growth in people claiming Invalidity Benefit.[7] As well as this, a paper published in the Journal of Public Health Medicine argued that people with mild mental disorders were increasingly likely to claim Invalidity Benefit, and showed that the rate of people claiming Invalidity Benefit where their main disability was Depression or Anxiety had grown rapidly between 1985 and 1995, but that there was a much smaller increase in claims over the same period for potentially more disabling mental disorders, such as psychosis. The author claimed that this supported the view that the government was using Invalidity Benefit to conceal unemployment levels.[11]

Role of GPs in assessing fitness to work

An editorial in the British Journal of General Practice published in 1990 argued that GPs felt pressured into giving patients sick notes because they did not have time to fully assess the patient's fitness to work, which was contributing to the rise in Invalidity Benefit claims.[12]

References
  1. Westminster, Department of the Official Report (Hansard), House of Commons. "House of Commons Hansard Debates for 21 Apr 1971". parliament.uk.
  2. Westminster, Department of the Official Report (Hansard), House of Commons. "House of Commons Hansard Debates for 15 Jun 1993". www.publications.parliament.uk.
  3. Blake, David (1995). Pension Schemes and Pension Funds in the United Kingdom. Oxford: Oxford University Press. p. 56. ISBN 978-0-19-828623-3. Retrieved 4 January 2019.
  4. Holmes, Phil; Lynch, Mauricea; Molho, Ian (20 January 2009). "An Econometric Analysis of the Growth in the Numbers Claiming Invalidity Benefit: An Overview". Journal of Social Policy. 20 (1): 87. doi:10.1017/S0047279400018493.
  5. Burchardt, Tania (1999). "The Evolution of Disability Benefits in the UK: Re-weighting the basket" (PDF). CASEPaper 26. Centre for Analysis of Social Exclusion. Retrieved 3 January 2019. Cite journal requires |journal= (help)
  6. Walker, Alan; Walker, Lucy. "Disability and Financial Need – The Failure of the Social Security System" (PDF). Policy Studies Institute: 32. Retrieved 3 January 2019.
  7. Beatty, Christina; Fothergill, Stephen (2004). "The Diversion from 'Unemployment' to 'Sickness' Across British Regions and Districts". Regional Studies. 39 (7): 837–854. doi:10.1080/00343400500289804. Retrieved 3 January 2019.
  8. Beatty, Christina; Fothergill, Steve; Gore, Tony (2017). The Real Level of Unemployment 2017 (PDF). Sheffield: Sheffield Hallam University. pp. 3, 6–9, 12–13. Retrieved 31 December 2018.
  9. Bartley, Mel; Owen, Charlie (24 August 1996). "Relation between socioeconomic status, employment, and health during economic change, 1973-93". BMJ. 313 (7055): 445–449. doi:10.1136/bmj.313.7055.445. PMC 2351866. PMID 8776309. Retrieved 3 January 2019.
  10. Disney, Richard; Webb, Steven (March 1991). "Why are There So Many Long Term Sick in Britain?". The Economic Journal. 101 (405): 252. doi:10.2307/2233816. JSTOR 2233816.
  11. Moncrieff, Joanna; Pomerleau, Joceline (1 March 2000). "Trends in sickness benefits in Great Britain and the contribution of mental disorders". Journal of Public Health. 22 (1): 59–67. doi:10.1093/pubmed/22.1.59. PMID 10774906.
  12. Murfin, David (August 1990). "Medical sickness certification: why not review the role of the general practitioner?". The British Journal of General Practice. 40 (337): 313–4. PMC 1371306. PMID 2121174.
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