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Monday, 24 October 2011

12m limit to contribution-based ESA - an explanation from Lord Freud

It may be helpful if I first explain that ESA is structured into both contribution-based and income-related elements. lf a person does not satisfy the National Insurance contribution conditions for ESA, they can claim income-related FSA provided they satisfy the eligibility criteria. Once a claim for ESA has been made, people are then expected to undergo a Work
Capability Assessment {WCA) which will make a functional assessment as to whether they are capable of work, taking into account their health condition or disability.

Claimants who are assessed as having limited capability for work will be placed either in the Support Group or the work Related Activity Group.  Those who are placed in the Work Related Activity Group are expected to undertake some work-related activity with a view to moving into employment in the short to medium term.

Those with the most severe health conditions or disabilities for whom work is not viable, are placed in the Support Group. These claimants are not expected to undertake work-related activity, although they can do so if they wish.

As part of his Spending Review announcement on 20 October 2010, the Chancellor set cut his intention to introduce a time limit of one year far those claiming contributory ESA who are placed the Work Related Activity Group only. ESA for those in the Work Related Activity Group has always been intended to be a temporary benefit for people in this group who are expected to move towards the work place with the right help and support.

However this will not affect all ESA claimants. People in the Support Group who we do not expect to work or prepare for work will not have their contribution-based benefit time limited

Nor will people claiming income-related ESA have their income-related benefit time limited even if they are assessed as able to participate in work-related activity. This is in line with our commitment to support and protect the most vulnerable and disabled people in our society.

Currently people can qualify far many years of benefit on the basis of National insurance contributions made over a relatively short period of time.  This is no longer acceptable in the current fiscal climate where we need to review the balance between contributions paid and indefinite entitlement to support. We do not think that it is right in principle that those who are assessed as able to undertake work-related activity should be able to remain on contributory ESA for an unlimited period.  We have therefore decided to introduce a one year time limit on entitlement to contributory ESA.  By rebalancing the benefit system in this way we believe we are being fair to recipients as well as making the support provided affordable to the taxpayer.

Yours sincerely

Lord Freud
Minister for Welfare Reform

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