Welfare Reform for the 21st Century

ABI WELFARE REFORM FOR THE 21ST CENTURYIn order to reduce the cost of the welfarebudget, many more households need tohave a safety net outside of the welfaresystem. IP is a private contributory safetynet. It replaces lost employment (or selfemployment)income when an individual isforced to stop work due to serious illnessor injury.Parliament has already recognised the powerand importance of innovative workplacesolutions in overcoming the psychological andbehavioural forces that inhibit people acting tosupport their financial wellbeing in retirement, byintroducing workplace pension automaticenrolment.The current Government has recognised theimportant impact of early health andrehabilitation support on how fast and how farsomeone recovers from illness or injury, andtherefore their ability to return to work. In light ofthis, the Government is reforming State supportfor those who sign off work due to ill health, byimplementing the main recommendations of theindependent review into sickness absence ledby Dame Carol Black and David Frost 1 , ‘Healthat work – an independent review of sicknessabsence’. The new ‘Health and Work Service’ isto be implemented as a result ofrecommendations from the Black/Frost Reviewand will provide advice and signposting to thoseoff work for health reasons for more than amonth. It will be funded through the abolition ofa previous subsidy for employers with highlevels of sickness absence (the PercentageThreshold Scheme). The service will not,however, go so far as to provide or arrangerehabilitation support. This will be left to theindividual, hopefully with the help of theiremployer or GP. This contrasts withrehabilitation services provided by insurers forthose IP claimants where it is judged thatrehabilitation support can make a significantdifference to recovery.“For many households withmoderate incomes, ESA willno longer provide a long-termsafety net against ill health ordisability.”Given the context of institutional welfarereforms, the shrinking income safety netavailable through the State, and thepotential for greater use of rehabilitationservices to support recovery, it is time toreview the role of IP, the interaction betweenprivate and State insurance, and the role ofemployers in building necessary andaffordable income safety net solutions.1Black, C. and Frost, D. (2011) Health at work – an independent review of sickness absence, Department for Work and

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